May, 2009
The Weekender
This week on FT Alphaville,
- A multi-trillion bidder for Madoff’s company.
- Oil prices vs the economic recovery.
- Coming soon to a crisis near you…
- Some anti-market banking.
- Bradford & Bungled,
CDS wrap: “A depression is no longer on the agenda”
This CDS report was written by Markit’s Gavan Nolan
John Kenneth Galbraith, the Canadian economist, is remembered for many things. His masterly account of the Great Crash of 1929 is being re-read by policy makers and laymen alike,
Marketing before market share: a lesson for A&F
As the recession in the United States drags on, more and more companies are considering cutting prices in a bid to attract cash-strapped consumers. However, lowering prices may hurt the perception of a brand – particularly in the luxury sector – and squeeze margins,
GM breaks the buck
Not before time, perhaps.
Shares in General Motors were trading at 90 cents around midday in New York, down 22 cents. The company is due to file for bankruptcy in the US on Monday.
Tortuous talks to save the European operation continue…
The new art of inflation mongering
One of the biggest debates concerning the current crisis has focused on whether the world is heading towards a deflationary or inflationary environment. But it appears there’s a new ‘big’ debate emerging:
US economy contracts by 5.7% in Q1
From the FT:
The US economy continued to contract in the first quarter of this year as the pain of the recession spreads from consumers to businesses in the face of eroding global demand.
Revised commerce department figures showed on Friday that US gross domestic product declined by an annualised rate of 5.7 per cent in the first three months of the year,
Charting the mortgage crisis
Key to any impending US economic recovery will be how high the red line in the below chart is going to go.
That’s from a presentation by Whitney Tilson, managing partner at T2 Partners (H/T Clusterstock),
Funds piling back into the commodities trade
With risk-appetite returning to the market it appears the trade of last year may back in fashion at funds around the world.
Barclays Capital observe in their latest Commodity Investor letter that fund exposure to commodities has increased sharply over the past few weeks with non-commercial net length in US commodity futures back firmly above 800,000 lots for the first time since July 2008.
Analysts: These ladies aren’t for turning
Citi has an interesting note out on Friday, examining the ability of analysts to predict turning points in the market.
We’ll save you the suspense of the overall conclusion: analysts are, on aggregate,
Oil at six-month high
Crikey, that’s quite a spike in WTI oil futures on Friday:
Interestingly, this is how the dollar is trading versus the euro on Friday:
Dollar index:
No similarity there at all, huh?
Related links:
Lunch Wrap
On FT Alphaville Friday morning,
- Gillian Tett on the shape of things to come.
- Barclays prime.
- Reinsurance is sexy.
- Extreme leverage, broker fraud edition.
- Staggered by Sweden.
- Eastern Europe on the edge? (Again).
Extreme leverage, broker fraud edition
Blithe investment in CDOs, it has come to be known, was generally a very bad idea.
Among their many failings, the instruments had huge built-in leverage: from the leverage inherent in the underlying mortgages themselves,
Japan: Land of the rising (output) surprise
Bikkuri shimashita (surprise, surprise), as they say in Japan.
What is going on there? In stark contrast to all the bleak news lately about plunging exports, factory closures and mounting lay-offs, official figures on Friday showed one of the biggest monthly surges on record in April industrial output – putting Japan on track for near record output growth in the second quarter.
Reinsurance is sexy
Quite apart from the fact that any post with “sexy” or derivations thereof in the title gets us millions of google referrals, there is a point – a valid one at that – to our seemingly tautological headline and this post.
Markets live transcript 29 May 2009
Markets live chat transcript for the chat ending at 12:06 on 29 May 2009. Participants in this chat were: Paul Murphy, FT (PM) Bryce Elder (BE) PM:Hello PM:Welcome to Markets Live
Staggered by Sweden
Here are some key statistical points regarding Sweden’s record GDP contraction of 6.5 per cent on the year in the first quarter, as handily compiled by Reuters:
- The contraction was the worst since the statistics office began publishing seasonally adjusted quarterly data in 1993,
Is Eastern Europe on the edge again?
Edward Hugh over at A Fistful of Euros draws our attention to the following warning over the Baltic region issued by Danske Bank on Thursday:
The event risk has risen sharply in the Baltic markets and we advise outmost caution.
Gillian Tett: The shape of things to come…
In the ongoing compulsion among commentators and analysts to use metaphors for economic trends and phenomena (a la “green shoots”, “black swans” etc), there’s also a continuing fascination with shapes – for example,
Further reading
Elsewhere on Friday,
- A huge drop in central bank liquidity swaps.
- How 2009 is similar to 2003 in the bond market.
- Ready or not interest rates are rising.
- Or is the bond sell-off just normalisation?
- Credit card default,
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Roula Khalaf: Obama must respect the choice of Lebanon’s voters
At a time when President Barack Obama is on a mission to improve America’s battered
Snap news
Breaking pre-market news on Friday,
- Nationwide: House prices rise for second time in three months – statement.
- Aegon and Mongeral complete joint venture – statement.
- Potential procurement irregularities at Cadogan Petroleum – statement.
GM board to finalise bankruptcy
General Motors’ board will meet on Friday to approve the stricken carmaker’s move into bankruptcy protection after agreeing an 11th-hour deal with some of its biggest bondholders. Holders of $27bn of
Row intensifies over GM’s Europe units
General Motors was poised to file for bankruptcy protection as tensions over the fate of GM’s Opel/Vauxhall operations in Europe broke into the open, with German officials accusing Washington of an “ambush” after the failure of critical bail-out talks early on Thursday morning.
Sky bids big for Virgin Media channels
British Sky Broadcasting has made what appears to be a knock-out bid for a package of seven digital television channels owned by Virgin Media, offering about 60% higher than its nearest challenger. None of the other declared bidders,
Terra Firma injects more cash into EMI
UK buyout firm Terra Firma has been forced to inject more cash into EMI for the second time in six months, after the debt-laden UK music group missed targets imposed in its banking covenants. Terra Firma,
Time Warner to spin off AOL by year-end
Time Warner will spin off the entire AOL internet business by year-end, the US media group said on Thursday, bringing the curtain down on one of the biggest and worst deals in history. AOL’s all-share acquisition in 2001 valued Time Warner at $164bn but was followed by a series of huge write-downs,
Credit Suisse begins UK property sale
Credit Suisse has begun a sale of its London property estate that could raise as much as £500m as part of a strategy to focus on core banking operations. The investment bank this week instructed CB Richard Ellis to begin marketing the smaller of its two buildings in Canary Wharf,
Greenlight’s Einhorn shorts Moody’s
Shares of Moody’s fell sharply on Thursday after hedge fund manager David Einhorn, who correctly questioned the health of Lehman Brothers four months before its collapse, disclosed he was shorting the ratings agency,