October, 2009
That Goldman Sachs (big) bank upgrade
It might seem counter intuitive, but according to Goldman Sachs, Wells Fargo is now the bank to own.
The Banking Holding Co. (née Investment Bank) upgraded the biggest US banks, including Wells, on Monday citing:
Chasing the fat tail
Alternate title: Building a better Monte Carlo model.
Risk managers and investors will, of course, be familiar with Monte Carlo simulations — which are used in finance to value potential loan losses and things like portfolio risk or derivatives.
Lunch Wrap
On FT Alphaville Tuesday morning,
- Indy and the topple of dollar.
- The world reacts to Indy dollar plot.
- The segmented commercial real estate crash.
- US excess reserves, in pics.
- How to spend it — the billionaire way.
The world and the dollar react to Robert Fisk
As we reported earlier, The Independent appears to have rocked the world on Tuesday with its Robert Fisk exclusive exposing a secret plot by international central banks to topple the US dollar.
As we’ve stressed,
Markets live transcript 6 Oct 2009
Markets live chat transcript for the chat ending at 12:14 on 6 Oct 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE) NH:Howdy NH:Good morning and welcome to Markets Live
Guest post: Lawrence Hunt on the all-biz class airline model
Lawrence Hunt was CEO of Silverjet, the British all-business class airline that operated between January 2007 and May 2008. Here he gives his thoughts on British Airways’ new all-business class service,
BoE signals no cut on deposit remuneration
New liquidity rules for UK banks, announced by the Financial Services Authority on Monday, slightly overshadowed an announcement from the Bank of England on the subject of reserves accounts.
As the BoE press release noted (our emphasis):
What Australia’s rate hike means for the market
Australia on Tuesday became the first G20 nation to raise interest rates since the peak of the financial crisis, as its central bank increased the official cash rate from 3 per cent to 3.25 per cent. (Israel,
In case of capital emergency…
Break out the contingent capital.
Contingent capital is an idea that is gaining some credence. Fed chairman Ben Bernanke mentioned it in a speech late last month. It has also garnered a few mentions in academic texts,
How ETFs are like mortgage-backed securities
Bedlam Asset Management takes a look at exchange traded funds in its latest market commentary (H/T paver). Specifically, at how — largely because of greed — a sound concept has once again potentially been bastardised by the financial industry.
Presenting the segmented commercial real estate crash
Lo and behold — the commercial real estate market crash in nuanced detail.
FT Alphaville journeyed to the offices of CB Richard Ellis, the CRE specialist and special servicer to the CMBS stars, on your behalf,
Indy and the secret plot to topple the dollar
Rarely does The Independent (remember it?) make such a big international — and financial — splash.
But its front-page article on Tuesday, by Middle East correspondent Robert Fisk, has certainly caused a stir.
How to spend it
How much does it cost to keep a billionaire?
The answer to that question, and others, was revealed at the High Court in London on Monday as embattled billionaire Maan al Sanea — the man behind Saad Group — attempted to overturn a $9.2bn freezing order on his worldwide assets.
The UK’s sloshing, ‘riskless’ liquidity
Check out this chart from Deutsche Bank’s fixed income team:
That is Deutsche’s UK Data Surprise Index — its proprietary measure of economic data — against the UK 10-year swap rate. Swap rates tend to act as a proxy for yields.
US excess reserves, pictorial edition
Excess reserves held by banks at the Federal Reserve are back on the rise, hitting their highest level last week since May 2009.
Kyle Bass of Hayman Advisors, who made money on the subprime crisis, now puts those reserves into pictorial context (H/T The Pragmatic Capitalist):
Further reading
Elsewhere on Tuesday,
- The coming conflict over T-bills and derivatives.
- Brazilian ETFs — the way to go for 2016.
- How did Krugman get it so wrong?
- Gold: Off the launching pad.
- Buy and hold comeback?
- CDS:
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Europe’s plot to take over the world
Fortified by its new foreign-policy structures, the Union is staking a claim to be taken seriously as a global superpower.
AV after dark
On FT Alphaville late Monday,
- Fed’s changes to Talf eligibility criteria may shake up rating agencies.
- The end of Kobe beef burgers, or how thrift stole Christmas.
- Hot cocoa.
Over in the Long Room,
Snap news
Breaking pre-market news on Tuesday,
- Societe Generale seeks €4.8bn rights offer — Bloomberg.
- Brammer announces rights issue to raise £38.3m — statement.
- Corporate: Tesco, Northern Foods,
UK sets out tough liquidity rules
Tough new liquidity standards announced on Monday by the UK’s FSA watchdog could force UK banks and investment firms from next year to increase their holdings of cash and government bonds by £110bn and cut their reliance on short-term funding by 20% in the first year alone.
Australia lifts key rate
Australia on Tuesday became the first G20 nation to raise borrowing costs since the start of the global financial crisis more than a year ago, as the central bank unexpectedly raised its benchmark interest rate from a 49-year low and signalled more increases in coming months,
Corus Bank assets sold for $550m
A group led by Barry Sternlicht’s Starwood Capital investment company has won the bidding for the assets of failed Corus Bank, with the help of a financing package crafted by the FDIC regulator. The purchase price of about $550m values the assets of the US bank – which specialised in loans to condominium projects – at about $2.5bn,
Citi to outsource investment services
Citigroup is moving further away from its 11-year focus on combining brokerage and banking by outsourcing some investment services for US branch customers to outside financial advisers and shifting up to 550 employees currently advising wealthy customers to new roles.
Nomura to double US headcount
Nomura is poised to double its headcount in the US, in a push that highlights the Japanese institution’s ambition to transform itself into one of the top five global investment banks. Nomura’s hiring spree will increase staff in the US to 1,200 by the end of this fiscal year to March,
Telenor, Alfa Group in Vimpelcom deal
A corporate battle that has blighted Russia’s investment climate for years took a big step towards resolution on Monday when Telenor, the Norwegian telecoms operator, and its Russian partner, Alfa Group,
Actis to launch infrastructure fund
Actis, the UK private equity group that specialises in emerging markets, announced on Tuesday that it has raised $750m for a new infrastructure fund to invest in power and transport assets in Africa, Asia and Latin America.
Australia’s GrainCorp in $655m buy
GrainCorp, eastern Australia’s largest grain handler, agreed to buy United Malt Holdings for $655m from buyout firms Castle Harlan and CHAMP, doubling the size of the company, reports Bloomberg. The deal will be funded by selling A$589m ($517m) in new shares at a 20% discount to their Monday closing price and $200m in debt.
Gulf in oil-dollar talks, report
The US dollar fell on Tuesday on a report in The Independent that Gulf Arab states were in secret talks with Russia, China, Japan and France to move their crude-oil trading from the dollar to a basket of currencies,
Countries spar over World Bank
The World Bank’s big shareholder governments sparred on Monday at their meeting in Istanbul over a request for up to $5bn in new equity to support lending to middle-income countries even as they praised its efforts to fight the crisis.