July, 2009
CIT saved, but troubles still brewing in the CP market
David Rosenberg of GluskinSheff draws attention to the continuing contraction of the US commercial paper market, one of the main portals of funding for medium-sized enterprises in the country. In his latest report he writes (our emphasis):
Bloomerberg.comedy
Where, oh, where do we place the Bloomberg news agency on this “visual thesaurus,” an interactive tool from Thinkmap that allows us to “discover the connections between words in a visually captivating display?” Words like GULLIBLE.
Further reading
Elsewhere on Tuesday,
- No inflation here.
- Did Blackrock pay too much for BGI?
- A brief Latvia loan update.
- “Beware of unknown Mideast investors bearing big LBO premiums.”
- CNBC’s Dennis Kneale takes on the blogs (again).
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
George Magnus: Older societies will have to retire later
UBS’s senior economic adviser writes: The debate about longer working lives is normally framed in terms of the rights or the capacity of individuals to do so.
Snap news
Breaking pre-market news on Tuesday,
- Truckmaker Volvo Q2 loss worse than expected – statement.
- Johnson Matthey Q1 profit falls 21 pct – statement.
- Actelion 2Q net up, raises FY view on Tracleer – statement.
FSA warns banks over long-term bonuses
Banks that have agreed to pay their executives a guaranteed bonus for more than a year risk heavy penalties, the head of the FSA warned in a letter sent to more than 40 chief executives within the financial services industry.
Deutsche Bank caught by ‘spying’ probe
Deutsche Bank is involved in a probe into possible criminal wrongdoing after it hired detectives to carry out surveillance of board members in the latest in a series of “spying” scandals at top German companies.
Friends rejects Resolution’s sweetened offer
Friends Provident on Monday rebuffed a fresh takeover proposal from Clive Cowdery’s Resolution after a frosty meeting that left the two sides at odds over the structure of a merged group, the FT said. Mr Cowdery said his Guernsey-based company would not make an offer for Friends that compromised Resolution’s status as a separate vehicle designed to pursue various consolidation projects.
Drug groups to reap swine-flu billions
Some of the world’s leading pharmaceutical companies are reaping billions of dollars in extra revenue amid global concern about the spread of swine flu. Analysts expect to see a boost in sales from GlaxoSmithKline,
Tarp exposes US to $23,700bn risk, watchdog says
Neil Barofsky, special inspector-general for the troubled asset relief programme, said that the various US schemes to shore up banks and restart lending exposed federal agencies to a risk of $23,700bn – a vast estimate that was immediately dismissed by the Treasury,
China Investment takes Diageo stake
China’s sovereign wealth fund has acquired 1.1 per cent of the Diageo drinks group, giving it a stake worth £221m in a sign of its emerging strategy to spread its investments over different global markets and asset classes.
Private equity groups eye Merill’s Asian businesses
Several firms have expressed an interest in buying the management of Merrill Lynch’s Asian real-estate investment business, including the management of its $4 billion Merrill Lynch Asian Real Estate Opportunity Fund,
Ameritrade to buy back auction rate securities
TD Ameritrade, the US online broker, became the latest company to agree to repurchase auction rate securities from investors as part of a settlement with regulators investigating the collapse of the market for the debt instruments,
CIT board approves $3bn rescue package
CIT’s board on Monday approved a two-year, $3bn rescue package with a group of lenders enabling the troubled US finance group to avoid a bankruptcy filing, after round-the-clock weekend talks. The company and its creditors had to move quickly to arrest a slide into bankruptcy and prevent its best customers from defecting for fear the lender could no longer support them.
California reaches budget deal
California lawmakers, their state broke and its credit rating shot, finally sealed the deal with the governor Monday night on a plan to close a $26 billion budget gap, the NY Times reported. The plan distributes pain through nearly every aspect of government services,
Overnight markets: Up
Asian stocks moved higher on Tuesday as Australia’s treasurer said the worst of the global recession may have passed, Bloomberg reported. The MSCI Asia Pacific Index added 1.2 percent to 106.05 as of mid-morning in Tokyo,
“Extrapolating is dangerous”
So say Dresdner’s credit analysts in a note published on Friday. From the report:
•Markets have been extrapolating the recent improvement in economic data, which is a dangerous assumption.
• Similarly,
Morgan Stanley’s hedgie hire
Morgan Stanley (NYSE: MS) announced today that Jack DiMaio will join the Firm as the Global Head of Interest Rate, Credit and Currency trading. Mr. DiMaio, who has more than 20 years experience in the bond and credit markets and previously served as the Head of Fixed Income (North America) at Credit Suisse as well as the Head of Alternative Investments at Credit Suisse Asset Management,
Lex: Iceland’s rehabilitation
Iceland’s plan to save its banks looks good on the surface, but there are at least three problems with it.
First, the agreement to compensate British and Dutch retail savers the $5.5bn they deposited in internet bank Icesave requires parliament’s approval.
The Fake Sheikh is back in town… (2nd update)
… and we’re not talking the News of the World’s fancy dress enthusiast Mazher Mahmood.
Yesterday afternoon news organisations the world over received a fax (yes, a fax, remember those?) from an organisation called Arabian Peninsula Group announcing a $49.50 bid for US car stereo-maker and Essex boy-racer staple Harman International.
Sticky inflation, redux
Last week UK inflation fell below the Bank of England’s target for the first time since September 2007, meaning it has taken almost two years of financial crisis to bring inflation back below 2 per cent.
Timber!
Friday’s much better than expected US housing start figures are still feeding through into positive sentiment this Monday. At 582,000, the number reported by the Commerce Department beat analyst expectations of 530,000 by one of the widest margins yet since the crisis.
Lunch Wrap
On FT Alphaville Monday morning,
- A tale of multiple CDOs.
- George Osborne, clap trapper.
- A pugnacious Gasparino.
- EU-IMF breakdown over Latvia?
- The rise of Jamie Dimon in Further reading.
Markets live transcript 20 Jul 2009
Markets live chat transcript for the chat ending at 12:04 on 20 Jul 2009. Participants in this chat were: Paul Murphy, FT (PM) Bryce Elder (BE) PM:Welcome PM:It’s Monday.
A tale of multiple CDOs
We heard last week that Morgan Stanley has begun making plans to repackage downgraded debt into a new tranche of AAA-rated securities. That technique essentially involves employing a Re-REMIC strategy typically used for CMBS-backed CDOs,
George Osborne, clap-trapper
There was one thing missing from George Osborne’s cosy Sunday morning chat with Andrew Marr on the BBC, and his subsequent View from Europe interview with George Parker, the FT’s political editor: evidence that this man quite has what it takes to be Britain’s next Chancellor of the Exchequer.
Quotes du jour, Gasparino pugnacity edition
From the FT’s profile of CNBC’s Charlie Gasparino:
Gasparino thrives on being awkward, even on being disliked, within CNBC. It burnishes his image as a tough outsider willing to go to battle with anyone – colleague or contact – in pursuit of the story.
EU-IMF breakdown over Latvia?
The IMF’s mission to Latvia should have finished last Friday. But with no agreement on the international body’s second instalment of aid yet, many are beginning to question the very survivability of the current international lender model in emerging Europe.
Further reading
Elsewhere on Monday,
- Hide-and-seek in the market.
- The rise and rise of Jamie Dimon.
- Cashing in, again, on risky mortgages.
- “Pity poor Goldman Sachs. Well, maybe not exactly poor.”
- Monster distortions in the Big Mac Index.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: A rocky road for the fiscal stimulus
Unemployment has already risen further in the US than President Barack Obama’s economics team expected,