July, 2009
The finance of flu
With the British Chamber of Commerce hosting an online seminar on Tuesday to discuss the potential impact of swine flu on businesses, it is probably an apt time to look back at the effects of the last great influenza pandemic — that of Spanish flu in 1918 — on the financial services industry.
Further reading
Elsewhere on Monday,
- Oil: The market is the manipulation.
- The Taylor rule debate.
- Is Wall Street picking our pockets?
- Iceland’s magic wand.
- The long slide in Mexico goes on.
- The faster the ride,
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Gillian Tett: Forget globalisation – localisation is back in fashion
In some offices in the US Treasury, there are framed posters exhorting the country’s population to buy US government bonds as part of their patriotic duty.
Snap news
Breaking pre-market news on Monday,
- Commerzbank sells Dresdner Bank (Switzerland) to Liechtenstein-based LGT Group — statement.
- Julius Baer first-half net profit falls to CHF 324m, AUM up 9 per cent at CHF 299bn — statement.
US takes 34% stake in Citi
The US government will this week take a 34% stake in Citigroup following Sunday’s completion of a long-awaited $58bn share offering. The move is a milestone in a crisis that has seen Washington rescue some top institutions.
Europe braced for credit card defaults
European lenders fear a surge in consumer debt defaults as the US credit card crisis spreads across the Atlantic. The IMF estimates that 7% of the $2,467bn of consumer debt in Europe will be lost, with much of that falling in the UK.
Courts to rule on Ericsson’s Nortel win
US and Canadian courts are expected on Tuesday to approve Ericsson’s $1.1bn bid for most of the core wireless assets of Nortel Networks, the Canadian telecoms equipment company operating under Chapter 11 bankruptcy protection.
VW plans to raise $5.7bn
Volkswagen, Europe’s largest carmaker, is eyeing a capital raising of up to €4bn ($5.7bn) as part of a plan to buy Porsche. Last week the Piëch and Porsche families ended months of feuding by agreeing to fold the German sports carmaker into VW.
UK’s National Express set to reject bid
Troubled UK transport group National Express is this week set to reject a takeover bid from Spain’s Cosmen family and CVC private equity group, rebuffing an approach that was expected to value the group at more than £500m.
Hungary offers bail-out for Permira deal
The Hungarian government is throwing a lifeline to one of eastern Europe’s biggest buyout deals by offering a €100m ($142m) loan to Borsodchem, the chemicals group acquired by UK buy-out house Permira for €1.6bn in 2006.
Arcelor eyes $3bn unit spinoff
ArcelorMittal is exploring a joint venture spinoff of its stainless steel business, worth an estimated $3bn, suggesting it is scaling back after expanding over the past decade via acquisitions including the €26.9bn purchase of Arcelor of Luxembourg in 2006. One company with which ArcelorMittal has discussed a possible stainless steel JV is Posco of South Korea.
HNA, Bravia try to untangle Allco deal
Executives from China’s HNA Group and US buyout firm Bravia Capital Partners will this week try to win over European lenders opposed to the consortium’s bid to take over the aircraft leasing business of collapsed Allco Finance.
FSA extends tests to traders
Up to 2,000 traders and managers in the UK could face extra checks and even interviews by the UK financial regulator to ensure they are “fit and proper” to do their job. Traders, bankers and managers who exert significant influence over their companies are set to face additional scrutiny from this week as the FSA watchdog formalises proposals to widen its “approved persons” regime.
Costas launches boutique bank
John Costas, who helped make UBS into one of the world’s biggest investment banks, and long-time partner Michael Hutchins have launched The PrinceRidge Group, a boutique broker-dealer, reports Reuters. The firm will focus initially on trading mortgage and corporate debt,
Kuwaiti businessman found dead
Hazem Khalid al-Braikan, a Kuwaiti businessman being sued by the US securities regulators over market manipulation allegations, was found dead on Sunday with a gunshot to the head, in an apparent suicide.
Overnight markets: Asia powers on
Asian markets rose for a 10th consecutive trading day on Monday, driving the MSCI Asia Pacific Index to its longest winning streak since 2004, on confidence that a rebound in regional economies will boost earnings.
The Weekender
On FT Alphaville this week,
- The fake Sheik returned.
- A tale of multiple CDOs.
- Latvia’s IMF breakdown, and trouble at Parex.
- A pugnacious Gasparino.
- Some stressed-out VaR.
- More blogger CNBC wars.
Now children, don’t be frightened…
That’s Warren Buffett, in case you didn’t recognise.
A new children’s media company called A Squared Entertainment has teamed up with AOL to unveil a new slate of “purpose-driven entertainment brands ”
The Porsche Fett Katze
Fresh (and yet almost unbelievable) from the FT’s Daniel Schäfer in Frankfurt:
Porsche offered ousted chief €140m
A row over the €50m payoff for Porsche’s ousted chief executive intensified up on Friday when it emerged that the sports carmaker’s family owners had originally offered Wendelin Wiedeking €140m. Wolfgang Porsche,
Lex: DeBeers
DeBeers is struggling as shoppers tone down the bling, but perhaps more significantly, it could cause trouble for Anglo American in the near future.
De Beers is a small carat in Anglo’s bejewelled crown.
Covered Brit bonds abroad
This is surely the financial equivalent of Brits migrating to Spain.
Recall, that Spanish bank AyT issued a new multi-cedula (Spanish covered bond) on Tuesday. Now the success of the Spanish issue is being cited as a potential jump start for the UK to revive its own covered bond market.
An ode to JPMCC 2007-LDPX A2S
Oh, JPMCC 2007-LDPX A2S,
You are the black sheep
Of the Fed’s legacy CMBS Talf programme,
JP Morgan built you.
Now nobody wants you.
Why?
That is JPMCC 2007-LDPX A2S, part of a CMBS deal put together by JPM two years ago.
Lunch Wrap
On FT Alphaville Friday morning,
- A UK GDP YoY fall/FAIL!
- The equity market goes ‘pre-pay’.
- FTSE 100 factoids.
- High frequency trading in Europe.
- Inflation-seeking, a survey.
- A short-selling villain casting call.
EMH, AMH: Edwards and Montier ride again
It seems just like old times for SocGen’s (now disbanded) top-rated strategy team of James Montier and Albert Edwards at SocGen.
Montier quit SocGen last month to join US investment manager Grantham Mayo Van Otterloo & Co, just after the duo won the Thomson Extel European analysts’ award last month as the top global strategy tream.
High frequency trading in Europe
From a 2008 paper written by Robert Barnes, managing director of equities at UBS, on MiFID and the growth of dark and light liquidity pools:
Smart order routing will arrive in Europe to pool, in a virtual manner,
Markets live transcript 24 Jul 2009
Markets live chat transcript for the chat ending at 12:09 on 24 Jul 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH) PM:Hi PM:Welcome to Market Live
Bovine accounting
Step forward then, Pricewaterhouse Coopers, again. This time in relation to the subprime-lender Cattles.
From the FT:
PwC, the Big Four accountancy firm, is being investigated over its auditing of Cattles,
Inflation-seeking
From JP Morgan’s survey on inflation attitudes among investors:
Related links:
Investors are floundering in post-traumatic syndrome – Gillian Tett, FT
FTSE 100 facts
It’s bull-speed ahead again in London on Friday morning.
In spite of a poor Q2 GDP reading, the FTSE 100 is up a further 18 points to 4,577, leaving the index on course to record its tenth straight session of gains.