Posts from Friday Jun 11 2010

Introducing the Soccer Power Index

After an inconclusive World Cup opener on Friday, we’re still on the look-out for decent prediction models for who’s going to win.

This one’s looking good, even if (horror!) market quants didn’t design it: Read more

US retail sales surprise — on the downside

Disappointing data on May’s US retail sales gave markets a nasty shock on Friday.

Flashes via Reuters: Read more

European SPV, meet Russian playwright

Reflection time on Europe’s sovereign debt crisis: we now have a European Financial Stability Facility. So will we see it used?

Er… pass for now, says Barclays Capital’s Aziz Sunderji and team: Read more

Expecting inflation like it’s August 2008

Here’s a datapoint to ponder as market commentators veer between predicting deflation and inflation.

The Bank of England’s latest quarterly inflation attitudes survey comes down firmly on the inflationary side of things — at least for the UK. Read more

Markets Live transcript 11 Jun 2010

Live markets commentary from FT.com 

Lawmakers seek to unify financial reforms

US lawmakers gathered in a rare public conference on Thursday to merge two versions of financial reform, but glossed over private animosity and doubt over the ultimate shape of the legislation, the FT reports. Senatorial aides indicated that votes cast during the bill’s passage could change depending on the conference’s negotiations, which will particularly hinge on Senator Blanche Lincoln’s still-unresolved measure to force banks to spin off their swaps desks.

SEC gets set for stock circuit-breakers

Exchanges will install circuit-breakers on individual stocks as early as Friday, reports the WSJ, after the Securities and Exchange Commission approved the measure on Thursday. The NYSE said it will begin a phased roll-out. The move, which will halt stock trading in response to sudden and large price shifts, was taken in response to the May 6 ‘Flash Crash’. SEC chair Mary Schapiro is exploring other methods of regulating high-speed moves on the market, the NYT adds.

US companies hoarding cash

US non-financials have built up a $1.84tn pile of liquid assets, hoarding 26 per cent more compared to a year earlier, according to the WSJ. The increase is the biggest since records began in 1952. Holding cash is a popular move as expansion looks risky while the recovery is in doubt, and Europe teeters on the brink of its debt crisis. Corporate bond offerings have slumped for the seventh week, Bloomberg reports.

FBI to target mortgage fraud

The Federal Bureau of Investigation is preparing a nationwide crackdown on mortgage fraud, the latest in a series of efforts to curb lending practices that contributed to the housing meltdown, people familiar with the matter told the FT. Hundreds of people across the US face arrest as early as next week for offences including encouraging borrowers to falsify income on mortgage applications and misleading on foreclosure arrangements, two sources said.

Spill politics keeps BP pressure up

BP’s chief executive Tony Hayward is ‘considering all options’ on whether to pay out an upcoming dividend, the WSJ reports. Politicians have attacked the prospect of the payout at a time when victims of the Deepwater spill have not received compensation. Despite some political support in the UK, BP now also faces 160 class action lawsuits over the disaster, the FT adds.

One almighty decoupling

Credit Suisse’s analysts have noticed one almighty decoupling in bonds and equities, FT Alphaville notes – safe haven yields are down, but defensive stocks are being beaten by cyclicals. What’s going on? Read more

China overheating?

Here’s a pop-quiz for China-watchers on Friday:

Does this: Read more

Rally round the (BP) flag

Rule Britannia, Britannia rule the horrifically polluted waves!

Shares in BP were up by over 5 per cent in early London trading on Friday: Read more

Super-confusion on Australia’s mining super-tax

A possibly tiresome — but still important — update on the Australian government’s much-villified plan to impose a 40 per cent “resources super-profits tax” on mining companies:

Confusion reigns on Friday. Read more

Moody’s says everything is just FINE in European banks

Well here’s something to make the rally monkey jump for joy, FT Alphaville writes: the rating agency has done its own stress test of European banks via a survey. Severe losses on Greek, Iberian and Irish assets would be survivable even assuming a forced sale of peripheral debt. Well, just how orderly would that be, however? Read more

Germany’s rebalancing act

And you thought China was bad.

As Germany pushes for fiscal austerity amongst its eurozone brethren, it’s worth keeping in mind just how conservative die Deutschen themselves have been, in one sense. Read more

The bursting of a bubble, scientifically deconstructed

How’s this for some Friday irony?

The BBC reports physicists have just discovered that, under certain (liquid, ahem) conditions, bursting bubbles don’t just disappear. No, instead they create lots of smaller ‘daughter’ bubbles, which then go on to create even littler bubbles, until they get so small they rupture into tiny aerosol droplets, which are eventually absorbed into the atmosphere. Read more

Further reading

Elsewhere on Friday,

- Hedge funds vote for deflationRead more

Pink picks

Comment, analysis and other offerings from Friday’s FT,

Philip Stephens: Some home truths on oil for the president
BP’s Deepwater Horizon crisis is a reminder that politicians can handle only one challenge at a time, writes the FT’s Stephens. Barack Obama had shown signs of being different. Yet even this supremely self-possessed politician has forgotten how to walk and chew gum. A president who used to pride himself on staying calm now feels it necessary to prove he can panic with the best of them. Read more

Snap news

Breaking pre-market news on Friday,

- BP’s Hayward ‘considering all options’ on dividend – WSJRead more

China inflation jumps 3%

China’s inflation quickened in May to the fastest pace in 19 months according to official figures on Friday, reports Bloomberg, adding that the data highlights the risks of economic overheating, . Consumer prices rose 3.1% from a year earlier, slightly above economists’ estimates and April’s 2.8% annual gain, the news agency reported. The figures, together with a leap in exports and property prices, underscore US arguments for a more flexible renminbi.

BP official: ‘not heard’ bankruptcy talk

Raymond Dempsey, vice president of strategy for BP America, on Thursday told a US Senate subcommittee hearing on the Gulf of Mexico oil spill that he had not heard any internal discussions that BP may have to file for bankruptcy due to growing costs related to the Gulf oil spill, reports Reuters. Earlier, the FT reported that BP shares slid nearly 7% on Thursday to a fresh 13-year low of 365.5p and the cost of insuring its debt rose to a record high amid investor fears about the company’s stability.

Overnight markets: Up

Asian markets
Nikkei 225 up +190.41 (+2.00%) at 9,733
Topix up +12.72 (+1.48%) at 869.51
Hang Seng up +244.90 (+1.25%) at 19,878

US markets
S&P 500 up +31.15 (+2.95%) at 1,087
DJIA up +273.28 (+2.76%) at 10,173
Nasdaq up +59.86 (+2.77%) at 2,219 Read more

Better Capital to raise funds

Better Capital, the new investment firm founded by leading UK buy-out figure John Moulton, is to raise a further £67m and move from London’s Aim market six months to the LSE main market after raising £142.4m from its flotation, reports the FT. Moulton told the FT he was looking at several potential turnround investments in the construction and luxury fashion retail sectors.

Cameron defends BP

David Cameron, UK prime minister, has leapt to BP’s defence, emphasising the “economic value” the oil company brings to the UK and US, in a sign of British concerns over increasingly hostile rhetoric about the Gulf of Mexico oil spill, reports the FT. Cameron’s intervention marked a shift from his earlier support for the US stance and came amid growing political pressure to respond to attacks on the British multinational. See also FT.com’s in-depth report on BP’s crisis.

US warns on China exports

A surge in Chinese exports and rising US anger is fuelling pressure on China to let its currency rise against the dollar, reports the FT. Chinese data on Thursday showed exports jumping an annual 48.5% in May, far ahead of forecasts. US figures meanwhile showed America’s trade deficit widening slightly in April, giving impetus to a push by US lawmakers for a bill to restrict Chinese imports. Tim Geithner, US Treasury secretary, on Thursday warned China that growing US anger on the subject could result in rapid action.

Funds await BP dividend news

BP’s UK shareholders were anxiously awaiting a statement on the oil company’s plans for its dividend on Thursday, reports the FT. The oil major is a big income generator for UK fund managers, accounting for 12% of UK dividend pay-outs, and is the top holding in nearly half the UK’s 86 equity income funds. Lex, meanwhile, examines BP’s bleak options while FT Alphaville considers the “Sinofication” scenario.

Bankers warn on Basel rules

Economic growth in the eurozone, the US and Japan will be cut by three percentage points between now and 2015 if proposals to force banks to hold more capital and liquid assets go forward unchanged, according to an impact assessment issued by the Institute of International Finance, the top banking industry group, at a meeting in Vienna. The IIF is pushing for the Basel Committee on Banking Supervision to rewrite or delay implementation of the proposals, known as Basel III, which are to be voted on later this year.

Suspicious trades mar UK deals

Suspicious trading took place before 30.6% of UK takeovers last year, the highest level in eight years, even as the UK’s markets regulator stepped up enforcement efforts, reports the FT. The FSA levied 46 fines with a record total value of £33.6m and successfully brought two criminal insider dealing cases in the year to April 30, according to its annual report published Thursday.

Brit Insurance rejects Apollo

Brit Insurance has rejected a £10-a-share indicative takeover offer from US buy-out group Apollo that values the Lloyd’s of London insurer at more than £570m, reports the FT. Apollo made the offer to Brit’s board on Monday, and was considering on Thursday night whether to raise its offer, said people close to the situation. Brit, which did not disclose the bidder in a stock exchange statement, said the all-cash offer “significantly undervalues” the group.