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Live markets commentary from FT.com
If you’re thinking it’s an odd time to be holding a special session of our regular Markets Live chat, well that’s the Committee of European Banking Supervisors for you. It has chosen the close of play in Europe on a Friday as the perfect time to formally release the results of the European bank stress tests.
So join Paul Murphy, Joseph Cotterill, Stacy-Marie Ishmael and Izabella Kaminska at 4.45pm London time, 11.45am New York time to discuss the results. Read more
Count ‘em! We’d better capture these bullish talking-points from Gluskin Sheff’s David Rosenberg, just in case they disappear…
– Congress extending jobless benefits (yet again). Read more
There was a last-minute outbreak of nerves in Europe over stress-test credibility on Friday, after Meera Louis of Bloomberg revealed that banks will only be stressed for their exposure to sovereign debt on their trading books, not their held-to-maturity portfolios.
According to Louis’ story (emphasis ours): Read more
In case you were wondering about market expectations ahead of the stress tests.
The below has just landed in our inbox. It’s the results of a Goldman Sachs survey of 376 mostly-European market “participants” ahead of the results. And the responses show an expectation of a result roughly equivalent to a ‘B’ in American grading, on aggregate. Or, as Goldman notes: Read more
Moody’s reckons a one-notch cut is most likely, in the next four months — but this depends on whether talks resume. S&P slapped a negative outlook on its ratings of Hungary later on Friday, again noting the IMF soap opera. Read more
Not even death will get in the way of the FSA’s determination to disclose shorts.
The Financial Services Authority — otherwise known as the Britain’s premier zombie financial services regulator — has decided it definitely will be using its remaining powers to ferret out those scurvy short-sellers. Read more
Live markets commentary from FT.com
Blackstone is on a roll. Having just reported strong Q2 results – featuring a 13 per cent annual increase in income and news that it raised $13.5bn in the quarter for its new buy-out fund, the biggest such fund since the financial crisis – it is now eyeing property investments in hitherto unchartered territory.
As Bloomberg reported on Thursday, following up on an initial report in Japan’s Nikkei newspaper, Blackstone is in talks with Morgan Stanley about buying its Japanese real estate assets assets — a deal that would mark its first property investment in the country. Read more
Rising hopes for a positive result to the stress tests – set to be released later today amid rumours that five of six Greek banks had passed – have contributed to a febrile mood in Friday markets, reports the FT. The FTSE All-World index rose 0.4 per cent, on the heels of the Asia-Pacific index’s 1.6 per cent bump. However crude oil, was slightly softer after hitting a two-month high on Thursday. European markets opened slightly lower too as Ericsson, the mobile-phone maker, missed its earnings targets, saying global network sales were slower. The dollar, meanwhile, extended its losses, with the British pound up 0.2 per cent, and the yen higher by 0.1 per cent, to Y86.93. Read more
Britain’s economy grew almost twice as much as economists expected in the second quarter, boosted by a pick-up in services, manufacturing and construction, the Office for National Statistics said on Friday. According to the stat men, the 1.1 per cent rise in the three months through to June is its fastest expansion in four years. Economists polled by Bloomberg and Reuters had forecast a 0.6 per cent gain. For more on the story see FT Alphaville. Read more
Efforts to plug BP’s Gulf of Mexico oil leak were threatened on Friday as Tropical Storm Bonnie gathered strength and vessels and rigs involved in the operation prepared to move out of the system’s path. The storm formed south of the Bahamas but is set to move across the southern tip of Florida and into the Macondo-spill effected waters of the Gulf of Mexico, accorrding to the US National Hurricane Center. Bloomberg reports it could reach the Macondo well site by Saturday. Read more
Goldman Sachs has revealed the counterparties it used in hedging risk associated with a potential failure of American International Group. According to sources cited by Bloomberg, the bank provided a list of names to US investigators as requested by panels reviewing the beneficiaries of New York-based AIG’s $182.3bn government bailout. Goldman Sachs, which received $12.9bn after the 2008 rescue tied to contracts with the insurer, has always said it would not have suffered in the event AIG’s failure because it was hedged. Read more
Some highlights from Thursday’s first ever annual report from the UK’s Asset Protection Agency (APS) show interestingly that the whole thing seems to be accounted for as a derivative (as opposed to say, an insurance contract — something that was discussed by the APA), reports FT Alphaville. And as a derivative, the APS is valued at fair value. The Agency is even using a Gaussian Copula to determine that value — albeit one that has been slightly tweaked to take into account recent (crisis) events. Read more
The European Union’s banking stress tests cover 91 banks in 20 countries. Seven of those financials are Nordic — but none of them are Norwegian, reports FT Alphaville. Norway is of course, not a member of the EU, but it keeps close ties, and seems to have had the option to participate in the tests — if it wanted. Only, it really didn’t. The head of the Norwegian FSA, a Mr Bjørn Skogstad Aamo is quoted in Thursday’s Dagens Naeringsliv saying there was “no national need” for its banks to participate in the stress test. Read more
Stress test Friday is upon us. At 5pm London time/6pm Central European time/12pm Eastern Time, the Committee of European Banking Supervisors is scheduled to publish an aggregate summary of the results of the European bank tests. From then on, individual results will be published on an ad hoc basis by the banks or their national regulators. FT Alphaville will be holding an extra-special stressed-out session of Markets Live from just before 5pm London time (12 noon NYC) onwards, which will see the fabulous and predictively-gifted Paul Murphy handle market and analyst reaction to results. In the meantime though — here’s a handy Q&A courtesy of Goldman’s Nick Kojucharov. Read more
Comment, analysis and other offerings from Friday’s FT,
Jean-Claude Trichet: Stimulate no more – it is now time for all to tighten
The acute fiscal challenges across all industrial economies are no surprise. Our economies are emerging from the worst economic crisis since the second world war, and without the swift and appropriate action of central banks and a very significant contribution from fiscal policies, we would have experienced a major depression. But now is the time to restore fiscal sustainability, writes the president of the European Central Bank. Read more
Standard Life, a top shareholder in Tomkins, the US car part and building-fittings maker, indicated in a Thursday statement it would reject a 325p-a-share offer that values the UK engineering company at £2.9bn ($4.4bn), amid suggestions that some shareholders could demand £3.5bn or more for the business, reports the FT. The statement is the first clear rejection of any key investor in an approach for Tomkins from a consortium comprised of Onex, the Canadian private equity group, along with Canada Pension Plan Investment Board. Read more
New York’s comptroller Thomas DiNapoli on Thursday filed separate lawsuits against Bank of America and Merrill Lynch, BofA’s controversial acquisition, alleging that the state’s pensioners suffered losses because of both companies’ actions during the financial crisis, reports the FT. The suits follow the comptroller’s decision to opt out of broader class actions against the banks. Read more
A solid bunch of European economic data and US company earnings on Thursday overshadowed Fed chairman Ben Bernanke’s cautious tone in late Wednesday remarks to a Senate committee about the pace of the economic recovery, the FT reports in its rolling Global Markets Overview.
The FTSE All-World equity index reversed an early decline and was up 1.9% at 20:00 BST, with commodities higher and US Treasury yields moving up. The S&P 500 index in New York closed up 2.3 per cent, its best performance in two weeks. Read more
General Motors has agreed to buy AmeriCredit, a Texas-based vehicle finance company, for $3.5bn in cash, the FT reports. The deal marks GM’s first significant acquisition since its emergence from bankruptcy protection a year ago under the control of the US government. The NYT adds that Senator Charles Grassley questioned GM’s decision to make a big acquisition while most of the money spent on the carmaker’s rescue remained outstanding. Read more
A group of troubled US banks paid more than $2bn in bonuses and other payments to their top earners as the financial system teetered in late 2008; yet, nearly 80% of that sum was unmerited, according to Kenneth Feinberg, the Obama administration’s special master for executive compensation. The NYT says that in a report to be issued on Friday, Feinberg is expected to name 17 financial companies that made questionable payouts totalling $1.58bn straight after accepting billions of dollars of taxpayer aid. Read more
The UK agency responsible for managing a £230bn pool of Royal Bank of Scotland’s riskiest loans has criticised the bank’s handling of these assets, reports the FT. In its first annual report, the Asset Protection Agency, which oversees toxic loans under the government’s asset protection scheme, also asked RBS to appoint external advisers to help analyse the risks posed by the loans, and revealed concerns over the quality of RBS’s analysis. Read more
Swiss regulators will on Friday attempt to upstage the issuance of long-awaited stress test results for European banks by publishing the results of an exercise Swiss bankers say was “twice as tough” as the EU scenario, reports the FT. The tactic, which is expected to give a clean bill of health to both Credit Suisse and UBS, coincides with the Friday publication of test results for the biggest EU banks. Read more