Posts from Wednesday Jul 14 2010

Important information about the 6am Cut

Some of you won’t like this. Charging is (partly) upon us.

From next Tuesday (July 20) you will have to be a fully-fledged subscriber to FT.com in order to continue receiving the 6am Cut briefing service. That’s £3.79 a week for access to what we believe is the best business website around. Read more

Fed cuts its 2010 growth forecast

The Federal Reserve has cut its 2010 growth forecast for the first time since the economic recovery began last year, as debate at the central bank turns from when to tighten policy to whether to ease it further, the FT reported. The Fed’s ‘central tendency’ forecast is now for growth between 3.0 per cent and 3.5 per cent in 2010, down from the 3.2 to 3.7 per cent that it forecast in April, according to the minutes of its June meeting published on Wednesday.

Dubai’s Nakheel presents restructuring plans

Nakheel, the company behind some of Dubai’s most famous landmarks, presented detailed restructuring plans to creditors on Wednesday. It is seeking to extend maturities on $10.5bn in debts amid a government-backed recapitalisation for the troubled developer and Dubai World, its parent, the FT reported. The deal on offer to Nakheel banks is more generous than the one made to Dubai World holding company creditors.

Blow-out fears hit BP efforts to seal leak

Fears that a new cap fitted over the leaking oil well in the Gulf of Mexico could lead to a blow-out beneath the seabed have led US authorities to delay BP’s tests on the procedure and to suspend the drilling of a relief well, the FT reported. The decision follows a meeting between Stephen Chu, US energy secretary, and his scientific team. BP must now move more slowly with a process that industry analysts say risks causing a bigger problem in the gulf.

GE chief backtracks on criticism of China

Jeffrey Immelt, General Electric’s chief executive, on Tuesday rowed back from criticisms he made this month of China’s hostility to foreign companies and of Barack Obama’s fractious relationship with business. Speaking to the FT on Tuesday, Mr Immelt said: “China is a very important market for GE. It’s one that we do quite well in. It’s one that we’re committed to for the long term.”

Naspers takes stake in Russian internet group

Naspers, the rapidly expanding South African media group, on Wednesday said it had taken a substantial stake in Digital Sky Technologies, the internet company that controls Russia’s leading internet, e-commerce and social networking sites, the FT reported. Naspers exchanged its existing 39.3 per cent stake in its Russian unit, Mail.ru, which it co-owned with DST, and paid a further $388m to acquire a 28.7 per cent stake. Following the deal, DST will own 99.9 per cent of Mail.ru.

Abu Dhabi’s Mubadala in property venture

Mubadala, one of Abu Dhabi’s most prominent state investment vehicles, is launching a joint venture with Pramerica Real Estate Investors to raise capital for property projects in the emirate and set up funds to invest in global markets, the FT reported. The company, Mubadala Pramerica Real Estate Investors, will be headquartered in Abu Dhabi and initially focus on raising funds to invest in middle-income housing in the emirate. The venture marks US-based Pramerica’s first big move into the Middle East.

Indian inflation stays above 10%

Inflation remained stubbornly high in India last month, piling pressure on the central bank to curb rising prices with a second July rate rise when it meets in two weeks, the FT said.  Wholesale prices had risen 10.55 per cent in June from a year earlier, data released on Wednesday showed. Prices rose 10.16 per cent in May. Most economists expect the Reserve Bank of India to raise the benchmark rate by 25 basis points at its policy review on July 27 in what would be the fourth rate increase this year.

Agbank assures investors of rise on debut

Executives at Agricultural Bank of China have assured investors the lender’s shares will rise on when it begins trading following what is expected to be the world’s largest-ever IPO. Senior executives at the bank and other Chinese financial officials have “guaranteed” investors the shares will rise in Shanghai on Thursday and in its Hong Kong debut on Friday, the FT reported, citing people familiar with the matter.

Asian players are a worry for eurozone

As Europe prepares to publish the results of bank stress tests, it is not simply the behaviour of the bond market that is “intimidating” governments. Nor is it merely the antics of American hedge funds that are causing alarm. Instead, the players provoking particular behind-the-scenes unease are those sitting in Asia, according to the FT’s Gillian Tett. The potential market power – or ability to intimidate by implication –  of sovereign wealth funds is rising steadily, as their coffers swell. And that, in turn, is starting to have some surprising impact on the eurozone debates.

Singapore economy grows at record rate

Singapore recorded blistering economic growth in the first half of the year, further evidence that Asia is leading the world economic recovery amid growing regional concerns about inflation, the FT said. The city state economy grew 18.1 per cent compared with the same period last year, according to the Singaporean government. In the second quarter, it posted growth of 19.3 per cent year-on-year, the biggest expansion since records began in 1975. As Lex mused, “rampant GDP growth is an almost exclusively Asian phenomenon”.

BSkyB in talks for Arabic news channel

UK television operator BSkYB is in talks with an Abu Dhabi-based private investor about setting up a 24-hour Arabic language satellite news channel, the Wall Street Journal reported on Wednesday. The channel would be based in Abu Dhabi with bureaus in most major regional and international news centres and would be free-to-air, the newspaper said.

FOMC minutes show Fed expects lower inflation, higher unemployment

The Federal Open Market Committee on Wednesday released the minutes of its most recent two-day meeting.

Highlights of their “summary of economic projections” are below, emphasis FT Alphaville’s: Read more

Star trader Guillaume Rambourg resigns from Gartmore

Guillaume Rambourg, the star hedge fund veteran at the FTSE-listed UK asset manager Gartmore has resigned from the firm.

Here’s the RNSRead more

CDS report: Earnings vs economy

The optimism instilled by the solid start to US earnings season took a knock today after investors received a reminder that the economic backdrop is far from rosy.

Markit chart of Spain and Portugal 5-year CDS Read more

Euro-nostalgia

Tip of the hat to Alea for this. A European Central Bank academic paper reveals the euro’s burgeoning global role…

…last year. From the summary (our emphasis): Read more

Cold shouldered by the Takeover Panel

Things you probably didn’t know about the City of London.

The first in an irregular series starts with Wednesday’s news that the Takeover Panel — the body which polices all mergers & acquisition activity in the UK — has “cold shoulder” powers. Read more

Iberian bank rating tea-leaves

Ahead of the European bank stress tests, here’s a couple of more-interesting-than-usual rating actions centring on financial institutions in Spain and Portugal.

Although there’s been a low-grade rumour in the market of Fitch downgrading the sovereign itself (again? Fitch cut from AAA to AA+ in May). Here’s a rebuttal: Read more

Pay (I)TV

Shares in ITV, the UK’s biggest free-to-air broadcaster, are under pressure on Wednesday.

Merrill Lynch has done the damage, cuttings its recommendation to “underperform” because it believes ITV’s forthcoming strategy review won’t address the fundamental limitations of its business model. As Merrill writes: Read more

Fitch goes aaaagh on Chinese securitisation

Frightened with Fitch on Wednesday. The rating agency has looked at where Chinese lending is disappearing to — only to reiterate that rather too much is flowing into the black hole of informal securitisation. FT Alphaville has the details. Read more

Regulators acting at the speed of fax

Hat tip to @carlcarrie via Twitter for the following priceless nugget of information regarding some of the regulatory processes governing the increasingly fast-paced world of high frequency trading across non-equity based asset classes.

From the Reuters original, pertaining to the Commodity Futures Trading Commission’s processes in particular: Read more

Is something really scary coming in October?

What on earth is going on with the Vix?

Dedicated Vix watchers at the Daily Options Report and Vix and More blogs are getting a little agitated. Read more

Markets Live transcript 14 Jul 2010

Live markets commentary from FT.com 

The banking ‘miracle’ – debunked [updated]

The Bank of England’s executive director of financial stability has a refreshingly straight-forward answer to his self-imposed question “The Contribution of the Financial Sector: Miracle or Mirage?”

His response: Read more

Banco Santander vs Bank of BMW

2010 is shaping up to be a good year for Germany’s luxury carmakers.

In April, Daimler caught investors on the hop with a sudden doubling of its profit expectation, and on Tuesday arch-rival BMW increased its profit and sales forecast for 2010. Read more

Asia data joins tech stocks in easing slowdown fears

The stock market has Intel inside, according to the FT’s global markets overview. Barnstorming results and upbeat forecasts from the chip bellwether have lit up the global tech sector and convinced many traders that the US second-quarter earnings season can help banish fears of an economic slowdown. In addition, record growth in Singapore has lifted hopes that Asia will continue to provide the impetus for global expansion. S&P 500 futures suggest Wall Street will open higher by 0.5 per cent.

Artificial intelligence on Wall Street

A new wave of Wall Street firms are using machine-learning programs to invest stocks, the WSJ reports, bringing ever-more complex artificial intelligence to the market. One small hedge fund, Rebellion Research, has topped the S&P 500 by 10 per cent a year after fees since 2007 by using the programs — but has struggled to raise funds from investors sceptical of quantitative strategies. Rebellion however differs from so-called high-frequency traders in that its AI units tend to hold stocks for long periods.

Financial reform edges towards passage

Senate Democratic Leader Harry Reid has scheduled a vote on the long-awaited law overhauling the financial system for Thursday, Reuters reports. It wasn’t supposed to end like this, says the NYT: presented as a major reform, the Dodd-Frank bill is set to barely scrape through the Senate with the minimum 60 votes needed. Even once inked at last, the new Act will unleash a ‘regulatory mess’ of 243 changes to federal rules, including 95 revisions for the Securities and Exchange Commission alone, the WSJ says, heightening uncertainty for Wall Street.

Fed tensions over slower growth

The Federal Reserve is likely to publish a reduced growth outlook on Wednesday, the WSJ reports, but how to act on it remains a matter of intense debate. Officials disagree in particular on whether current low inflation will flip over into a bout of deflation, plus whether renewed Fed purchases of US government debt or mortgage-backed securities will have much impact on pepping up a flagging economy.  The issue may eventually come down to politics and a signal from the White House, says Tim Duy at Fed Watch.

Greece, more Daedalus than Icarus, for now

The Greek Treasury knew better than to fly too close to the sun.

Tuesday’s rollover of T-bills by the Hellenic Republic went pretty well, in and of itself. Read more