January, 2010
An overseas sterling liability?
Recent developments at the Bank of England have provided ammunition to Britain’s considerable community of eurosceptics.
After all, argue some, had the UK been part of the eurozone it could not have quantitatively eased its way out of deflationary trouble.
Further reading
Elsewhere on Wednesday,
- Mind the gap in inflation.
- The global deleveraging.
- Debt in Dubai, adventures in estimates.
- “Why do the largest banks make so much more than other banks?”
- The bidding war for failed banks.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Greek tragedy deserves a global audience
The Greek government has promised to slash its fiscal deficit from an estimated 12.7 per cent of GDP last year to 3 per cent in 2012,
Snap news
Breaking pre-market news on Wednesday,
- Cadbury battle ends with midnight handshake – FT, publication of offer.
- IBM Consulting sales fall 2.8 per cent to $4.58bn – statement.
- Address by Mervyn King to the University of Exeter Business Leaders’ Forum – speech.
Which governments are really at risk of bankruptcy?
Everyone knows who are the sick men of Europe, right? Just look at the CDS markets to see which countries have the riskiest debt profiles: Greece wins hands down followed by Ireland some way behind.
But CDS traders might be systematically underestimating the riskiness of some of the traditionally more fiscally heavy-weight nations,
Cadbury post-mortem
No doubt the board of Cadbury are feeling pretty pleased with themselves right now.
After all, they have just managed to extract a higher offer from Kraft, providing an exit at a 50 per cent premium to the level it was trading at the day before the first offer in September.
Citi’s CVA oops
What’s this? An own credit oversight up at Citi?
From the bank’s fourth-quarter 2009 earnings statement:
[Securities & Banking] revenues declined to $3.5 billion from $4.9 billion in the prior quarter.
Chevron’s refinery slapdown
Wow. We knew things were bad for Chevron’s refining business but we didn’t quite expect this.
From Reuters on Tuesday:
- CHEVRON TO RESTRUCTURE REFINERY OPERATIONS, CUT UNDETERMINED NUMBER OF JOBS
- CHEVRON TO EXIT CERAIN REFINERY MARKETS,
Citi’s so-called credit caution
Citi may still claim to be “cautious” about the outlook for future credit losses, but its loan-loss reserve build suggests it’s really quite optimistic about future credit prospects. Or at least, it’s acting that way.
The world’s top 280 energy projects
Here’s an exhaustive view of the energy projects that are likely to change the world according to Goldman Sachs.
In fact, the bank says there are 280 such projects currently under development or in the process of exploration.
Citi posts Q4 loss of $0.33 a share, net loss of $7.6bn
Terminally-troubled Citigroup is the second of the big US banks to report this fourth-quarter earnings season.
And on Tuesday, the company’s shares were down slightly in pre-market trade after posting a Q4 net loss of ‘just’ $7.6bn,
Europe’s auto-ABS revival
We’re not talking about automatic breaking systems either.
Last week it emerged Ford and BMW would be breathing life back into the European market for asset-backed securities by issuing more than €1bn of debt backed by automobile loans and leases.
Lunch Wrap
On FT Alphaville Tuesday morning,
- Cadbury melts away.
- And some Kraft-iness.
- Mervyn readies his pen.
- Barclays needs more capital.
- SocGen calling (bonds).
- A kamikaze bankruptcy at JAL.
Mervyn readies his pen
From Reuters on Tuesday:
LONDON, Jan 19 (Reuters) – British consumer price inflation rose at its fastest annual pace in nine months in December as a cut in value added sales tax, heavy discounting and a sharp fall in oil prices at the end of 2008 were not repeated in 2009,
Markets Live transcript 19 Jan 2010
Markets Live chat transcript for the chat ending at 12:16 on 19 Jan 2010. Participants in this chat were: Neil Hume, FT Bryce Elder
NH
Hola
NH
And welcome to Markets Live
SocGen calling
What’s this? A bank actually calling its Tier 1 bonds?
From a statement on the Luxembourg Exchange:
The calling and not-calling of Tier 1 and Tier 2 bonds became something of a controversial subject,
Krafty
If you thought Kraft shareholders might be able to derail the company’s new, improved bid for Cadbury think again.
From the Recommended Final Offer for Cadbury, unveiled on Tuesday morning:
The Final Offer does not require the approval of Kraft Foods Shareholders.
Cadbury melts away
Lo and behold, not with a bang but a whimper, do the finalised terms of the Kraft-Cadbury deal come on Tuesday morning, right, as Pestowire predicted, at 9:04am London time.
From the statement:
*
JAL’s kamikaze bankruptcy
It gives new meaning to the word kamikaze… In a move that the FT attributed to “self-inflicted wounds”, Japan Airlines formally nosedived into bankruptcy on Tuesday, filing with the Tokyo District Court for a court-led restructuring as its share price reached the miserable level of Y5.
Further reading
Elsewhere on Tuesday,
- Kradbury terms on Pestowire.
- Why the Fed should regulate banks.
- The ‘dumbest’ article of the year?
- The derivatives of politics.
- The other side of Dr (Marc Faber) Doom.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Why America and China will clash
Google’s clash with China is about much more than the fate of a single, powerful firm, writes FT columnist Rachman.
Snap news
Breaking pre-market news on Tuesday,
- Travelport to raise $1.775bn via London IPO to reduce indebtedness – statement.
- Kraft nears £12bn Cadbury takeover – FT, statement and PestoWire.
- Severn Trent to rebase dividend – statement.
(Ir)rational enthusiasm, emerging markets edition
There was something uncanny about the coincidence of a frothy comment on Russia and a typically less-than-impressed note from David Rosenberg both hitting our in-boxes on Monday.
First, from RBS (emphasis FT Alphaville’s):
Intl Power says “No deal”
Better late than never we suppose.
Press release timed at 15.09 on Monday afternoon.
London – 18 January 2010) International Power plc (“International Power” or the “Company”) notes the recent market speculation and movement in the Company’s share price.
Did foreigners cause the financial crisis?
That’s foreigners, as in non-United States. And it’s the thesis of MIT economist Ricardo Caballero that’s already setting the blogosphere aflame after it was highlighted by Time Magazine over the weekend.
A drachma-tization
Could Greece be forced out of the euro zone – or for that matter the EU – as a result of its fiscal delinquency?
As we reported last week, it’s a matter recently taken up in an EU paper entitled “Withdrawal and Expulsion from the EU and EMU:
Hamp-ing up the numbers
On Friday the US Treasury released December figures for its Home Affordable Modification Program.
The report makes for interesting reading maths.
For a start, as Calculated Risk notes, you have to wonder why,
Austerity is the way… (updated)
…according to Bob Janjuah, chief strategist at RBS, who has just published his 2010 outlook piece. We can report that it has an intriguingly pro-Eurozone flavour.
It’s also very, bearish. So much so that some of it might even make Albert Edwards and his colleagues wince.
What Google says about inflation
Alternative research shop Variant Perception is always good for an exciting nugget of eco-data.
In their latest monthly report their focus — as always — tips towards the inflationary view of things.