Posts from Thursday Jul 15 2010

KKR shares in low-key market launch

KKR, the legendary buy-out firm co-founded by George Roberts and Henry Kravis, finally listed on Thursday on the New York Stock Exchange, where it made a low-key debut in a down market, the FT reports. The shares opened at $10.50 and were little changed by midday, giving the firm a value of more than $7bn. Reuters says the listing will act as a bellwether for other PE firms looking to follow suit.

BP stops oil flow in gulf

BP on Thursday reached a critical milestone, stopping the flow of oil from its Macondo well three months after it began leaking in to the Gulf of Mexico. The flow was stopped in a test of a temporary fix that BP hopes will hold until it can permanently shut the well with a relief well in the coming weeks, the FT reports.

Google earnings fail to meet expectations

Google’s earnings fell short of Wall Street’s forecasts in its latest quarter in spite of unexpectedly strong revenues, as the company continued to invest heavily for a new phase of growth, according to figures released late on Thursday, the FT reports. The company’s net revenues, after deducting the traffic acquisition costs it pays to other websites, rose 24 per cent to $5.1bn, above the $5bn most analysts had expected. Eric Schmidt, chief executive officer, said the search company had seen “solid growth in our core business and very strong growth in our emerging businesses”.

NTT in $3.2bn deal to buy Dimension Data

Japanese telecommunications operator NTT has agreed an all-cash deal to buy Dimension Data, valuing the UK-listed South African information technology services group at £2.1bn ($3.2bn), in a move to expand NTT’s overseas revenue, the FT reports. The deal, which represents an 18 per cent premium over Dimension Data’s closing share price on Wednesday, is the largest acquisition for NTT since its mobile unit invested $2.7bn for a 26 per cent stake in India’s Tata Teleservices in 2008.

Carlyle acquires NBTY for $3.8bn

Carlyle, the US private equity group, has agreed to buy NBTY, a vitamin and nutritional supplement producer, in a $3.8bn cash deal that would be the biggest leveraged buy-out of the year, the FT reports.

Bolton bets on Chinese domestic consumption

Anthony Bolton, the fabled British stockpicker, is staking his reputation on a £460m bet that the Chinese economy is shifting away from exports and towards domestic consumption. See the FT video interview here.

AgBank makes muted Shanghai debut

The shares of Agricultural Bank of China finished their Shanghai trading debut on Thursday up less than 1 per cent from their issue price, well below the 10 per cent jump the bank’s management had targeted, the FT reports. Although disappointing in the context of the Chinese market – where share prices usually soar on their first trading day – the fact that the shares did not fall will come as a relief to bank executives and government officials, who are hoping the initial public offering will break the record as the world’s biggest.

JPMorgan signals end of Wall St rebound

JPMorgan Chase on Thursday confirmed investors’ fears that Wall Street’s year-long rebound from the financial crisis had come to a halt in the second quarter, offsetting steady improvement in the financial health of US consumers and businesses, the FT reports. JPMorgan’s investment bank, which had enjoyed a boom in trading and capital raises since early 2009, had its worst results in over a year as mounting worries over Europe, the global economy and regulation forced investors and companies to the sidelines.

US Senate passes financial reform

The US Senate approved a sweeping overhaul of the US financial sector on Thursday, introducing a raft of restrictions on banks to curb risk and sealing a landmark legislative victory for President Barack Obama, the FT reports. Lawmakers voted 60-39 in favour of the bill, sending it to Mr Obama to sign into law. Hours earlier they voted 60-38 to end debate on the bill, which in spite of the smattering of Republican votes and some influence on the text, remains a partisan piece of legislation.

Goldman Sachs settles with SEC

The Securities and Exchange Commission has announced a $550m settlement of its civil fraud case against Goldman Sachs in a move that closes the most high-profile regulatory action related to the financial crisis, the FT reports. The SEC called the penalty the largest ever by a Wall Street firm and Goldman acknowledged using incomplete information in its marketing materials and said it would “reform its business practices”.

Visit FT Alphaville to view the settlement documents and also to check the Goldman share price action before the settlement was announced.

Goldman wins SEC fight

Well, this is a MAJOR result for Goldman Sachs. Charges associated with the Abacus affair are being settled with a payment of just $550m – $250m of which will go to allegedly harmed investors and the remaining $300m going to the US Treasury.

Oh, and the bank has promised to “reform its business practices.” Read more

UPDATE: Goldman has settled with SEC (The soaring price of squid)

Just slamming an update in here…

According to Henny Sender and Francesco Guerrera in the FT’s NY office, Goldman has definitely reached a settlement with the SEC covering the Abacus affair and a string of other mortgage-related matters. Read more

What’s the US financial reform legislation actually called?

We’re confused. Is it HR4173 or the Wall Street Reform Act? Or the American Financial Stability Act of 2010? Or the Dodd-Frank Wall Street Reform and Consumer Protection Act?

Anyway, it’s been passed.. Read more

Summer reading from SocGen’s Dylan Grice

Need some beach reading? SocGen strategist Dylan Grice on Thursday shared five books he’s read recently that he rather enjoyed.

Here are Grice’s picks and brief commentary: Read more

The BSkyB is the limit

When Nomura slapped a £10 target price on satellite broadcaster BSkyB earlier this week our reaction was to scoff. However, it looks like we are wrong. Sky really could be worth that sort of money.

That at least is the view Crispin Odey of Odey Asset Management reckons shareholders would be mad to sell out for anything like Rupert Murdoch is offeringRead more

Now, about that Citi muddle…

Some confusion in the market for C. on Thursday, after this story was published on Bloomberg:

July 15 (Bloomberg) — Citigroup Inc. said it misclassified as much as $9.2 billion of repurchase agreements and $1.9 billion of securities lending transactions as sales during the past three years. The errors, which the bank described as unintentional and “not material,” were disclosed in a letter from the New York-based bank to the Securities and Exchange Commission released today. Read more

Turbo-Drachmarks

Push over Lazarus, there was a new comeback kid in town on Thursday:

 Read more

The end of diversification, natgas edition

What happens when you get a weekly inventory natgas weekly figure that’s roughly in line with expectations?

This, apparently (H/T Sean Corrigan): Read more

You cannot be Sirius

So this is what it means to be given the ‘cold shoulder’ in the City of London.

From RNSRead more

Is ‘cash for commodity’ the biggest trade in town?

FT Alphaville has speculated before about the chances that the financial credit crunch led a number of commodity players to turn to the term-structure of their markets to access an alternative type of funding. You can read about it here, here and here.

As a trend, the process effectively mimics the one already long established in the gold markets, where producers like Barrick Gold and Ashanti for many years helped finance their production by selling off tomorrow’s production today. Read more

This time it’s different

Compare and contrast, Ocado version.

From the Silicon Valley Insider, July 2000: Read more

Spotted outside Ofcom HQ

So, is Richard Desmond close to getting his hands on Channel Five?

Well… seen parked outside Ofcom on a blustery Thursday afternoon in London: Read more

There’s a silver lining in every flash crash…

So says JP Morgan’s Michael Cembalest, who might well take an interest in the events of May 6.

As protectorate for “several hundred billion dollars in client assets,” the JPM private banking chief investment officer says he’s very interested in anything that might “detract” from market confidence. Which would be a rather reserved way of describing the May 6 ‘flash crash,’ which erased about $1,000bn in US equity in the space of minutes and for no apparent reason. Read more

The end of diversification?

Back in 2007, the CFTC filed a complaint against Dutch high-frequency market maker Optiver for manipulating energy futures via a practice known as ‘banging the close’.

In 2008, Optiver was charged in connection with the case, although the case is still ongoing. Read more

JP Morgan says earnings per share $1.09 in Q2

JP Morgan reported second-quarter EPS around 40¢ above market expectations on Thursday at $1.09 — although ex-exceptional brought this down to $87.

Flashes, via Reuters: Read more

Markets Live transcript 15 Jul 2010

Live markets commentary from FT.com 

Apple to brief on iPhone 4

Apple will hold a news conference on Friday about its iPhone 4 product after criticism surrounding antenna reception, the NYT reports. Analysts are expecting the company will present a solution — or a compensatory workaround — during its briefing, says the WSJ. While Apple’s quarterly results will probably still shine when due on July 20, the iPhone issue has placed the company on the defensive, with key supports being tested in its stock recently, Reuters reports.

Agbank disappoints on debut

Agricultural Bank of China’s shares rose up to 2.2 per cent from their issue price in the bank’s trading debut in Shanghai on Thursday, well below the 10 per cent jump the bank’s management had targeted, the FT reports. The result disappointed given the context of Chinese markets, which often see shares soar on their first day of trading, although the fact that Agbank did not fall below its issue price will be a relief to China’s government, which has backed the IPO.

Europe’s SPV – not saving anything?

Not the €440bn European Financial Stability Facility then, but €366bn?

German paper Süddeutschen Zeitung reported on Wednesday that the EFSF would be €74bn smaller than the €440bn planned, because of the collateralisation needed to get that triple-A ratingRead more

GSK to take $2.36bn legal charge

GlaxoSmithKline expects to take a £2.36bn charge to resolve several long-running legal battles, including a probe into a former manufacturing plant in Puerto Rico and litigation related to Paxil and Avandia, two of its blockbuster drugs, the FT says. It’s still unclear whether Avandia will remain on the US market, the WSJ reports, with the FDA set to make the final call after an advisory recommended sales should continue, though noting ‘significant safety’ concerns from the diabetes drug’s heart attack risk.