May, 2009
Datapoint du jour: Footsie losses erased
Presenting the ‘Hook-shaped’ global economic recovery scenario
Deutsche Bank was probably kidding when it argued the US recession (and subsequent recovery) might take the shape of a diminishing sine wave, but Moody’s is quite serious about a “hook-shaped scenario”.
BofA, CCB and capitalism with Chinese characteristics
So yet another big western bank is moving to sell down some of its Chinese bank investments, according to the FT’s report on Wednesday that Bank of America is considering the sale of an $8bn stake in China Construction Bank.
Lunch Wrap
On FT Alphaville on Wednesday morning,
- Reserve Primary directors charged with fraud.
- Crisis, what crisis?
- Insiders selling this rally.
- Bill Gross, gnostic.
- Further UK house price declines likely.
CDS report: A tightening trend
The cost of buying protection against default on investment-grade bonds in Europe decreased slightly on Wednesday, as spread indices tightened after initially increasing in anticipation of the release of the US bank stress test results on Thursday.
Reserve Primary management charged with fraud
Over a two day period in September 2008, after the news of Lehman Brothers’ bankruptcy filing roiled the US financial markets, Defendants engaged in a systematic campaign to deceive the investing public into believing that the Primary Fund -their flagship money market fund -was safe and secure despite its substantial Lehman holdings.
Crisis? What crisis?
How quickly markets forget. From UBS.
Related link:
Market sentiment: Faber et al take on ‘green shoot ennui’ – FT Alphaville
Markets live transcript 6 May 2009
Markets live chat transcript for the chat ending at 12:11 on 6 May 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:Okay PM:It’s 11.03
Insiders selling this rally
The Pragmatic Capitalist points us to a recent development: In the midst of the current rally, insider buying has slowed to a trickle.
Here’s his chart of insider buying (in dollar amounts), which, if accurate,
Bill Gross, gnostic
We’re stumped too.
Through my years here at PIMCO there have been numerous demarcation points where Baruch’s whispers almost turned into screams. Two plus two screamed four in September of 1981 with long-term Treasury yields approaching 15%,
Further UK house price declines likely
Few green shoots here.
The latest house price survey from the Halifax is not only weaker than expected – economists had forecast a fall of 1 per cent on the month – but it also includes the following warning from Martin Ellis,
Annals of easy targets: Bloomberg goes after technical analysis
Bloomberg is running an interesting article on the ‘failings’ of technical analysis. Here’s an extract.
Stock Charts Fail Forecast Test in Complete S&P Miss
May 4 (Bloomberg) — John Bollinger, inventor of the “Bollinger bands”
Quote du jour, economist dining edition
From a Newsweek article titled “Prisoners of the White House“:
In fact, Paul Krugman seems a little bit testy about the contents of his dinner (conversation).
Further reading
Elsewhere on Wednesday,
- Positive thinking drives irrational exuberance.
- Is this 1974 or 1982?
- All about optics (stress-test version).
- Five reasons to worry about tax havens.
- The bear is dead,
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Central banks must target more than just inflation
FT columnist Martin Wolf writes: Just over five years ago, Ben Bernanke gave a speech on the “Great Moderation”
Snap news
Breaking pre-market news on Wednesday,
- Wolseley sells position in Stock Building Supply to Gores Group, via Chapter 11; £375m additional covenant headroom created – statement.
- Aviva announces restructured reattribution offer;
BofA eyes CCB stake sale
Bank of America is considering the sale of an $8bn stake in a top Chinese bank within days, reports the FT. BofA, which is undergoing a crucial US government “stress test” and received government pledges of $25bn in support in October,
Tests highlight BofA’s need
US regulators have determined that Bank of America has the greatest need for new capital among the 19 biggest US banks that underwent stress tests – possibly about $31bn, reports Bloomberg. Citigroup’s shortfall is more limited as the group already plans to convert government preferred shares to common stock,
UK funds Malaysian deal for LDV
The UK government on Tuesday night agreed a £5m bail-out of LDV, the stricken Midlands vanmaker, in a controversial move that marks a symbolic shift in Labour’s recession-time industrial policy. Ministers stressed that the four-week taxpayer-funded loan,
Fed directors’ bank stakes under fire
Corporate governance practices at the 12 regional Federal Reserve banks faced criticism this week after the WSJ reported on Monday how Stephen Friedman, chairman of the Federal Reserve Bank of New York and a Goldman Sachs director,
US to impose Tarp payback rules
US regulators plan to impose tough conditions on banks that want to repay bail-out funds, requiring proof that they can issue debt without government insurance. They may also be required to demonstrate ability to raise equity capital from private investors The new requirements could deter some banks from trying to repay funds early.
Bernanke sees early signs of stability
Demand in the US “may be stabilising” Ben Bernanke said on Tuesday, in cautiously optimistic remarks that suggest the recession is likely to end this year. In a congressional testimony, the Fed chairman highlighted a recent recovery in consumer spending and said there were “signs of bottoming” in the housing market.
SEC opens new front on insider trading
The US SEC brought its first-ever case alleging insider trading in credit-default swaps, reports the WSJ. The case hinges on the 2006 buyout of Dutch media company VNU. The SEC alleges that Jon-Paul Rorech,
Fund chiefs charged with fraud
Executives of the $63bn US money market fund whose implosion last September helped deepen the global financial crisis were charged with fraud on Tuesday by the SEC. Bruce Bent Sr, who founded the Primary Reserve fund in 1970,
UBS cuts into wealth arm
UBS’s core Swiss and international wealth management businesses will bear the brunt of job losses aimed at saving SFr4bn ($3.5bn) a year. Some 4,000 jobs will go in the wealth management and Swiss bank division,
StanChart sees record Q1 profit
Standard Chartered said on Tuesday it was in “very good shape” as the emerging markets bank reported record levels of income and profit in the first quarter. In a trading update, the bank singled out a strong performance from its wholesale banking arm as the main reason for its buoyant start to 2009.
France pushes EU on hedge fund rules
France pressed its EU partners on Tuesday to impose tougher rules than planned on hedge funds, despite Swedish warnings that even the tightest regulation would be no guarantee against further financial turmoil.
RBS finance director to step down
Guy Whittaker, finance director of Royal Bank of Scotland, will leave his job, clearing the bank’s board of one of the last executives responsible for the ill-fated takeover of ABN Amro, its Dutch rival.
AIG reveals extra $454m in bonuses
Embattled US insurer AIG paid some $454m in previously undisclosed performance bonuses to employees for 2008, the company said in answers to questions from a US lawmaker that were released on Tuesday, reports Reuters.
Overnight markets: Stress
Asian stocks and US index futures fell on Wednesday amid concerns about the results of US stress tests on the 19 biggest US banks and reports that Bank of America had the greatest need for new capital.