February, 2009
Baugur on brink of administration
Baugur, the Icelandic investment group that bought various UK and other retailers in the last decade, could fall into administration after Landsbanki called in its £1bn debt. The Icelandic bank said Wednesday it had asked PwC to step in and run the business,
Obama gets tough on executive pay
President Barack Obama on Wednesday imposed sweeping restrictions on pay for executives at companies receiving public bail-outs in efforts to stem public anger at Wall Street excesses before the White House requests new emergency funds for the financial sector.
Bonus cuts: Europe’s turn
Investment bankers across Europe are braced for cuts of at least 50% in their annual bonuses as Deutsche Bank kicks off the earnings season on Thursday. Banks around the world have slashed compensation after $1,000bn in writedowns of bad loans and toxic assets,
Russia abandons bail-outs
Russia indicated on Wednesday it would switch from bailing out individual companies to supporting the economy through the banking sector. Moscow also plans huge budget cuts in an attempt to limit its fiscal deficit – rejecting pressure to follow the US and other western countries to try to stimulate the economy with a big boost in public borrowing.
SEC ‘illiteracy’ to blame for Madoff case
The losses linked to Bernard Madoff may be closer to $15bn-$25bn rather than the $50bn the New York broker allegedly told US investigators, according to Harry Markopolos, a former money manager and long-time Madoff critic.
Madoff ‘feeder’ funds to be named
The whistleblower who spent almost a decade trying to expose Bernard Madoff claimed Wednesday there are still a dozen unidentified “feeder” funds in Europe which gave money to the New York broker accused of an alleged $50bn fraud.
BofA to sell jets, helicopter
Bank of America is selling three corporate jets from its fleet, as well as a helicopter acquired through its purchase of Merrill Lynch, the company said Wednesday. The bank is also believed to be trying to sell one of its corporate apartments in New York.
US ‘played hardball’ with BofA
Federal officials pushed Bank of America hard to complete its acquisition of Merrill Lynch even as credit losses mounted at the troubled investment bank, reports the WSJ. By December, as Merrill’s losses were soaring,
Ford in talks to sell Volvo
US car-maker Ford, seeking to raise cash to avoid a US federal bailout, is in preliminary talks to sell its Volvo Car unit to Geely Automobile, a Chinese maker of compact cars, reports Bloomberg. Ford will likely get less than the $6.4bn it paid for Volvo in 1999,
Goldman keen to repay Treasury
Goldman Sachs wants to repay the $10bn it received from the US government last October in order to free itself from restrictions imposed with the capital, David Viniar, Goldman’s chief financial officer,
Japan hits at ‘Buy American’
A proposed ‘Buy American’ provision in Washington’s forthcoming stimulus bill would breach WTO principles, Japan’s prime minister claimed Wednesday, in an escalation of international opposition to the US plans,
Lazard cuts workforce
Lazard on Wednesday said it had cut 10% of its staff as a steep drop in fees generated by its advisory and asset management businesses halved its net income. The investment bank, which suffered a 40% drop in annual net income,
Investors shrug off Macquarie warning
Macquarie Group on Thursday warned that its full year profits would fall sharply but investors nevertheless sent shares of the bank up 3% to A$23.57 in the belief its balance sheet remains relatively strong.
P&G looks to exit pharmaceuticals
Procter & Gamble is working with Goldman Sachs to identify potential buyers for its pharmaceuticals brands or find other ways to exit the business. The consumer goods group has been shifting its focus on high-growth businesses and to divest non-key assets.
Kazakh devaluation triggers sell-off
Evidence of deteriorating economic conditions in central and eastern Europe fuelled a broad-based return to risk aversion in currency markets on Wednesday after Kazakhstan devalued its currency and Russia’s credit rating was downgraded.
Baltic Dry Index jumps 15%
The Baltic Dry index, the benchmark for freight costs for dry bulk commodities such as iron ore, coal and iron, on Wednesday jumped almost 15% to 1,316 points. the biggest daily increase in almost 25 years,
Wall Street stops the dancin’
Under growing pressure to curb its extravagant ways, Wall Street is staying close to home, cancelling remote conferences and junkets – which means more bad news for the struggling hotel business, reports the WSJ.
Overnight Markets: Mixed
Asian stocks were mixed on Thursday, although mining and shipping companies gained as China stepped up economic stimulus efforts and the Baltic Dry Index the benchmark for freight costs for dry bulk commodities saw its biggest one-day gain in 25 years.
Super Treasuries!
Spotted by Alea, the below is from the minutes of the latest released report of the (US) Treasury Borrowing Advisory Committee:
…members discussed the potential to issue other securities if needed including a reintroduction of a 4-year note,
A moment of silence for Trader Monthly
Is this the end of trader porn? You know the kind – glossy magazines dedicated to wristwatches, Cuban cigars, fast cars and Pink-shirted young(ish) men obsessed with the size of their, er, bonuses.
As Mediabistro put it in its review of one such publication -Trader Monthly – two years ago,
Masters of the Universe, no more
Earlier in the week, Sen Claire McCaskill’s plans for a $400,000 limit on executive pay at Wall Street firms were being pooh-poohed as unviable. Turns out, not so much.
From President Obama:
…in order to restore our financial system,
CDS update: Traders shrug off Russia downgrade
This CDS report was written by Markit’s Gavan Nolan
The European credit market has been following the path of its equity cousin this week, and today was no exception. The Markit iTraxx Europe index was 5bp tighter at 155.5bp,
Markets live – select committee special transcript 4 Feb 2009
Markets live chat transcript for the chat ending at 15:43 on 4 Feb 2009. Participants in this chat were: Sam Jones, FT (SJ) Neil Hume, FT (NH)
SJ:
Ok right we’re off to a shaky start
The flood commences
(Hat Tip John Kemp of Reuters).
Related link:
February 2009 Quarterly Refunding Statement – US Treasury
Credit crisis indicators show it’s not all doom and gloom
As fond as we are of our bearish reputations here on FT Alphaville, we are not averse to presenting what good news there is. And as Prieur du Plessis contends on his Investment Postcards blog, some credit indicators have improved markedly in recent weeks.
Markets Live – Select Committee Special
Bored of snow? Unimpressed by the markets?
Then why not join Sam Jones and Neil Hume for a special edition of Markets Live this afternoon. They will be live blogging Wednesday’s sitting of the Treasury Select Committee.
Russia: From rags to riches to rags
Fitch has finally buckled and downgraded Russia’s sovereign rating to ‘BBB’ from “BBB+” — the first such move by the agency since 1998. What is more, the agency says further cuts are still possible.
VaRy complex
Two rather disarming charts from Dresdner today.
They’re looking at the distribution of Goldman Sachs’ daily trading profit and loss numbers, to show just how different risk has become in the current environment — and conversely,
Presenting FT Alphaville’s first-ever NY event
Financial Times & The Paley Center for Media present:The Changing World of News:
How to Survive and Thrive During a Meltdown
Thursday, February 5, 2009
5.30 – 6:00pm Reception
6:00 – 8:00pm Program
Hosted by:
Lunch Wrap
On FT Alphaville this morning,
- The bad bank revival.
- UK economy: the good, the bad, and the ugly.
- Arguments against the Buy America clause: costs of trade war.
- While buyout groups struggle,