September, 2009
The G-whizz 20 and Tobin
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SUMMERS SAYS REGULATORY REFORMS MUST ELIMINATE REGULATORY ARBITRAGE
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WHITE HOUSE ADVISER SUMMERS SAYS MUST TACKLE MORAL HAZARD PROBLEMS IN EFFORT TO CREATE SAFER FINANCIAL SYSTEM
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‘TOBIN TAX’ ON GLOBAL FINANCIAL TRANSACTIONS SEEN REFLECTED IN G20 COMMUNIQUE-G20 SOURCES
Mind yer eye.
CME abandons plan to trade OTC derivatives
In a not entirely unexpected move, CME – the world’s biggest futures exchange by volume – and Citadel abandoned their joint effort to set up a trading platform for credit derivatives.
Still, and optimistically, CME said it would continue to push its CDS clearing effort,
The giant sucking sound of US private sector credit contraction
BNP Paribas analyst Julia Coronado highlighted an overlooked and significant aspect of the Fed’s latest flow of funds report, that of private sector deleveraging.
As she put it in a note released on Friday (emphasis FT Alphaville’s):
“This overvalued, overbought, overextended market…”
Here’s some more from Gluskin Sheff’s David Rosenberg, because his latest “Breakfast with Dave” note is just so good.
He is NOT buying this stock market – remember, bear market rallies “are to be rented;
A busy week for Frank Timis
Vasile “Frank” Timiş, chairman of AIM-listed prospector African Minerals, has always been a busy bunny. But this week he really has excelled himself.
On Friday afternoon Frank revealed to our sister organisation Mergermarket that he was “a large shareholder”
Just who is buying this rally?
Here’s an insightful question from David Rosenberg of Gluskin Sheff on the matter of the current rally in global equities.
Who is actually doing the buying?
As Rosenberg notes:
It’s not private clients – stock funds registered net outflows of $1.33bn last week.
Bull in a China bullion shop
Stories galore have been doing the rounds about China’s recent promotion of gold and silver investing to its general population. Mostly, these have focused on the sudden appearance of Chinese TV slots like this:
Sell bonds, buy stocks, says Credit Suisse
Much has been written about how shrinking corporate bond yields might fuel an M&A boom, but the performance gap between credit and equities persists, despite the lengthening queue of analysts warning that credit markets have run far enough in the short term.
Is all well at Wells Fargo?
On September 1, a rumour spread rapidly around the City of London and Wall Street: “Wells Fargo is in trouble.”
Wells’ shares duly declined as much 4.8 per cent, the bank’s biggest slide in two weeks and a steeper fall than the wider US market.
Pushing the renminbi
So how do you go about legitimising the renminbi as an international reserve currency if you’re China?
Easy. You denominate all shares in your soon-to-be-launched international exchange in renminbi.
The mother of all inventory cycles
Is a favourable US demand/inventory balance signalling a significant rebound in manufacturing? Via Danske Bank:
Related link:
Does the US have an inventory problem? – FT Alphaville
Another Latvia wobble
Latvia’s parliament failed to pass a critical property tax hike plan on Thursday which was closely connected to conditions agreed with the European Union and International Monetary Fund for its €7.5bn bailout.
Lunch Wrap
On FT Alphaville Friday morning,
- Swiss stock exchange launches investigation into UBS.
- Banks’ coverage ratio capers, cont.
- The anaemic equity rally.
- In defence of Barclays’ Protium deal.
Banks’ coverage ratio capers, cont.
Look who’s jumped on the bad bank coverage ratio bandwagon — Goldman Sachs.
In a note out today, GS analysts, are also looking at how falling coverage of non-performing loans (NPLs) has fueled this year’s profits among European banks.
Markets live transcript 18 Sep 2009
Markets live chat transcript for the chat ending at 12:04 on 18 Sep 2009. Participants in this chat were: Bryce Elder (BE) Miles Johnson, FT (MJ) Izabella Kaminska, FT (IK)
BE:
Arr landlubbers, here be Markets Live.
Back to bondage
Encyclopedia Britannica – Debt Bondage — description ( in slavery (sociology) )
A person became an indentured servant by borrowing money and then voluntarily agreeing to work off the debt during a specified term.
Pandit and the $100m man
It’s a perfect day for reports to emerge from Washington about the US administration’s plans to curb pay for bank employees – including traders and loan officers as well as executives.
It comes on the heels of Thursday’s stark admission by Citigroup CEO Vikram Pandit that,
Faber on China: Still right after all these years…
Love him or hate him – his utterings on markets and investment in general frequently generate controversy - Marc (aka “Dr Doom”) Faber is often proved right. In quite a few decades of punditry, Faber has called US recessions,
Someone’s smarter than the average natgas bear
Analysts agree, natural gas fundamentals are still bearish. Despite that, Nymex Henry Hub futures went — dare we say — a little crazy this week in terms of volatility. After a massive run-up mid week,
The anaemic equity rally
Here’s something to put the equity rally in perspective.
That’s a chart of net flows into European equity funds from Citi. You can see that while investors rushed to pull out money in the latter half of 2008 — by record amounts — they haven’t exactly enthusiastically returned — yet.
Swiss stock exchange launches investigation into UBS
UBS appears to be having a hard time keeping out of the news.
Less than a month after reaching a settlement with the US government over a probe into client tax evasion the bank finds itself under the spotlight again.
Further reading
Elsewhere on Friday,
- The dollar: Hope – and a little fear.
- The search for America’s worst investor.
- Lock’em up!
- The ‘sheep index’ and retail investors.
- Option ARMs to wreak more havoc.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
No need for an orderly queue to exit
Jim O’Neil, chief economist of Goldman Sachs, writes: Heads of state preparing for the G20 summit next week have been emphasising the need for a co-ordinated “exit”
Snap news
Breaking pre-market news on Friday,
- Lloyds Banking Group says it is considering possible alternatives to the UK Government Asset Protection Scheme – statement.
- UBS is under investigation by the Swiss stock exchange for possible breaches of rules regarding publishing price sensitive information – statement.
Lloyds scheme fails FSA stress tests
Lloyds Banking Group has been forced to abandon plans to withdraw from the UK’s toxic debt insurance scheme after failing to show it could raise enough capital through a rights issue and disposals to meet strict regulatory requirements,
American Airlines raises $2.9bn
AMR, the parent of American Airlines, has struck financing accords with GE and Citigroup that will free $2.9bn in cash to help offset a slump in air-travel demand, reports the FT. Shares of the carrier jumped more than 23% on Thursday’s news,
Money fund outflows surge
Investors stepped up their withdrawals from money market funds this week days before a federal guarantee to safeguard their assets expires on Friday, reports Reuters. The outflows could sharpen scrutiny of how to regulate the funds,
Blackstone to buy 50% of Broadgate
British Land will complete the sale of half of London’s £2.2bn Broadgate office complex to US buyout group Blackstone. British Land was on Thursday night finalising the cash-and-debt deal, which entails a joint venture with Blackstone to hold the 32-acre City of London estate.
Balfour buys Parsons Brinckerhoff
Balfour Beatty is buying US consulting and engineering group Parsons Brinckerhoff for $626m, in what will be the largest acquisition in the UK construction group’s history. The purchase, which will bolster Balfour’s position in a US market that accounts for 24% of its revenue,