Posts from Thursday May 27 2010

US Justice Dept seeks halt to civil Sojitz suit

The Justice Department asked a federal court to halt a civil lawsuit filed against Japanese commodities-trading giant Sojitz Group, citing the government’s own criminal bribery probe, the WSJ reported. According the WSJ story, ‘the lawsuit was filed in December by Bahrain’s state-owned aluminum producer, Aluminum Bahrain BSC, known as Alba… [and] alleged Sojitz paid Alba employees nearly $15m in bribes over 13 years to gain discounts on aluminum prices.’

Japanese exports soared in April

Japan’s exports rose 40.4 per cent in April from the previous year, boosted by strong overseas demand for Japanese cars and marking the fifth straight month of increases, the WSJ reported. The brisk exports helped lift the nation’s trade surplus to 742.3bn yen from 48.9bn yen in the same month a year earlier, the newspaper said, citing data released Thursday by the Ministry of Finance.

Alarm rises over N Korea

North Korea threatened to scrap all military assurance agreements with South Korea on Thursday and warned of an immediate attack should Seoul intrude on the disputed maritime border, the FT reports. The threats mark the most serious deterioration in relations between the neighbours, who are still officially at war, in more than a decade and have rattled international markets.

Can Europe learn from Dubai?

Dubai World’s chairman has declared victory. At the opening of a Mars confectionary factory yesterday, Sultan bin Sulayem said Europe could learn from the emirate’s experience in restructuring its debts, estimated by the IMF to total $109bn, the FT’s beyondbrics blog reported.

India bucks a trend – and boosts short selling

Just as Germany is clamping down on short selling, and some other countries are thinking of following suit, India is moving in the opposite direction – and looking to boost short selling. It is clearly a sign of the growing confidence that emerging markets regulators have in their financial sectors, the FT’s beyondbrics blog said.

Martin Wolf v Stephen Roach on US-China relations

Who’s more opinionated? Tough call, when its Morgan Stanley’s Stephen Wolf up against the FT’s Martin “Two Brains” Wolf on the small matter of US-China relations and the outlook for China’s currency policy. Bloomberg filmed the pair, who spoke — at length — at an event in New York on May 25. The president of the National Committee on US-China Relations, Stephen Orlins, moderated the 90-minute discussion. See FT Alphaville for a link to the video. Read more

Pequot, Samberg settle SEC charges

Hedge fund manager Arthur Samberg and his former firm, Pequot Capital Management, on Thursday reached a $28m settlement with the SEC over allegations of insider trading in Microsoft stock. The settlement brings an end to the SEC’s five-year investigation, the FT said. For details of the complaint and settlement, see FT Alphaville.

DIC seeks debt extension

Dubai International Capital, one of the United Arab Emirates’ high profile  investment arms, on Thursday said it had called for an extension on some debt maturities until Sept 30. The request, agreed by a committee of lenders co-chaired by HSBC and Dubai’s Emirates NBD, was put to an all-bank meeting on Thursday and comes ahead of a $1.25bn syndicated loan due for repayment on June 27, the FT said.

Nigeria weighs sale of state electricity system

Nigerian officials have begun preparing a plan to sell the crippled state electricity system, in what would be one of Africa’s biggest privatisations. President Goodluck Jonathan has privately signalled his support for a potential multi-billion dollar sale of state-owned distribution companies and power plants. But he has encountered stiff resistance, the FT said, citing people familiar with the situation.

Obama unveils offshore drilling rules

Barack Obama on Thursday ordered all 33 deepwater oil rigs in the Gulf of Mexico to halt drilling and extended a moratorium on new deepwater wells, as his administration imposed tough new restrictions on oil companies following the BP spill, the FT said. The FT’s Energy Source blog is providing live updates on BP’s ‘top kill’ attempt to plug the leaking well.

Pru seeks to slash $35bn AIA price tag

Prudential is trying to renegotiate the $35.5bn price tag on the Asian businesses of AIG in a last-ditch attempt to win over some of its biggest investors and head off a “no” vote on its planned takeover of AIA. The UK life assurer has sounded out investors opposed to the deal about whether a cut price would win their favour. It now hopes to reduce the price to as low as $30bn, the FT said, citing people familiar with the situation

China’s CIC: eurozone ‘concerns’

CIC, China’s main sovereign wealth fund, is “very concerned” about short-term market fluctuations resulting from eurozone instability but the ongoing debt crisis will not seriously affect China’s overseas investment, Gao Xiqing the fund’s president said on Thursday. The Kuwait Investment Authority also affirmed its commitment to eurozone debt. FT Alphaville however notes that China well knows this is no time to undermine confidence in eurozone debt.

Strike forces Honda to shut Chinese plants

Honda has been forced to suspend operations at its manufacturing plants in China, as a strike at a supplier factory ripples through the Japanese carmaker’s supply chain, the FT reported. More than 1,800 workers at a Honda transmission factory in southern Guangdong province have gone on strike, demanding higher wages. The workers appear to be acting independently and without support from the country’s only officially recognised union, the All China Federation of Trade Unions.

Governments just don’t understand…speculators

Reuters on Thursday published snippets of the discussions taking place at its Global Energy Summit, including some forthright commentary from the heads of various commodity exchanges.

The subject? Government and regulators v evil speculators. For instance: Read more

Pru tries to renegotiate AIA price

Prudential is trying to renegotiate the $35.5bn price tag on the Asian businesses of AIG in a last-ditch attempt to win the support of some of its biggest investors and head off a disastrous “no” vote on its planned takeover of AIA, the FT reported on Thursday.

Here’s more: Read more

Kerviel speaks: traders, know thyselves

Roguish trader turned novelist  – ‘L’Engrenage, Mémoires d’un trader’Jérôme Kerviel has some advice for his peers on the all-important annual review.

In an extract from his book featured on eFinancialCareers on Thursday, Kerviel opined thus: Read more

CDS report: Grinding tighter

Markit’s Gavan Nolan wrote this CDS report

Markit CDS chart for BBVA, Santander and iTraxx senior financials Read more

SEC Charges Pequot Capital and CEO Samberg with insider trading

It’s been a busy week for financial regulators, and a mixed one — at best — for hedge funds.

On Thursday, the SEC said it had charged Pequot Capital Management and its chairman and chief exec Arthur Samberg with insider trading in Microsoft shares. Read more

Get liquid

It’s “Caps Lock” time again. Bob ‘The Bear’ Janjuah has followed Monday’s missive,  AN ÜBER BEAR EARLY WARNING ALERT, with a tactical update.

And the message is simple – use any bull trap to OFFLOAD risk and get liquid. Read more

Ken Starr, advisor to the stars, accused of $30m Ponzi

On Thursday, the US Department of Justice issued a curious one-liner:

A press conference will be held today to announce the unsealing of charges against financial advisor Kenneth Starr for allegedly perpetrating a $30 million fraud against his clients.

 Read more

It’s time…

… for this.

A century-long look at the US equity market

Here is an interesting chart from Deutsche Bank’s Jim Reid:

 Read more

Einhorn: long America’s grandchildren, short rating agencies

Don’t let that baby face deceive you. David Einhorn has never been shy about picking fights, as Erin Callan learned to her cost.

Einhorn’s op-ed in the NY Times on Thursday was no exception. The hedgie ranged widely, covering everyone from Tim Geithner to Bill Gross, via the rating agencies, Greece, and Long-Term Capital Management. Read more

Kuwait also sticking with eurozone debt

Are we going to have to go through all the sovereign wealth funds? On Thursday, China’s CIC roundly denied the FT’s report that it has sought to reduce its exposure to eurozone debt.

This was followed by a similar statement from the Kuwait Investment Authority, which denied a local media report that it was cutting back. Via ReutersRead more

Germany’s naked shorts ban unpopular, again

Will Germany’s latest ultra-tough proposals to ban naked short-selling win more European friends than last time?

Er, doesn’t look like it. Read more

SAFE or not?: China’s eurozone debt holdings

Just like practically every other investor in the world, China — which boasts the world’s largest forex reserves – is undoubtedly concerned about the increasingly bleak outlook for eurozone sovereign debt.

But that is not something Beijing — under pressure on its own currency — would care to admit to the world. Read more

Markets Live transcript 27 May 2010

Live markets commentary from 

Unstable structure, do not enter

That warning comes from Nomura’s Mike Prew who thinks property stocks, or real estate investment trusts (REITs), are at risk from a second wave of rights and possibly dividend cuts.

The highly regarded analyst (and property bear) reckons the accounting presentation of REITs must be re-examined because revenues are being flattered by a string of one-offs and other curiosities: Read more

Derivatives reform deal looks dead

The White House has distanced itself from proposals to make banks spin off their derivatives portfolios, indicating that the measure is not considered a core part of financial reform legislation now in conference, the WSJ reports. Senator Blanche Lincoln’s provision was criticised as ‘unclear’ by a senior Treasury official.

FASB market value plan attacked

The Financial Accounting Standards Board’s new rules expanding mark-to-market accounting have drawn fire for their possible effects on volatility, according to the American Banker. The FASB wants banks to value loans they intend to hold in much the same way as for loans they want to sell. If the change is approved by a rules panel, dramatic revisions to banks’ balance sheets could follow, the WSJ says.