Posts from Tuesday Feb 5 2013

The Closer

FT markets round-up: “Global stock markets rebounded after a wobbly start to the week, pushing the S&P 500 back above the 1500 mark, as a batch of better-than-expected earnings and news of Dell’s $24bn buyout boosted investors’ appetite for growth assets. News that hiring in the US service sector rose to a near-seven-year high in January was also a positive development for growth-sensitive products. Investors also welcomed a better 2013 earnings forecast by companies such as Computer Sciences, which jumped 10 per cent. Commodities were firmer, with copper up 0.2 per cent to $3.77 a pound and Brent crude briefly retaking the $117 a barrel level, while perceived havens are losing cachet. Yields on the 10-year Treasury note rose 5 basis points to 2.01 per cent, while gold fell $2 to $1,672 an ounce. The FTSE Eurofirst 300, which lost 1.5 per cent on Monday, closed 0.3 per cent higher, while Wall Street’s S&P 500 — which shed 17.5 points in the previous session — rose 1 per cent and closed at 1511.” (Financial Times)

Daring $24bn deal to make Dell relevant: “Michael Dell’s proposed $24.4bn deal to take his company private marks an audacious bid to use his immense fortune to rescue the personal computer maker he founded three decades ago in his college dormitory room. If approved by shareholders, the deal would be the largest buyout since the financial crisis, and the largest tech buyout ever. Yet even with Microsoft and Silver Lake Partners at his side, Mr Dell now faces the complicated task of trying to make Dell relevant again in the face of growing competition from mobile computing.” (Financial TimesRead more

Argentina, and penultimate pari passu case games

As if we could keep away from the latest paper mountain in the pari passu saga.

Argentina and its restructured bondholders (and Bank of New York Mellon) filed briefs to the Second Circuit on Friday, returning fire at the most recent salvo from holdouts. Read more

The sequestration cuts and the state of the states

Lots of talk about the sequester Tuesday, with Obama’s speech and the CBO report assuming that most of the cuts (or compensating cuts of equal amount) will actually take effect.

Long story short: the cuts would add to further budget deficit reduction this year but also contribute to slower economic growth, naturally. Read more

Goodbye, Jim O’Neill

Jim O’Neill, chairman of Goldman Sachs Asset Management, Red Knight, and all-round Mr Bric, will retire later this year, the bank announced on Tuesday.

The full statement follows… Read more

All’s fair in love and currency wars

Japan’s Masaaki Shirakawa gave notice on Tuesday that he would be leaving his post as governor of the Japanese central bank on March 19, three weeks earlier than slated.

Can we blame Shirakawa? His departure now coincides with that of two deputy BoJ governors who would be replaced by Abe-nominations (we resisted the urge to go for ‘Abominations’; it wasn’t easy.).

If Shirakawa had stuck around he presumably would have found himself the head of an increasingly mutinous court. Read more

S&P killer, qu’est-ce que c’est?

Did the world not already know that a CDO analyst at S&P parodied Talking Heads “Burning Down the House” as the residential market teetered in 2007?

Like “it could be structured by cows and we would rate it”, it feels like a meme that would need to be invented if it didn’t already exist. Read more

Dell goes private for $13.65 per share

As was widely expected, the computer maker has struck a deal to go private – for a whopping $24.4bn. The price per share is at the higher end of the $13.50 to $13.75 reported.

The statement from the company is here:

  • Dell stockholders to receive $13.65 per share in cash
  • Transaction valued at approximately $24.4 billion
  • Transaction implies a 37 percent premium over the average closing share price during the previous 90 calendar days ending Jan. 11, 2013

 Read more

The US v S&P

Hat-tip to the WSJ Law Blog, the full US government complaint against Standard & Poor’s:

 Read more

The great rotation: Not so great, and not even really a rotation

The ‘great rotation’ from bonds into equities: a few weeks ago it was looking like it might be seriously on. Even Albert Edwards sort of kind of said equities were cheap. And Ray Dalio said it is happening, too.

But there are a bunch of reasons why it doesn’t seem to be quite such a sure thing, at least for now. Read more

UK productivity puzzle possibly solved?

Hugh Small is an independent economic analyst and management consultant, who was formerly with US-based firms Arthur D. Little and A. T. Kearney. He blogs at mature economy.org, and has a running thesis that mature economies must be assessed differently to developing economies because they share very different strategic goals.

Furthermore, once you factor in the subtle differences that apply to developed economies, things like the UK productivity puzzle begin to look a little less mysterious. Read more

Markets Live: Tuesday, 5th February, 2013

Live markets commentary from FT.com 

The (early) Lunch Wrap

Barclays adds £1bn to mis-selling bill || Dell board said to vote Monday night on $24bn LBO || Liberty Global set for Virgin Media bid || China pumps $72bn into money markets || UBS in SFr5bn bond buyback to lower costs || Moody’s hits out at Jefferies’ pay deals || Markets: Stocks are pretty firm on Tuesday morning after a eurozone wobble Read more

UBS bonuses go bail-inable

UBS reported a fourth quarter loss of CHF1.2bn — actually CHF1.9bn, when considering Libor fines and other regulatory and legal costs, plus restructuring costs. The loss came in a little lower than the median estimate of analysts surveyed by Bloomberg.

The full monstrous PDF is here, but meanwhile, we note the FT’s Daniel Schäfer scooped an interesting change to the bank’s bonus policy for its 6,500 highest earners: Read more

Impromptu Snap News

If you missed Snap News, today has so much corporate news we decided to temporarily resurrect it:

- Barclays is provisioning an extra £1bn to cover mis-selling of interest rate hedging products and PPI, bringing its total provisions for both to more than £3.45bn. Read more

Further reading

Elsewhere on Tuesday,

- On the deadly quest for safety.

- Janet Yellen and the December 2007 ‘teleconference’.

- Paul Krugman wonders what Masaaki Kanno is talking about. Read more

The 6am Cut London

Liberty Global preparing Virgin Media bid || Asian markets fall on Spain, Italy fears || KPN finalising plans to raise €2bn – €4bn || SGX considers LCH.Clearnet stake || S&P to face DoJ civil case over mortgage ratings || British retail sales up 1.9% || Australia holds rates at 3% || BP Gulf settlement could take another year  Read more