It’s a big theme: investors of all colours have reportedly been pouring money into equity funds of late. In fact, over the past week money has been flowing into stocks at the fastest rate since September 2007, according to EPFR.
Which should give all investors pause for thought. Read more
That would be straight-talking Nomura strategist Bob Janjuah. Just a small taste of his latest missive to clients…
We are four S&P closes away from being stopped out on the bearish call outlined in my August note . It seems – let’s see how this week plays out – that we were wrong to believe that central bankers would not become so “political”. As we have captured around 300 S&P points in the sell-off that began in early April (1422 to 1275) and the rally that began in early June (1275 to 1425), and as the S&P traded at 1425 on the day my August note with its 1450 S&P stop was released, the extraordinary central bank actions of the last few weeks has resulted in a very small hit to „our year to date‟. As said, however, my stop loss will be triggered on this Friday’s close if the S&P is still above 1450. So my stop-loss and I are at the mercy of the next four days’ price action. Real-world risk takers/investors may choose to exercise any such stop sooner but I will wait/accept the risk. But to reiterate, if the S&P closes above 1450 on Friday, the bear call of August is closed and initially at least I‟d choose to go flat/neutral on a tactical basis. If my stop-loss is NOT triggered by this Friday’s close – a possibility, but not a probability – then I will write again, but my initial sense in such an event would be that the half-life upside cycle is even shorter then I currently think and has already played out. Let’s see. Read more
Just in case the real trophies never get cast, here are the advisers to the
$90 $80 $70 $60 $55(?)bn putative merger between Glencore and Xstrata. Click to enlarge.
First there was the foul-up over competition issues. Unbelievably, Glenstrata had not factored in the likelihood of a referral to the European authorities. Read more
This novel proposal is from a concerned Nomura shareholder (h/t to reader JZ):
Proposal 12: Amendment to the Articles of Incorporation (Regarding overhaul of basic daily movements) Details of Proposal: It should be stipulated in the Articles of Incorporation that all toilets within the Company’s offices shall be Japanese-style toilets, thereby toughening the legs and loins and hunkering down on a daily basis, aiming at achieving 4-digit stock prices. Read more
Live feed via Fox NY of the downtown evacuation of World Financial Center 2 (‘cos of a suspect package) at pixel time. Click image for more:
Serious equity grief in Milan, where the FTSE MIB fell 5 per cent late afternoon on Tuesday…
Nomura’s Richard Koo has been banging on about the similarities between Japan’s balance sheet recession and the current financial malaise for a long while.
His main point has always been that the financial system won’t recover unless corporates and households complete their deleveraging journey. Read more
Let’s start with four graphs from Nomura. Click to enlarge.
Nomura has reported a surprise 33 per cent gain in the fourth quarter compared to a year earlier, reports the WSJ. Part of the gain, however, was due to one-off events such as the sale of the company’s stake in Japanese restaurant chain Skylark Co. While Nomura’s fixed income and investment banking businesses reported increased reviews, the bank is still under review by Moody’s for a possible downgrade. Nomura cited cost-cutting measures amongst the reasons for its turn of fortune. Read more
Nomura has appointed Steve Ashley, a former head of rates at RBS, as its global fixed income head and Georges Assi as his deputy, the WSJ says, citing an internal memo. The appointments follow news recently that Jasjit “Jesse” Bhattal, Nomura’s highest-ranking foreign executive and joint deputy president, had resigned as had the head of the global markets division, Tarun Jotwani. Read more
In part one, the appetizer, we quickly looked at whether the US banking sector is stronger than it was in 2008, as Lewis Alexander, the new Nomura chief US economist, argues. On the face of it, he’s right — balance sheets appear stronger, but we can’t be sure.
In part two, the main course, we look at what would happen if a crisis was to hit again. Read more
Lenders to Battersea Power Station have moved to take control of the building, drawing an end to months of speculation about the latest plans for the derelict London landmark, the FT reports, citing people familiar with the situation. Lloyds and Ireland’s National Asset Management Agency will on Thursday notify Battersea Power Station Shareholder Vehicle (BPSSV), the holding company behind the Grade II listed building, that they intend take the site into receivership. Real Estate Opportunities, the majority owner of BPSSV, has been seeking a partner to help develop the site, which it bought for £400m five years ago. Recent rumours have included takeover bids from Roman Abramovich’s Chelsea Football Club and a £262m offer from Malaysian property developer SP Setia to take over the senior debt. However, Lloyds and Nama, the Irish bad bank, which hold almost equal shares of a total £325m of debt on the site, are understood to have tired with REO’s failure to find a buyer, and plan to run an open-market auction process to try and offload the development. Read more
European sovereign debt, that is.
And the answer is over €500bn, according to Nomura, which has pieced together data from the IMF and national sources to come up with an updated picture of foreign exposure globally to the Eurozone. Read more
Nomura has reduced its self-reported net exposure to countries in the eurozone periphery by 75 per cent in the past two months in a move that highlights concerns about the growing risk of holding eurozone periphery government debt amid the region’s crisis, reports the FT. The Japanese investment bank said it had cut its country exposure to Greece, Ireland, Italy, Portugal and Spain from $3.55bn at the end of September, to $884m by last Thursday. Nomura said it had slashed its exposure to Italy, in particular, by 83 per cent from $2.8bn to $467m. Read more
Say what you like about Bob Janjuah (and plenty of readers have – Ed) but he always has a view.
And Friday’s report — an appetizer for his 2012 outlook piece — is no exception. A hard default is probable in Europe, the US fiscal/debt problem is about to flare up again and the improvement in growth data is about to be exposed as a post-Japan tragedy cyclical bounce. Read more
Nomura on Tuesday said it would slash costs by US$1.2bn after suffering a bigger than expected net loss of Y46.1bn (US$590m) in the second quarter, the FT reports. Japan’s leading investment bank posted its first quarterly loss since the global financial crisis, when it lost Y216bn in the first three months of 2009. Analysts had expected a Y35.6bn net loss for the latest quarter, according to Reuters. The latest cost cuts include US$400m Nomura unveiled in the previous quarter and highlight the difficulty the bank faces generating profits overseas. The bank said the cuts would be focused on its wholesale division. The results make it more difficult for Jesse Bhattal, chief executive of the global wholesale division, to achieve his stated mission to return the business to profitability. Nomura’s weak performance overseas also raises questions about its ambition to become a leading global investment bank, following its acquisition of Lehman Brothers’ European and Asian operations in late 2008. Read more
Nomura is considering a major cost-cutting drive that will likely see its European operations hit hardest, says the WSJ, citing people familiar with the matter. Some executives are arguing to cut back by as much as $1bn a year, the story says, although others in the Japanese brokerage are opposed to such dramatic action. The plans are expected to be unveiled as soon as November 1, when Nomura announces what analysts expect to be a quarterly loss. Read more
Bain Capital may reach an agreement this month to buy family-restaurant chain Skylark from Nomura’s private equity unit, for about 250bn yen ($3.3bn) including debt, Bloomberg says, citing two people with knowledge of the matter. Nomura led a management and employee buyout of Skylark, which has about 3,700 restaurants, in 2006. It has already told two of its private equity assets this year, to focus on expanding in overseas markets. Read more
Thought the recent pick-up in trading volumes would be good news for the big investment and universal banks?
Think again. Read more
Nomura Holdings is planning to trim about 5 per cent of jobs in Europe to reduce costs, Bloomberg says, citing two people with knowledge of the matter. The cuts will reportedly total less than 400 jobs worldwide, most of them in Europe. They are expected to be announced as early as today. Joey Wu, a Tokyo-based spokeswoman for Nomura, declined to comment. Nomura has almost 4,500 employees in Europe, mostly employed in its wholesale unit, which includes its investment banking and trading operations in London. Read more
Not intentionally, perhaps, but Nomura’s equity analysts do a half-decent Perry Mason impersonation in a note sent out late Friday.
The note offers a fresh estimate for how much the banks sued by the FHFA stand to lose, and it’s a good deal more optimistic (for the banks) than other estimates we’ve seen — including FT Alphaville’s initial guess, and for that matter Nomura’s first effort too. Read more
Bob ‘The Bear’ Janjuah has filed his last piece before heading off for his summer hols.
The Nomura man is still forecasting a risk-on melt-up over summer (the S&P 500 into the 1,400s by September, 10-year US Treasury yield at 3.4 per cent, stronger commodity price weaker US dollar etc) Read more
Earlier on Monday we looked at China’s pork-led inflation and declining imports, only the latest data that would seem to reinforce increasing concern among market observers about the potential impact of a Chinese slowdown on global growth.
The US economy has hit a proverbial “soft patch” of uncertain transitoriness (TM), Europe remains mired in sovereign debt problems, Japan is still recovering from its earthquake, and the next commodities price shock always seems just round the bend. So, to be understated about it, now would be a bad time for China to grind to a halt. Read more
After losing a lot (some estimated up to $2bn) as a result of Japan’s March 11 earthquake and tsunami, and giving a bit ($1m) to Japan’s relief effort, Man Group is recouping some losses and is back in serious business in Japan – and wants everybody to know about it.
The timing seems good. Man’s move comes as Japan’s stock market on Monday reached its highest level since the March 11 disasters, after plunging more than 16 per cent in the first two trading days after the earthquake. Read more
Australia has awarded an operating license to Chi-X Australia, paving the way for it to become the first foreign-owned stock exchange in the nation’s 150-year trading history, reports Bloomberg. Just weeks after blocking a proposed A$8.3bn ($9bn) takeover by the Singapore Exchange of ASX, the country’s stock exchange, was blocked by Swan on April 8, Treasurer Wayne Swan and financial services minister Bill Shorten said that “competition in Australia’s financial markets is critical to promoting exchange innovation and lowering transaction costs…” Chi-X, which is owned by Instinet, a subsidiary of Japanese bank Nomura, plans to start operations in the fourth quarter. Read more
Nomura reported a 35 per cent drop in quarterly net profits as its global market operations were hit by volatility resulting from the European sovereign credit crisis, the FT reports. Japan’s leading investment bank posted net profits of Y11.9bn ($146m) in the January to March quarter, a decline of 11 per cent compared with the third quarter of its fiscal year. Nomura said its quarterly revenue performance was the best since September 2009. The bank’s performance in global markets was “unfortunately, a bit disappointing”, said Shigeru Oshita, chief fund manager of Japanese equities at Chuo Mitsui Asset Trust and Banking. While western investment banks’ profits from global markets rose substantially in the past quarter, “Nomura’s global markets business has not grown much at all compared with the third quarter”, he said. Read more
Nomura’s sceptical strategist Bob ‘the bear’ Janjuah is feeling very pleased with himself, following S&P’s decision to revise its long term outlook on the USA to “negative”.
As well he might. Read more
Nomura has replaced the head of its US investment banking business with a Deutsche Bank veteran, in a sign of its struggle to make inroads on Wall Street, the FT says. Jim DeNaut, a senior oil and gas banker who joined Nomura from Deutsche last August, is taking over with immediate effect from Glenn Schiffman, who is leaving the bank after just one year at the helm of its New York operations. Nomura’s push into business outside Japan since 2008 has seen its US arm turn into profit in the last two quarters, but its important US wholesale arm remains loss-making. The bank’s US staff has tripled within a year. Nomura’s expansion is favouring employees at the expense of its shareholders: the bank has a 1 per cent return on equity, Lex notes. Read more
Nomura has replaced the head of its US investment banking business with a Deutsche Bank veteran as it struggles to make significant inroads in the fiercely competitive North American market, the FT reports. Jim DeNaut, a senior oil and gas banker who joined Nomura from Deutsche last August, is taking over with immediate effect from Glenn Schiffman, who is leaving the Japanese bank after just one year at the helm of its New York operations. DeNaut’s elevation follows management changes at Nomura this year, and highlights the bank’s focus on US banking business. Fins notes that the US push has been expensive amid growing competition from fast growing boutiques and big domestic banks. Read more