January, 2009
On return-free risk and the bond bubble
Why buy Treasuries? They are, to borrow Jim Grant’s phrase — “return-free risk” — not exactly an attractive asset class.
Talk of a bond bubble to boot, abounds. Should we be anticipating the pricking of that bubble?
At its heart the argument comes down to a simple macro outlook:
Markets live transcript 13 Jan 2009
Markets live chat transcript for the chat ending at 12:15 on 13 Jan 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:Hello, is that Alpha – ville?
Land grab
Something of an obstacle has appeared in BAA’s plans to build a third runway at London’s Heathrow airport.
From The Guardian:
Land earmarked by Heathrow owner BAA to build a third runway has been bought by a group of celebrities,
Signs of life in the corporate bond market
It is very faint, but there seems to be a pulse. In fact it could be a bit more than that.
There was $41bn of corporate bond issuance last week, which was the highest weekly total in eights months and roughly equal the tally for all of last September and October when the credit markets froze,
Gold (sub)standard
Gold bugs must have been weeping into their gilded keyboards last night (we assume they have those) as the precious metal had its biggest fall in six weeks, declining nearly $40 to about $814. Poor gold bugs.
The ECB’s secret weakening?
The below graph – ECB financial account, official foreign currency reserve assets:
Buying FX to weaken the Euro? Thoughts? (HT Trade and Taxes). See also ECB data warehouse.
Further reading
Elsewhere on Tuesday,
- Further, further reading, from Dear John Thain.
- “… our current politicians are committing the very acts of economic lunacy that “Atlas Shrugged” parodied in 1957.”
- Low beat variance.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT:
The Short View: Could the eurozone actually split up?
John Authers discusses an “unthinkable suggestion” which as member countries become more wobbly,
Snap news
Breaking pre-market news on Tuesday,
- Marstons closes deal with banks on £400m debt restructuring – statement
- Mecom sells off German assets – statement
- Corporate results: AGA, Big Yellow,
Santander probed on ties to Madoff
Spanish prosecutors are investigating how one of Europe’s largest banks, Banco Santander, lost more than €2.3bn ($3.1bn) for clients by investing with Bernard Madoff, reports the WSJ. Santander itself lost just €17m.
Assets frozen in fund linked to Madoff
A Luxembourg judge has frozen some assets held by UBS for Luxalpha, one of the principal European investment funds that gave money to US money manager Bernard Madoff, said a lawyer in the Grand Duchy on Monday.
Sony tumbles on loss report
Sony shares plunged 8.2% to Y2,020 yen in Tokyo on Tuesday after the Nikkei business daily reported it is expected to post an operating loss of about Y100bn ($1.1bn) for 2008/09 on weak sales and a stronger yen,
Hedge funds’ stellar performers
Several hedge funds reported stellar returns last year even as the financial crisis claimed some big Wall Street names and credit markets seized up. Among the top performers were some relatively unknown names such as Cedar Hill Capital Partners,
Lloyd’s insurers to tap Names for capital
Lloyd’s of London insurers are going back to the Names – private investors who traditionally supported the world’s oldest insurance market – in a search for much-needed underwriting capital. In the first three weeks of December alone,
UK state to own 43% of Lloyds-HBOS
The UK government will own 43% of the combined HBOS/Lloyds TSB after institutional shareholders shunned the two banks’ capital raising, leaving the Treasury to take up 99% of the unsubscribed new shares.
JPMorgan to rush out results
JPMorgan Chase, the second-largest US bank by assets, on Monday said it will announce Q4 results on Jan 15, six days earlier than planned, reports Reuters. It was not immediately clear whether the move suggests that results will be better or weaker than investors expect.
Spain warned on credit rating
The growing dangers for Europe’s sharply slowing economies were highlighted Monday as Spain became the third eurozone country to be warned over its deteriorating public finances in the space of three days.
China exports plunge
China’s exports fell the most in almost a decade in December as the deepening global recession cut demand for its toys, clothes and electronics, Bloomberg reports Tuesday. Shipments dropped 2.8%, compared with a 21.7% gain a year earlier.
Merrill-BofA to cut 1,900 UK jobs
Merrill Lynch and Bank of America, its new owner, are preparing to cut about 1,900 staff in London — one of biggest single staff reductions in the history of the City, reports The Times. Staff at Merrill have been told that management is looking to cut 30% of the combined workforce in the capital.
Alcoa sees profits plunge
Alcoa, the largest US aluminium maker, highlighted the difficulties facing global manufacturing and construction by reporting a Q4 $1.19bn loss, exceeding estimates by even the most bearish analysts. The company seemed blindsided by the pace of decline in aluminium prices,
RWE agrees €9.3bn Essent deal
RWE has agreed to buy most of Essent, the biggest Dutch power company, for €9.3bn ($12.4bn), in one of the biggest deals since the onset of the credit crisis. Juergen Grossmann, RWE chief executive, described the Essent deal – his first major transaction since he took over in October 2007 – as the “perfect match”.
Air France-KLM buys 25% of Alitalia
Air France-KLM, which just months ago said state-controlled Alitalia needed to be saved by an exorcist, on Monday trumped Lufthansa to buy a 25% stake in the relaunched Italian airline from its new Italian owners for about €323m ($432m).
Abbott buys Advanced Medical Optics
Abbott Laboratories of the US is set to buy Advanced Medical Optics, a top provider of cataract and laser eye surgery devices, for $1.4bn, in an attempt to increase its share of the growing global eye care market.
Worst Christmas on record for UK retail
Britain’s retailers suffered their worst Christmas on record, according to figures released Tuesday. As Land of Leather, the sofa-retail chain, on Monday night joined the growing list of retailers forced to enter administration,
Moody’s warns on UK building societies
Some of the UK’s 55 building societies could declare losses for 2008 as they face pressure on rising impairments from UK mortgage lending and commercial property, according to Moody’s. The credit rating agency has warned in a report about the amount of capital UK mortgage lenders,
Top traders’ key to success is genetic
Scientists will on Tuesday give banks a new tool for gauging the money-making prowess of financial traders – the lengths of their fingers. Researchers at Cambridge university have discovered a strong statistical link between the profitability of male traders at a London bank and the ratio of index to ring fingers on their right hand.
Overnight markets: Down
Asian stocks followed US and European markets down on Tuesday, sending the benchmark index down the most in a month, as falling metal and oil prices dragged on commodity producers and a higher yen dimmed profit outlooks for Japanese exporters of cars and electronics. A report that Sony is set to announce a big loss for 2008/09 also weighed on Asian stocks.
Citi sees $3.6bn Q4 loss at Bank of America
It’s that time again – the carnival that is US earnings seasons. The big financial companies start reporting next week – Bank of America kicks it off on Tuesday 20th – but analysts are still tweaking their spreadsheets and sharpening their knives – er,