February, 2010
The European exit strategy, revisited
We’ve seen charts like the below before, but they are still striking:
That’s a Goldman Sachs snapshot of European central bank liquidity. As you can see, it basically falls off a cliff come summer 2010,
Spencer sells, Icap warns and the City reacts
Ouch.
That’s the price action in Icap on Friday morning after the inter-dealer broker warned on profits.
Icap now expects underlying pretax profits for the year to March 2010 to come in between £295-£315m.
Very good reasons to buy Toyota (cars and stocks)
In the volumes about “Toyota terror” cascading forth from the media, the FT’s Philip Stephens’ keenly counter-intuitive take stands out as a beacon of provocative — and we think persuasive — reasoning.
EMI – a (on)going concern? (updated)
Maltby Capital Limited, the vehicle Guy Hands used to acquire EMI for £4.2bn shortly before the credit markets collapsed a couple of years ago, has filed results and financial statements for the year to March 31,
Santander’s deteriorating ratio
Analysts mostly put a positive spin on Santander’s fourth quarter results on Thursday — interpreting the bank’s rise in provisioning as prudent rather than a signal of distress — but that didn’t stop Santander’s shares sinking on the day.
Further reading
Elsewhere on Friday,
- Model-oggling Macquarie banker keeps his job.
- The Devil really does wear Prada, or how luxury changes people.
- What happened the last time the UK defaulted?
- A scary subprime chart.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: The race for Greece before the ECB exits
Warren Buffett famously observed that it is only when the tide goes out, that you can see who is swimming naked.
Snap news
Breaking pre-market news on Friday,
- Icap warns profits for the year to 31 March 2010 will be in the range £295 million to £315 million – statement.
- British Airways reports third quarter operating profit of £25m – statement.
“A fraud against the American people”
The banker backlash continues – and in some style.
Thursday afternoon, New York attorney general Andrew Cuomo’s has taken the case against Ken “we’re good at this” Lewis public.
Reuters flashes report Cuomo is charging the former Bank of America CEO in connection with his role in Bank of America’s troublesome acquisition of Merrill Lynch,
Presenting the UK’s second most widely held share
Banco Santander:
That’s right. Thanks to the takeover Abbey National and the rescue of Alliance & Leicester, the Spanish bank is the second most widely owned stock in Britain, with 1.8m private shareholders.
Santander’s prudent provisioning, or not?
From Santander’s 2009 result statement on Thursday:
The chart above shows how Santander’s Spanish NPL ratio rose from 1.95 per cent to 3.41 per cent in 2009 and its coverage ratio (loan loss reserves divided by NPLs) fell from 98 per cent to 73 per cent.
A knee jerk reaction
The price action in the 10-year UK gilt in the wake of the Bank of England’s decision to put its quantitative easing programme on hold — but with an important caveat…
The Committee will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them.
Lunch Wrap
On FT Alphaville Thursday morning,
- The contagion spreads, parte dos.
- And here’s the corporate contagion.
- Still spreading sovereign CDS.
- Short-selling sovereign debt, the scale.
- Filling the central bank void.
Bank of England holds interest rates, pauses QE
The Bank of England opted not to surprise markets on Thursday; deciding in its latest policy meeting to keep interest rates at 0.5 per cent and pause its quantitative easing program at £200bn.
Here’s the release,
China: First the banks, now the corporates
First it was the banks and now, in a slightly less dramatic but possibly more potent warning to any investor who ever contemplated buying shares in a listed Chinese company, it’s the corporates. As the FT reports on Thursday:
Markets Live transcript 4 Feb 2010
Markets Live chat transcript for the chat ending at 12:21 on 4 Feb 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHHola NHand welcome to Markets Live
And here’s the corporate contagion
A couple of weeks ago, FT Alphaville noted missing Greek corporate contagion.
This Thursday we’ve found it.
And it’s not just corporate names in Greece, but also companies in Iberia and Italy:
That Bloomberg grab is courtesy of Gary Jenkins,
[Mining Indaba 2010] Day III
By Matthew Kennard.
Wednesday was all about investment security and Africa. The conference was addressed by South African mining minister, Susan Shabangu, who made noises a lot of people in room liked.
The scale of sovereign short-selling
The sovereign debt most targeted by short-sellers is not what you might expect, according to DataExplorers.
We’re not entirely sure of the methodology here, but the short-selling specialist has presented this interesting chart.
The contagion spreads, parte dos
More pain for Europe’s peripherals on Thursday morning:
And once more the financials are taking the brunt of it.
And anything related to public spending, particularly if it has loads of debt:
Filling the central bank void
Some thoughts to ponder before the Bank of England’s much-anticipated QE announcement later on Thursday.
FT Alphaville has worried before about what might happen once the Federal Reserve ends its $1.25 trillion buying-spree of mortgage-backed securities (MBS).
Sovereign CDS is spreading
The SovX Western Europe index went above 90bps for the first time on Wednesday:
And we hear it’s just gone over 100bps on Thursday.
Portugal CDS is up 21bps to 216bps and Greece is up 20bps to 410bps.
The cost of sticky accelerator pedals
That’s the share price chart of Toyota, which overnight said it expected costs and lost sales from its sticky accelerator pedals to total $2bn.
Surprisingly, the recall of 8m vehicles did not stop the company increasing its guidance for the year to March after a forecast busting third quarter – which was largely due to various cash for clunkers schemes.
Deutsche Bank, the flow rider
Deutsche Bank reported net income of €5bn for the year 2009 on Thursday, compared to a €3.9bn loss in 2008.
This, we would say, is a pretty impressive turnaround in anyone’s business.
So what helped Germany’s premier financial institution do so well last year?
Well,
Kontrast and Kompare
Preliminary guidance for Kraft’s bond seems to be out.
The below is courtesy of Marc Ostwald at Monument Securities
Just for fun, Ostwald provides details of a new Lithuanian 10-year bond:
Media-fuelled Goldman bonus neurosis
Even in the bold new era of “bonus rage”, rarely has so much limelight been focused on one individual banker’s remuneration. This stirring headline and breathless report from Thursday’s New York Times (our emphasis):
Five reasons why punters will continue to love FX
In the late noughties, banks and and platform providers seemed to go forex mad.
Some even decided to go after the retail buck — an area traditionally considered far too small for any big interbank player to care about.
Further reading
Elsewhere on Thursday,
- Meet the market’s biggest losers.
- Goldman departures: if you left Lloyd, he’d find you…
- That Macquarie Bank picture aftermath.
- Revenue beat rate: this earnings season.