The new scourge of the markets has struck again.
HBOS on Tuesday afternoon said that its Grampian credit arbitrage conduit would be using credit lines from the bank to repay maturing paper “until such a time as market pricing improves to a level acceptable to HBOS.”
Look - we’re all a bit jumpy. But this rumour-driven unease can’t be doing anyone any good.
All through the European morning, we were being bombarded with stories that a cut in Fed funds rate was on its way.
An outbreak of damp-eyed optimism on Tuesday by those who think that the world’s got a little over-wrought in the financial flip-flopping of recent weeks.
The banks have come in for a particularly hefty dose of soothing words - with a detailed Merrill report just the first to land informing us that banking armageddon is not upon us.
Most of the market might be on edge, but analysts at Merrill Lynch aren’t being cowed. Evidence for the current crisis is “not compelling” the bank declares in a detailed note sent to clients on Tuesday.
A conspiratorial subprime-related letter, referred to here on FT Alpahville earlier on Tuesday after extracts were quoted in Barron’s and attributed to an anonymous hedge fund manager, turns out not to be very “anonymous”
Hayman Capital 2626 Cole Avenue, Suite 200
Dallas, TX 75204
July 30th, 2007
Dear Investors,
Over the past few months, we have seen the exacerbation of the Subprime problem accelerate at a precipitous pace.
European credit derivatives markets weakened on Tuesday morning amid concerns that mounting problems in the commercial paper market would force investors to sell assets.
Investors have been refusing to buy asset backed commercial paper (ABCP),
On FT Alphaville this morning,
- A Bank of England report charts the interplay between financial innovation, the banks and their counterparties - covering such hot topics as the monoline insurers and ABCP.
Sometimes it’s not easy being the world’s most successful - and famous - investor. Whenever any media outlets float the idea that Warren Buffett may buy into something - in this case it’s the WSJ reporting speculation by some investors that Buffett may scoop up bits of troubled US mortgage lender Countrywide - the report is picked up by wire agencies,
Markets live chat transcript for the chat ending at 11:57 on 21 Aug 2007. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH) PM: We’re off! PM: Welcome to Markets Live, Alphaville’s daily discussion of what’s moving and why.
The “bundling and unbundling, slicing and dicing of risks”? ABCP conduits? Monoline credit insurers?
These are phrases of the moment.
How about this as a description of the finer points of the current financial fiasco,
Suntans are peeling fast as most bankers furiously search their floppies for that memo from the summer of ‘03 that came on cold for the US mortgage market.
Most, but not all.
Indeed, you will be forgiven for not knowing that the current credit crisis could be the work of an evil cabal.
Emerging markets are the new black. Right? (The old black being structured finance and subprime lending - but don’t let that put you off.)
Inboxes at Alphaville HQ have been flooded with reports and analysis extolling the virtues of the developing world during the current market shake-up.
“The recent turmoil in credit markets has led to a renewed focus on the battle between greed and fear – a battle that is as old as financial markets themselves,” says Michael Gordon, chief investment officer at Fidelity International,
The slow spread of toxic subprime slime may be about to consume another important but little-known group of market participants - the bond insurers.
A story in today’s FT reports that the monolines,
The stock market has got the Fed’s message, the money market has not. Unfortunately, the message was intended for the money market, notes the FT’s John Authers in Tuesday’s Short View column.
Stocks “bounced”
Need to be up to speed from the moment you rise? Sign up for FT Alphaville’s 6.00 AM Cut.This morning briefing note is published right at the beginning of the European working day. Designed for busy readers on the move,
Money market investors staged a dramatic flight to safety on Monday, knocking down yields on short-term US government debt, as Treasury and Fed officials continued behind-the-scenes efforts to maintain confidence in the credit markets.
The spillover effects of the US subprime mortgage crisis on short-term debt markets claimed more victims on Monday when a $1.5bn investment vehicle run by Solent Capital, a London hedge fund, was forced to begin selling assets.
The US mortgage meltdown spread further on Monday as two big lenders announced expected losses of a combined $1.8bn. Capital One Financial, one of the largest US credit card providers, said it would close its wholesale home lending unit,
Northern Rock on Monday sought to reassure investors about the impact of market turmoil when the UK mortgage lender said it had minimal exposure to US subprime mortgages and had also sold almost £500m of commercial property loans.
Problems at KKR Financial, a unit of KKR, the US private equity group, over losses on its mortgage portfolio have cast a cloud over plans by KKR to follow rival Blackstone into the stock market with a $1.25bn listing.
Nasdaq will sell its 31 per cent stake in the London Stock Exchange, valued at about £800m, as it steps up its fight with Borse Dubai, for OMX, the Nordic exchange and technology group. Nasdaq said it would use the proceeds from any sale to buy back shares,
HSBC is in talks to buy a 51% stake in Korea Exchange Bank from US private equity group Lone Star for about $5bn-$5.5bn, in a move that would realise the bank’s desire for a presence in Asia’s third-largest banking market.
Sentinel Management Group, a US money manager at the centre of recent market turmoil, was on Monday charged with fraud and misuse of client assets by the SEC. The problems at Sentinel came as a particular shock to US and global markets as it was thought to be investing in relatively safe assets on behalf of hedge funds and futures brokers.
China’s capital markets on Monday took a significant step towards integration with the rest of the world when Beijing announced it would allow individuals directly to buy securities offshore for the first time.
Macquarie Bank shareholders will in October vote on the creation of a new non-operating holding company structure aimed at freeing the bank’s growing portfolio of non-banking operations from Australian regulatory requirements.
GE is understood to be considering the sale of Lake, its Japanese consumer finance subsidiary, amid a shrinking market and claims from borrowers of excessive interest payments. The US group has sounded out financial institutions about their interest in acquiring or investing in Lake,
The alternative trading platform that is Project Turquoise may be facing a launch delay amid wrangling over a 700-page legal agreement, but banks backing it have underlined their support with some astute appointments to its board,
US markets
DJIA - up 42.27 at 13,121.35
Nasdaq - up 3.56 at 2,508.59
S&P 500 - down 0.39 at 1,445.55
Asian markets
05.20 BST
Nikkei - up 182.59 at 15,915.07
Topix - up 29.66 at 1,553.23
Hang Seng
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