May, 2009
Lunch Wrap
On FT Alphaville this morning,
- Stress test capital shortfall could have been $68bn bigger.
- Green shoots and miracle grow at Barclays.
- Charting the suckers’ rally: dash for trash.
- UK lenders increasing mortgage rates.
Commodity ETF investors move significantly into natural gas
The USO ETF’s command of the WTI crude market has taken a breathtaking drop in the last few months. Having held close to 100,000 WTI contracts at the end of February (amounting to nearly 20 per cent of the WTI market) it has now halved to some 50,000 contracts.
Stress test capital shortfall could have been $68bn bigger
The scenarios contained in the US banking stress tests have been much criticised. Now, the type of capital used in the SCAP is coming under scrutiny.
This from RBC Capital Markets’ Gerard Cassidy:
Overall we were pleased with the transparency the level of detail given by SCAP but we have a couple of criticisms of the program.
Markets live transcript 11 May 2009
Markets live chat transcript for the chat ending at 12:08 on 11 May 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:Welcome PM:It’s Monday.
‘V’ victorious
This, apparently, is the chart that “shows” the economic recovery will be V-shaped.
That’s from JP Morgan and here’s the accompanying commentary (H/T TJB):
Will the global recovery by V-shaped or L-shaped? That is easy and has been settled.
UK lenders increasing mortgage rates
The Bank of England may have kept rates on hold at 0.5 per cent last week, and the 3-month Libor rate may still be edging lower, but that is unlikely to stop many UK lenders from raising mortgage rates as soon as next week.
Dignity, death and securitisation
Death is living up to its reputation as the ultimate defensive business.
Dignity, the UK’s only listed provider of funeral services, has issued a trading statement on Monday morning and business is err,
British Airways and Iberia, a credit update
The possible merger between British Airways and Iberia has been the basis for many analysts’ “buy” or “hold” recommendations on the UK carrier.
Not so the credit agencies. This from Standard & Poor’s.
Charting the ‘suckers rally’
Another sign of fakery – apart from the implausible ‘V’ shape – is the “dash for trash” in this rally. The mostly heavily shorted stocks are up 70pc: the least shorted are up 21pc. Stocks with bad fundamentals in SocGen’s model (Anheuser-Busch,
Further reading
Elsewhere on Monday,
- A bull market that few are buying.
- Can this rally keep going?
- Investing with Mobius.
- The trouble with market eschatology.
- Trouble in quantland.
- How women invest.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: America’s classroom equality battle
Much of what ails the the US — including growing economic inequality — can be traced to the country failing calamitously in primary and secondary education.
Snap news
Breaking pre-market news on Monday,
- Lonmin to raise $457 in rights issue, posts half-year operating loss of $142m — statement, statement.
- Travis Perkins announces £300m rights issue, four-month revenue down 13.6 per cent — statement,
Hedge funds cut fees for investors
Some big firms in the hedge fund industry, known for charging high fees, are finally cutting their charges amid heavy outflows and investor complaints after a year of losses. Three hedge funds contacted by the FT admitted to cutting their fees for new investors,
Icap group bids €830m for LCH.Clearnet
A consortium of 11 banks and Icap, the interdealer broker, has submitted an €11-per-share cash offer for LCH.Clearnet, valuing the clearing house at about €830m ($1.1bn). The bid, which is understood to have been submitted on Friday,
Intel braced for record EU fine
Intel, the world’s biggest chipmaker by sales, is bracing itself for one of the heaviest penalties levied in Europe for anti-competitive behaviour after a near-decade long probe into the group’s marketing practices.
Ackman steps up Target battle
Bill Ackman, the billionaire hedge fund investor, will on Monday step up his campaign to win seats on the board of Target, the discount retailer, in one of the largest and most costly proxy battles in US corporate history.
Buffett’s Berkshire sees Q1 loss
Warren Buffett’s Berkshire Hathaway late Friday posted its first quarterly loss since 2001, hurt by losses on derivative contracts, its investment in oil company ConocoPhillips, and the weakening economy,
Dresdner Kleinwort staff defect
Fifty Europe-based Dresdner Kleinwort equity specialists – including several top-ranked analyst teams – have jumped ship this week to Evolution and Nomura. Evolution recruited 46 staff members – including the bulk of DK’s equity sales and trading team and 18 analysts – and in the process boosted its securities division by 30%.
Wells Fargo says earnings to fill deficit
Wells Fargo, deemed to need $13.7bn of capital by the US government’s stress test last week, has the earning power to fill its capital deficit by November and quickly apply to repay $25bn of government funds,
UK’s Anacap to buy Ruffler
Ruffler Bank has become the first UK deposit-taking institution to be bought by private equity. The leisure and property lender has agreed to be acquired by Anacap Financial Partners, a specialist in financial services buy-outs.
Citic Bank buys stake in affiliate
China Citic Bank Corp said it is buying a 70.32% stake in Citic International Financial Holdings from its parent for HK$13.56bn ($1.74bn) as part of its plans for foreign expansion, reports the WSJ. The midsized lender said late Sunday it will pay for the stake it is buying from its parent,
UK’s Odey ready to join tax exodus
UK hedge fund boss Crispin Odey has threatened to move his firm out of Britain to avoid the 50% income-tax rate on high-earners, reports The Times. He joins a growing list of Britain’s wealthy businessmen and City financiers,
Weekend catch-up
In case you missed these stories:
- Hedge funds have their best month in years
Hedge funds posted their best monthly returns in nine years in April as they took advantage of rallying stock markets and opportunities in the energy and fixed income markets.
Overnight markets: Weak
Asian shares largely extended their rally on Monday and riskier assets such as the euro held on to recent gains, but warnings about an impending pullback grew amid weak corporate results and views that any global recovery will only be gradual.
The Weekender
On FT Alphaville this week,
- Down yields, down!
- Les francais Zzzzzzzz.
- Sell in May and go away? Or not?
- Green shoots fever, Faber.
- L&G’s CDO saga, continued.
- The first ever CDS insider-trading case.
Prime-time problems for Fannie
News that Fannie Mae, the US government-controlled mortgage group, is still bleeding cash shouldn’t really come as a surprise. Nevertheless, the losses continue to astound us here at FT Alphaville.
On Friday the group reported its seventh consecutive quarterly loss in the order of $23bn.
The coming oil-equity disconnect or the end of efficient markets theory?
Nymex WTI futures on Friday were headed for their biggest weekly gain in two months, trading at around $57.49 per barrel in European afternoon trade.
This, as we’ve pointed out before, comes despite extremely weak fundamentals — nicely reflected in the following chart from Goldman Sachs showing current US inventories figures.
At least one central bank in the Q1 happy bank club
The Swiss National Bank (SNB), being a listed institution, reports every quarter just like any other publicly traded bank. On Friday the SNB reassuringly announced that it — like most other banks in the quarter — was also back in the black;