February, 2009
NAB, ANZ warn on bad debts
National Australia Bank and ANZ Banking Group said rising bad debts are eroding profit growth as losses spread from financial markets to the wider economy, reports Bloomberg. NAB, the country’s biggest by assets,
State Street slashes dividend
State Street, the world’s biggest institutional money manager, on Thursday said it would slash its dividend, cut bonuses for its top 5 executives and halve them for others in efforts to raise capital.
SEB and Danske to raise capital
Two of Scandinavia’s biggest banks – Sweden’s SEB and Danske Bank of Denmark – on Thursday announced they would seek to raise capital as their loan losses mounted. Until now Swedbank – which raised Skr12.4bn ($1.5bn) in November – was the only big Nordic bank to have shored up its capital base significantly.
UBS, Blackstone advisers charged
UBS and Blackstone Group takeover advisers fed information to an insider-trading ring including a former Jefferies Group money manager in a scheme that yielded more than $8m in illegal gains, US federal authorities said,
Japan’s ‘mini-Madoff’ arrested
Japanese police on Thursday arrested the 75-year-old head of a bedding company and 21 others suspected of operating an alleged $2.5bn Ponzi scheme that sucked in tens of thousands of people, the country’s largest ever such fraud.
Overnight markets: Cautious optimism
Asian stocks rose on Friday, led by technology companies and banks as investors shrugged off a wave of negative economic and corporate news and showed optimism that the US will widen its support for the financial industry.
Life insurers: terrible bond investors
American life insurers, at least.
A lot of focus has gone into whether insurance companies could be sitting on big piles of troubled structured-finance bonds, like mortgage-backed CDOs. That makes sense.
How do they do it at LVMH?
Jonathan Birchall, the FT’s US consumer correspondent, reflects upon LVMH’s recent results and the performance of global luxury brands
The global luxury brands company seems to have shrugged off the collapse of the luxury market in the US.
Fitch worried about Polish corporate fx exposure
As FT Alphaville has been warning, Poland’s economy – once believed to be very much protected from the vulnerabilities facing some other new European Union members – is facing ever greater pressures connected to its foreign exchange exposure.
CDS report: Markets bounce back, helped by US equity strength
This CDS report was written by Markit’s Gavan Nolan
European credit spreads bounced back in the afternoon, helped by a strong US stock market. The Markit iTraxx Europe index was trading around 156bp,
=XDR (or, one special drawing right)
With IMF special drawing rights increasingly being pitched as a possible solution to the financial crisis, we thought it might be worth putting up a historical chart of the so-called ‘paper-gold’ currency.
The death of equity
“Global equities have returned -29% this decade, compared to 80% from government bonds. We’ve seen two 50% equity bear markets in just five years. This combination of miserable returns and extreme volatility has led some to pronounce that,
The gold-to-oil ratio
It may be hard to imagine, but there is one market position that has significantly outperformed most major commodity indices of late – the gold-to-oil ratio, which is a position that involves selling oil and buying gold.
New jobless claims in US surge to 26-year high
The number of US workers filing new claims for unemployment relief reached a 26-year high last week, data released by the Labor Department on Thursday show.
The advance figure for seasonally adjusted initial claims hit 626,000 in the week to Jan 31,
Albert Edwards allegedly spots “green shoots”
We assume this is a spoof, or something.
Someone’s nicked all the SocGen pixels that go in to making up Albert Edward’s regular Global Strategy Weekly, complete with date and contact details. But the sub-title gives it away:
Structured finance paramnesia, Bear Stearns edition
The transaction was not structured with adequate over- collateralization…
Ever was it so.
Point in case: the Maiden Lane/Bear Stearns portfolio, which, since June, has declined by $4.22bn in value.
CDS report: Swiss Re leads insurers higher
European insurance groups outperformed in generally weaker credit markets on Thursday morning. Zurich based Swiss Re announced that it will seek up to SFr5bn of new funding to shore up its declining capital base;
Lunch Wrap
On FT Alphaville this morning:
- BoE cuts rate 50bps.
- Depression in the UK.
- (But UK house prices rise).
- Introducing… submerging markets.
- Deutsche’s loss.
- And Goldman is bullish on the “currency of last resort”:
Bank of England cuts interest rates by 50bps
Bank of England reduces Bank Rate by 0.5 Percentage Points to 1.0 per cent:
Bank of England Reduces Bank Rate by 0.5 Percentage Points to 1.0%
5 February 2009
The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 0.5 percentage points to 1.0%.
Maturity transformation
Neat little graphic from this morning’s FT:
Related links:
Treasury reveals plan for record debt – FT
Super Treasuries! – FT Alphaville
Markets live transcript 5 Feb 2009
Markets live chat transcript for the chat ending at 12:09 on 5 Feb 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder, FT (BE) NH:hello, good morning and welcome NH:to another edition of Markets Live
UK house prices rise (surely some mistake, eh?)
No, rub your eyes, it’s no mistake!
UK house prices rose by 1.9 per cent in January, says the Halifax house price index.
Halifax’s Martin Ellis comments:
It is always important not to place too much weight on any one month’s figures.
Introducing the ‘submerging markets’ of the UK, US
Mavercon blogger and former Bank of England MPC member Willem Buiter is back with an interesting view of the UK and US positions in the current financial crisis. In fact, he coins a whole new economic classification for them – behold the ‘submerging markets’.
Depression *alert* – politico edition
We had the first from a major investment bank economist last week, now we have the first from a major politician.
LONDON (AFP) – Prime Minister Gordon Brown acknowledged Wednesday that the world is in a full-blown economic “depression,”
Goldman Sachs bullish on ‘currency of last resort’ gold
Don’t get Goldman Sachs wrong, the bank still believes gold is overvalued, however, in the near term, its commodities research team is raising its gold forecast:
We believe that these elements of financial and sovereign risk will likely remain a feature of the market over the near term,
Deutsche Bank’s loss
From the bank’s website, emphasis ours.
Deutsche Bank reports net loss of EUR 3.9 billion for the year 2008
- Loss before income taxes of EUR 5.7 billion
- Tier 1 capital ratio of 10.1%
- Leverage ratio,
Further reading
Elsewhere on Thursday,
- Are you on the Madoff list?
- Get your free money here!
-The Bailout rap comes to YouTube.
- China breakout?
- “In 1915, the average number of people sharing a home,
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Comment: Clive Crook — The reckless stupidity of ‘Buy American’
The Buy America provisions in the House stimulus bill were bad enough. The Senate version threatens to make them even worse.
Snap news
The latest on Thursday,
- Deutsche Bank posts 2008 pretax loss of €5.7bn – Reuters.
- Swiss Re says Warren Buffet to invest SFr 3bn – Reuters.
- Corporate: National Grid trading in line with expectations, Compass says first-quarter currency operating profit ahead of last year’s,
US Treasury plans record debt sale
The US Treasury on Wednesday opened the floodgates of government bond issuance, revealing plans for a record debt sale in February and more frequent auctions in coming months. The announcement came amid growing fears about US government deficits and sent the yield on the benchmark 10-year Treasury note up to 2.95%,