Posts from Thursday Jul 22 2010

What’s the SEC to do about 436(g)? Call a time out.

The securitization industry has reacted to the decision by rating agencies to step back from allowing their ratings to be used in prospectuses and registration statements by declaring the end of the world. So what’s the SEC to do? For now, they’ve offered a 6-month reprieve to issuers and rating agencies, FT Alphaville reports. Read more

Dell to pay $100m in SEC probe

Dell is paying the Securities and Exchange Commission $100m to end an investigation into its accounting practices and also its relationship with semi-conductor maker Intel, Reuters reports.

Profits surge at Microsoft

Microsoft Corp managed a 48 per cent rise in quarterly profits on Thursday, helped by strong sales of Windows 7. As Reuters reports, sales were up 22 per cent to $16bn, reflecting a general recovery in tech spending.

Carbon caps reportedly shelved by Senate

US efforts to pass legislation limiting greenhouse gas emissions may be abandoned by Senate legislators, the WSJ reports. Senate majority leader Harry Reid said he had failed to persuad 60 senators to support even limited proposals restricting emissions from electric-power companies.

Amundi to launch seafood fund in Japan

Japan’s army of small investors are to be offered the chance to put their money into something fishy after Amundi, the asset manager, decided to launch the world’s first public mutual fund devoted to the seafood business, the FT reports. Amundi, formed by a merger of Crédit Agricole’s and Société Générale’s asset management businesses, decided to create the fund after it noticed a strong correlation between people’s rising incomes in emerging economies and an increase in seafood consumption.

Everbright Bank plans $3bn IPO

Everbright Bank, the only big Chinese state-owned lender that has not yet gone public, plans to raise as much as Rmb20bn ($3bn) next month in a long-delayed initial public offering in Shanghai, the FT reports. The IPO marks the end of a decade-long reform process during which China’s biggest lenders have been cleaned up, injected with fresh capital and floated on stock exchanges.

GM buys AmeriCredit in $3.5bn deal

General Motors said  it had agreed to buy AmeriCredit, a Texas-based vehicle finance company, for $3.5bn in cash. The deal marks the Detroit carmaker’s first significant acquisition since its emergence from bankruptcy protection a year ago under the control of the US government, the FT reports. GM sold a majority stake in its former financing arm, GMAC, four years ago to Cerberus Capital Management.

Citi learns the hard way: don’t mess with sharks

The global coalition against shark fin soup has a surprise new convert – Citigroup. Just last week, the US bank was trying to profit from the Asian delicacy. It launched a promotion, offering credit-card holders 15 per cent off a shark’s fin and garoupa dinner at a popular Chinese restaurant chains in Hong Kong and the same discount for dining at the Imperial Court Shark’s Fin Restaurant in Singapore.

But, as Beyond Brics at FT.com noted, the idea returned to bite Citigroup…

Taiwan mulls curbs on bank funds

Taiwan’s banking regulator is considering curbs on private fundraising by local banks and insurers, the FT reports. At a time when western, Japanese and Chinese banks are raising billions of dollars in new capital to meet regulatory demands, any restrictions could test Taiwan’s banks, already squeezed by competition.

Blackstone fund hits $13.5bn

Investment powerhouse Blackstone has raised a greater-than-anticipated $13.5bn for its new buy-out fund, the biggest since the financial markets crisis, in a strong quarter in which income rose 13 per cent to $205m. As the FT reports, the group’s portfolio was buoyed largely by improved real estate values, in spite of the fall in the stock market and a chill in the debt capital markets. Blackstone’s fee-earning assets under management rose to $101.4bn from $93.5bn a year ago.

ECB chief urges tightening

Public spending cuts and tax increases should be imposed immediately across the industrialised world amid mounting evidence of a European recovery, according to Jean-Claude Trichet, president of the European Central Bank. Writing in Friday’s FT, Trichet argues that policymakers who want to prolong stimulus are mistaken and that cutting borrowing would have “very limited” effects on growth.

All hail the (tiny) predictive power of FT Alphaville

We’re not quite sure how to take this particular compliment:

FT Alphaville Disproportionally Interesting Compared to General News in Predicting Stock Returns Read more

The incredible restructured stress test

Analysts are down to their last gasps of stress-test commentary before we finally get the official results on Friday. Credit Suisse had a useful contribution on Thursday, tackling the queasy ‘everyone’s a winner!’ hints that politicians have been dropping.

Basically — we should hope so, given the bailouts already in the system. Read more

What does Spanish bank stress look like in real life?

Here’s some reality-based European banking stress to consider ahead of Friday’s theoretical test announcements, courtesy of some results from a Spanish lender.

Step forward, Banco SabadellRead more

Welcome to ‘synthetic warehousing’

John Kemp, at Reuters, continues his sterling work on how contango in commodity markets is influencing trading strategies — and to what degree ‘cash-for-commodity‘ strategies are now getting overly crowded.

The big new thing he adds are ‘synthetic’ cash-for-commodity deals, in which position holders collect contango yields by establishing negative spread positions (shorting near-dated futures and going long future further forward). Read more

Jargon alert: banks and their ‘platforms’

In light of the emergence of yet another ‘platform’-based product on Thursday — Deutsche Bank’s platinum Ucits platform, in connection with Paulson & Co’s retail fund offering — we thought it probably best to explain something to the banking community.

(For it seems they do not know.) Read more

Explaining the Baltic Dry sell-off

FT Alphaville, and others, watched the Baltic Dry’s recent 60 per cent tumble, which took place over a run of 35 consecutive days, with particular interest.

Some, after all, suggested that it meant the index was no longer a valid economic indicator. Other worried that it was just that. Read more

Buiter can’t believe it’s not traditional European central banking

Some, cool, if frankly brain-melting, stuff from Citigroup chief economist Willem Buiter on the plight of the European Central Bank on Thursday.

Or as we should perhaps call it instead —  a ‘quasi-fiscal actor’. Read more

Why repealing Rule 436(g) violates the first amendment and other rating agency guff

Here’s something to silence the notion that ratings agencies were caught off guard by the repeal of Rule 436(g).

The idea of eliminating the loophole which prevented the firms from being treated as experts under the US Securities Act — and therefore being more liable in lawsuits — had been discussed ad nauseum in recent years. Read more

Goldman’s Q2 really was ‘exciting with risks’

Does anyone remember Goldman Sachs’ 2010 Outlook?

The bank’s year-ahead piece, which carried the title “The Outlook for 2010/11: Exciting, with risks!”, is being given a second life after its December 2009 publication. But not in a good way. Read more

Markets Live transcript 22 Jul 2010

Live markets commentary from FT.com 

So, is it really another lost decade for equities?

Are we going Japanese? No doubt fed-up with being asked that question in client meetings, Citigroup strategist Robert Buckland has set out to find the answer.

He has examined the Japanese bear market, which started back in 1990, and come to the conclusion that while there are parallels, equity markets in the developed world aren’t facing the same dire combination of weak economic growth, falling corporate profits and earnings dilution. Read more

Bond offerings surge as yields decline

Goldman Sachs and Morgan Stanley led $14.2bn worth of US corporate bond sales on Wednesday as yields in company debt hit six-year lows. According to Bloomberg it was was their busiest day in almost four months. The deals included Goldman Sachs raising $3bn in a two-part bond offering, its biggest since January 2009, and Morgan Stanley issuing $3bn of debt after it reported second-quarter earnings that surpassed analyst estimates.

SanDOWN in Lloyds ABS! Moody’s still making mistakes

Last week, Lloyds Banking Group became the first UK bank to sell bonds backed by loans to small and medium-sized enterprises — an SME CLO — since the asset-backed market basically shut in 2007. But, reports FT Alphaville, a Moody’s error may have cost Lloyds an additional £20m in the deal. Read more

EU appeals WTO ruling on Airbus

The European Union has appealed a World Trade Organization ruling against EU government aid given to Airbus, a subsidiary of EADS, the Wall Street Journal reports. The move follows the US government’s winning of a case three weeks ago in which it claimed the European Union’s support to Airbus was disadvantaging US rival Boeing in the airline market. The paper says EU officials said at the time they had no intention of suspending the aid and had hinted strongly about an appeal.

Spurs 1 – Autonomy 0

Just weeks after signing a deal to have its name emblazoned on the shirts of Tottenham Hotspur, shares in FTSE 100 software company Autonomy have dropped following the publication of half year results, reports FT Alphaville. And there’s plenty for the bears to chew over: earnings are lower than expected in spite of a lower tax rate, costs are rising, cash conversion was just OK, and that’s before R&D capitalisation is considered. Read more

Credit Suisse hit by sharp fall in revenue

Credit Suisse reported a sharp drop in investment banking revenues on Thursday, as the bank suffered from Europe’s sovereign crisis. The division’s pretax earnings slid 53 per cent to SFr784m, missing the 1.01 billion-franc estimate of analysts surveyed by Bloomberg. Net income at the bank rose 1.4 per cent to SFr1.59bn. Reuters reports the Swiss bank said it had seen tough market conditions in the second quarter and believes risk aversion will run high amongst its customers until at least the third quarter.  The bank’s shares fell as much as 3.1 per cent in early European trade.

AvOcado’s still on sale

Related link:
Ocado (IPO) tombstone – FT Alphaville

Stress-test rumours and reality

Leaks and rumours abound ahead of European stress-test result day, not least because the test results could include more information than earlier thought, says FT Alphaville. EU regulators are now reportedly likely to release the results earlier than planned, seeing them hit during European trading hours. European markets would have been closed if the CEBS had released results according to their original schedule. Read more

I’d rather have a go at Cocoa Jobs…

From page three of Thursday’s appointments section in the FT:

 Read more