May, 2010
‘Shut it, George’
Quoth George Osborne, the UK’s new Chancellor, in Monday’s FT:
We are finding all sorts of skeletons in various cupboards and all sorts of decisions taken at the last minute. By the end the previous government was totally irresponsible and has left this country with absolutely terrible public finance,
Pru rights issue: the details
Not before time…
Prudential – finally and at long last – announced its much delayed $20bn rights issue on Monday morning (UK time), allowing Tidjane Thiam, chief executive, “to make the financial case for Pru’s $35.5bn takeover”
One giant leap for ManGLGed (Group) Part II
(We have updated the header with the new name for Man/GLG and there’s added comment).
Shares in Man Group are the biggest faller in the FTSE on Monday morning, as investors digest its transformational deal – the acquisition of GLG Partners for $1.6bn.
One giant leap for Man (Group)
Man Group has made a bold move to diversify its business — it’s buying GLG Partners for $1.6bn.
Via Reuters:
MAN GROUP PLC – VALUES THE FULLY DILUTED SHARE CAPITAL OF GLG AT APPROX $1.6 BLN
MAN GROUP PLC ACQUISITION EXPECTED TO BE EARNINGS ACCRETIVE IN THE FINANCIAL YR ENDING IN 2012
The deal is being structured as a cash offer — $4.50 a GLG share,
A missing €34bn of German exposure to Greece?
Uh oh. We’ve heard this before.
Despite the announcement of a EuroTarp package last weekend, worries about European banks’ exposure to Greece are still affecting money markets. To wit, the Libor-OIS spread:
More on the ECB’s mysterious bond-buying
After a couple of false starts it *looks* like the European Central Bank will start reporting the amount of government bonds it has been buying as part of its near-quantitative easing, tomorrow, Tuesday.
Further reading
Elswhere on Monday,
- It’s baa-aack. RMBS, that is.
- An underground economy problem.
- The (very abridged) story of Greece.
- Did volume drop on Friday? Now we know why.
- Merkley-Levin is a joke.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Wolfgang Münchau: To save the eurozone, reform its governance
The eurozone came extremely close to a breakdown 10 days ago, the FT columnist writes .The European rescue package has changed the odds about the currency union’s future in two ways.
Snap news
Breaking pre-market news on Monday,
- Prudential finally launches record-breaking £14.5bn rights issue; issues trading update – statement and statement.
- BHP Billiton to review Australian operations and investment plans in light of super tax – statement.
FTfm on AV
Highlights from Monday’s FTfm.
‘Risk’ fears threaten trackers
Index tracking managers’ hopes that they may finally gain a strong foothold in the UK following an industry shake-up could be dashed by financial advisers’ fears over the perceived riskiness of passive funds
Pitfalls ahead for gilt investors
Initial market reaction to the new UK government is positive,
Guest post: El-Erian on the difficult choices still facing Europe
Pimco’s chief executive Mohamed El-Erian considers the painful options facing policy makers now that the massive interventions already appear to be stalling
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The beneficial impact of last weekend’s $1 trillion “shock and awe”
The Treasury non-conundrum, or why yields are trading below 3.6%
SocGen economist Aneta Markowska affects bemusement at the benign bond yield environment in the US. As she put it in a recent note (any emphasis/links FT Alphaville’s):
Sovereign debt concerns have rocked many economies in recent months.
Dubai repays $980m Nakheel bond on time
Finally, some good news:
May 13 (Reuters) – Dubai repaid a $980 million Islamic bond issued by developer Nakheel while another state-owned firm said it was confident of refinancing an upcoming loan as it digs out from a massive debt burden.
Europe is Lehman-fied, part quatre
There have been more than a few comparisons drawn between the crisis in the eurozone and Lehman Brothers here on FT Alphaville. Here’s another, via Tullett Prebon Economist Lena Komileva.
Here are extracts from Komileva’s argument,
Rosenberg: ‘Gold is now in a bubble? Not a chance’
This is Dave’s moment, and the the Gluskin Sheff man let fly on Friday – proclaiming the enduring attraction of gold, tearing into spurious retail sales figures in the US and declaring the primary trendline now to be global deflation.
CDS report: Volte face
Drastic times call for drastic measures. In Europe this week we have been treated to the sight of politicians and central bankers jettisoning deeply-held beliefs in response to events out of their control.
Reuters names e-mini ‘flash crash’ seller
A big exclusive for Reuters, which on Friday afternoon revealed the identity of the mystery trader CFTC chairman Gary Gensler said placed a disproportionately large sell order in CME e-mini S&P futures around the time of Thursday’s ‘flash crash’.
Equities and CDS, also eurotrashed
European stocks crash-landed toward their close on Friday, countering the gains reached at the week’s start in the wake of the eurozone rescue.
Spain’s Ibex 35 led the way with a 7.2 per cent drop — its biggest daily fall since November 2008,
Eurotrash all over again
Ouch. The Mighty Drachmark plunged to 1.236 against the dollar in late European trading on Friday — flying past levels last seen in October 2008:
In Europa We Trust
Now here’s a bravely contrarian Goldman Sachs research headline:
The European Rescue: Stability and sanity restored!
Which comes from the bank’s chief European economist Erik Nielsen.
As European markets end their first week of life under the Great Rescue Package,
[CFA in Boston] The surprising cost of volatility
From Ted Seides, senior managing director of founder of Protégé Partners, who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…
Extract:
Twice in the last four years I felt compelled to express my thoughts in this format.
The great Aussie-yen unwind
Get ready for the great unwind in yen-Aussie dollar trades.
That, at any rate, is the view from JP Morgan’s Japan currency strategist Tohru Sasaki.
As he noted on Friday, Japanese retail forex margin traders have not reduced their yen shorts much on an aggregate basis,
Now, about those DEM rumours – redux
On Thursday we poured scorn on the bizarre rumour that German officials have already prepared for a “plan B” contingency involving the return of the Deutsche Mark as soon as this weekend.
Although it might not have been as far fetched as we thought…
Markets Live transcript 14 May 2010
Markets Live chat transcript for the chat ending at 11:26 on 14 May 2010. Participants in this chat were: Neil Hume, FT Izabella Kaminska, FT NHGood morning NHor should i say hola
CSI: Chicago
The Chicago Mercantile Exchange has published its account of what happened on May 6, and considering trade in the exchange’s e-mini S&P 500 future has been thrust into the spotlight by CFTC chairman Gary Gensler,
Austerity Britain and equities
Should stock market investors fear the onset of austerity Britain?
Not necessarily, according Goldman Sachs which has examined three periods of significant financial retrenchment over the past 40 years,
The deflationary pain in Spain
Ouch. You don’t want deflation when your economy is struggling with huge private debts. So spare a thought for Spain on Friday, where official data revealed negative core inflation.
Flashes via Reuters,
US monetary base growth is really quite off the chart
From the latest edition of the St Louis Fed’s Monetary Trends:
Err, time to expand those parameters maybe?
On a more serious note, the St Louis Fed’s May Monetary Trends also has a short section on the effect of monetary policy on asset prices — including house prices and equities.
A short history of European liquidity
Here’s a timely report from Fitch — a short history of the European Central Bank’s liquidity operations.
For those who are having difficulty keeping track of what’s been on offer, here’s a quick summary: