Posts from Wednesday Sep 1 2010

Domestic sales rise for Asian carmakers

Asian carmakers enjoyed sharp increases in domestic sales in August, data from across the region showed on Tuesday, though a slowing global economic recovery and the end of government incentives in Japan clouded the outlook for the coming months, reports the FT. In Japan, car sales jumped 46.7 per cent from a year earlier to 290,789 units, the 13th straight monthly increase and the largest rise for August, as buyers hurried to take advantage of tax breaks on the sale of lower-emission vehicles that are set to expire at the end of this month. Domestic sales at Toyota, whose Prius petrol-electric hybrid has been the top- selling car in Japan since the tax breaks were introduced last year, rose 43.3 per cent, while Honda’s sales climbed 61.3 per cent and Nissan’s increased by 44.6 per cent. In South Korea, the two largest carmakers, Hyundai and Kia, also reported strong results. Hyundai reported a 17 per cent jump in sales to 288,313 units, while Kia lifted sales by 55 per cent to 150,541 vehicles.

Santander tops UK complaints

Santander has emerged as the bank with the highest proportion of customer complaints in the UK, with gripes about its banking service flooding in at the rate of one every minute in the 2010 first half, the FT reports. The Spanish-owned bank received 216,158 complaints in the six months, making it the institution with the highest ratio of complaints to the number of customer accounts. Barclays was next with 195,956.

GM sales dip casts shadow over IPO

General Motors’ sales in its core US market sagged in August, potentially complicating its bid to drum up investor support for its forthcoming public share issue, reports the FT. Sales were a quarter lower than in August 2009, when demand was bolstered by the Obama administration’s cash-for-clunkers scrappage incentives. GM has also eliminated four brands since then. More worrying, however, was a 7.2 per cent decline from July. Low-margin sales to car rental operators and other fleet owners climbed to 28 per cent of the total, from 25 per cent in July. “August was definitely what we call ‘one of those months’,” said Don Johnson, GM’s head of US sales operations.

Outsourcers warn US producing too few engineers

US universities are producing too few engineers to meet industry demand, Indian outsourcing companies say, leaving such businesses little choice but to hire foreign skilled workers to fill jobs in America, the FT reports. Cognizant Technology Solutions, the US-listed Indian outsourcing group, says it has 57 recruitment staff in the US permanently looking for engineers locally but is still being forced to import Indians on work visas. The US last month passed a border security law that will be partly funded by doubling the cost of visas for IT workers, a move that will mostly affect Indian outsourcing companies.

Fuld accuses Fed of worsening crisis

Dick Fuld, the former chief executive of Lehman Brothers, accused the Federal Reserve of worsening the financial crisis by letting his investment bank fail, the FT reports. In the most vigorous defence yet of his actions at the helm of Lehman, Mr Fuld said in prepared testimony to the Financial Crisis Inquiry Commission on Wednesday that regulators pushed his group to file for bankruptcy and denied it the same access to Fed credit that other banks were allowed. The FCIC, which was set up by Congress to examine the causes of the financial crisis, is examining the phenomenon of “too big to fail” institutions at this week’s hearing in Washington.

Chinese economy wins manufacturing boost

China’s manufacturing sector made a modest recovery last month, boosting confidence that the economy will avoid a hard landing this year as Beijing strives to cool the property market and restrain bank lending, reports the FT. Equity markets in Asia and some commodity prices rose on Wednesday after two separate business surveys showed signs that manufacturing was stabilising after several months of slowdown, although shares fell on the Chinese mainland. The government’s purchasing managers’ index rose from 51.2 in July to 51.7 last month, while a separate index compiled by HSBC bank rose from 49.4 to 51.9.

Dengue fever threatens Commonwealth Games

India’s aspirations for glory as host of the upcoming Commonwealth Games is facing a new threat with a serious outbreak of dengue fever in New Delhi, the FT reports. The capital, where the games are to start on October 3, has had 937 cases of the potentially lethal, mosquito-borne fever in recent weeks, according to official figures. However, hospital figures show even more people have contracted the illness, with more than 2,000 patients suffering with the fever, far exceeding normal levels.

Burger King in talks with hedge fund

Burger King is in talks with 3G Capital, a little-known investment fund, about a deal that could see the US burger chain return to private ownership for the second time in a decade, reports the FT. According to people familiar with the matter, an agreement could be reached within days, although they warned that as the details are yet to be finalised the talks could still collapse. 3G is a hedge fund group, whose biggest investors are wealthy individuals in Brazil, said one person familiar with the fund.

Apple raises stakes in TV battle

Apple made its most serious bid yet for the internet-connected television market, slashing the price and size of its AppleTV product by more than half and providing it with movies and television shows to rent, reports the FT. The digital entertainment powerhouse demonstrated the $99 gadget at a press event in San Francisco on Wednesday, where Steve Jobs, chief executive, showed a new interface that lets users stream movies from Net-flix, home movies from their computers or rentals from the iTunes online store. The push came hours after Japanese rival Sony announced that it was working on a service for streaming music over the internet to multiple devices. Online retailer Amazon is also working on a television streaming service, while Google is developing music streaming.

Data boost from economic giants

A surprise bounce in manufacturing activity in the world’s two biggest economies in August cheered investors as it ended the bleak run of US economic data over the summer, the FT reports. Global stock markets surged as investors took global surveys of manufacturing output to show that the world economy was still recovering rapidly and the chances of a double-dip recession had receded. At the London close, the FTSE All-World index had reversed most of its 3.5 per cent fall in August and was up 2.7 per cent on the day. There were gains of more than 2 per cent in European and US stock markets. The exuberance was linked by analysts to better than expected surveys of purchasing managers of manufacturing companies.

CMBS delinquencies climb again, but not by much

It seems the news continues to be better for CMBS than for commercial real estate as a whole.

Standard & Poor’s has released its monthly CMBS snapshot for July, and the top line is that the pace of increase in the delinquency rate has nearly flattened: Read more

Breaking down the ISM numbers

Having explained the limits of economic indicators, perhaps it’s unfair to hit you with a discussion of another one.

But given the overwhelmingly bearish nature of this month’s US economic data (especially in the housing market) the surprisingly positive ISM numbers are worth further, detailed consideration. Read more

JP Morgan Securities Inc. no longer exists

Blink and you would’ve missed it, but JP Morgan Securities has just changed its legal status, and name.

From the Federal Reserve’s primary dealers updateRead more

Disembark the QE2

Perhaps the good ship won’t be sailing after all.

The market reaction to Wednesday’s better than expected US ISM reportRead more

All aboard the QE2

Bank of America Merrill Lynch has joined the passengers on the good ship QE2 and expects to set sail some time early in New Year.

From strategist David Bianco on Wednesday: Read more

Live from the FCIC – it’s Dick Fuld!

A Too Big To Not Follow diversion for an otherwise quiet Wednesday. The former Lehman Brothers CEO will be appearing in front of the US Financial Crisis Inquiry Commission at 9a.m. New York time.

Evans-Pritchardium, the Telegraph hack of thunder

In case you missed it, there was a pretty major event that transpired over the long weekend in the UK.

While many were stuck on the M40 motorway, attempting to get out of London for the Bank Holiday, it seems the Telegraph’s Ambrose Evans-Pritchard may have solved the world’s energy problems — possibly whilst cooking sausages over a coal-fired barbecue (although about that we can only speculate). Read more

The Tui deal less travelled

Tui Travel is one the biggest risers in the FTSE 100 on Wednesday morning.

 Read more

A scary September…

Pinch, punch, first of the month, Rabbit, Rabbit, Rabbit, and all that.

Today is September 1 — and September is the cruelest month — for stocks anyway. Read more

Markets Live transcript 1 Sep 2010

Live markets commentary from FT.com 

China to launch first registered hedge fund

E Fund Management, China’s second-largest asset management company, plans to start the nation’s first officially registered hedge fund, according to Bloomberg. The move comes after the domestic securities regulator eased rules in July. Bloomberg reports that E Fund will be able to raise money from high-net-worth individuals in separate managed accounts and use the same investment strategies as hedge funds. According to the money manager, which has $29bn in assets under management, it will become the country’s first institutional hedge-fund product. Funds in China currently only have access to limited leverage because of a lack of prime broker services and securities for borrowing.

Athens is open for short-selling

All eyes on the Greek stock market and Hellenic bank shares because Wednesday, September 1, is the day the Hellenic Capital Market Commission’s ban on short-selling of shares listed on the Athens Exchange is set to (finally) end. Prohibition began on April 28, in response to “conditions prevailing in the Greek market” and was extended in June. Although did it actually help, wonders FT Alphaville? Read more

Backlash prompts rethink on forex leverage

A US regulator has softened proposals on the use of borrowed money in retail foreign exchange trades in the face of an unprecedented pushback from dealers and small traders, the FT reports. The Commodity Futures Trading Commission on Tuesday announced final regulations for spot transactions that will allow traders to borrow as much as 50 times the value of their collateral to trade major currency pairs such as dollar-yen or euro-dollar, and 20 times collateral for other pairs. The new rules, while tougher than existing limits, are much laxer than earlier proposals. Under earlier proposals, the rules would have capped retail forex leverage at 10 to one.

Not another freaking economic indicator

Inbox jammed with the latest barrage of daily economic data points and previews?

Feeling overwhelmed at the prospect of wading through the reports and trying to figure out what the market consensus is? Read more

Investors seek to forget dire August

Traders decided on Wednesday that a fresh month deserved a sunny disposition, as positive data out of China provided risk assets with a good start to September, reports the FT. After falling 3.5 per cent in August, the FTSE All-World equity index was up 0.3 per cent, commodities were firmer and bond yields higher. US equity futures were up 0.7 per cent. The slightly more optimistic mood appeared predicated on some cautiously well-received economic data over the past 24 hours. Tuesday’s better-than-expected US consumer confidence report has been followed by news that activity in China’s manufacturing base picked up last month, temporarily salving fears that the world’s production engine was spluttering.

Morgan Stanley’s Chinese irony

Morgan Stanley’s word of the week in China has to be “irony”, as news emerged late on Tuesday that the US Federal Reserve has given the go-ahead for China Investment Corp, the country’s main sovereign wealth fund, to buy up to 10 per cent of voting shares in the US bank.

As Forbes reportsRead more

The solution to all the ECB’s problems, by Goldman Sachs

Goldman Sachs does it better than the ECB . . . or the rating agencies, says FT Alphaville. Late on Tuesday, the investment bank published a proposal for the European Central Bank’s future role in shaping eurozone policy. The suggestion: a simple system of graduated haircuts on sovereign securities — based on the size of emerging imbalances — that would provide warning signals for markets. In fact, Goldman’s Erik Nielsen (long a fan of sliding haircuts) and Alexandre Kohlhas, argue such a system would probably have helped avert the recent eurozone crisis. Read more

Further reading

Elsewhere on Wednesday,

- What is wrong with JPMorganRead more

Pink picks

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

Martin Wolf: Obama was too cautious in fearful times
Suppose that the US presidential election of 1932 had, in fact, taken place in 1930, at an early stage in the Great Depression. Suppose, too, that Franklin Delano Roosevelt had won then, though not by the landslide of 1932. How different subsequent events might have been, says the FT’s Martin Wolf. The president might have watched helplessly as output and employment collapsed. The decades of Democratic dominance might not have happened. Read more

Snap news

Breaking pre-market news on Wednesday,

- China may probe BHP’s bid for Potash, China Business News reports – Via ReutersRead more