Posts from Tuesday Oct 16 2012

The Closer


Stocks powered on after well-received earnings, including Goldman’s. The S&P 500 rose 1.03 per cent to close at 1,454.92. (ReutersRead more

Citi conference call live! (US Markets Live special)

We’re liveblogging the Citi call introduce Michael Corbat to analysts – and presumably saying goodbye to Vikram Pandit. 

Valedictory for Vikram

New York – Michael E. O’Neill, Chairman of the Citigroup Board of Directors, and Michael Corbat, Chief Executive Officer, will host a teleconference on Tuesday, October 16, 2012 at 4:30 p.m. (Eastern)…

And we’re going to try and liveblog the call, which will introduce Corbat to analysts after Vikram Pandit’s exit. Read more

Troika negotiators escape to Olympic Villa… oh, wait.

The euro is dropping and Talthybius-wire has a few suggestions why. Our money is on the fugitive.

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The Pandit years

“These are the times that will define us all,” Vikram Pandit told fearful Citi staff on March 10, 2009. They’re certainly going to define him.

Is Citi’s CEO going out on top? (‘Top’ in relative Citi terms)

Getting out now that banking is boring? Or just possibly — board pressure. Compared to Jamie Dimon and Lloyd Blankfein, the only crisis-era survivors left after Pandit (who himself already took over from Chuck Prince, who led Citi into the crisis), the Citi chief never had the chairman’s role. Richard Parsons, who had served with Pandit since February 2009, made plans to step down in March.

As we went to pixel the WSJ was reporting a board clash but what actually happened is still unclear. The Journal says it was “strategy and operating performance at businesses including its institutional clients group, according to people with knowledge of the bank.”

Update — From the FT:

People close to the situation said Mr Pandit opted to leave immediately after a tense board meeting where succession planning was discussed. One said the underlying issues were Citi’s failure to pass stress tests earlier this year, a defeat on a “say on pay” vote and the handling of the sale of the bank’s stake in Smith Barney to Morgan Stanley.

(Felix says in response that on governance, “Citi can credibly claim to be leagues ahead of Goldman.”)

Well, we are going to miss the Pandit years… Read more

A Reinhart & Rogoff update

We’ll keep this short, with a hat-tip to Barry Ritholtz. Reinhart & Rogoff, the doyens of financial remembrance, are back with a new paper and a Bloomberg piece containing some entertaining irritation.

Their main aim is…

to dismiss the misconception that the U.S. is somehow different. The latest financial crisis, yet again, proved it is not.

But they happily took some time to single out a few people who are guilty of “gross misinterpretations of the facts” too . Read more

On the long-lasting hit to UK productivity

Let’s look at the latest from the UK’s Office for Budget Responsibility (our emphasis):

The combination of more robust employment and much weaker GDP growth than we expected together create a significant ‘productivity puzzle’. Output per hour is much weaker than in previous cycles and than in our June 2010 forecast. Several explanations for the puzzle have been put forward and although we believe that some of the weakness of productivity relative to the pre-crisis trend is likely to be a temporary phenomenon, we also assume that a significant proportion of the hit is likely to be permanent or long-lastingRead more

Pandit quits Citi

COO John P. Havens gone too. Mike Corbat, CEO of Europe, Middle East and Africa since the start of the year, is to step up to the big chair.

And we thought the figures were pretty good. Odd.

He had been tipped for a more extended stay. Read more

As good as Goldman?

Goldman’s Q3 is out, and it’s raised the roof in trading / the dividend:

The Board of Directors of Group Inc. increased the firm’s quarterly dividend to $0.50 per common share from $0.46 per common share…

As the FT reports, total net revenues doubled, to $8.35bn, and it’s a marked changed from the third quarter last year.

Although, does this count for something? — 1 per cent quarterly growth in FICC: Read more

What’s the German for ‘property porn’?

“Immobilie porn”, suggests Google Translate but we’re open to correction.

Either way, this piece from the FT on Tuesday makes for good reading. It suggests there may be a bubble building in the German property market with Berlin in particular looking peaky, although that must be caveated with the relatively sedate nature of the market previously. Read more

Markets Live: Tuesday, 16th October, 2012

Live markets commentary from 

My Journey, by M Wheatley (self published)

Click to look inside!

 Read more

The (early) Lunch Wrap

Royal Bank of Scotland has suspended its head of rates trading in Europe and Asia Pacific, the most senior employee to be put on leave so far as the bank investigates its alleged role in the interbank lending rate scandals. Jezri Mohideen was suspended last week as part of the bank’s continuing investigation into the interbank rate-setting affair, according to two people close to the bank. (Financial Times) Read more

Tantalising glimpses that Spain might be ready to jump through well-positioned hoop

This, for Draghi’s (and everyone else’s) eyes only, from Tuesday’s FT:

A senior official within the Spanish ministry of economy said Spain did not require any money from the European Stability Mechanism, the eurozone’s state rescue fund, but would be comfortable making a request for a credit line only in order to satisfy the conditions of the ECB to begin buying bonds.

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Has a segment of China’s shadow banking system been curtailed?

There’s some interesting detail in the September loan data published over the weekend by the People’s Bank of China.

As we wrote yesterday, Michael Werner from Bernstein noted the role of big changes in the amount of ‘discounted bills’, a type of short term financing product, on total lending numbers. In short, the growth in these bills has been responsible for much of the growth in year-to-date lending. If you look at the far right column, the amount of medium- and long-term lending is quite meagre once the bills are removed: Read more

Further reading

Elsewhere on Tuesday,

– What IS the Nobel economics award anyway?

Deutsche Bank hearts US growth prospects.

– The five-bladed shaver of volatility. Read more

The 6am Cut London

Asian stocks gained ground as exporters were buoyed by stronger-than-expected US retail sales and financial shares were boosted by Citigroup’s better than expected earnings. The MSCI Asia Pacific index rose 0.6 per cent with Japan’s Nikkei 225 Stock Average up 0.9%, South Korea’s Kospi Composite index adding 0.7% and Australia’s S&P/ASX 200 index 0.6% higher. Hong Kong’s Hang Seng index and China’s Shanghai Composite index added 0.2% in cautious trading. (Financial Times)

Spain prepares rescue request, concerns over effect on Italy: Madrid has now found a formula that it feels comfortable with to make a rescue request, but the move is awaiting resolution of how it might affect other countries, particularly Italy’s borrowing costs, rather than a reluctance of the government of Mariano Rajoy to take the politically damaging step. A senior official within the Spanish ministry of economy said Spain did not require any money from the ESM but would be comfortable making a request for a credit line only in order to satisfy the conditions of the ECB to begin buying bonds. Spain believes the effect on financial markets of a request would be such that it could be enough on its own to cause a sharp drop in its borrowing costs. (Financial TimesRead more