Posts from Friday Jul 1 2011

The weekender

This week on FT Alphaville,

Greek politicians and French bondholders rolled over in different ways. Read more

When European interbank volatility is good for money funds

Where “good” = yield from a nice Eonia trade.

Quite frankly, this looks to us like picking up pennies in front of a steamroller. Read more

Goldman’s on top of the Dodd-Frank talks

A list of financial entities most panicked about upcoming Dodd-Frank rules.

 Read more

US Markets Live transcript 1 Jul 2011

Live markets commentary from 

Reminder: US Markets Live starts at 10am New York time

For the chronologically-challenged, that’s 3pm London time.

We’ve got our usual banter about all things markety, this week featuring thoughts on the end of QE2, Tim Geithner’s “mulling”, the debt ceiling, card fees, and — for a special treat — Hugo Chavez. Read more

Shorting DSK’s guilt

Beyond reasonable doubt, markets edition.

Friday’s gambling action on the odds of DSK being found guilty, courtesy of IntradeRead more

The Sovereign’s Wealth Fund

Poor Queen.

The House of Saud controls the world’s largest oil reserves, and with them, a tidy annual revenue stream of about $200bnRead more

Libor, repressed

From the annals of financial repression, we bring you Libor rates.

It’s a torrid tale of QE2, dollar funding and liquidity — and it’s one we thought we’d mention, given that the Federal Reserve’s second bout of quantitative easing has just come to an endRead more

The face of Ireland’s new bank

Yes, Anglo Irish and Irish Nationwide have been stitched together to make… the Irish Bank Resolution Corporation. It will take about a decade to ‘resolve’ them.

Although we’re sure readers can think of a better name. Keep it clean… Read more

Markets Live transcript 1 Jul 2011

Live markets commentary from 

Li Ka-shing closes in on Northumbrian Water

Friday’s statement from takeover target Northumbrian Water is more interesting for what it doesn’t say, than for what it does.

Statement regarding possible offer Read more

Strauss-Kahn case close to collapse

Prosecutors are on the verge of abandoning sexual assault charges against former IMF chief Dominique Strauss-Kahn as the credibility of his hotel maid accuser is rapidly deteriorating, the NYT reports. Officials have focused on recorded phone conversations between the hotel maid and an incarcerated man, adding that the accuser had repeatedly lied since Strauss-Kahn’s arrest. His lawyers will apply for bail conditions to be lifted at a hearing on Friday, which may test the case to the limit, says the FT.

RIM bows to pressure on governance

Research in Motion has promised to study changes to its board and management, avoiding an ugly showdown with shareholders later this month, Bloomberg says. Northwest & Ethical Investments had pressed for RIM to split the roles of chief executive and chairman, tapping into concerns that the company is falling behind Apple in the mobile market. The two roles have been shared between Jim Balsillie and Mike Lazaridis since December, Reuters reports. RIM is already reeling from an open letter from an anonymous senior executive, posted on BGR. The letter calls on employees to refocus on end users and fight a lack of accountability at the firm. In its response, RIM said it was ‘fully aware of’ the concerns.

Consortium buys Nortel patents for $4.5bn

Bidders including Apple, Research in Motion, and Microsoft have bought up the remaining patents of Nortel Networks, hoping to gain further mobile and tablet technologies including 4G, Bloomberg reports. The $4.5bn sale must still await approval from courts but is expected to close this quarter. Google and Intel were among the companies losing out in the auction, Reuters says. RIM bought $770m worth of the 6,000 patents on offer. Nortel, once Canada’s biggest tech company, imploded and filed for bankruptcy in January 2009.

UBS opts for Axel Weber as next chairman

Deutsche Bank has lost its chance of appointing Axel Weber, former president of the Bundesbank, to an executive role after UBS selected him as its next chairman, says the FT. It also resolves succession problems at the Swiss bank. The current chairman, former Swiss finance minister Kaspar Villiger, is 70 years old. UBS directors are expected to nominate Weber to the board as non-independent Vice-Chairman in May 2012, with his succession of Villiger taking place a year later. The appointment will quash speculation that Weber would join Deutsche Bank as chief executive after Josef Ackermann steps down in 2013, says Reuters. It’s generally not a good week for Ackermann, who also faces having to roll over his bank’s exposure to Greece, but then Weber has a reputation for abrasiveness that may unsettle UBS, FT Alphaville notes.

Piling on the government gurantees

Government guarantees for financial institutions are a financial crisis thing, right?

Wrong. Read more

Paulson pressed BofA to resist bond claims

John Paulson, one of Bank of America’s largest shareholders, pushed the lender not to make the $8.5bn investor claims settlement it announced this week, reports the WSJ. BofA had faced a lengthy legal fight over with a group of bondholders including Blackrock, until the settlement was included in a $20.6bn set of provisions to deal with losses from its acquisition of Countrywide. Paulson argued that the bank had enough ammunition to fight a case against private investors, but ultimately lost out to a group led by BofA chief executive Brian Moynihan, following legal decisions against the bank that made it easier for investors to bring claims.

Chinese manufacturing droops, ISM seen struggling

Chinese manufacturing growth has fallen to its slowest level in more than two years as monetary tightening bites, reports the FT. The PMI fell to 50.9 in June, from 52 one month earlier, and perilously close to the 49 recorded in February 2009. Indian PMI data also dropped sharply, to a nine-month low. Friday’s ISM manufacturing index will likely fall from 53.5 in May to 52, its lowest level since August 2009, as supply chain disruption from Japan continued, according to Bloomberg. Estimates have varied from 49 to 55.

Geithner could leave Treasury, Dimon in the frame for replacement

Tim Geithner will decide on whether to leave the post of Treasury secretary once negotiations on raising the debt ceiling are over, Bloomberg says. President Obama faces losing the last member of his original economic team months before his re-election campaign hits full stride. Geithner has been privately discussing the move for weeks, reports the FT. Figures including CFTC chair Gary Gensler, Facebook COO Sheryl Sandberg and OMB head Jack Lew have already been mooted as his replacements, says Reuters. Jamie Dimon could be a ‘strong dark-horse candidate’ nevertheless, according to Politico, depending on the White House’s willingness to align itself with Wall Street.

Back inside the horrors of the Gaddafi fund [updated]

Another FT story on the swingeing losses incurred by Libya’s sovereign wealth fund under the Gaddafi regime — based on another leak to Global Witness.

Click the image for the full document: Read more

Ackerman’s week to forget

It’s not been a good week for Deutsche Bank chairman and CEO Josef Ackermann.

First, he was forced to roll over his Greek debt for the greater good of the eurozone. Read more

Tail risk italiano

Italian banks have had a rough ride recently.

Stocks have been falling and CDS spreads are rising as the banks grapple with a Moody’s warning, various capital increases, concern about contagion, and various corporate governance issues. Read more

Further reading

Elsewhere on Friday,

– Wow, DSKRead more

Pink picks

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

Gillian Tett: State is now dominant force in US capital markets
By the time you read this column today, a fascinating shift will almost certainly have occurred in the nature of US finance: for the first time the government will be the biggest source of outstanding home mortgage and consumer credit loans in the US, eclipsing private sector banks or investors, writes the FT’s TettRead more

Snap news

Breaking pre-market news,

– Former Bundesbank president Alex Weber nominated to UBS board; to become chairman in 2013 — statementRead more

Regulators probe Twitter’s developer relationships

US regulators have begun an investigation into whether Twitter has unfairly disadvantaged other developers who had built businesses by tapping into its global audience, according to a person familiar with the review. The FT reports the Federal Trade Commission has held fact-finding meetings with developers to look at how Twitter manages its relations with companies that have tried to build services and apps around its ecosystem. The study follows a turbulent period in the relations between the internet messaging service and companies that make Twitter applications and “clients”, or software for PCs and smartphones that Twitter’s members use to access the service. The company drew protests from some of its developers a year ago when it first indicated it planned to create more of the applications for its users that had previously been produced by outsiders.

NY Fed halts mortgage bond auction

The Federal Reserve Bank of New York has suspended plans to sell off the remaining mortgage bonds held by its Maiden Lane II vehicle, conceding that investors’ retreat from riskier assets had weighed on the auction. The FT says the  decision highlights how the uncertain outlook for the US housing market and abundant supply of assets for sale had combined in recent months to damp demand for the securities the regulator chose to auction off over time. It sold only 36 of the 73 securities that it had intended to auction off on June 9. By contrast, a May 10 sale secured buyers for 74 of the 79 securities that were auctioned.


Citigroup takes stake in Vietnamese brokerage

Citigroup has acquired a 9.9 per cent stake in Vietnamese securities firm Horizon Securities Corporation for an undisclosed sum. The price was not disclosed, Reuters reports. The deal comes as Vietnam’s economy is foundering, the WSJ says, with inflation at 20 per cent, but the country’s financial sector is seen as ripe for consolidation. Vietnam limits foreign investments in its companies to 49 per cent.

Japanese business sentiment dips

Sentiment among large Japanese manufacturers has turned sharply negative since the March earthquake and tsunami and resulting nuclear crisis, but companies expect conditions to improve over the next three months, the Bank of Japan’s Tankan survey shows. The FT reports the closely watched quarterly survey underscored the impact of the disaster on business and current worries about electricity supplies. But it will also reinforce hopes that economic recovery will be swift. The Tankan’s headline index, which compares the number of large manufacturers reporting positive conditions with those reporting negative views, fell to -9 for June, a decline of 15 points from the +6 reported three months ago. The result was the first negative result since March 2010 and was lower than the average forecast by economists surveyed by Dow Jones. However the Tankan survey also found expectations of an 11-point recovery in the index in September.

Overnight markets: Up

Asian shares opened the new quarter on a positive note as technology exporters and automakers rose on an improvement in US business activity and Japanese companies’ plans to increase capital spending. The MSCI Asia Pacific index was up 0.3 per cent after figures showing US manufacturing unexpectedly expanded at a faster pace in June and as fears of an imminent Greek default receded after the country’s parliament passed austerity measures. However, some caution set in after figures showed China manufacturing activity was at its lowest level in two years as the government battles inflation.

Asian markets Read more