July, 2009
The Weekender
On FT Alphaville this week,
- Financial pundit scrap.
- The commodities oxymoron.
- China’s land BOOM!
- And China’s extremes.
- Another S&P flip-flop?
- Bulls vs Bears, Bond vs Gross.
Lex: Anglo American
Anglo’s CEO talked about many issue during the results presentation, but was deafeningly silent on the one most people wanted to hear about: Xstrata
“I’ve got nothing to say,” was, in effect, the sum of Cynthia Carroll’s defence when Anglo American’s chief executive was quizzed about Xstrata’s nil-premium merger proposal.
Legacy loan lift-off
The FDIC started its Legacy Loans Program this Friday, launching its first test deal in its effort to help banks shed their toxic assets.
Here are some details, from the FDIC’s press release:
The first test using the LLP funding mechanism commenced this week.
Battle of the financial pundits
We at FT Alphaville are not getting involved in this one, though we think our readers might want to wade in.
The very vocal Janet Tavakoli, of Tavakoli Structured Finance, has been in an ongoing spat with Black Swan man Nassim Nicholas Taleb.
Living in a commodities oxymoron
It appears it’s not just oil that’s defying supply and demand fundamentals, with prices rising in the face of growing inventories.
As Reuters reports on Friday copper and aluminium prices are doing much the same thing (our emphasis):
US economy shrinks 1% in Q2
Government data released on Friday showed the US economy shrank 1 per cent in the second quarter, which was less than expected by analysts.
Here’s the Reuters release (our emphasis):
WASHINGTON,
Lunch Wrap
On FT Alphaville Friday morning,
- China, some extreme views.
- Chinese land boom, a datapoint.
- S&P’s covered bond flip-flop?
- Refining is the weakest link.
- Buy suncream futures.
- FHLBs,
China’s land boom, a datapoint
This is Guangqu Road in Beijing.
And this, courtesy of the analysts at Mitsibushi UFG, is the sale price of a circa 280,000 square-metre plot of land on the road:
A plot of land at No. 15 Guangqu Road in Beijing sold for RMB4.06bn in mid-June,
Markets live transcript 31 Jul 2009
Markets live chat transcript for the chat ending at 12:05 on 31 Jul 2009. Participants in this chat were: Paul Murphy (PM) Neil Hume, FT (NH) PM:Hi PM:Welcome to Market Live
FHLBs, you shan’t go to the securitisation ball
That’s the Federal Home Loan Banks, the 12 regional US government-sponsored enterprises charged with providing loans to some 8,000 member banks.
The FHLBs have gained some prominence in the recent financial crisis,
Buy suncream futures
Or, better still, make it a pairs trade and sell Britain’s Met Office as well.
The actionable event is clear for all to see: having forecast a “barbecue summer” in the UK, the resultant wash-out has drawn an up-dated forecast from the national weather service,
Refining, the weakest link in the recovery
Crude oil refining margins have been trying to warn the world about weak US demand for months now. This week’s oil major results may finally spread the realisation that not all is well in industrial demand for energy into the wider public consciousness.
S&P’s covered bond flip-flop?
What’s this?
Another flip-flop — albeit a more protracted one than that on CMBS — on the horizon from ratings agency Standard & Poor’s?
Recall that the agency announced in February that it wanted to change its methodology for rating covered bonds.
China: A tale of extreme views
China – more specifically its short and mid-term future – has been the theme of the week, with much hype and speculation about coming meltdowns or rampant inflation. The truth, as the true experts conclude,
Further reading
Elsewhere on Friday,
- Is the bond market bonanza just a blip?
- The new hedge fund bucket list: Sojourn to the Middle Kingdom.
- More Goldman smack talk.
- “Now, will everyone please shut up about Goldman Sachs?”
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Get ready for lower Chinese growth
Michael Pettis, senior associate at the Carnegie Endowment, writes: Everything has changed. Whether America likes it or not,
Snap news
Breaking pre-market news on Friday,
- Luminar announces share issue to raise £37.5m, capital reorganisation — statement.
- Bank of America plans wholly-owened China subsidiary — Reuters.
- FSA ‘failed spectacularly’,
Earnings fuel surge of optimism
Equity markets around the world powered to fresh 2009 highs on Thursday as a global wave of forecast-beating corporate earnings helped allay concerns about potential asset bubbles in China. In New York,
Tarp banks award billions in bonuses
Citigroup and Merrill Lynch, which lost $55bn in 2008, between them paid 1,400 employees bonuses of $1m or more each, according to a New York state report. The study, compiled by Andrew Cuomo, New York attorney-general,
US derivatives plans spark doubt on CDS
A US legislative plan to regulate the near-$600,000bn market in OTC derivatives suggests that lawmakers debate the idea of banning so-called “naked credit default swaps”, which allow investors to speculate on the creditworthiness of companies.
Lenders win control of Delphi
A US bankruptcy court has given the go-ahead for a group of lenders to take control of Delphi, the US car-parts maker, setting the stage for Delphi to emerge from bankruptcy protection by the end of September,
Sumitomo Trust to acquire Citi unit
Citigroup said on Thursday it would raise Y112.4bn ($1.2bn) by selling its Japanese fund management arm, part of an effort to repair its balance sheet after its rescue by the US government. Citi agreed to sell Nikko Asset Management to Sumitomo Trust & Banking,
Microsoft and Yahoo on defensive
Microsoft and Yahoo were forced to mount a renewed defence of their search alliance on Thursday as investors continued to punish Yahoo’s price over the deal. Yahoo’s shares slid further on Thursday,
Ireland reassures on bad bank ‘fire sales’
Ireland’s bad bank that plans to buy up billions of euros of impaired commercial property loans from Irish lenders will not engage in “fire sales” of the property holdings it will control in Britain,
FirstRand in tie-up with Chinese bank
South Africa’s biggest financial services group on Thursday announced a “strategic co-operation” agreement with China Construction Bank, China”s second-largest bank, a move that underlines the growing interest of South Africa’s corporate sector in Asia and Chinese interest in African construction projects.
Agencies berated as Reed taps investors
Big UK institutions turned their guns on credit-rating agencies on Thursday as Reed Elsevier, the Anglo-Dutch publisher, became the latest company to tap its shareholders for capital, reports The Times.
Mizuho in fourth straight quarterly loss
Mizuho Financial Group, Japan’s third-biggest bank by market value, booked its fourth-straight quarterly loss on higher bad loan charges, reports Bloomberg. The Y4.5bn loss ($47m) in the three months ended June 30 compares with a Y133bn profit a year earlier,
Shell and Exxon Q2 profits tumble
Profits at two of the world’s biggest oil companies, ExxonMobil and Royal Dutch Shell, have plummeted amid tumbling international oil prices and weaker demand for energy. Exxon, the largest US oil group,
NYSE Euronext reports loss
NYSE Euronext, operator of the New York Stock Exchange, on Thursday reported a Q2 net loss of $182m, compared with a profit of $195m a year ago, after absorbing a one-time charge, mostly made up of a $355m payment to LCH.Clearnet for breaking a contract as the US group moved to set up its own UK-based clearer.
Overnight markets: Up
Asian stocks climbed on Friday, sending the MSCI Asia Pacific Index to a fifth monthly gain, as better-than- expected earnings and a commodities rally lifted confidence about a global economic recovery.