April, 2010
Totting up a Greek Götterdämmerung, Part II
Put apocalypse on hold. Bundesbank president Axel Weber has now denied that he said Greece may need €80bn in the years after an eventual rescue by the Eurozone and IMF, contrary to statements reported by the WSJ on Tuesday.
Markets Live transcript 21 Apr 2010
Markets Live chat transcript for the chat ending at 11:16 on 21 Apr 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHHola NHGood morning NHand welcome to Markets Live
The people’s flag is deepest red
Here’s a fun — and highly timely — bit of political science to ponder, just as legislators in the US and UK are limbering up for a big push on financial regulation, and markets wonder just how far they will go.
Subprime sushi
Oh, Greg Lippmann, you,
Who love sushi, hate subprime,
What is Fred up to?
That’s an FT Alphaville haiku in commemoration of Greg Lippmann’s time at Deutsche Bank. Bloomberg reports the avid raw-fish eater,
[Abacus] The exemplary Magnetar CDOs
What’s the proper way to disclose that someone going short on a CDO is also selecting its assets?
The SEC seems to have had some idea.
In Part II of its defence documents, Goldman talks of the following suggestion made by SEC staff at a September 2009 meeting — before the regulator filed its CDO fraud suit against the bank:
[Abacus] Fabrice Tourre goes underground
Want to check in on Fabrice Tourre’s Linked-in profile?
You can’t.
It looks like the Goldman Sachs man, who’s been accused of CDO fraud by the SEC and was de-registered from the FSA on Tuesday, has been busy removing his digital footprint.
Further reading
Elsewhere on Wednesday,
- Goldman’s unwanted super-senior position.
- “The SEC may be trying to cure unethical behavior by treating it as illegality.”
- Pay no attention to the SEC failure behind the curtain.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: The challenge of halting the financial doomsday machine
Can we afford our financial system? The answer is no, the FT columnist writes.
Snap news
Breaking pre-market news on Wednesday,
- Autonomy reports record Q1 revs of $194.2m, and pre-tax profit of $85.3m – statement.
- Game Group CEO Lisa Morgan steps down, reports weak annual results – statement and statement.
The (allegedly) NSFW Ponzi
Latest from the SEC’s enforcement division:
McGinn, MS Capital and MS & Co. also deceived investors into unwittingly investing in a sexually-oriented charter cruise venture created by McGinn. In February 2008,
Introducing the FAT(cat) tax
You could almost hear the supranational cogs a-whir at the IMF. How else to explain the organisation’s proposals for new taxes on financial institutions?
—
So how do we rebrand this Tobin tax idea and get some decent press?
Well,
Two dirty words: ‘Wall Street’
Here’s evidence of the reputational damage suffered by a certain street in lower Manhattan:
When the dirty words “Wall Street” are not mentioned Americans are quite closely divided on the need for reform of the financial sector;
Schapiro defends regulators. Again.
Mary Schapiro must be getting a bit bored of having to mount lengthy defences of the regulatory bodies she has headed.
Under her tenure, for instance, FINRA failed entirely to investigate numerous tips that Allen Stanford and Bernard Madoff might not have been on their best behaviour.
Chinese property: less pop, more boom
Now here’s an interesting take on matters bubble, boom and bust in the role property investment plays in China’s surging growth.
Lombard Street Research made a succinct case on Tuesday for boom, not bubble:
Mangling Magnetar
The FT’s John Gapper has copy of the letter dispatched to Magnetar clients in the wake of the ProPublica investigation. In short, the hedge fund (as Gapper put it) has came out fighting against the accusations levelled against it.
Friends of the bankers (not)
Among the scores of responses to the Basel Committee’s call for comments its proposals to strengthen the resilience of the banking sector, one stands out – a submission by Friends of the Earth Europe.
And why shouldn’t they have a (left-field) view on the financial system?
Banks and other financial institutions play a crucial role in allocating financial resources in our present,
The non-performing pain in Spain goes on, and on
The Bank of Spain released the February data for Spanish banks’ non-performing loans on Monday, and the details aren’t pretty.
Like much else in the wreckage of Spain’s pre-recession property boom, the performance of these banks’ loan portfolios is less than reassuring,
CDS report: Fundamentals outweigh events
Global credit markets bounced back today as the strong fundamentals evident in recent weeks outweighed idiosyncratic risk. The Markit iTraxx Europe index was trading around 80.5bp, losing some of its gains from earlier in the day but still 3bp tighter than yesterday’s close.
Goldman’s Q1 results – analysts react
Analysts are starting to respond to the blow-out first quarter figures from Goldman Sachs with wait for it…a flurry of ‘buy’ recommendations.
In fact, heading into the results the number of ‘buy’ ratings on Goldman was at a five year high,
[Abacus] The experience of Laura Schwartz
Laura Schwartz is a name that appears in Goldman Sachs’ defence documents — the bank’s counter-arguments against the SEC’s allegations of civil fraud in its Abacus CDO — and the pitch-book for the deal.
Goldman Sachs Q1 EPS beats forecasts at $5.59
Goldman Sachs shares rose 1.4 per cent in pre-market trade in New York after the bank reported Q1 earnings per share of $5.59. The figure beat the Reuters consensus forecast of $4.01.
Here follow the initial flashes from Reuters:
The volcano’s impact on airline fuel hedges, jet storage
FT Alphaville noted earlier on Tuesday how Barclays Capital seemed convinced the volcanic ash cloud would not have a lasting impact on the global oil market balance via its depressive demand effect on jet fuel.
Markets Live transcript 20 Apr 2010
Markets Live chat transcript for the chat ending at 11:16 on 20 Apr 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHHello there NHand welcome to ML NHFT Alphaville’s daily tango round the markets
Basel letters page (updated)
The Basel Committee of Banking Supervisors has released the feedback it received on the proposed reforms to capital and liquidity frameworks — or Basel III as they are more commonly known.
Unsurprisingly there’s a lot of it — 252 letters in all from banks,
Défãult rísk – again
Remember January 15? That was the day Greece’s CDS curve inverted.
And February 9 was the day Portugal’s CDS curve inverted.
An inverted CDS curve basically indicates that the market believes there’s a higher probability of a default in the short-term than in the longer term — the cost of protection in the short-term is higher.
[Abacus] Is this the sound of a bandwagon?
This, from the UK’s Financial Services Authority, landed in FT Alphaville’s inbox on Tuesday morning:
FSA statement on Goldman Sachs International
Following preliminary investigations the Financial Services Authority (FSA) has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations.
UK inflation – still rising
The consensus among City economists is for UK consumer prices to fall to 1.8 per cent by the end of this year before staying in a 1.4-1.7 per cent range next year.
So, where do those forecasts lie after Tuesday’s strong than expected reading?
From Reuters:
Totting up a Greek Götterdämmerung
A billion here, a billion there, and soon you’re talking real money, as a US Senator once (possibly) said. For Bundesbanker Axel Weber, however, you’re mostly talking a giant headache, as numbers fly over what rescuing Greece will actually cost Europe.
What the Fed’s boringness begot
Last week the analysts at Deutsche Bank blamed the erstwhile boringness of central bank policy — or at least its predictability — for fueling the financial crisis.
Mortgage expert and George Soros-advisor Alan Boyce has a similar idea: