December, 2009
Longer-dated bonds reflect optimism
Governments, banks and corporates are issuing more longer-dated bonds, in a sign of increased confidence among investors in global growth prospects. The shift towards longer-term bonds is expected to reduce refinancing risks in 2011 and 2012,
Fears grow over US debt market
Some of the most controversial financing practices of the credit-bubble years – including “cov lite” loans, Pik toggle notes and dividend recap exercises – have returned to Wall Street, stoking fears that debt markets are overheating.
BofA breakup raised in CEO hunt
At least two candidates for the top job at Bank of America told directors that the banking giant should consider breaking itself up, but board members conducting the CEO search have rejected the idea at least for now,
BNP hails Fortis integration
The integration of BNP Paribas Fortis, the largely Belgian arm of French bank BNP Paribas, will lead to annual savings of €900m ($1.35bn) by 2012, BNP has said, reports Reuters. The business will boost earnings as early as next year before restructuring costs,
BoJ offers banks cheap loans
The Bank of Japan announced at a surprise policy board meeting on Tuesday that it would offer up to Y10,000bn ($115bn) in cheap, three-month loans to commercial banks, an easing of monetary policy it said would “firmly support“ Japan’s fragile economic recovery.
Yorkshire set for Chelsea takeover
Yorkshire Building Society is set to finalise a deal to take over lossmaking rival Chelsea in the latest sign of consolidation in the UK’s troubled mutual sector. A combined Yorkshire and Chelsea would be a strong number two to market leader Nationwide.
Boardroom row escalates at M&B
The boardroom row at UK pub operator Mitchells & Butlers escalated on Tuesday when M&B appointed a chairman over opposition from Joe Lewis, its biggest shareholder with a 23% stake, and called on both his board representatives to quit.
Overnight markets: Up again
Asian stocks rose for a third straight day on Wednesday, reports Bloomberg, lifting the MSCI Asia Pacific Index to a six-week high as commodity prices increased. Futures on the S&P500 Index were little changed after the gauge rose 1.2% on Tuesday as concerns over Dubai World’s debt crisis eased.
Goldman bankers and their (alleged) guns
This gratuitous little comment piece is pinging round the financial blogosphere, for obvious reasons. From Alice Schroeder at Bloomberg:
“I just wrote my first reference for a gun permit,” said a friend,
CDS report: Sovereign index rallies as risk aversion retreats
Gavan Nolan of Markit wrote this CDS report
Credit and equity markets across the world resumed their rally as risk appetite returned after a brief hiatus. The Markit iTraxx Europe index tightened to 84bp,
[Wilmot on AV] Beyond Shiller P/E
We have never been great fans of the “Shiller P/E” based on 10-year moving averages. Much, much better than spot P/E but still too short-term to cope with the sometimes outsize cyclical fluctuations in earnings.
Fancy running an Icelandic bank?
Iceland’s Arion Bank is looking for a CEO. Interested? Apply here.
But first, the details:
In the next few days, Arion Bank will be inviting applications for the position of CEO, the first of Iceland’s large commercial banks to do so.
Somali pirates set up co-op, make hijacking a ‘community activity’
We’re always in the market for a good pirate yarn here on FT Alphaville, and we quite liked this Reuters story about Somali pirates’ funding techniques (beyond pillaging):
In Somalia’s main pirate lair of Haradheere,
[Wilmot on AV] Invisible Bubbles
The Global Composite Valuation Indicator combines a number of key valuation metrics. It covers US, European, Japanese and EM real equity returns, G5 equity-to-bond returns, BBB credit spreads and our World Wealth index.
ETF traders, the new hot financial commodity?
Whereas it could be said that commodity experts were the most sought after traders just a few years back, a new industry trend is definitely emerging.
Behold the industry grab for exchange-traded-fund traders.
[Wilmot on AV] John Law and Shadow Money
Another sign that shadow money “is as auld as the hills” comes from Niall Ferguson’s recent book “The Ascent of Money.”
In a chapter on bubbles, Ferguson amusingly describes “renegade Scotsman”
The shifting sands of UAE bank capital
Here’s some useful data from ratings agency Fitch – a breakdown of how the capital of banks in the United Arab Emirates is likely to be impacted by the Dubai World debt restructuring.
It’s basically an updated version of Fitch’s capital sensitivity test for UAE banks,
‘Deep down, even the fiercest equity bulls must be doubting themselves’
The latest missive from the dynamic SocGen strategy duo, Albert Edwards and Dylan Grice, landed in the FT Alphaville inbox on Tuesday, and it’s a stunner.
Some of the top lines from the presentation — titled:
[Wilmot on AV] No Fuel For Inflation…
So far at least.
Taking our cue from Hayek we recently had a shot at measuring “shadow money” in the US — the counterpart of the credit created through the shadow banking system. In today’s securitised system the repo market helps make longer term debt securities supremely liquid — for a certain haircut they can be turned into cash at a moments notice.
[Wilmot on AV] Hayek on “Elastic Money”
There can be no doubt that besides the regular types of the circulating medium ….there exist still other forms of media of exchange which occasionally or permanently do the service of money.
Now while for certain practical purposes we are accustomed to distinguish these forms of media of exchange from money proper as being mere substitutes for money,
Hamp-ing it up
Swat teams, shaming and sanctions are just a few of the incentives now in place to force financial companies to make more mortgage modifications.
But why are such drastic measures needed?
First a quick recap:
[Wilmot on AV] Markets After Momentum Peaks
Even after early cycle momentum peaks risk appetite tends to ebb, and risk assets tend to struggle for a while: developed equities usually under-perform bonds and emerging equities usually under-perform developed equities,
[Wilmot on AV] Post-panic Recoveries…
We called for a very strong bounce in global industrial production back in February/March.
Global IP (as we call it) is now roughly 9% above its March trough (on our estimates for October) and is already back to the pre-Lehman’s level.
The wisdom of Sheikh Mohammed bin Rashid
Sheikh Mohammed bin Rashid is in a contemplative mood.
Instead of lashing out at the parades of guffawing international press presently camped out in his kingdom’s crumbling hotels, Sheikh Mohammed has taken to expressing his thoughts in haiku form.Only the tree that
Bears fruit becomes a target
For the stone throwers
DISCLAIMER:
Lunch Wrap
On FT Alphaville Tuesday morning,
From guest editor Jonathan Wilmot, chief global strategist at Credit Suisse Investment Bank,
- BoJ on the spot – (much) more to do.
- False idols: Are US consumers really over leveraged?
- Slugging it out…(in a gentlemanly sort of way)…
LNG transatlantic arbitrage in action
Here’s a fine example of liquefied natural gas (LNG) arbitrage at work.
While hugely weak fundamentals are doing this to Henry Hub Natgas front-month futures prices :
UK NBP forward market prices were doing this:
Markets live transcript 1 Dec 2009
Markets live chat transcript for the chat ending at 12:28 on 1 Dec 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE) Miles Johnson, FT (MJ) Jonathan Wilmot (JW) NH:Good morning
[Wilmot on AV] BoJ on the spot – (much) more to do
Good deflation and bad deflation?
There’s nothing wrong with deflation when it’s a falling price boom we’re talking about. In modern times China comes closest: no one is stressing about the fact that Chinese non-food inflation is minus 1.5 per cent at the moment.
GE’s sukuk
Largely untested Islamic finance structures have, as we all know, been drawing unwanted scrutiny due to Dubai World’s recent debt-standstill antics.
However, that hasn’t stopped western corporates from adopting Islamic debt structures in a bid to raise much needed financing from alternative non-Western sources.
For sale in Dubai soon
As the $26bn debt workout at Dubai World gets underway, Reuters has produced a list of assets the Emirate’s flagship investment company might look to sell. And it is quite a long list.
However, the key question is whether anyone wants 300 islands in the shape of the world’s continents,