Posts from Thursday Apr 21 2011

FT Alphaville’s Easter break

We’ll be running a slightly reduced schedule over the Easter break.

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Further further reading

For the commute home, enjoy the long weekend with some short pickings,

- The US has already had a lost decadeRead more

A Greek farce

Now — far be it from FT Alphaville to tell the Athens public prosecutor what to do, however…

Greece’s finance ministry has blamed a bank trader’s email for spreading rumours that the country will default this weekend. (We’re going to point out, again, that this timing is utterly silly.) Read more

Greece vs Citigroup

We have a name! Greece didn’t identify the bank they’re investigating for allegedly spreading rumours that it will restructure debt this weekend. (Which was a daft conjecture indeed.)

The Guardian has just identified which bankRead more

Let them eat wheat price inflation

An interesting, vaguely Easter-themed chart by Barings Asset Management, via Paul Mason’s Idle Scrawl blog:

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Guest post: ETFs – what’s the fuss about?

Paul Amery, editor of IndexUniverse.eu, a specialist publication devoted to index-based investing and exchange-traded funds, considers the recent assault on the market.

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Today’s energy statistics were brought to you by…

The US Energy Information Administration, distributor of the world’s most scrutinised and transparent energy statistics, is facing tough budget choices on account of the government’s ongoing debt ceiling fiasco.

Indeed, as the now hard-up EIA stated in a press release on Thursday, it’s come to the point where it’s even holding meetings to seek advice on how it can make its data gathering processes more efficient: Read more

If you prick a sovereign, why do they not bleed?

You all know we’re absolute suckers for anything with ‘sovereign vulnerability’ stamped all over it. So…

… Presenting Rabobank’s latest Sovereign Vulnerability Index: Read more

Markets Live transcript 21 Apr 2011

Live markets commentary from FT.com 

Political risk, elections edition

We saw some ‘political risk’ last weekend — when Finnish voters elected a number of politicians from the euro-skeptic True Finns party into office. It is feared that any resulting political coalition with the True Finns included could threaten to throw the eurozone’s bailout plans out of whack.

So don’t expect political risk to go away. Read more

Fiat edges Chrysler stake to 46 per cent

Fiat has come closer to taking control of Chrysler by the end of 2011 by paying $1.27bn to increase its holding to 46 per cent, Bloomberg reports. The 16 per cent stake will be acquired after Chrysler’s pays back debts to the US and Canadian governments and Fiat exercises a call option, the WSJ says. The US government gave Fiat another 5 per cent of Chrysler last week after progress on targets, including opening car dealerships in Brazil. The remaining 5 per cent needed to take Fiat’s holding to over half of Chrysler is expected to come from a target to produce a fuel-efficient car in the US.

Equity bulls eye up manufacturing, earnings

US manufacturing output is estimated to have grown four times faster than the economy in 2011′s first quarter, underscoring an ebullience of business spending and exports to emerging markets, reports the WSJ. Demand for agricultural machinery at a time of inflation in food-prices has boosted output, in addition to stronger infrastructure growth in China, India, and Latin America. The US consumer remains out of the picture however, and concerns on the costs of raw materials are rising. Earnings season is nevertheless coming at a critical time for equities as they struggle to break high watermarks of the bull run begun in March 2009, the FT reports.

Quant funds: The Brits are coming

There is talk in the City of London that Man Group’s new HQ has been outfitted with ultra-sophisticated cabling, the FT reports. It provides another signal that London’s quant funds are upping their game, with the big four – Man Group, Winton Capital, BlueCrest and Aspect – leading the race to develop trading models and increase execution ability. More frequent trading means big firms could get even bigger, but investors now face tough choices over whether to continue with established super-size names, or move on to nimble, smaller funds with differentiated models.

Apple profits jump 95 per cent

Apple’s latest quarterly results have blown past forecasts, posting revenue and profit growth of 83 and 95 per cent respectively, says the FT. Strong sales of iPhones and Macs boosted the figures, but chief operating officer Tim Cook has conceded that Apple faces ‘the mother of all backlogs’ on iPad deliveries because of production bottlenecks. Apple sold only 4.69m iPads versus 7.3m in the last three months, Reuters says. Analysts had expected 6m. However, strong performance in the company’s iTunes store is being ignored, says MediaMemo: sales jumped 27 per cent to $1.4bn during the quarter, suggesting a big boost from its App Store.

Greece is gonna get those restructuring whisperers

Someone’s in trouble.

Wednesday’s market whispers – that Greece was going to announce a restructuring of its debt as soon as this Easter weekend — have spurred a response from the country’s finance ministry. Read more

Treasury still set for AIG sale next month

The Treasury still plans to sell $20bn of AIG shares in May, despite the company’s stock falling 25 per cent in the last three months, the FT reports. AIG’s falling stock has reduced the government’s paper profit on its 2008 bailout to $6bn from $24bn in January. Sources familiar with the planned sale said that the Treasury may even sell below its break-even price of $28.73 a share, although the offering’s size would be reduced. AIG is meanwhile busy cleaning itself up for the sale, with asbestos exposure on its books sold to Berkshire Hathaway on Wednesday for a $1.65bn fee, Reuters reports.

Brazil gently raises rates 25bps

Brazil’s central bank has raised the benchmark Selic interest rate from 11.75 to 12 per cent, 25bps fewer than had been expected, reports the FT. The move is a sign that officials have other tools in mind to tackle inflation, which it is feared could breach the bank’s upper-limit target and hit 7 per cent by August. The bank’s policy committee was unusually split on the rate decision, with two votes favouring a 50bps increase versus 25bps. Further, ‘softer’ and protracted increases have been signalled, but analysts fear that inflation expectations could worsen without a sharp hike, reports Bloomberg.

Say goodbye to Anglo Irish

Dubliners out and about on Thursday, might notice that Anglo Irish has disappeared. The nationalised bank has removed signage from its offices ahead of a planned rebranding.

BP sues Transocean and Cameron

BP has filed a $40bn law suit against Transocean, accusing the offshore rig company of negligence and causing the Deepwater Horizon drilling rig in the Gulf of Mexico to be “unseaworthy,” according to the FT. Another suit blames Cameron International for making a ‘flawed’ blow-out preventer on the well. Transocean said BP’s action was ‘specious and unconscionable’. Wednesday marked the final day for suits to be filed, with litigation key to deciding who must pay compensation to federal and local governments for spill costs, the WSJ says. A Norwegian risk management company has previously found design flaws in the blow-out preventer in one investigation, although several other inquiries have blamed BP.

Barber-ians at the (Greek) gate

We’ve been here before.

Now that talk of Greek debt restructuring has once again reared its head we’re starting to get those ‘who holds Greek bonds’ notes (again) . And here’s a nice one from Citi’s Greek banking team. Read more

Further reading

Elsewhere on Thursday,

- On US reserve rates and new technologies. Read more

Pink picks

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

John Gapper: Two chiefs can be wiser than one
Goldman Sachs publicly pooh-poohs the idea but thoughts are turning to who will succeed Lloyd Blankfein as its chief executive, writes the FT columnist. The bank, which this week reported a 7 per cent fall in first-quarter revenues, is in sound enough shape despite its reputational pasting that he can respectably cede control within a year or two. His successor could be Gary Cohn, its president, one of the two other candidates mentioned in a New York Times article this week, or someone else. Read more

Snap news

Breaking pre-market news on Thursday,

- Dollar index hits three-year low – Reuters
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Overnight markets: up

The US dollar index slid to a 3-year low while Asian stocks jumped to a 3-year high on Thursday, as risk-on returned with a vengeance. Investors rushed to get in front of upward momentum in higher-yielding assets, particularly in emerging markets, reports Reuters.

Asian markets
Nikkei 225 up +59.20 (+0.62%) at 9,666
Topix up +1.83 (+0.22%) at 839.00
Hang Seng up +235.00 (+0.98%) at 24,131 Read more

Mohammed Fayed joins race for Pinewood

Mohammed Fayed, the former owner of Harrods, has made a surprise entrance into the emerging bidding war for Pinewood Shepperton, claims Sky News. The studios group is already considering a previous approach by Peel Holdings offering 190p a share, valuing Pinewood at £88m. Pinewood issued a statement on Wednesday saying it had “received a further approach from an unconnected third party which also may or may not lead to an offer being made for the Company. A further announcement will be made in due course.”

BP sues Transocean for $40 billion over oil spill

BP filed a $40bn suit against Transocean in New Orleans on Wednesday, reports Reuters. The British oil giant is seeking damages and other costs from the owner of the Deepwater Horizon rig. It also sued Cameron International Corp, saying a blowout preventer made by the firm failed to avert the disaster in the Gulf of Mexico.

Yorkshire Building Society agrees N&P takeover

Yorkshire, the second largest building society by assets, has agreed a takeover of Norwich & Peterborough, the smaller mutual lender that was this week fined £1.4m for mis-selling investments in the now-collapsed Keydata, says the FT. The proposed deal, which is described as a merger and is subject to a vote in favour by N&P savers and borrowers, would create a combined society with £34bn of assets, 3m members and 224 branches.

Nama to step up sales of property in UK

Ireland’s National Asset Management Agency, the “bad bank” set up to take over the toxic property loans of the country’s banks, intends to aggressively step up sales of property backed by bad Irish debt in the UK, the FT reports. As part of an ambitious strategy to reduce its €77bn (£68bn) loan book by a quarter by the end of 2013, Brendan McDonagh, Nama chief executive, told the Financial Times he would push through the sale of at least €2.5bn of UK commercial property in the next three years.

Banks ordered to repay loan insurance

Millions of consumers are set to share in the largest UK compensation pay-out in almost a decade, after the banking sector lost a High Court challenge over the sale of controversial loan insurance, the FT reports. In the latest twist in a long-running dispute over payment protection insurance, the court dismissed an appeal brought by the banks against regulatory changes that would force them to refund past policies worth billions of pounds.

iPhone sales help Apple profits soar

Strong sales of iPhones and Mac computers helped Apple’s profits surge 95 per cent in the March quarter, but the company said it was struggling to produce enough of its latest version of the iPad to meet demand, says the FT. The Silicon Valley company said on Wednesday that it earned $5.99bn in the quarter, blowing past Wall Street estimates. Revenue rose 83 per cent to $24.7bn.