Comment, analysis and other offerings from Tuesday’s FT,
Kenneth Griffin: We must overturn the status quo in derivatives
Griffin, founder and CEO of Citadel Investment Group, writes: Following the collapse of Long Term Capital Management, a government report called for derivatives market reform. The report, issued by the President’s Working Group in April 1999, noted that “market history indicates that even painful lessons recede from memory with time”. Sure enough, once the LTCM headlines disappeared, the impetus for reform vanished. Today we face a similar challenge – to not let time, a rebound in the market, or lobbying efforts of derivatives dealers obscure the need to reform the over-the-counter derivatives market.
Analysis: Payback time
Séverin Cabannes offers a simple but telling explanation of the current rush by European banks to tap their shareholders for fresh funds. “The market reopened the window to do this kind of thing,” says the deputy chief executive of Société Générale, which joined the stream of rights issues this month. “And nobody knows if the equity markets will stay open.”
Editorial comment: Testing strength
After British, Japanese, and American nail-biting about where their currencies are headed, eurozone leaders are the latest to join in the jeremiads. With the euro touching $1.50, an adviser to the French president, Nicolas Sarkozy, has called the euro’s strength a “disaster” for Europe’s industry.
Lex on activist investors
It has already been a good week for rabble-rousers. HealthSouth Corp announced on Monday it will reimburse certain shareholder expenses connected to proxy campaigns related to the election of directors. And fund management group Legg Mason announced the appointment of Nelson Peltz to its board. The billionaire, who prefers the term constructivist investor, agreed in return to keep his hedge fund’s holding below 10 per cent, and to vote with the board for two years.
Investor’s Notebook: Why sovereign bond yields will explode
It will not be business as usual for government bond prices. That is because current bond yields and the increasing insolvency of our rulers are the biggest disconnect in financial markets today. This comes from two factors: quantitative easing by central banks and the collapse of credit demand by the private sector. Neither are permanent features of the economic landscape.
John Authers’ The Short View: Dotcom bubble, redux
It is as though the last 10 years never happened. Since publishing its well-received Q3 results last Thursday, Amazon.com has gained more than 30 per cent. That takes it to an all-time high. And that is amazing.
Letters to the Editor
- How to transform quality of risk management
- The threats that stem from Asia’s `water towers’
- Restore equilibrium between banks too big to fail and their competitors