Posts from Tuesday Aug 14 2012

The Closer


FT markets round-up: “The FTSE All-World equity index closed 0.15 per cent higher, while Wall Street’s S&P 500 ended the session nearly flat at 1,403 points after modest gains. In Europe, the FTSE Eurofirst 300 enjoyed a gain of 0.5 per cent after the Asia-Pacific region rose 0.4 per cent. The euro was little changed at $1.2324 after touching a session high at $1.2385 as tensions in the eurozone debt complex eased further, with Spanish 10-year yields falling 12 basis points to 6.72 per cent.” (Financial TimesRead more

StanChart settles

From Superintendent Benjamin Lawsky:

“The New York State Department of Financial Services (“DFS”) and Standard Chartered Bank (“Bank”) have reached an agreement to settle the matters raised in the DFS Order dated August 6, 2012. The parties have agreed that the conduct at issue involved transactions of at least $250 billion. Read more

China’s literally ground-breaking copper inventories

Remember how China was being buried alive in copper a few months ago? The stuff was piling up in carparks? Now it’s even WORSE.

Judy Zhu and Han Pin Hsi, the Standard Chartered analysts who brought us the carpark images back in April, have been on another fact-finding mission, this time beginning in Waigaoqiao where they found this: Read more

‘Don’t be a hero – start from zero’

Matt King, Citi credit strategist, strikes again in a new presentation — this time on capital preservation and making ‘risky’ assets ‘safe’. Full note in the usual place. Click to enlarge…

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‘The new form of corporate alter ego’: SPEs, encore

We qualify ‘new’. This paper is a full 30-year history of the special-purpose entity in banking, from Mike Milken to the Abacus CDO, via Bistro — up to the denouement of FAS 167.

Penned by William Bratton and Credit Slips blogger Adam Levitin, it also points out that corporate law continues to lag the accountancy profession in understanding the implications of SPEs. That weakness is important when the original purpose of many SPEs — for banks to replace equity with contracts as a means of controlling assets taken off-balance sheet, in order to gain relief from regulatory capital — is as relevant as ever. Read more

The mechanics of a water pump

Well, that was silly.

United Utilities share price chart Read more

Floating points and French GDP figures

Germany and France both beat expectations for GDP growth in the second quarter, while the eurozone and wider group of 27 European countries saw an anticipated quarter-on-quarter contraction of 0.2 per cent.

The figures, released on Tuesday morning, revealed some resilience in the German economy, with 0.3 per cent growth. Economists had expected the quarter-on-quarter figure to come in at 0.1 per cent. Read more

It’s hard being a China short seller

It’s a big, big China leveraged buyout — the biggest ever, in fact. Advertising company Focus Media, which is listed in the US, said it has received a $3.5bn takeover offer from its chief executive who is backed by a number of private equity groups, including Carlyle.

It’s gained attention in part because the offer (in the form of a non-binding proposal letter) of $27 per share is higher than the level the shares closed on the last day before the short seller Muddy Waters published the first of several reports criticising the company. Read more

The (early) Lunch Wrap

Good morning New York…


ESM, not yet of this world, dodges another curveball

On Monday, FT Alphaville wrote about the case in front of the German constitutional court concerning Europe’s fiscal pact and permanent bailout fund, the European Stability Mechanism. An interim ruling scheduled for September 12 could give a greenlight for the ESM to be brought online. The wait was already unnerving for markets.

By late Monday afternoon, news hit that the court had received a fresh challenge. The WSJ reports that a spokeswoman for the constitutional court has stated that the September 12 date for the interim ruling will not be affected by this latest challenge. More detail on this below. Read more

Further reading

Elsewhere on Tuesday,

Italy’s problem is growth, not fiscal balance. Read more

The 6am Cut London

Peregrine chief indicted over fraud allegations. Russell Wasendorf Sr, the CEO of collapsed brokerage firm Peregrine Financial Group (PFG), was indicted on Monday by a federal grand jury. The indictment comes a month after Wasendorf was found after having attempted to commit suicide. An arraignment date has not been set (NYT DealBook).

The Coalition is preparing to unveil a new package of house-building stimulus measures next month, by using the government’s balance sheet instead of putting money upfront. Rules for affordable properties may be relaxed for builders, and the government would underwrite bonds issued by housing associations to enable them to borrow more cheaply (Financial Times). Read more