April, 2009
The management myth
It’s sunny in London. The markets are falling. If you’re still struggling to generate that elusive alpha you might be interested in the below (H/T Alea).
New York, April 20, 2009- Standard & Poor’s Index Services released today the year-end 2008 results for its Standard & Poor’s Index Versus Active Fund Scorecard (SPIVA).
CDS update: US banks worsen
The cost of protecting US banks against default rose sharply on Tuesday afternoon UK time as investors in both equity and credit markets showed renewed signs of skittishness over the durability of bank earnings and over the upcoming results of the US “stress tests”.
Calculating the cost of accounting
A worthwhile exercise in relation to banks’ Q1 results. And probably by no means complete:
Goldman Sachs – December orphan month hiding a pre-tax loss of $1.3bn (net $780m).
Bank of America - $2.2bn pre-tax fair value adjustment on Merrill structured notes.
‘Fund of funds’ redemptions soar in Q1
Hedge funds may be faring better now than they were in the fourth quarter of 2008, but it seems the general investor backlash against high fees and risky exposure continues to thwart the ‘fund of funds’ part of the industry (what with their double fees etc.)
In its latest findings,
Markov switching and financial watersheds
Not so long ago there was a small debate here on FT Alphaville about the consequences of the Lehman collapse back in September 2008, and whether it really did constitute – for lack of a less hackneyed phrase – a paradigm shift.
Make yer budget bets
UK budget-related bets tend to trend towards the financial. GBP may will fall. UK CDS will tighten widen etc.
There are other ways to go though. Spread betting firm Sporting Index is offering odds on the following aspects of UK chancellor Alistair Darling’s speech:
Quote du jour, Roubini ‘green shoots’ edition
Nouriel Roubini on the ‘green shoots’ sentiment currently doing the rounds:
Related links:
The Susan Boyle Factor – FT Alphaville
Optimistically, pessimistic in the US – FT Alphaville
How will this work?
We’ve no idea what this new web site is or does but we’ve signed up for e-mail alerts.
Related link:
The American dream – FT Alphaville
CDS report: European credit default swaps widen on worries over banks
European credit spreads widened on Tuesday amid growing concerns about bank losses and worries over US company results.
Markit’s investment grade index, the iTraxx Europe index, widened to 156 basis points – a 2bp rise from Monday’s London close.
Lunch Wrap
On FT Alphaville Tuesday morning,
- One off gains.
- Every quibble helps Tesco.
- More stress test stress.
- Godzillion-yen let loose in Japan.
- Ken kills a bear (market rally).
- Back to 1960.
Has Ken killed the bear market rally?
Shares in Bank of America lost a quarter of their value on Monday. And if you thought that might have been an overreaction, think again.
Here were reprise the Credit Quality (or lack of) section from
Japan’s godzillion-yen bond and stimulus spree, but will it work?
Japan is moving into an orgy of public spending, as the government announced plans on Tuesday to issue extra bonds worth ¥10,820bn ($110bn) to fund its planned ¥15,400bn ($155bn) stimulus package, announced earlier this month.
Free lunch at Broadgate Circle – from 11:45(BST)
We’re already feeling hungry over here at FT AV HQ.
From the Londonist:
If you find yourself in the City tomorrow [Ed. - today] around lunchtime with your tummy grumbling head over to Broadgate Circle for a free lunch prepared by Celebrity Masterchef winner,
Markets live transcript 21 Apr 2009
Markets live chat transcript for the chat ending at 12:10 on 21 Apr 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:Hi there – welcome to Markets Live
Haircut 100
BIS Committee on the Global Financial System estimated typical haircuts on debt securities. Note CDO haircuts, April 07 v. Aug 08:
Related link:
Switch to Fitch? – FT Alphaville
Haircut 100:
More stress test stress (updated)
Widely derided as a racist crank, former internet talk-jock Hal Turner has seen his claim to having acquired a copy of the US bank stress test results met with scepticism.
His blog post saying the tests show 16 of the top 19 US banks to be insolvent was enthusiastically emailed across dealing rooms on Monday,
Back to 1960
We were all much relieved in Britain at the end of March when a widely anticipated deflationary figure for RPI in February came in just above zero at 0.1 per cent.
Alas, such relief has proved short-lived.
One off gains
They’re all at it.
There’s a conspiracy afoot: to make it seem like the banks are all doing just fine. But they’re not. Take the most recent results from Citi and BoA, which reported numbers on Friday and Monday respectively.
Every quibble helps Tesco
Behold the highlights from Tesco’s FY results:
HIGHLIGHTS
* Solid start to new financial year – 12.0% (ex-petrol) growth in Group sales, including increase in UK like-for-like sales of 3.4% in first six weeks (4.4% on a VAT-adjusted basis)
* 15.1% increase in Group sales to £59.4bn
* 10.0% growth in underlying profit before tax,
Further reading
Elsewhere on Tuesday,
- Stress test rumours: Another fun day in the markets.
- BofA and Merrill: Now,about that integration…
- In defence of diversification.
- “Question everything, never follow the crowd,
Pink picks
Comment, analysis and other offerings from Monday’s FT,
FT video: Advice for Alistair
Lords Howe, Healy and Lamont – all former chancellors – give their advice to Alistair Darling on recessionary budgeting.
Snap news
Breaking pre-market news on Tuesday,
- Tesco FY profits grow at slowest pace in 15 years – statement.
- Reed Elsevier announces Anthony Habgood to suceed Jan Hommen as chairman – statement.
- Corporate: Subsea 7, AB Foods,
BofA’s bleak view hits US stocks
US stocks suffered their worst one-day fall in six weeks on Monday as Bank of America rattled investors with a bleak picture of economic conditions in the coming months. BofA’s warning came as the US bank reported a better-than-expected $4.2bn in Q1 earnings,
Oracle in $7.4bn swoop on Sun
Oracle chief executive Larry Ellison unveiled a surprise $7.4bn agreed offer for Sun Microsystems on Monday. The deal, at $9.50 a share in cash, came two weeks after IBM’s failed bid for Sun and threw the spotlight onto Sun’s Java,
GSK agrees $3.6bn Stiefel buy
GlaxoSmithKline, the pharmaceutical group, has agreed to pay up to $3.6bn for Stiefel Laboratories of the US, significantly boosting its presence in dermatology as part of a growing portfolio of consumer healthcare businesses.
PepsiCo offers $6bn for bottlers
PepsiCo on Monday made an unexpected $6bn cash and stock proposal to buy both the Pepsi Bottling Group, in which it owns about a 33% stake, valuing it at $29.50 per share, and Pepsi Americas, in which it owns about 43%,
Pandit faces fresh doubts at Citi
Vikram Pandit, Citigroup’s chief executive, will on Tuesday try to convince investors at the group’s annual meeting that Citi is on the road to recovery, even as it emerged that officials at the Federal Deposit Insurance Corporation have privately discussed replacing Pandit if Citi needed more government aid.
The TARP cop report
The acronym SIGTARP has a military air about it. And, to be sure, Neil Barofsky at the Office of the Special Inspector General for the Troubled Asset Relief Program sees serious dangers in the operation of the US Treasury’s umbrella bailout plan.
Japan to sell $110bn of bonds
Japan’s finance minister Kaoru Yosano on Monday said the government will sell Y10.8 trillion ($110bn) of additional new bonds this fiscal year to pay for Prime Minister Taro Aso’s record stimulus package,
UBS sells Brazil arm for $2.5bn
UBS’s new management on Monday took a first big step to trim the balance sheet and redeploy capital with the $2.5bn sale of Pactual, the Swiss bank’s Brazilian financial services operation, to some of its founders.