January, 2011
Markets Live transcript 10 Jan 2011
Markets Live chat transcript for the chat ending at 12:36 on 10 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHand welcome to Markets Live
Another blow for BP
BP just can’t keep out of the news these days.
After hitting the Gulf coast with its Macondo well oil spill last year, the oil major as of Saturday was seemingly involved in another major oil-infrastructure fail — the shutdown of its Trans-Alaska pipeline system due to a leak.
Bid or no bid for Smith & Nephew?
Did Smith & Nephew receive a bid of more than 750p a share from Johnson & Johnson before Christmas?
The unsatisfactory answer after a weekend of frenzied speculation (and a big run-up in the S&N share price on Monday morning) is that we still don’t know.
Timeline Portugal
As goes Greece…
And Ireland…
So goes Portugal?
As Gary Jenkins over at Evolution Securities reminds us, it took Greece and Ireland less than a month to request EU/IMF aid after their 10-year bond yields breached that all-important 7 per cent level (as indicated in the charts above).
Further reading
Elsewhere on Monday,
- Alan Greenspan says: “prove I was wrong.”
- Money market freezes and (fiscally biased) central banks.
- On the media creating a frenzy.
- “Without rehypothecation, collateralised lending destroys liquidity.”
Pink picks
Comment, news and other offerings from Monday’s FT,
Wolfgang Münchau: No happy new year for the eurozone
The longer the eurozone’s crisis drags on, the more radical, and improbable, any solutions must be,
Snap news
Breaking pre-market news on Monday,
- Dupont to acquire Danisco for $6.3bn — statement.
- Omega Insurance confirms bid approach from Canopius Group — statement.
- Ocado says December sales rose by 26.7 per cent — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Bank-run funds are poor performers
Investment funds managed by banks and insurance companies generally underperform those operated by independent asset managers across much of Europe,
Fair disclosure – UK takeover edition
What’s this? Another UK company deciding not to reveal a takeover approach in spite of persistent bid speculation?
Looks that way. And this one is a FTSE 100 constituent.
From Mark Kleinman of Sky News:
Further further reading
For the commute home,
- Alan Greenspan tells the WSJ that he wouldn’t have done anything different, challenges critics to prove he was wrong.
- The 10 greatest trades of all time.
- On Chinese demographic trends.
The Irish covered bond exception
Here’s an interesting eurozone related bond trade for you.
While Irish debt may be looking unappealing due to the haircuts being applied, there is one possible Irish bond market that could still prove attractive:
Peak smokes
Citigroup downgraded three large-cap tobacco stocks (Philip Morris, Imperial Tobacco, BAT) on Friday.
Some parts of their reasoning were… unusually existential for equity analysis. Historic, even.
Ill(inois) behaviour in the municipal markets [updated]
Sing along with us:
From a wilderness of prairies, Illinois, Illinois,
Straight thy way and never varies, Illinois, Illinois,
Till upon the inland sea,
Stands thy great commerical tree, turning all the world to thee,
And the financials all went down on Massachusetts
(Excuse the Bee Gees song reference, couldn’t help ourselves.)
As we have already noted, Wells Fargo and US Bancorp on Friday lost what could turn out to be a highly critical case regarding the general legality of bank foreclosures in the United States.
More thoughts on the employment report
Let’s jump right in:
1. To dispense with the obvious, the headline number of 103,000 new jobs fell a good deal short of the roughly 150,000 expected. Including subsequent revisions, this is what the payroll changes in the last six months look like:
Sovereign CDS, un petit complexe de Napoléon
Should the Republic of France really be trading as a credit two notches above junk?
Five-year credit default swaps on the French sovereign were trading at 110bps at pixel time, according to Markit.
In other words:
Bernanke bashes the budget
The man with 100 per cent confidence in himself doesn’t seem to have the same belief in Congress.
Ben Bernanke was giving testimony and answering questions in front of the Senate Budget Committee at pixel time on Friday.
From the US to Germany – NFPs halt Bund futures trading
According to Reuters, trading in German Bund futures was halted for two minutes on Friday after US December non-farm payrolls sent price volatility spiking:
Related link:
Why trading machines don’t
December payrolls: employment grows by 103,000
We’ll be back with analysis in a bit, but here’s the link and the main part of the report:
The unemployment rate fell by 0.4 percentage point to 9.4 percent in December, and nonfarm payroll employment increased by 103,000,
Buiter’s €2,000bn solution for the Eurozone
The latest (and as usual, substantial) note from Willem Buiter, chief economist at Citigroup, has landed in the FT Alphaville inbox.
The bulk of its 84 pages can be summarized in one line though: “no sovereign is really safe”
A court case to challenge securitisation standards [updated]
Currently winding its way through the Massachusetts Supreme Court — a little court case that could end up having big consequences for mortgage securitisations.
It’s called the ‘Ibanez case’ and here’s the story.
Markets Live transcript 7 Jan 2011
Markets Live chat transcript for the chat ending at 12:28 on 7 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHwe are back NHand by the looks of it SNAFU
Simon says… LOL
The bid battle for Capital Shopping Centres has taken a slightly farcical turn on Friday morning, with the UK’s largest mall operator claiming it’s worth 50 per cent, or £2bn, more than its current market quote.
That EFSM bond crowd
An EFSM crowding out effect? Not necessarily in Spanish or Portuguese bonds.
Europe sold the first (€5bn) tranche of its Ireland-bailout bond on Wednesday. The Commission will pay 2.59 per cent interest on the debt,
US jobs optimism, the test
There are indicators and then there are indicators, as seen in the debate surrounding the US jobs optimism highlighted in this week’s private-sector payroll figures from the ADP National Employment Report.
Happy new year from the Eurozone
Friday’s price action in …
… the euro:
… the government bond market (via Reuters):
- PORTUGUESE/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD WIDENS TO 433 BPS, 13 BPS WIDER ON DAY
-SPANISH/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD WIDENS TO 264 BPS,
Ashes to Ashes for the UK stock market?
It’s 24 years since England last tasted cricketing success in the Ashes down under and to mark this historic event we present some spurious stock market correlation via Shore Capital strategist Gerard Lane.
Further reading
Elsewhere on Friday,
- Rising bond yields: good or bad for shares?
- Goldman and that Abacus deal, ACA edition.
- Apple’s new CFO hunting ground.
- Top 10 ways to fail a job interview.
- Catastrophe bonds,
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Samuel Brittan: Look behind the myth of global imbalances
Internationally, everything depends on what the surplus countries do with their surpluses,