April, 2009
Lunch Wrap
On FT Alphaville Wednesday morning,
- Stress test results leaked (again).
- Structured finance 101.
- The blame game in CDS.
- The IMF and Table 1.8 Gate.
- More green shoots, China edition.
Stress test results leaked (again)
This time it’s not from a self-proclaimed white supremacist, but the Associated Press news agency.
AP Exclusive: Fed tests harder on regional banks
WASHINGTON (AP) — The government’s “stress tests”
CDS report: European markets tighter on US banks
European credit derivatives saw spreads move slightly tighter on Wednesday as market worries eased over the health of the balance sheets of the US banks.
Markit’s investment grade iTraxx Europe index narrowed a touch ahead of the UK Budget,
Markets live transcript 22 Apr 2009
Markets live chat transcript for the chat ending at 12:09 on 22 Apr 2009. Participants in this chat were: Neil Hume, FT (NH) Paul Murphy, FT (PM)
NH:
Okay
NH:
It’s 11.03
Playing the blame game in CDS markets
Here is a prime example of a ‘Big Bang’ protocol that appears to be working – at least, for the regulators concerned.
Bloomberg reports on Wednesday that credit-default swap dealers slashed their market by 38 per cent last year as regulators pushed them to reduce risk,
IMF and Table 1.8 gate
There was a predictable media flurry on Tuesday night as the IMF mysteriously backtracked on its £200bn estimate on the cost of bailing out the UK’s banks, as quoted earlier in its Global Financial Stability Report.
Some more green shoots, China edition
Goldman Sachs has hiked its forecasts for Chinese GDP and reckons the magical growth figure of 8 per cent could be reached this year.
Our new forecasts predict real GDP growth of 8.3% in 2009 (versus 6.0% previously) and more importantly,
On Swiftian regulation: “Dear Chairman Schapiro…”
Via Felix Salmon at Reuters, a lesson in dry satire. We hope.
Truth # 5: The SEC’s Job Is To Stay Out Of The Market When It’s Rising And Step In To Appropriately Alter The Rules When It’s Falling.
The SEC’s regulatory mandate in a laissez-faire economy is two-fold.
Further reading
Elsewhere on Wednesday,
- Confessions of a TARP wife.
- Goldman, same as it ever was.
- IMF embarrassment.
- The arms race in high-frequency trading.
– Banks and their cash: a proposal.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Interactive: Budget briefing
As the UK Treasury presents its 2009 budget, see how the economy has fared in a turbulent year of rising public debt and unemployment,
Snap news
Breaking pre-market news on Wednesday,
- Peter Hambro confirms plans to start trading on main LSE market on Wednesday – statement.
- Lloyds of London reports year on course as predicted, launches £100m security buyback – Q1 update,
Darling to issue £200bn of bonds
The UK is set to issue more than £200bn worth of government bonds this financial year – well above market expectations – as chancellor Alistair Darling prepares to concede in Wednesday’s Budget that public finances have plunged into the red.
Geithner sparks banks rally
Tim Geithner, US Treasury secretary, on Tuesday sparked a rally in financial stocks after he said the “vast majority” of US banks are well-capitalised and assured investors that the government would not wipe out their holdings.
US earnings blunt recovery hopes
A raft of US companies reported earnings on Tuesday with results that showed how difficult the 2009 first quarter has been for sectors ranging from financials to industrials. In banking, while changes in accounting rules helped boost earnings at large US banks such as Citigroup and Bank of America,
US Bancorp bucks regional gloom
US regional banks on Tuesday provided investors with a mixed picture of the state of the financial sector as stronger-than-expected earnings from US Bancorp helped counter the gloom resulting from big losses at Zions Bancorp.
RBS Asian assets sale under cloud
Regulatory uncertainties surrounding the sale of Royal Bank of Scotland’s Asian assets could limit the price that bidders are prepared to offer and possibly delay any divestment. The stricken UK bank last month started a process to offload its retail and commercial operations in eight Asian countries.
Pandit pledges to stay on at Citi
Vikram Pandit vowed to stay on as Citigroup’s chief executive and repay $45bn in government aid, as angry investors attacked the troubled bank’s current and previous management and directors at a heated annual shareholder meeting in New York.
Chrysler creditors reject debt demand
Chrysler’s creditors, led by JPMorgan Chase and Citigroup, on Tuesday rebuffed a US government request to forgive the bulk of their debt holdings, a move that will prolong the stand-off over the carmaker’s future.
LVMH eyes sale of Moët to Diageo
LVMH has indicated it may be willing to sell some or all of its two-thirds stake in Moët Hennessy, its wine and spirits business, to partner Diageo. LVMH, part of the French luxury empire controlled by Bernard Arnault,
Och Ziff benefits from bank woes
Managers of some of the world’s top hedge funds say they are benefiting from sharply reduced competition from the once-mighty proprietary trading desks of the same investment banks they used for financing – which earlier in the decade were taking similar trading positions as their hedge fund clients.
NY City probes Quadrangle
New York City’s pension funds are probing whether private equity fund Quadrangle “intentionally misled” it about placement agents used to win pension fund business, reports Reuters. Quadrangle was formerly led by Steven Rattner,
Chi-X to offer Europe a dark alternative
Chi-X, Europe’s largest alternative trading platform, will on Wednesday unveil plans for a “dark pool” equities trading facility, in a sign of growing demand from traders for capacity to carry out large orders.
LSE picks Baikal partners
The London Stock Exchange on Tuesday took a step towards rolling out a pan-European share trading business by choosing Fidessa, a trading technology and data company, and BNP Paribas, as technology partners for Baikal,
Myners hits at ‘landlord’ shareholders
Lord Myners, the minister responsible for London’s financial centre, has attacked shareholders for acting like “absentee landlords” and urged them to get more involved with companies they own. Lord Myners pressed investment groups to engage “along deeper lines” and heed their responsibilities to probe issues such as pay and how it influences corporate behaviour.
Overnight markets: Modest rebound
Asian stocks mostly rose on Wednesday, led by technology companies after Elpida Memory said it plans to raise memory-chip prices, although telecoms shares declined. Futures on the S&P 500 index lost 0.4% after the gauge climbed 2.1% in New York on Tuesday after Treasury Secretary Tim Geithner said the vast majority of US banks were relatively well-capitalised.
The battle for corporations, or North Dakota vs Delaware
For years Delaware has been the preferred US state for corporate charters.
In fact, Delaware’s website is chock-a-block with sales pitches to attract new companies. For instance, we’re told that,
More than 850,000 business entities have their legal home in Delaware including more than 50% of all U.S.
Munis hoping investors are ready to build America
California and the New Jersey Turnpike Authority are among several issuers hoping investors will buy ‘Build America bonds’, a new form of federally approved funding unveiled earlier this month by the US Treasury
These bonds are intended to support the stressed municipal bond market,
Unsecured, insecurity in the UK
The Bank of England launched a brand new report on Tuesday entitled ‘Trends in Lending’.
The reasoning behind the publication was described as follows:
The publication is launched at a time when the world economy has entered a deep and synchronised downturn,
Marking the Bank of England to reality
It will be interesting to see the next Financial Stability Report from the Bank of England – and whether the Bank continues its habit of pouring cold water on the crunch-related losses predicted by both financial markets and the financial punditry.