October, 2009
The interesting lesson from the RBA rate hike
When the Reserve Bank of Australia took the plunge on Monday and became the first G20 central bank to raise interest rates since the global downturn began, it triggered big gains for equity markets around the globe.
US consumers’ credit problem
Data released on Wednesday show US consumer credit declined for the seventh straight month in August as wary, cash-strapped consumers kept their credit cards in their wallets.
The Federal Reserve said consumer credit outstanding fell by a more-than-expected $12bn in August to $2,460bn.
The pitfalls of being market neutral
Data from the Credit Suisse/Tremont index on hedge funds’ performance — strategy by strategy — is already available online, gratis.
Here though, from the latest Lipper Hedge Fund Insight Report, is quite a striking visualisation of just which hedge fund strategies have suffered most from the financial crisis (click to enlarge):
Work work work work…
The French are lazy.
Germans are efficient.
And Brits and Americans are…
Well, the Brits and Americans just work.
Thanks to the FT’s Money Supply blog for pointing us in the direction of the UK’s Office for National Statistic’s international comparisons of productivity,
Gold ETFs, caveat emptor
With gold prices on a tear of late it’s no surprise bullion-investing exchange-traded funds (ETPs) are facing more demand than ever from retail investors. As Barclays Capital noted on Thursday:
Speculative interest remains close to record highs and ETP holdings continue to grow.
Sheila Bair has strong words for secured creditors
On Monday, FDIC chair Sheila Bair proposed forcing the secured creditors of any failed US banks to take a 20 per cent haircut on their exposure to said institution. According to a Reuters report, Bair believes having secured creditors take a hit when a financial institution fails “could help rein in excessive risk-taking and strengthen the financial system”.
Burden sharing for bondholders lives!
Remember the hybrid debt, or subordinated bond, attack launched by the European Commission against certain Euro-area banks?
The Commission wanted bank bondholders to share some of the pain of government bailouts,
A titillating cash offer
Consolidation in the porn industry down under.
And here is page one of SexyLand’s takeover offer, and pages two, three and four.
Update:
From the Age.
The online retailer Adultshop was taken by surprise yesterday with a $5.2 million takeover bid from a Melbourne chain of sex stores called Sexyland.
Lunch Wrap
On FT Alphaville Thursday morning,
- BoE holds interest rates, leaves QE unchanged.
- The £25bn question facing Lloyds.
- Of gold coin craziness and conspiracy.
- On the matter of renewing confidence in the Latvian economy.
BoE holds interest rates, leaves QE unchanged
Mucho boring.
As widely expected, the Bank of England voted to hold interest rates at a record low of 0.5 per cent and keep its asset purchasing programme at £175bn.
Here’s the statement:
BANK
The dollar-adjusted S&P 500
Another extract from Diapason Commodities’ latest note, courtesy of author Sean Corrigan.
This time the S&P 500 as multiplied by the US dollar trade-weighted index:
According to Corrigan, the chart — which is set to a logarithmic scale — shows the extent to which money illusion has boosted the apparent performance of US equities.
Central bankers look to biology!
Sean Corrigan of Diapason Commodities presents an interesting metaphor for recent Keynesian measures to restart the world economy in his latest report.
Specifically he looks at cell biology and the role of adenosine tri-phosphate (ATP) in the body.
Markets live transcript 8 Oct 2009
Markets live chat transcript for the chat ending at 12:15 on 8 Oct 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE) NH:hello there NH:it’s 11.03 and that means it is time for
SEC wishlist: Derivatives data with which to pursue derivatives fraud
Here’s an obvious thing that would help the SEC root out fraud in the $54,000bn credit derivatives market — having access to real-time derivatives data.
But the SEC has apparently been without access to such data,
The £25bn question
So, how will Lloyds Banking Group raise the vast dollop of capital it needs to withdraw completely from the government’s asset protection scheme?
The UK media are in agreement that most of the money will come from another rights issue.
Of gold coin craziness and conspiracy
In another instance of economics in reverse, the US Mint has suspended production of certain gold and silver coins because of “unprecedented demand.”
Here’s the Mint’s press release:
Because of unprecedented demand for American Eagle Gold and Silver Bullion Coins,
Japan’s new ministers for disruption
Who ever said Japanese society was all about “wa”? — the tendency to preserve harmony.
In the space of just three weeks, two of the key figures for financial and economic issues in Japan’s new Hatoyama administration have managed to generate confusion,
On the matter of renewing confidence in the Latvian economy
One thing the financial crisis has taught the Western world is that when it comes to defending your reputation, the CEE states are masters of their game.
Who can forget their unity over evil currency speculators?
Or,
Further reading
Elsewhere on Wednesday,
- The problem with securitisation.
- The other problem with securitisation.
- The secret that wealthy investors don’t want you to know.
- Ask Paul.
- Hope is not a strategy.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Analysis: New monetary target
It is an unlikely rallying cry. At marches and meetings against big government across the US, where some placards damn the president,
AV after dark
On FT Alphaville late Wednesday,
- Poison Gasbag.
- Ladbrokes — odds on for a cash call.
- Final public-to-private dash by Lloyds?
- Introducing NattyMac.
- Charts du jour, commodities edition.
Snap news
Breaking pre-market news on Thursday,
- HSBC, others resume talks for RBS Asia units — Reuters.
- Hochschild raises $260m in share, bond issues — statement, statement.
- Ladbrokes to raise £275m from rights issue — statement.
Lloyds eyes £15bn fund-raising
Lloyds Banking Group and its advisers have begun sounding out investors about a £15bn ($24bn) capital raising, which they believe could allow the bank to withdraw entirely from the government-sponsored asset protection scheme.
HSBC targets rivals’ assets in Asia
HSBC is in advanced talks to buy separate Asian assets being sold by two troubled western financial groups. The bank, which is to relocate its chief executive from London to Hong Kong, is in the lead to acquire the Asian private banking operations being divested by ING,
Santander raises $7bn in Brazil IPO
Santander of Spain on Wednesday raised $7bn from the listing of its Brazilian subsidiary Banco Santander in the world’s largest IPO this year. The IPO – in which Santander floated 14% of the enlarged capital of its Brazilian business – will be worth slightly more than $8bn if there is extra demand for the shares,
BlackRock up for risk-rating role
BlackRock, the US money manager that gained multiple government assignments in the financial crisis, is a contender for another influential role: helping state regulators size up risks in insurers’ investments,
WestLB sheds debt via ‘bad bank’
WestLB, hit hard by the financial crisis, will become Germany’s first lender to create a “bad bank” after agreeing on Wednesday to offload at least €87bn ($128bn) in non-strategic assets. The publicly-owned Landesbank is one of only a few German banks expected to utilise the scheme,
Citi management gets mixed review
The positions of Terri Dial, head of Citigroup’s troubled US consumer bank, and two other Citi executives have been called into question after an external review of the bank’s top management raised concerns over their managerial skills,
BofA dissidents attack CEO candidates
A dissident group of Bank of America shareholders launched a battle on Wednesday to prevent the beleaguered bank’s board from naming as chief executive one of two men who were deeply involved in the controversial acquisition of Merrill Lynch last year.
Julius Baer buys ING’s Swiss unit
Julius Baer on Wednesday bought the Swiss private banking operations of Dutch lender ING for SFr520m ($507m) – its first acquisition since spinning off its fund management business. The acquisition of ING Bank (Switzerland) will add SFr15bn in funds under management,