September, 2009
Pink picks
Comment, analysis and other offerings from Monday’s FT,
In defence of financial innovation
The fact that a bubble could grow this large is a sign of imperfect financial institutions, rather than overly complex ones,
Snap news
Breaking pre-market news on Monday,
- UK house prices increase most in two years, Hometrack says — Bloomberg.
- Deutsche Bank lent Sal Oppenheim €350m — Reuters.
- Johnson & Johnson to buy 18% holding in Crucell — statement.
Abbott in €4.5bn deal for Solvay unit
Abbott Laboratories will announce on Monday the €4.5bn ($6.6bn) acquisition of Solvay’s pharmaceutical company, ending a five-month takeover battle. The US drugmaker beat UCB of Belgium and Nycomed of Switzerland to buy the Solvay unit,
Kraft set to go ‘hostile’ on Cadbury
Kraft Foods is poised to launch a hostile bid for Cadbury valuing the UK confectionery business at around £11bn ($17.4bn), the Guardian reports on Monday, following a report in its Sunday sister paper The Observer. City sources say Kraft could bid 800p a share,
Sinochem offers $2.4bn for Nufarm
Sinochem made a A$2.8bn ($2.4bn) cash bid for Australia’s Nufarm on Monday in a deal that could significantly expand the Chinese group’s global footprint in agricultural chemicals. The A$13 a share offer was pitched at a 17% premium to Nufarm’s last traded price of A$11.14 and came two months after Nufarm said it had been approached by Sinochem.
Unicom to buy back stake SKT stake
China Unicom will buy back a stake held by SK Telecom, South Korea’s biggest mobile carrier, for $1.3bn, followingUnicom’s move to boost its alliance with Spain’s Telefonica, reports Reuters. Telefonica and SKT became uusual bedfellows in China Unicom after reforms reduced China’s four main telecoms carriers to three earlier this year.
US banks face new borrowing rules
US financial regulators are working on new rules aimed at preventing banks from growing overly dependent on short-term borrowings. The proposed rules would require banks to operate under new measures – or ratios – gauging their dependence on short-term funding and their susceptibility to market shocks.
Goldman Sachs launches recruiting drive
Goldman Sachs has launched an aggressive recruiting drive to build its asset management business just as its rivals pull back from fund management. The US bank will hire up to 200 staff across all regions in efforts to establish a dominant position in asset management.
FSA grants ‘light touch’ to UK listings
British companies will be allowed to list on the London Stock Exchange using a “light touch” set of rules previously only available to overseas companies, as the UK seeks to bolster the City’s position as a financial centre.
RBS to sell wealth management assets
Royal Bank of Scotland is selling off part of its asset management division in efforts to reduce its dependency on the UK government, reports the Times. The bank is planning to break up RBS Asset Management,
‘Toxic’ securities rally boosts banks
The recent rally in the markets for “toxic” securities could significantly boost US banks’ Q3 earnings if they book accounting gains on assets that caused them huge losses in the financial crisis.
DZ Bank set for rights issue
Germany’s biggest mutual bank is in the final stages of raising €900m ($1.3bn) as it seeks to become one of the few institutions in the country to recover from the financial crisis without government help.
Glorious raises $1.3bn from HK IPO
Glorious Property Holdings raised US$1.28bn from its Hong Kong IPO last week, after pricing near the low end of an indicative price range, reports the WSJ. The Shanghai-based developer’s IPO, the first by a Chinese real-estate company in more than 15 months,
TPG’s Myer targets $2bn for IPO
Myer Group, controlled by US buyout firm TPG, plans to raise as much as A$2.34bn ($2bn) in Australia’s biggest IPO in two years as private equity companies profit from a stock rally, reports Bloomberg.
Madoff relatives to be sued
Bernard Madoff’s two sons, his brother and a niece will be sued this week for $198m, the trustee winding down the Madoff firm told CBS News’ “60 Minutes” programme on Sunday, reports Reuters. Madoff sons Mark and Andrew,
Overnight markets: Down
Asian stocks fell on Monday as the yen appreciated against the dollar and after unexpectedly poor figures for US home sales and US durable goods were issued on Friday. Futures on the S&P 500 lost 0.3% after the gauge dropped 0.6% on Friday.
The Weekender
On FT Alphaville this week,
- The waru waru waru recovery.
- Calling all available cash.
- Bankers lag baseball stars.
- Special pleading from David Rosenberg.
- Did he really say that? Parts one,
Ever heard of the the “News Heard” index?
On Friday, Credit Suisse’s chief economist Neal Soss issued a note in which he upgraded his forecast for the upcoming September report on US consumer confidence (to 70 from 60, and compared with a reading of 54.1 in August).
Death bonds are NOT the same as subprime CDOs, OK?
The Institutional Life Markets Association (ILMA) is none too impressed with the recent and critical focus on the possibility of securitising life settlements into what have become known as “death bonds”.
EM bond funds record highest inflows in three years, EPFR says
Investors poured $727m into emerging market bond funds during the week to September 23, the equivalent of 1.3 per cent of these funds’ total assets and the highest inflow since February 2006, EPFR data show.
CDS report: Once upon a time, index rolls would roil the markets…
Gavan Nolan of Markit wrote this CDS report
There was once a time when the roll of the main CDS indices – the Markit iTraxx and Markit CDX families – was an event capable of rocking the credit markets.
Rosenberg: ‘I stand accused of having missed the turn’
David Rosenberg released a 24-page special report on credit, commods and Canucks on Friday, but before he delved into those matters he had some words for his critics (emphasis FT Alphaville’s):
I stand accused of having missed the turn and that accusation comes from the throngs who believe that the only way to generate a positive return is through the equity market.
Feeling nostalgic for the Crunch?
Bored with the rally? Nostalgic for a spot of crisis? Fear not.
Late on Thursday the Federal Reserve released the findings of the 2009 Shared National Credit Program – a once-a-year review of large syndicated loans that the Fed and other banking regulators have been undertaking for the past 36 years.
Reject opportunistic Cadbury bid, says FT Alphaville
Summary: Cadbury is a great British business, with a marvelous Anglo-African heritage, superb financial prospects and a sparkling management team. In any case, its takeover by Kraft Foods Inc would almost certainly be against both the UK national interest and the common consumer good,
Of square roots and economic indicators
Remember when George Soros warned of an inverted square-root recovery?
Something that might look a little bit like this in fact:
Well, we couldn’t help noticing Danske Bank’s chart showing off the Baltic Dry Index as a potential leading indicator on Friday:
Musings on regulation and risk, from the Morgan Stanley CFO
They are helpfully contained in this note by UBS analyst Glenn Schorr, who met up with the Morgan Stanley man for a tête à tête over the bank’s outlook.
Here are some excerpts:
We recently met with Colm Kelleher,
What the ‘Grande Latte index’ suggests about the yuan
Reuters reporter Simon Rabinovitch, taking a page out of the Economist’s playbook, has introduced the “Grande Latte index” (with data, methodology and footnotes) in an attempt to answer a thorny econo-philosophical question:
Discorrelation alert
We’ve noted before that correlations between asset classes are increasing. We’ve also remarked upon the increased tendency for crude and equities to correlate, specifically.
On account of that, the following chart from Ashraf Laidi,
Something is rotten in the state of Denmark. And Ireland. And Spain.
And the ECB will direct it. Ha.
As we mentioned earlier on Friday, UBS analysts John-Paul Crutchley and Alastair Ryan have been looking at the European banking landscape afresh — specifically in relation to the credit support ops of the European Central Bank.