Posts from Friday Jul 9 2010

Introducing the Sovereign Vulnerability Index

We all love a good league table – so here’s one from Rabobank economist Shahim Kamalodin.

No prizes for guessing which major industrialised economy is most vulnerable to a sovereign debt crisis, although interesting to see Japan, the US, Belgium and France all sitting above the UK, Spain and Ireland. Read more

Re: Flotation


Hello again Michael, Read more

Cocoa pops

The cocoa market could be about to pop, according to former commodity analyst John Kemp now columnist at Reuters.

On Thursday Kemp explained how 50,000 futures contracts, representing some 500,000 of tonnes of cocoa on the LIFFE exchange were still left open just five days before the July 2010 delivery date is due. Read more

Markets Live transcript 9 Jul 2010

Live markets commentary from 

Rebound continues as Seoul raises rates

The risk asset bungee of recent weeks continued its lurch higher: though momentum appeared to be waning on Friday, reports the FT. The FTSE All-Word equity index was up 0.3 per cent, and industrial commodities were firmer. However, the euro slipped back from a fresh two-month high and US equity futures were down 0.1 per cent.

Google confident of China licence renewal

Eric Schmidt, Google’s chief executive, has issued his most optimistic prediction yet that the Chinese government will renew his company’s licence, a move that would allow it to continue operating in the world’s biggest internet market, reports the FT. “We would expect we would get the necessary operating licence,” Eric Schmidt told reporters at the annual Sun Valley conference of media and technology moguls, sponsored by Allen & Co, a boutique investment bank, on Thursday evening.

QE2 or lower for longer?

Goldman wants it, Krugman would welcome it, but what about the Fed? Is it ready to set the printing press running again and start buying assets, wonders FT Alphaville. According to a seemingly well-informed article in the Washington Post the answer is no — unless things get much worse. Read more

Banker of the year? — err, yes, quite

We don’t wish to seem churlish but – well, Euromoney’s decision to award its ultimate banker accolade, Banker of the Year, to Citigroup’s Vikram Pandit, piqued FT Alphaville’s curiousity. Not only that, Citi – which in the last couple of years has been more widely known for the massive US government bail-out it received as well as its numerous internal problems than anything else – gained 13 major product and regional awards in the annual Euromoney Awards on Thursday. Read more

Korea: To raise rates right now ‘takes guts’

After all those lectures about stimulus measures and well-meant (for the most part) advice from western central bankers about exit strategies, Asia appears to be leading the way in removing monetary stimulus.

The Bank of Korea on Friday surprised markets and most economists by raising its benchmark rate a quarter-point to 2.25 per cent from a record low of 2 per cent for the first time in 16 consecutive months. Read more

Further reading

Elsewhere on Friday,

– What’s a double-dip, anywayRead more

Pink picks

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

Martin Wolf: Why we must halt the land cycle
Those who do not learn from history are condemned to repeat it, writes the FT’s Wolf. This applies not least to the immense financial and economic crisis into which the world has fallen. So what lay behind it? The answer is the credit-fuelled property cycle. People of the US, UK, Spain and Ireland became feverish property speculators. Today, the toxic waste poisons the entire world economy. Read more

Snap news

Breaking pre-market news on Friday,

– Federal court refused to reinstate US deepwater drilling ban — reportRead more

BC, Silver Lake in $3bn Multiplan deal

US private equity groups BC Partners and Silver Lake Partners have agreed to purchase health-care business MultiPlan in one of the year’s largest leveraged buyouts, valuing the company at $3.1bn, reports the WSJ. Carlyle Group and Welsh, Carson, Anderson & Stowe are selling MultiPlan. People close to the transaction say Carlyle will make more than three times its investment in MultiPlan, which it acquired in 2006, added the Journal.

Overnight markets: Mostly up

Asian markets
Nikkei 225 up +32.09 (+0.34%) at 9,568
Topix down -0.08 (-0.01%) at 860.94
Hang Seng up +245.12 (+1.22%) at 20,296

US markets
S&P 500 up +9.98 (+0.94%) at 1,070
DJIA up +120.71 (+1.20%) at 10,139
Nasdaq up +15.93 (+0.74%) at 2,175 Read more

Greek banks face funding threat

Greek banks may have to unwind complex securitisation deals to try to maintain access to central bank funding, bankers have warned, according to the FT. The prospect of such action is based on concern that a review being conducted by credit-rating agency Moody’s could see some ratings on the deals fall below the ECB’s minimum standards for their use as loan collateral.

UniCredit wins AS Roma in debt deal

Italian bank UniCredit is seeking to sell AS Roma, one of Italy’s top Serie A football clubs, following an agreement on Thursday with Rosella Sensi to settle debts owed to the bank by Italpetroli, her troubled family holding company, reports the FT. UniCredit is expected to appoint Rothschild as adviser in the sale process. Most of Italpetroli’s other assets, mainly in oil storage and handling, will also pass to UniCredit, which previously owned 49% of Italpetroli.

South Korea raises rates

The Bank of Korea on Friday raised its benchmark interest rate for the first time since the global crisis, boosting the won more than 1% against the dollar as South Korea joined several other Asian countries which have recently removed monetary stimulus, reports Bloomberg. The BoK boosted the seven-day repurchase rate to 2.25% from a record low of 2%.

Spain to reform cajas

Spain’s troubled savings and loans banks, or cajas, will be able to sell up to 50% of their equity to private investors under sweeping reforms aimed at the institutions that have fuelled investor concerns about Spain’s financial health. The reforms, to be approved on Friday, also seek to curb political meddling in the cajas by restricting the number of elected public officials allowed on their management and supervisory boards

Trichet dismisses eurozone fears

The world should not write off the eurozone, the ECB president Jean-Claude Trichet said on Thursday, as a surge in German exports highlighted Europe’s economic resilience, the FT reports. In efforts to boost confidence in the 16-nation bloc, Trichet denied any signs of a double-dip into recession. His comments underlined ECB confidence that emergency measures to stabilise Europe’s 11-year-old monetary union are taking effect.

Those BIS gold-swaps

Gold prices recovered on Thursday after reaching a six-week low on Wednesday on news that the Bank for International Settlements had received 346 tonnes of gold in “swap operations”. Amid continuing controversy over the BIS’s role, FT Alphaville examines how the bank overcame restrictions against lending to commercial banks and concludes that gold forward rates finally became steep enough for the BIS to arbitrage the market in operations for its own bullion account.

UK’s OBR shrank job loss data

The UK’s new Office for Budget Responsibility made late changes to its Budget forecasts that had the effect of reducing the impact of the emergency Budget on public sector job losses, the government has acknowledged. In a move that the FT says will raise further questions about its independence and relevance, the OBR trimmed its official forecasts for public sector job losses by about 175,000 by 2014-15.