June, 2009
Meredith Cassandra Whitney
On the issue of credit card debt and the deteriorating health of the US consumer, the FT reports on Thursday:
Record credit card losses are pushing big US banks to come to the rescue of off-balance sheet vehicles they use to transform hundreds of billions of dollars in consumer loans into securities sold to investors. The support provided by Citigroup,
Flowers and Cerberus get into ‘new sky thinking’ in Japan
The latest deal activity in Tokyo brings some intriguing twists in the oft-troubled saga of some top US buyout groups in Japan and their key investments: Shinsei Bank – 33 per cent owned by buy-out king Chris Flowers – and Aozora, 49.7 per cent owned by Cerberus.
The next bubble?
Here are some more interesting charts.
And they worry Citigroup’s lead strategist Robert Buckland because they could create the next mania – an emerging markets bubble.
Over the last four months we have seen large outflows from traditional safe havens including money market funds.
Borrowed in China
Here’s quite a glaring chart from Standard Chartered depicting M2 expansion rates from around the world:
What do StanChart’s analysts make of it? Well, they suggest it’s actually an example of the most effective monetary easing in the world.
Further reading
Elsewhere on Thursday,
- Citi’s pay-rises – good or bad?
- At the ECB, forget the helicopter drops.
- Conclusive evidence that the US stock market is highly inefficient.
- Hedge-fund guy points to ‘Z’-shaped recovery.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Apple’s network helps prevent a fall
The fact that Apple persuaded others to rally round has helped to shield it from the margin squeeze in the personal computer and consumer electronics industries.
Snap news
Breaking pre-market news on Thursday,
- BP says Ericsson CEO Carl-Henric Svanberg to replace Peter Sutherland as chairman – statement.
- Ericsson says appoints Hans Vestberg as president and CEO to replace Svanberg – statement.
ECB pumps €442bn into banking system
The ECB on Wednesday pumped hundreds of billions of euros in one-year loans into the eurozone’s banking system, providing record amounts of emergency finance in a bid to unlock credit markets. The move came as the Fed said it was keeping interest rates on hold.
Fed opts for no change
The Federal Reserve said on Wednesday it would leave interest rates unchanged at a range between zero and 0.25%, and that economic activity would remain weak for “some time” before growth resumes. The Fed said it was proceeding with its $300bn Treasury purchase plan and would “continue to evaluate” the timing and amounts of its purchases.
Addax deal to take Sinopec into Iraq
China highlighted its ambitions to expand in the resources sector on Thursday when state-owned Sinopec – one of China’s largest oil companies – agreed to a C$8.3bn ($7.2bn) takeover of Addax, a Swiss-based oil company listed in Toronto and London with interests in Africa and Iraqi Kurdistan.
Aozora, Shinsei rise on merger talks
Shares in Aozora Bank, the Japanese lender controlled by Cerberus Capital Management, and Shinsei Bank, backed by billionaire Christopher Flowers, rose in Tokyo trading after the banks confirmed they are in merger talks,
KKR to merge with Euronext fund
KKR announced on Wednesday that it will give itself an Amsterdam public listing by merging its operations with those of its Euronext Amsterdam-listed fund, KKR Private Equity Investors (KPE), which could lead to a listing of its entire operation on the NYSE.
Nomura’s Ashikaga plans IPO
Ashikaga Holdings, owner of the failed regional lender acquired by investors led by Nomura Holdings last year, plans to sell shares in an IPO in the second half of 2010, reports Bloomberg. Nomura, Japan’s biggest brokerage,
Xstrata steps up pressure on Anglo
Xstrata stepped up pressure on Anglo American to join merger talks on Wednesday, publishing the letter it sent to the rival miner outlining $1bn of possible cost savings and other synergies. It came as Cynthia Carroll,
Hedge funds protest Delphi sale plan
Hedge fund lenders to Delphi, the car parts maker with close links to General Motors, are seeking to disrupt the two bankrupt companies’ restructuring plans by objecting to an allegedly secretive deal under which Delphi plans to sell its assets to GM and California-based Platinum Equity.
Credit crunch takes toll on super-rich
The global population of “ultra high net worth individuals” – defined as those with at least $30m (€22m) to invest – shrank by nearly 25% in 2008 to 78,000, while their collective net wealth slumped by 24% according to the latest World Wealth Report produced by Merrill Lynch and Capgemini.
Critics round on Citi pay rises
Citigroup’s plan to increase salaries attracted criticism from unions, watchdogs and lawmakers on Wednesday in an echo of the bonus controversy that engulfed Capitol Hill earlier this year. The bank,
Overnight markets: Mixed
Asian stocks rose on Thursday, led by mining and technology companies, after metals prices gained and orders for US durable goods unexpectedly increased. Futures on the S&P 500 Index added 0.1% after the gauge rose 0.7% on Wednesday.
Fed leaves rate unchanged, continues to see ‘subdued’ inflation
Pretty much as expected then. Here’s the statement:
Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets havegenerally improved in recent months.
Oil/gas ratio likely to stay high
The epic flows of the last few months into the United States Natural Gas Fund ETF may be very counter-intuitive as far as predicting an upturn in the price of natural gas.
That, at least, is the message from Goldman Sachs on Wednesday,
Dear Mark and Cynthia…
And so the bear hug begins.
17 June 2009
Strictly Private and Confidential
The Chairman and Chief Executive
Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN
United Kingdom
Dear Mark & Cynthia,
On Goldman’s fat tail risk
Financial blog Zero Hedge points us in the direction of a risk management presentation from Goldman Sachs.
The majority of slides are typical management-type stuff. There are some impressive Venn diagrams and graphics of interlocked puzzle pieces,
Lex: China trade spat
China’s trade row with the rest of the world over bauxite, phosphorous and chickens is Punch and Judy politics on a global scale. Its real significance, though, is the growing engagement of the world’s third-largest economy with its most important international trade tribunal,
Crushing rates the ECB way
As the FT reports, the European Central Bank has pumped a record €442.2bn into the eurozone banking system in its first-ever offer of unlimited one-year funds.
Respective euro rates fell to record lows following the move,
Lunch Wrap
On FT Alphaville Wednesday morning,
- Some tulip mathematics.
- Les francais ont une crise de logement aussi.
- So, where next for the world economy?
- Where there’s muck, there’s brass.
- The Banker’s top 1,000 banks,
Re: email stress tests
From the New Scientist:
EMAIL logs can provide advance warning of an organisation reaching crisis point. That’s the tantalising suggestion to emerge from the pattern of messages exchanged by Enron employees.
A little case of international org schizophrenia
The World Bank on Monday warned the recession will be deeper than previously forecast:
June 22 (Bloomberg) — The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.
Markets live transcript 24 Jun 2009
Markets live chat transcript for the chat ending at 12:05 on 24 Jun 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:Okay PM:Hello PM:This is Markets Live
Tulip mathematics
Here it is – a fragment of an infinite-horizon heterogeneous-agent general-equilibrium model.
It forms part of the latest work from Pengfei Wang of the Hong Kong University of Science & Technology and Yi Wen of the Federal Reserve Bank of St Louis,