August, 2009
UBS and US strike tax probe deal
UBS and the US government have agreed an out-of-court settlement to end one of the most bitter assaults on Swiss banking secrecy. No details of the deal were revealed on Wednesday, pending formal signing,
Lloyds sells Insight to BNY
Lloyds Banking Group has agreed to sell its Insight asset management business to Bank of New York Mellon for £235m.
BNY is taking on £80bn in funds managed by Insight for clients outside the Lloyds group,
Sinochem swoops on Emerald
Sinochem, the state-controlled Chinese chemicals company, has agreed to buy UK-listed Emerald Energy for £532m. The recommended cash offer, at 750p a share, was backed by Emerald’s two top shareholders – Waterford Financial and Investment,
Citi hires external help for review
US regulators have forced Citigroup to hire external consultants to review the performance of its management, in a move that intensifies pressure on its top executives and board – in particular on Vikram Pandit,
Loan loss provisions drag on ING
ING, the Dutch banking and insurance group, returned to profit in the second quarter with net profit of €71m ($100m), down from €1.9bn a year ago though well up on its Q1 €793m net loss. But the result fell short of expectations as loan loss provisions remained high.
Australia’s CBA beats forecasts
Commonwealth Bank of Australia, the country’s second largest lender by market cap, beat analysts’ expectations on Wednesday, reporting that annual net profit fell 1% after bad debt charges rose and its wealth management unit generated less income.
Hedge funds make ‘best start’
Hedge funds have made their best start to a year in a decade as markets recover and the industry moves back to traditional investment strategies. The average hedge fund has had its best first seven months since 1999,
Investors ‘fatigued’ with rights issues
Signs of investor fatigue with rights issues are emerging even as markets brace for a further wave of cash calls, with recent equity raisings by European companies underperforming deals from earlier in the year,
Irish banks fear property loan writedowns
An Irish court decision to appoint a liquidator to one of Ireland’s leading developers has raised concerns that the country’s banks could be hit by deeper property loan writedowns. Bankers expressed
SEC set to file against Pequot
The SEC has warned Pequot Capital Management that it is considering filing securities fraud charges against the hedge fund and its chairman, Arthur Samberg, based on 2001 trading in Microsoft stock, Pequot has told investors.
Greenberg to join AIG settlement
Hank Greenberg and other former AIG executives have agreed to pay $115m to settle shareholder lawsuits over the insurer’s accounts. The settlement is Greenberg’s latest attempt to ease strained relations with AIG,
RBS pays £10m for two top bankers
Royal Bank of Scotland, which is 70% taxpayer-owned, has spent more than £10m hiring two bankers, in a move that may further inflame the row over City bonuses, reports The Times. RBS has poached Antonio Polverino,
Overnight markets: Optimistic
Asian stocks rose on Thursday, driving the MSCI Asia Pacific Index to its biggest gain this month, after the Federal Reserve said the recession is easing and pledged to keep interest rates low. Futures
Fed holds rates, says recession easing – statement
Statement released by the US Federal Reserve at the conclusion of the FOMC meeting on Wednesday, emphasis FT Alphaville’s. Note the Fed will also be winding down its Treasury purchases by October:
Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out.
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CDS report: Traders fail to be inspired by equity market rally
This CDS report was written by Markit’s Gavan Nolan
Credit markets proved resistant to bullish sentiment in the equity markets today and continued to widen. Credit investors have been taking profits after the recent rally and didn’t see yesterday’s widening as an opportunity to take long risk positions.
NYSE Liffe quits the CDS clearing game
Earlier this week, IntercontinentalExchange bragged that its European clearing unit marked its second week of operations by clearing 699 transactions with a notional value of €31.9bn. The exchange’s US clearing unit,
On the matter of groupthink
Gluskin Sheff chief economist David Rosenberg makes a lucid point in his Wednesday report (our emphasis):
It does appear that we have some groupthink to consider — virtually everyone at this stage is now bullish on the market.
RIP US driving season
The FT focuses on a very noteworthy trend highlighted in Wednesday’s IEA report — the disappearance of US driving season for a second year.
As the IEA explained in its August oil market report (emphasis FT Alphaville’s):
QE, explained?
A gem from the FT letters page…
From Mr Eric Keetch.
Sir, In a sleepy European holiday resort town in a depressed economy and therefore no visitors, there is great excitement when a wealthy Russian guest appears in the local hotel reception,
Lombard: FSA pulls its punches on banker pay
Bankers still seem to think they can justify lavish rewards by comparing themselves with top footballers and Hollywood stars. Try again. The Financial Services Authority’s alleged watering down of its proposed pay code is more likely to excite parallels with last week’s extraordinary £40m jewellery heist.
Volume alert
Market angst regarding a potential September turnaround appears increasingly to be penetrating the investor psyche — that’s despite recent proclamations by even long-time bears like Krugman and Soros that the current rally could indeed be the genuine article.
Lunch Wrap
On FT Alphaville on Wednesday morning,
- The BoE’s deflation fear.
- Job stat confusion, UK edition.
- Still intoxicated.
- ING, enhanced but not necessarily improved.
- Is the dollar reaching a turning point?
- Rio arrests:
Job stat confusion, UK edition
UK labour statistics released on Wednesday pointed to the highest unemployment rate in 14 years. As the FT reported:
Unemployment rose to its highest level for 14 years in June, but the number of new jobless benefit claimants remained much lower than earlier this year. The number of unemployed people in the three months to June rose by 220,000 to reach 2.4m,
The BoE’s deflation fear
In Wednesday’s Bank of England inflation report comes a more thorough explanation to last week’s surprise quantitative easing boost (our emphasis):
At its August meeting, the Committee noted that the immediate prospect was for CPI inflation to fall substantially below the 2% target.
Markets live transcript 12 Aug 2009
Markets live chat transcript for the chat ending at 11:57 on 12 Aug 2009. Participants in this chat were: Paul Murphy (PM) Bryce Elder (BE) PM:Hi there PM:Sorry I’m a minute late
Still intoxicated
The problem of toxic assets on banks’ balance sheets has not been dealt with and still poses a significant risk to the recovery of the US economy, according to a report out on Tuesday by the Congressional Oversight Panel,
Is the dollar reaching a turning point?
Ahead of the Fed’s interest rate decision later Wednesday, and just one week after the dollar hit its lowest level for 10 months, forex markets and currency analysts are now talking about whether the US currency is reaching a turning point.
ING, enhanced but not necessarily improved
Netherlands-based ING has followed in the footsteps of US and UK counterparts and returned to profitability in the second quarter, posting a net profit of €71m on Wednesday, down from €1.92bn a year earlier.
Rio arrests: China’s perverse ‘PR’ campaign
So now it’s official. China has formally arrested four Rio Tinto employees, including Rio’s chief iron-ore negotiator, Australian citizen Stern Hu and three Chinese employees, on charges of obtaining trade secrets and commercial bribery,