June, 2009
Overnight markets: Up
Asian stocks gained on Friday, with the MSCI Asia Pacific Index set for its third weekly advance, after BHP Billiton and Rio Tinto said they would form an iron- ore venture and the yen fell to its lowest in a week. In New York,
SEC accuses Angelo Mozilo of securities fraud, insider trading
The US Securities and Exchange Commission on Thursday accused Angelo Mozilo, Countrywide’s former CEO of wide-ranging securities fraud and of insider trading.
The civil lawsuit also names former Countrywide president David Sambol and former CFO Eric Sieracki.
Accounting for the endowment affect
As many a behavioural economist would contend, when people make decisions about buying or selling there are many psychological effects that can lead to seemingly “irrational” behaviour.
Since these psychological tics often play an important role in consumer behaviour,
SEC to outline fraud charges against Angelo Mozilo
Bad news for the perma-tanned one. Bloomberg reports:
June 4 (Bloomberg) — The U.S. Securities and Exchange Commission will announce a lawsuit against former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and two others for fraud.
Quote du jour: Thunder no more?
These guys all across the country are basically being told they are being turned into branch offices of Bank of America.
- Quoth an anonymous insider on Merrill’s thundering herd. It comes via Clusterstock,
SEC finalises ARS settlements with BofA, RBC, Deutsche…
From the SEC:
Washington, D.C., June 3, 2009 – The Securities and Exchange Commission today announced finalized settlements with Bank of America, RBC Capital Markets, and Deutsche Bank to resolve SEC charges that the firms misled investors regarding the liquidity risks associated with auction rate securities (ARS) that they underwrote,
CFTC calls for sweeping OTC derivatives regulation
On Tuesday, the biggest players in the over-the-counter derivatives committed to overhauling and improving the infrastructure and workings of that market. The concessions were unusual for Wall Street,
Living with negative repo rates
The market has been getting used to negative repo rates ever since the Fed introduced fines for failed US Treasury deliveries on May 1st. However, negative rates of 3 per cent are perhaps a little more than the market may have been prepared for.
Profiting from your own crummy creditworthiness, redux
When Citigroup said in its first-quarter results that it booked a sizeable fair value gain from the dismal performance of its own debt — it proved something of a talking point.
The idea that Citi could book a $30m profit on its own debt* — essentially profiting from a deterioration in the value of its bonds — seemed ludicrous if not downright misleading.
Bearing the Brownt
Here’s a live example of “false news shock” – the tendency of erroneous news to move markets even after it is proved to be wrong.
Just after 1pm on Thursday, Sterling jackknifed – falling from 1.64 to the dollar to a low of 1.61 and moving above 0.87 to the euro.
Rio breaks with Chinalco; $12bn rights likely
The Chinese must be livid.
From Lina Saigol and colleagues at FT.com:
Chinalco is set to walk away from a $19.5bn deal with Rio Tinto following weeks of wrangling over the terms of the transaction in a dramatic U-turn that will shock the market.
Marketing mark-to-market changes to the FASB
For an insight into the kind of lobbying that took place before the US Financial Accounting Standards Board agreed to ease mark-to-market rules, we direct you to this 2,180-word Wall Street Journal story (H/T Felix Salmon).
Make no mistake, the ‘Baltic Three’ are in the dock
While Latvia’s central bank stands firm in the face of adversity singing a united chorus of “we shall not devalue, we shall not devalue,” all indications still remain that they will.
First proof of the inevitable comes in the form of the Latvian interbank overnight rate,
Lunch Wrap
On FT Alphaville this morning,
- Albert Edwards, ueber bull bear, throws some recessionary shapes.
- Is the UK housing market turning?
- UK, US sovereign ratings update.
- Energy: “Demand is in the toilet”.
The art of aircraft ordering
Like the Japanese sport of sumo wresting, the art of placing an aircraft order is about two things — timing and bulk.
United Airlines may have perfected both aspects. From the Wall Street Journal:
United Airlines has asked Boeing Co.
Markets live transcript 4 Jun 2009
Markets live chat transcript for the chat ending at 12:08 on 4 Jun 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:Here we are PM:Alone
Debenhams sale confusion
Debenhams has confirmed plans to raise £323m in a placing and open offer to help cut debts, the details of which can be found here.
What you won’t find is any indication as to whether its private equity backers,
Urgent message from the central bank of Latvia: ‘Do not disrespect us!’
As posted on the website of the Latvian Central bank (in Latvian):
A quick Google Translate translation provides the following:
The discussion about the exchange rate
Last week, several Latvian politicians,
‘Homer Simpson policymaking’ Down Under
There are two ways to view Australia’s surprising quarterly rise in GDP – revealed, as Lex notes, “to a largely incredulous world” on Wednesday:
The glass-half-empty reading is that Australia, far from being different from the rest of the globe,
‘Demand is in the toilet’
Stephen Schork of the Schork Report sums up the energy demand picture in the US succinctly on Thursday:
So there you go, refiners did not make a lot of product last week because demand is in the toilet.
Albert Edwards, uber bull? (not quite yet)
There is much hope out there that the current moderation of recessionary forces is a prelude to recovery. I believe that the current market situation is like late 2001/early 2002. Any relapse in activity will cause a catastrophic loss of confidence.
Is the UK housing market turning?
The Halifax house price index for May is out, and like the Nationwide survey last week, it is positive. The 2.6 per cent jump in house prices during May was the sharpest month-on-month jump since October 2002 and is bound to fuel speculation that the housing market is turning.
Macquarie comes roaring back
Timing is everything and times certainly change quickly, as Macquarie Bank has reminded us in the past couple of days. Just a few months ago, Macquarie’s many detractors were sneering at the Australian investment bank’s various troubles – a big toll road project going wobbly,
Further reading
Elsewhere on Thursday,
- The stagflation myth.
- Holes in the China recovery story.
- Citadel makes a comeback!
- ‘Buy and hold is dead’…
- Options with leveraged ETFs.
- Natural gas revisited.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: GM goes to the garage
Chapter 11 gives chief executive Fritz Henderson room to manoeuvre in stripping down GM’s balance sheet,
Snap news
Breaking pre-market news on Thursday,
- Debenhams to raise £323m via placing and open offer — statement, statement.
- Lonmin receives acceptances for 96.38 per cent of new shares — statement.
- Galleon to raise £3.85m via placing — statement.
Bernanke warns on deficit
Ben Bernanke urged Congress on Wednesday to act to bring down long-term budget deficits, or else face a future debt trap, reports the FT. The Fed chairman said that recent sharp increases in bond yields – from below 3% to 3.76% last week for 10-year Treasuries – reflect “concern about large federal deficits” as well as new optimism about the economy and other factors.
FDIC stalls sale of toxic loans
Details of the US Treasury’s toxic asset plan are in doubt after the Federal Deposit Insurance Corporation on Wednesday said it was suspending a test run of the legacy loans programme. Sheila Bair, FDIC chairman,