April, 2010
The volcano’s impact on European jet fuel prices is ‘meh’
The volcanically-induced no-flight ban over Europe is having some follow-through on European jet fuel prices.
Barclays Capital estimated on Monday that the ash cloud could be responsible for cutting up to 1m barrels a day of demand in the short term.
[Abacus] Der Abakus
Alternate title: How Mitteleuropa led to the creation of the Abacus CDOs.
The German bank IKB, together with ACA, was one of the investors in Abacus 2007-ACI, the subprime-referencing synthetic CDO at the heart of the SEC’s civil fraud suit against Goldman Sachs.
Further reading
Elsewhere on Tuesday, and Goldman-related,
- Goldman’s defence — “a masterpiece of apophasis.”
- The politics of the Goldman fraud case.
- Abacus, Aba-bust.
- A Sunday night pep-talk for Goldman staff.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Roger Altman: America’s dangerous debt is Obama’s biggest test
The global financial system is again transfixed by sovereign debt risks, writes Altman,
Snap news
Breaking pre-market news on Tuesday,
- Tesco annual pre-tax profit up 1o per cent to record £3.4bn – statement.
- AB Foods H1 beats forecasts, upbeat for year – statement.
- Falklands explorer Desire sees Q3 drilling restart – statement.
[Abacus] Fabrice Tourre scores an indefinite paid holiday
Fabrice “Fabulous Fab” Tourre, the Goldman Sachs employee at the epicentre of the SEC’s allegations against the former investment bank, has gone on holiday. Indefinitely.
From the WSJ on Monday:
Goldman spokesman Lucas van Praag confirmed in an email that Mr.
Icelandic volcano ash and the eurozone, a primer from RBS
On Sunday, the NY Times summed up the situation facing Europe (at least as far as geothermal matters are concerned) in a simple headline: “Volcanic Ash May Weigh on European Economy”.
Quite. Here’s some analyst commentary on the ash-chaos,
CDS report: Banks and airlines drag market down
Financials took over from sovereigns as the negative catalyst du jour, pushing spreads wider across the board. The bearish sentiment triggered on Friday afternoon by news that Goldman Sachs had been charged with fraud gathered momentum over the weekend and continued today.
[Abacus] The Goldman defence documents
A big hat tip to the FT’s Francesco Guerrera here.
Presenting Goldman Sachs’ detailed defence of Abacus 2007-AC1 CDO — Part I and Part II
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There’s so much here worthy of discussion,
The China property splurge, up close and personal
Shimao is the Chinese property developer controlled by the country’s enigmatic billionaire, Xu Rongmao.
Readers in the UK might be familiar with Rongmao, since he was linked back in September 2008 to the possible purchase of Mike Ashley’s stake in Newcastle United Football Club.
[Abacus] Fisking Goldman’s latest rebuttal
Goldman doth protest too much, we think, in the statement it issued on Sunday on the SEC’s complaint against it and its trader Fabrice Tourre. We note that Goldman is already on its third rebuttal since Friday.
Greek austerity with the truth
The Greek finance minister is supposed to have set his government a Herculean task of fiscal adjustment — to get his country out of its debt crisis, and away from the risk of default.
So what’s the following comment all about,
[Abacus] A CDO litigation risk league table
Interesting table from Dan Davies at Credit Suisse, who checked the Dealogic database to see who acted as lead underwriter on deals similar to Goldman’s Abacus 2007-AC1.
Here’s the ranking for the key boom years,
Citigroup surprises with Q1 net income of $4.4bn
Citigroup shares rose 3.3 per cent in pre-market trade in New York on Monday after the bank reported a Q1 net income of $4.4bn. Profit from continuing operations came in at 14 cents per share.
Investors had expected the bank to break even in the quarter.
BA versus the volcano
So British Airways CEO Willie Walsh took to the skies this weekend — Icelandic volcanic ash, and the small matter of its closure of Europe’s northern air routes, be damned.
Walsh might well try to convince European airspace regulators that flying through clouds of volcanic emissions is safe;
Markets Live transcript 19 Apr 2010
Markets Live chat transcript for the chat ending at 11:27 on 19 Apr 2010. Participants in this chat were: Bryce Elder Izabella Kaminska, FT BEGood morning. BEAnd welcome to Markets Live.
Oh no, my ETF is turning Japanese!
Think your FTSE 100 equity Exchange-Traded Fund (ETF) investment guarantees you exact FTSE 100 returns, minus fees?
When things are going well it might very well do.
In Europe, the fact that a portion of ETF fund returns is often guaranteed by total return swaps can indeed provide for superior tracking ability.
[Abacus] A Goldman blogger round-up
The weekend produced a veritable Eyjafjallajökull ash cloud of blogging and bloviating on the SEC’s filing on Friday against Goldman Sachs and its structured products trader Fabrice Tourre. Here’s the best we’ve read.
[The Stanford Series] Strategies to cope with the SEC
There’s something else that emerged from the SEC on Friday — something that was coincidentally largely lost in the Goldman-CDO commotion.
It’s a report by the SEC’s Office of the Inspector General,
[Abacus] The analysts react
The SEC’s complaint against Goldman Sachs, alleging the bank misled investors on a 2007 subprime synthetic CDO deal, caused a 12 per cent drop in the company’s share price on Friday.
So, has the bank’s
[Abacus] ACA’s rather disastrous CDO forays
In addition to being your run-of-the-mill (disastrous) monoline insurer and at the heart of the SEC complaint against Goldman Sachs’ alleged fraud — ACA was something else: a very unsuccessful CDO manager.
Further reading
Elsewhere on Monday, and non-Goldman Sachs-related,
- The face that launched a thousand Greek bps.
- The non-existent hand.
- Adventures in yield curves, JPM edition.
- Do not trade at the open?
- Chinese GDP = 1/2 wasteful.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Frank Partnoy: Wall Street beware: the lawyers are coming
The US Congress will debate new financial legislation this week, but the real action in financial reform started last Friday with the fraud lawsuit filed by the Securities and Exchange Commission against Goldman,
Snap news
Breaking pre-market news on Monday,
- Tui Travel expects £20m loss so far from Eyjafjallajökull eruption — statement.
- LSR Group announces 12 per cent rise in EBITDA in 2009 — statement.
- SOCO International secures rig for drilling in Nganzi Block — statement.
[Abacus] ‘Goldman Sachs is disappointed…’
There’s got to be a sick squid joke in here somewhere.
Goldman Sachs, late on Friday, issued a fresh statement on the SEC/Paulson CDO pumping affair.
Highlights:
- Goldman Sachs lost $90m on this transaction
- IKB and ACA Capital Management “were among the most sophisticated mortgage investors in the world.”
[Abacus] Introducing Fabrice “fabulous Fab” Tourre
We all want to know much more about the sort of guy who can write this to a colleague:
More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor,
[Abacus] SEC/Goldman linkfest
Further gleeful reading,
- Now is the time to inject some genuine transparency – Gillian Tett, FT
- Goldman Sachs and a dark corner of the market – John Gapper, FT
- It’s not just Goldman – it’s the clients,
[Abacus] Paulson: ‘It’s our money now’
Well, in so many words…
If ABACUS 2007-AC1 is proved to be a fraud on Germany’s IKB and Britain’s RBS (née ABN Amro), then John Paulson’s hedge fund will be braced for compensatory claims.
Here’s the Paulson &
Crumbling resistance to financial reform
John Kemp at Reuters makes an important point: the SEC’s move against Goldman Sachs over subprime makes the passage of financial reform legislation through Congress a racing certainty.
Despite the widely-held belief that Wall Street has Washington over a lobbyist’s barrel,