Debates about asset valuation can quickly turn philosophical. The FT’s story on Deutsche Bank on Thursday provides fresh fodder, carrying allegations from three ex-employees that the bank failed to properly value certain credit derivative positions and thereby created a misleading impression of its health.
At first we thought, ‘umm, yeah, Deutsche Bank and others, no?’ But the mention of Berkshire Hathaway seemed an interesting twist. Read more
From Tuesday’s FT — some letter-writing:
Some European financial institutions should have taken bigger losses on their Greek government bond holdings in recent results announcements, according to the body that sets their accounting rules. In a letter sent to the European Securities and Markets Authority, the European Union’s market regulator, the International Accounting Standards Board criticised the inconsistent way in which banks and insurers have been writing down the value of their Greek sovereign debt. Read more
There are two fun things about BNP Paribas’ €534m Greek bond impairment (sat right at the top of its second-quarter results press release…)
Level 3 Communications has agreed to acquire Global Crossing for $1.9bn in an all-paper deal that will significantly expand Level 3’s reach and customer base, reports the FT. Level 3 provides the network backbone for online video streaming services such as Netflix, and internet-based communications services for business customers and telecoms companies. The deal, just weeks after AT&T announced its $39bn proposed purchase of Deutsche Telekom’s T-Mobile USA mobile unit, highlights consolidation in the telecoms industry. Level 3’s offer values Global Crossing at $23.04 a share, a premium of 56% to the company’s Friday closing price. DealJournal posts Dealogic’s profile of the merger, while DealBook says the agreement could prompt similar transactions. Read more
The global growth trade remains the favoured strategy, initially pushing many commodity prices and core bond yields higher, but leaving stocks struggling for gains as higher input costs raise concerns over corporate margins, reports the FT’s global market overview. Those inflation concerns were most clearly expressed in the precious metals sphere, where silver struck another 31-year high of $41.93 an ounce and gold touched a record $1,476 an ounce early in the session before some profit taking kicked in. Wall Street is firmer, with the S&P 500 up 0.3 per cent, helped by Level 3’s well-received $3bn bid for Global Crossing. London’s FTSE 100 is up 0.1 per cent as miners ride the commodity rally and banks show relief following the publication of the Vickers report on the UK banking system. Brent oil, which has been more closely correlated to Mideast supply concerns of late, is down 0.6 per cent to $125.86 a barrel, while US-based West Texas Intermediate is off 0.6 per cent to $112.15. The dollar index sits just above 15-month lows. Read more