Posts from Friday May 13 2011

The Weekender

This week on FT Alphaville,

– Europe’s Greek-out! took one look at a hard restructure… Read more

Further further reading

For the commute home, now a more expensive trip,

– IMF working paper on cyclical vs structural unemployment. Read more

Are US house prices not falling after all?

Douse your double-dip fears, house prices are actually going up.

At least that’s the contention by Citi analysts in a note published on Friday. Read more

The tsunami effect, charted

In the days immediately following the twin earthquake and tsunami disasters in Japan, there was much speculation about how big the impact might be on the country’s trade and exports.

Now thanks to Sean Corrigan, chief investment strategist at Diapason Commodities, we have it charted: Read more

Morgan Stanley wants you to pay more attention to seniors

Seniors have had a hard time of it lately.

They’ve been usurped by a trendier generation, buffeted by changing times. Now Morgan Stanley analysts want you to consider this frail group. They want you to … focus on senior bank debt, of course! Read more

US Markets Live transcript 13 May 2011

Live markets commentary from 

Help! We’re all being financially repressed!

There’s a wider theme running through the relatively technical question of how the European Central Bank’s massive holdings of Greek government bonds will fare in any Hellenic debt restructuring.

There are plenty of market participants who already believe the likelihood the ECB will have to suffer the same losses as private investors on their Greek debt investment, is very very low. They figure the central bank will seek preferred creditor status, lowering the payouts left for other investors. Then there are others who argue that the ECB should seek de facto preferred creditor status to avoid a pari passu precedent. Then there are people like Roubini who argue that the ECB has already claimed de facto juniority (?) because it’s agreed to be on the hook for about €91bn worth of Greek liquidity lines. Read more

The 2001 shift

Kevin Gaynor at Nomura — long-standing side-kick to Bob ‘The Bear’ Janjuah — has had an epiphany.

The crisis didn’t begin in the subprime fuelled mid-naughties. Read more

The return of US Markets Live: 10am in NY, 3pm in London

From Cardiff Garcia and John McDermott

After a three-week hiatus, we’re back. Read more

Surprise – Moody’s accidentally rates a bond too low

Is there a Type III ratings error category? Where rating agencies completely misidentify what kind of bond they’re rating? Awkward:

 Read more

ETF investors mistimed the commodity correction (again)

Here’s an interesting observation regarding this month’s commodity sell-off.

It comes from short-selling data firm, Data Explorers, and it concerns commodities ETFs: Read more

UBS on the commods crash – and getting ready for the next one

We’ve heard from Deutsche Bank, who blamed the coming end of QE for last week’s precipitous price moves.

UBS have now added their view to the causes of the commodities crash. In a nutshell, they’re citing: “extreme positioning short the dollar and long commodities” coupled with some disappointing indicators of global growth. Read more

Markets Live transcript 13 May 2011

Live markets commentary from 

The LSE’s IPO pipeline

Topaz Energy & MarineRussian Helicopters, Edwards Group, Skrill and Chelpipe.

Just some of the companies that have pulled or postponed plans to list on the London Stock Exchange. Read more

Government rescue for Fukushima operator

Japan has unveiled a rescue scheme for Tokyo Electric Power to ensure the utility can fund compensation for victims of the crisis at its crippled Fukushima nuclear plant and avoid financial collapse, the FT says. The package does not set a limit on the amount of public financial support available to Tepco. A state-backed vehicle will buy preference shares in Tepco, financed by special bonds issued by the government and some contributions from the nuclear industry. Japan will also guarantee bank loans to Tepco, in return for controls on the utility’s management and a programme of asset sales.

Republicans question August debt limit

Republican lawmakers have questioned the Treasury’s forecast that August 2 marks the absolute deadline to reach a deal on the US debt ceiling, adding a fresh twist to negotiations on a debt vote, the WSJ reports. Freshmen representatives are particularly sceptical of the Treasury’s calculations, leading Congressional leaders to worry that pressure for a deal is about to slip away. Treasury issuance is already within a whisker of breaching the $14 trillion ceiling with this week’s $72bn of debt settling next Monday, the FT reports. Thursday’s $16bn auction of 30-year bonds was surprisingly poorly received by investors, dealers said.

Eurostat isn’t happy with Greece and its Goldman swap

Greece’s currency swaps with Goldman Sachs may have slipped your memory.

Luckily Eurostat, in a just-published review of its methodological visits to Greece in 2010, has a quick reminder. More importantly, it’s kind of the European statistic agency’s final word on the matter: Read more

Facebook’s ‘clumsy smear’ on Google

Facebook has been forced into an admission that it secretly hired a PR firm to plant negative stories about Google’s record on internet privacy, reports the FT. Burson-Marsteller pushed stories to US reporters on Google’s alleged ‘scraping’ of private data without telling them it worked for Facebook, and apparently based on exaggerated claims, according to the Daily Beast — which has posted one such email to a journalist. While Facebook insists that the claims were in the public domain, the chief executive of the Public Relations Society of America has said the activity was “unethical and improper”. Burson-Marsteller said it was no longer working with Facebook.

A most unusual cash call

The spat between the Daily Telegraph and Stobart Group has boiled over on Friday.

The UK’s best known road haulage group says has hit back at claims the Financial Services Authority is examining a deal which will see Stobart buy a property portfolio from its chief executive. Read more

GM share sale no earlier than August

The Treasury will not sell its remaining shares in General Motors until August at the earliest, sources have told Reuters. The new delay to the secondary offering of the government’s 32 per cent stake is intended to give investors time to gauge GM’s second-quarter results and the effect of supply disruptions in Japan, the sources said. But investors had thought the Treasury would move quickly after a lock-up period for GM’s major shareholders ends on May 22.  An alternative proposal to allow GM to buy back Treasury shares with cash has been floated but could be seen as using subsiding the auto-maker via the current slough in share prices, especially given the history of GM’s $50bn bailout.

Hedge funds fear post-Raj research scrutiny

Hedge fund managers are bracing for a new era of intensified scrutiny of their research activities in the wake of conviction of Raj Rajaratnam, the FT says. Managers at an industry conference in Las Vegas said that they feared the government is pushing boundaries of what constitutes insider information ever closer toward normal research activities. The boundary has been challenged further by the defence’s failure to convince the jury that Rajaratnam traded on a ‘mosaic theory’ approach using information within the public domain, the WSJ reports.  Fund managers are already reconsidering their use of expert networks to gather information, the Journal adds.

Shanghai speculators key to silver swings

A 2,837 per cent rise in silver turnover on the Shanghai Gold Exchange this year is a sign that Chinese speculators have driven the surge – and crash – in silver prices, the FT reports. Silver trading in Shanghai remains below the levels in London and New York, the two main global hubs, but its rapid growth means it has become increasingly significant in driving prices, bankers said. Chinese retail investors cut positions sharply when silver last week, only to return in strength during a short-lived rebound, and would be crucial to breaking the threshold of $50 a troy ounce for the metal, according to analysts.

Big banks face ‘systemic’ surcharges

Global regulators are seeking ‘graduated’ capital surcharges for the world’s biggest banks that increase with their size and connections to other lenders, the FT says. The Financial Stability Board has coalesced around placing three to six ‘gradations’ of extra capital on top of Basel requirements for the lenders designated ‘systemically important’ by the FSB later in 2011, regulators told the FT. The charge will disadvantage top-tier US and European banks versus their second-tier compatriots and their more domestically-focused Chinese and Japanese rivals. The FSB next has to decide on whether the Sifi charge should take the form of equity or should allow contingent capital to be included.

In China, Coach and LVMH: win some, lose some

Slowly but steadily, it’s happening.

China’s famed production paradise for foreign companies is hollowing out. Amid spiralling wage costs and rising worker activism, some foreign manufacturers have been reassessing their China operations — and a growing number are beating a retreat to cheaper and more accommodating labour environments Read more

Where’s Lucas?

Where’s Lucas?

The man of many words has gone silent. Read more

Further reading

Elsewhere on Friday,

– Time to be serious, according to Jeremy GranthamRead more

Pink picks

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

Simon Tilford: Greece and Portugal should both go gracefully
Even as the ink is drying on Portugal’s European Union and International Monetary Fund bail-out agreement, evidence is mounting that last year’s bail-outs of Greece and Ireland have failed, writes Tilford, chief economist at the Centre for European Reform. Far from improving their access to the financial markets, Greece and Ireland face record borrowing costs. Notwithstanding the slightly less draconian terms of Portugal’s agreement, it will surely suffer a similar fate. Read more

Snap news

Breaking pre-market news on Friday,

– London Stock Exchange says annual profits up 22 per cent; files TMX merger application — statement and statementRead more

Caixabank to float in wider revamp

Spain’s Caixabank, the bank carved out of Barcelona-based savings and loan institution La Caixa, will be listed on the stock exchange on July 1 and is expected to be the 10th-largest lender in the eurozone by market cap, reports the FT. The flotation of the bank will mark the start of a new phase in the radical restructuring of the Spanish system of cajas, or savings banks. Spain’s regulators hope it will be followed by further flotations of merged cajas, although analysts say it will be harder for those that follow Caixabank to raise money through the necessary IPOs. La Caixa, larger and more solvent than smaller rivals, began its transformation from a position of financial strength and was also able to use Criteria, its quoted industrial holding company, as a listing vehicle.

Glencore to close IPO books early

Global commodities trader Glencore will close the books for its planned $11bn initial public offering on May 17, a day ahead of the original schedule, underscoring strong demand for the offer despite the recent downturn in commodity markets, reports Reuters. No reason was given for the early close in a term sheet seen by Thomson Reuters IFR on Friday. Sources previously told Reuters that order books were fully covered on the first day after strong interest from investors. Usually a decision to close books early is a sign of strong demand for the offer. On Thursday, Glencore CEO Ivan Glasenberg told a news conference the IPO had generated strong demand. The Telegraph reports that Kazakhstan’s key opposition figures have accused Glencore of illegally privatising assets worth up to $7.6bn amid fears the recent commodities sell off could hurt its valuation or force it to pull its $61bn flotation.