Are you one of many thousands already receiving our daily 6AM Cut financial news summary? If not, have a look at the sample items below.
Each morning, right at the start of the working day in London and Europe, the 6AM Cut brings you digestible nuggets of up to the minute financial news – from the FT and beyond, straight to your email inbox. Concise, breaking and informed, the Cut is selected and written by a seasoned editor, not a computer or an office junior.
And it’s FREE.
Existing recipients say they find the service indispensable – short news summaries ideal for Blackberry consumption or for a quick read at your desktop.
Click here and follow our simple, free registration process
______
VIRGIN FRONTRUNNER FOR NORTHERN ROCK
Sir Richard Branson’s Virgin group on Sunday night emerged as the
preferred bidder for Northern Rock, reports the FT, having won favour
with both the government and the bank itself. The Virgin consortium,
which includes AIG, the insurance giant, and Wilbur Ross, the US
distressed debt investor, was considered more attractive because it
would immediately repay more than £10bn of Northern Rock’s debt, while
treating the government as an equal creditor. The Virgin group plans to
inject about £1bn in cash and its Virgin Money subsidiary into Northern
Rock in return for a controlling stake, valuing Northern Rock shares at
less than half their closing price on Friday of 86p. Virgin is expected
to offer existing shareholders the opportunity to increase their stake
to around 45 per cent of the restructured bank by subscribing to new
shares in a rights issue.
———————————————-
MARKETS FEAR NEW CREDIT WOES
Investors fear the financial system is moving into new credit turmoil,
which could create further losses for financial institutions – and
potentially hurt sentiment in the “real” economy, reports the FT. Credit
markets are trading at levels which imply that investors assume that the
US is heading for a recession, bank analysts and economists have warned.
Lawrence Summers, former US Treasury secretary, writing in Monday’s FT,
says: “The odds now favour a US recession that slows growth
significantly on a global basis.”
———————————————-
EUROPEAN BANKS SET FOR TROUBLE
European banks are facing a new wave of financing troubles as the
markets where they borrow money take a turn for the worse, reports the
WSJ. The ECB will move to inject an unprecedented amount into European
money markets on Monday. Interest rates in short-term lending markets
have risen at a pace not seen since August as investors shy away from
risk and banks become increasingly wary of lending to one another. Lex
says US banks are both better at valuing their positions and more honest
than their European peers.
———————————————-
UK HOUSE PRICES TO FALL 7%
The City is betting on UK house prices falling by 7 per cent next year
in new tradeable derivatives contracts, which some bankers say is the
best indicator of the market’s direction as millions of pounds are
riding on the outcome. These future housing contracts, which were
published for the first time this year, reports the FT, and have seen a
surge in trading volumes in the past few months, are predicting much
bigger falls in property values than other non-tradeable forecasts.
———————————————-
HEDGE FUND’S 1000% SUBPRIME RETURN
Californian hedge fund Lahde Capital has made more than 1,000 per cent
return this year by betting against US subprime home loans, making it
one of the world’s best-performing funds of all time. Mr Lahde, whose
fund is one of the smallest specialists shorting subprime, has now begun
to return money to investors, telling them in a letter that he expected
the collapse in value of subprime mortgage-linked securities to be
repeated for bonds backed by commercial property loans in a deep
recession. “Our entire banking system is a complete disaster,” he wrote.
“In my opinion, nearly every major bank would be insolvent if they
marked their assets to market.” He also said he would be putting some of
his own profits into gold and other precious metals.
———————————————-
LEGAL ATTACKS ON RATING AGENCIES
Ratings agencies Standard & Poor’s and Moody’s have become embroiled in
legal action in the wake of the credit crisis, reports the Daily
Telegraph. Action has been brought by shareholders, including pension
and annuity funds, against Robert Bahash, the executive vice president
and chief financial officer of The McGraw-Hill Companies, which owns
S&P, and Linda Huber, the chief financial officer of Moody’s
Corporation. They claim Mr Bahash and Ms Huber “misrepresented or failed
to disclose” that their ratings agencies “assigned excessively high
ratings to bonds backed by risky sub-prime mortgages – including bonds
packaged as CDOs.”
———————————————-
TAX CRACKDOWN WILL PROFOUNDLY IMPACT LONDON
An elite of wealthy foreigners living in Britain faces paying billions
of pounds in capital gains tax on UK-based assets, under far-reaching
legislation being drawn up by the Treasury, reports the FT. The
Chartered Institute of Taxation has warned the Treasury that the
measures would have “a profound impact on the housing and art markets in
London as well as its pre-eminence as a financial centre”. The scale of
the Treasury’s ambition to crack down on offshore trusts that allow
“non-domiciled” residents to escape tax on their UK investments will
mean about 15,000 of the wealthiest non-doms will face much larger tax
bills than the £30,000 fee unveiled last month.
———————————————-
NYC TO OVERTAKE LONDON IPOS
The amount of money raised through initial public offerings in New York
is set to surpass London for the first time in three years as companies
fuel a surge in IPO volume in spite of the turmoil in capital markets.
Money raised through stock market debuts in New York is set to hit
levels not seen since the dotcom boom, with $51.3bn raised this year on
the NYSE and Nasdaq combined, according to figures from Dealogic, the
data provider. In London, debuts on the London Stock Exchange and Aim
have raised $45.8bn in the year to date.
———————————————-
RIO BEGINS BHP DEFENSIVE
Rio Tinto, the mining group, will on Monday launch a robust analysis of
its business, playing up the value of its operations and pipeline of
development projects in an effort to defend itself against a takeover
proposal from BHP Billiton, its arch-rival. In a presentation to
analysts and shareholders, management will argue that Rio Tinto has
unrivalled growth potential in the mining industry. Rio is expected to
run through the growth prospects of all of its main business groups and
argue that the stock market, and BHP, has undervalued them.
———————————————-
CREDIT SUISSE QUITS MTS
Credit Suisse has decided to stop making markets in European government
bonds on four trading platforms operated by MTS, protesting MTS’s
decision to open trading to hedge funds, reports the WSJ. The Credit
Suisse decision could pave the way for other banks to shift their bond
market-making businesses away from MTS as platform requirements ease.
Rivals include Bloomberg, Eurex Bonds, ICAP’s BrokerTec platform and
Espeed, which is an affiliate of Cantor Fitzgerald.
———————————————-
PUNCH SQUASHES M&B RUMOURS
Prospects for a £5 billion-plus bid for Mitchells & Butlers were
quashed last night by a statement from prospective bidder Punch, reports
the Times. Punch said it was not in talks or even sounding out M&B
shareholders. There have long been rumours that some sort of tie-up
between the two parties would happen, but the timing is awkward for
Mitchells & Butlers, which is considering whether to hive off its pub
property assets into a real estate investment trust (Reit). This follows
the collapse of a £4.5bn property joint venture with Robert
Tchenguiz. The entrepreneur, who speaks for 19 per cent of M&B, is
tipped to be a key investor in the Reit.
———————————————-
OVERNIGHT MARKETS
US markets (on Fri)
DJIA up 181.84 at 12,980.88
Nasdaq up 34.45 at 2,596.60
S&P 500 up 23.93 at 1,440.70
Asia markets (on Mon)
05.00am GMT
Nikkei up 195.34 at 15,084.11
Topix up 40.32 at 1,477.70
Hang Seng up 922.19 at 27,463.28
European markets (on Fri)
FTSE100 up 106.80 at 6,262.10
Eurofirst 300 up 22.13 at 1,476.16
Currencies
05.00am GMT
€/$ 1.4821
$/Y 108.34
£/$ 2.0635
10-year govt bond yields
US 4.01% (4.01%)
UK 4.55% (4.60%)
Germany 4.02% (4.03%)
Japan 1.41% (1.40%)