Posts from Tuesday Nov 20 2012

The definitive guide to the RBA’s ‘passive intervention’ in the AUD

A lot of ink has been spilled by various FX strategists over what the Reserve Bank of Australia is or isn’t doing with its FX transactions and whether this is or is not tantamount to printing money. The RBA isn’t ‘printing money’ but it is doing something… or rather, not doing something, as a way of signalling that it doesn’t like the Australian dollar being so strong. They’ve been given the opportunity to do this by a foreign central bank, but that’s neither here nor there. Read on for all the messy details…  Read more

The Closer


FT markets round-up: “A rally that saw global equity markets experience their best day for months coupled with gains for other risk assets, shuddered to a halt on Tuesday as concerns about the eurozone resurfaced. The FTSE All-World equity index, which had its best session since the beginning of June on Monday, closed 0.1 per cent higher on Tuesday, as a downgrade of France’s sovereign credit rating curtailed risk appetite in Europe. On Wall Street, the S&P 500 struggled to keep momentum after having had its biggest one-day advance on Monday in more than two months. The broad measure of US stocks closed nearly flat, up less than 0.1 per cent on the day to 1,387 points. The Dow Jones Industrial Average, which includes HP among its constituents, was also little changed, closing 0.1 per cent lower. HP at one point plunged more than 13 per cent to $11.45, a 12-year low.” (Financial TimesRead more

Stat du jour, federal deficit edition

It comes from Jed Graham via Felix:

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“Hi, Kweku, we need to clarify these exposures”

The following is a transcript of Kweku Adoboli’s last recorded phone call at UBS with members of the bank’s back office accounting team.

Not only does it reveal that Adoboli may have used Blackrock and SocGen as faux counterparties for hiding losses but that the “back-office genius” seemingly had difficulty grasping the difference between an asset and a liability (at least in public). Scrutiny of the bank’s unsettled trades, meanwhile, seems to be what prompted his eventual confession.  Read more

Adoboli, more Del Boy than Lex Luthor

The great UBS vs Kweku Adoboli trial has finally come to an end.

The verdict: Adoboli was sentenced to seven years for fraud related to a $2.3bn loss, but found not guilty of four counts of false accounting. Read more

SEC v CR Intrinsic

“This is an insider trading case where affiliated investment advisers and their hedge funds made over $276m in illegal profits…”

Click for the full SEC civil complaint against CR Intrinsic, hedge fund manager Mathew Martoma and neurology professor Dr Sidney Gilman: Read more

A sharp protest vote at Xstrata (but the deal goes on)

Maybe this was inevitable after the Qataris said they would approve Xstrata’s merger with Glenstrata, but would abstain on the retention bonuses. But the raw numbers of shareholders here saying payments to management were excessive suggest a very aggressive mood amongst institutions. Remember, this is a revised incentive scheme, where shareholders were supposed to have been listened to…

The result from Xstrata’s shareholder meeting on Tuesday… Read more

FT Alphaville also available for your ears, FX edition

As a special treat, the below podcast.

FT Alphaville reporter David Keohane met Simon Derrick, chief currency strategist at BNY Mellon. They geeked out on various FX topics. Read more

Muddy Waters vs Olam: from New Zealand, with fudge

Carson Block of Muddy Waters laid into Singapore-based commodities trading group Olam International at Monday’s Sohn conference in London. Such is the way of his shorting.

The thrust of his argument was that there are troubling irregularities in Olam’s accounts and that the company has taken on excessive leverage.

But Block also pointed to Olam’s acquisition of NZ Farming Systems Uruguay, noting that latter had recently published an annual report with the words “fudge this” next to one of the line items. The suggestion was that Olam has not been particularly wise or scrupulous in picking acquisition targets. Read more

Inevitably, eventually, Autonomy

Paging Dr Mike Lynch. Your patient seems to be suffering some nasty post-op complications.

From Hewlett-Packard’s fourth-quarter results:

Fourth quarter and full year fiscal 2012 results include a non-cash goodwill and intangible asset impairment charge of $8.8 billion relating to the Autonomy business within the Software segment.

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An actual consequence of France’s downgrade?

Not many people seem bothered by France’s overnight downgrade by Moody’s. The euro shrugged and French bond yields crept upwards at a snail’s pace.

But one place the downgrade might have a real and lasting impact is within the Swiss National Bank. They have a predilection for core eurozone bonds and the downgrade might just prompt them to ditch what holdings they have and/or stop loading up on French debt.
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Is Catalonia backing away from independence?

The people of Catalonia go to the polls on Sunday. Although it’s just a regional election, the vote is seen as a key gauge of the Catalan independence movement’s strength. And the latest indications are that Catalans are less keen on going it alone as the election day draws nearer. Read more

Markets Live: Tuesday, 20th November, 2012

Live markets commentary from 

The (early) Lunch Wrap

Moody’s cuts France’s Aaa rating || Eurogroup discussion on Greece || Glencore Xstrata is born, almost || Muddy Waters’ next target: Olam || A year in the life of the euro || Credit Suisse splits, and also new lawsuit being prepped against it || Otellini steps down from Intel top job || AIG lawsuit dropped || JPM names new CFO || BoJ policy on hold || US banks issue billons of prefs Read more

Bold AV call on Eurogroup discussion on Greece: No decision

There are so many aspects surrounding Greece’s ongoing refinancing needs still up in the air, it should come as no surprise that the agenda for Tuesday’s meeting of European finance ministers has reportedly been shrunk to addressing how an immediate €15bn gap can be bridged through to 2014. A further €17.6bn seemingly required to take the country through to 2016 can be discussed later. Read more

A year in a life…

Dear euro, this has been your 2012 so far. Do try and get through the rest safely:

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Glencore Xstrata is born, almost

Subject to the vote of Xstrata shareholders later on Tuesday, of course. And one or two regulatory hurdles remain. But while we wait for the XTA vote, here are the voting results of the Glencore shareholder’s meeting… Read more

Bank of England’s biannual anxiety survey

On Monday, the results of the Bank of England’s Systemic Risk Survey were out.

How confident are 79 market participants — from hedge funds, banks, building societies, large complex financial institutions, asset managers and insurers — in the UK’s financial system?

Well, it would appear that they’ve gone from approximately ummerrrr-dunno to hmmmRead more

Premier Foods’ brown bread plan

This is a euphemistic statement header, to say the least…


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Further reading

Elsewhere on Tuesday,

Capital controls work, but not for long.

– Karl Whelan shows admirable restraint in posting arch-nemesis pic.

– Private equity on a Twinkies adventureRead more

Credit Suisse re-aligns itself for the ‘new regulatory reality’

Here’s the statement:

Credit Suisse announces organizational changes and appointments to the Executive Board; divisional and regional alignment is designed to accelerate execution of strategy and sharpen client focus

New structure creates one of the world’s leading integrated wealth management businesses and one of the first global investment banks that is in alignment with the new regulatory reality

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The 6am Cut London

Asian shares higher || BoJ holds firm on rates || Moody’s downgrades France || New York attorney to sue Credit Suisse over MBS || Olam defends its integrity || Tiger takes stake in Groupon || Dark pool trading of US equities soars || What next for Australia after the boom? Read more