March, 2009
Lunch Wrap
On FT Alphaville this morning,
- The state of hedgie pay.
- Tabulating the bank/PPIP disconnect.
- L&G comes clean on CDOs. Sort of.
- Fed continues to QEase.
- A fresh wave of US/Japan parallels.
The tabular banking-PPIP disconnect
Zero Hedge has a very interesting table from Goldman Sachs. Click to enlarge.
It shows Goldman’s estimates for how banks are carrying assets like commercial mortgages and consumer loans on their books.
CDS report: weaker once more
European credit markets weakened again on Wednesday after the previous days improvements as markets generally saw the glow added by Tim Geithner’s public-private investment programme fade more rapidly than even the cynics had expected.
Gilt auction failure begins
Oh dear. Wednesday’s £1,750m auction of 4¼ per cent Treasury gilts dated 2049 failed, with a bid-to-cover ratio of 0.93.
That’s the first UK conventional gilt auction failure since 1995 according to Dow Jones.
Markets live transcript 25 Mar 2009
Markets live chat transcript for the chat ending at 12:14 on 25 Mar 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:hi there PM:My clock has been fixed
Fed to start QEasing today, should we be VaRy worried?
The Fed plans to begin its $300bn purchase of longer-term Treasuries today.
From the New York Fed:
NEW YORK-The Federal Reserve Bank of New York today released a tentative operation schedule for its purchases of longer-dated Treasury securities through April 3,
Hedge pay versus purchasing power
Institutional Investor’s Alpha magazine 2009 hedge fund compensation report is out – and the quick take-away is that while pay has fallen, it hasn’t fallen as far as some might expect.
Across the 800 hedgies surveyed,
L&G comes clean on CDOs – sort of
Annual results from Legal & General are out.
And everything is pretty much in line with expectations – which, isn’t saying much since expectations were pretty low to start with.
So, the final dividend has been chopped by 50 per cent,
Is a global super-currency on the agenda?
It started out as a call from the likes of George Soros and Ted Truman.
But the IMF’s little known international accounting system of special drawing rights [SDRs] has now been propelled straight into the limelight thanks to both China and Russia.
A Premier deal
Goodness, directors at London-listed Canadian oil group Oilexco were quite ignorant.
LONDON (Dow Jones)–Oilexco Inc. said Wednesday that it wasn’t aware of any corporate developments that impacted the trading of its shares on Tuesday,
Goodwin rage?
From the BBC:
The Edinburgh home of former Royal Bank of Scotland boss Sir Fred Goodwin was attacked by vandals overnight.
Windows were smashed and a Mercedes S600 car parked in the driveway was vandalised.
More Japan parallels
It might have been premature to assume the Geithner legacy toxic asset plan might end the recent spate of parallel-drawing between the US c.2009 and Japan 1992-2001.
But this time around, US moves appear to be unleashing a new wave of Japanese comparisons,
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Word of the day: Lemons
The citric fruit is cropping up in the oddest of places — specifically, in relation to Tim Geithner’s PPIP plan.
For instance, it’s in economist Willem Buiter’s Maverecon blog.
Banks with toxic assets on their balance sheet can choose to keep them there rather than participate in the Legacy Loans or Legacy Securities Programs.
Further reading
Elsewhere on Wednesday,
- Dark musings on the Geithner plan.
- Why the bears are wrong.
- All hail the new bull market!
- We really, really hate you guys.
- Heinous investment advice.
- Volcker on inflation,
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
John Authers: Is it back to the Fifties?
The crash has forced professional investors and academics to question the theoretical underpinnings of modern finance.
Snap news
The latest on Wednesday,
- Legal & General posts 2008 IFRS operating loss of £189m — statements.
- RAB Capital posts 2008 net loss of £17m — statement.
- Premier Oil announces proposed $505m acquisition of Oilexco North Sea Ltd.,
Treasury, Fed call for new powers
The Obama administration joined forces with Fed chairman Ben Bernanke on Tuesday to press Congress for powers that would enable regulators to seize control of troubled financial groups including “non-banks” such as insurer AIG.
US banks face big writedowns
The US government’s toxic assets plan will force banks such as Citigroup, Bank of America and Wells Fargo to take further large writedowns on their loans, requiring them to raise more capital from taxpayers or investors,
Bridgewater mulls toxic asset plan
Bridgewater Associates, one of the world’s biggest hedge-fund managers, said on Tuesday it might participate in the US Treasury’s public-private investment programme, calling it a “big transfer of money from the government to the banks and to the buyers”,
Goldman eyes $10bn Tarp exit
Goldman Sachs said it plans to repay $10bn of funds received from the US government’s TARP bank recapitalisation scheme possibly by late April, after the US Treasury completes the first round of its new “stress tests” for banks.
UK’s King warns on fiscal expansion
Mervyn King on Tuesday said the UK could not afford a second fiscal stimulus in next month’s Budget, in a rare public warning by the central bank governor. In comments that will weigh on Gordon Brown ahead of next week’s G20 summit in London,
Japan’s exports plunge 49%
Japan’s exports plunged a record 49.4% in February from a year earlier, amid waning global demand for the country’s cars and electronics, reports Bloomberg. Shipments to the US, Japan’s biggest market,
Deutsche Bank regains local majority
German investors bought shares in Deutsche Bank in unprecedented numbers last year, returning the country’s flagship bank to majority domestic ownership in an unintended consequence of the financial crisis.
MUFG eyes Morgan Stanley JV: report
Mitsubishi UFJ Financial Group, Japan’s biggest bank, may take a 60% stake in a planned brokerage venture with Morgan Stanley, according to Nikkei English News, reports Bloomberg. Morgan Stanley may take the remaining 40% stake when MUFJ Securities and Morgan Stanley Japan Securities combine their operations next spring,
Man Group fees hit heights
Wealthy investors in Man Group’s main guaranteed hedge funds pay fees of 8.5% a year, with performance fees on top, according to UBS research. The level of base returns required before clients break even is far higher than Man’s disclosed 4.36% gross margin from private investors,
Lloyd’s sanguine on financial claims
Lloyd’s of London played down its exposure to claims arising from the financial crisis as hurricane losses and lower investment income halved profits at the world’s oldest insurance market. Lloyd’s reported a fall in pre-tax profit from £3.85bn to £1.9bn in 2008 after what it said was the third worst year of claims in the past 15 years.
EU to regulate credit ratings
Credit rating agencies face regulation in Europe by a single body after a key parliamentary committee in Strasbourg endorsed proposed legislation. The legislation, which will give new powers to the Paris-based Committee of European Securities Regulators,