Bloomberg:
- Paulson May Face Litigation Following Goldman Suit, Whalen Says. Paulson & Co., the world’s third- largest manager of hedge funds, may face civil litigation for its role in the collateralized debt obligations that led to the fraud charges against Goldman Sachs Group Inc., according to Christopher Whalen. Billionaire John Paulson’s hedge fund made $1 billion on the CDOs that contributed to the worst financial crisis since the Great Depression. Whalen, a banking analyst at Institutional Risk Analytics in Torrance, California, said that allegations the firm helped shop a package of debt they were actively betting against opened it up to litigation in the wake of the suit by the Securities and Exchange Commission. “I’m not sure they will escape civil litigation arising from this,” Whalen said in a Bloomberg Radio interview with Tom Keene on April 16. “You can bet the parties who lost money here are going to be seeking redress.” While buy-side firms don’t often sue their dealers or advisers, the SEC suit will have done most of the legwork and attracted publicity, opening the door for other parties to claim damages, Whalen said.
- China to Damp Property Prices With 'Draconian' Moves. China told banks to stop loans for third-home purchases as the government steps up measures to cool property prices with some of the “most draconian” orders yet. Shares of developers and banks tumbled. Banks should also suspend lending to buyers who can’t provide tax returns or proof of social security contributions, the State Council said in a April 17 statement. The latest measures come on top of orders to banks this year to set aside more deposits as reserves and raise mortgage rates, and steps to re-impose a sales tax on homes. “These are the most draconian measures on the property market in history,” Jun Ma, Deutsche Bank AG’s Greater China chief economist, said in a note to clients today. Chinese press reports point to “panic selling” by investors who own more than one home in Shanghai, Beijing and Shenzhen, he said.
- China Stocks Tumble Most in Eight Months on Property Loan Curbs. China’s stocks plunged, driving the benchmark index down the most in almost eight months, on concern a government crackdown on the property market will increase bad loans and damp consumer spending. China Vanke Co. and Poly Real Estate Group Co., the nation’s biggest developers, fell more than 8 percent after the State Council told banks to stop loans for third-home purchases. Industrial & Commercial Bank of China Ltd. slid 4.9 percent, the most since October 2008. Anhui Conch Cement Co. led losses by construction material companies. “The market is worried about the impact of government measures to tame property price increases,” said Xu Lirong, who oversees about $2.6 billion at Franklin Templeton Sealand Fund Management Co. in Shanghai. “I think more measures will be introduced.” The Shanghai Composite Index slumped 150.01, or 4.8 percent, to close at 2,980.3. That’s the biggest decline since Aug. 31, when the gauge fell 6.7 percent on concern a slowdown in lending growth would slow economic growth. The gauge is the world’s third worst-performing stock market this year, losing 9.1 percent, as the government unwound monetary stimulus to avert asset-price bubbles after banks extended record credit last year.
- Goldman Sachs(GS) Faces U.K., German Regulatory Reviews. U.K. and German financial regulators are investigating whether they can take action against Goldman Sachs Group Inc. in relation to a lawsuit filed last week by the U.S. Securities and Exchange Commission. The Financial Services Authority is investigating “whether there are any implications for the U.K.-regulated entities of Goldman Sachs,” Leigh Calder, an FSA spokesman, said in an interview. “If there are, we will take appropriate action. We work closely with overseas regulators and will cooperate fully with the SEC.”
- Merkel Undermines Bunds as Premium to U.S. Debt Fades. Chancellor Angela Merkel’s about- face on bailing out Greece is turning German bonds into a losing bet after beating Treasuries the past 18 months. Yields on 10-year bunds rose as much as 0.24 percentage point relative to similar-maturity Treasuries since April 5 and BlackRock Inc., the world’s largest money manager, said it no longer pays to own the debt amid Europe’s fiscal crisis. Ignis Asset Management added to a bet that bunds would lag behind U.S. debt after the $61 billion rescue was announced April 11. “The bund rally is over,” said Stuart Thomson, a money manager at Ignis in Glasgow, Scotland, who helps oversee more than $100 billion. “Greece ultimately has to default and bund yields will have to rise as Germany funds the Greek rescue over the next two to three years.”
- Weber Said to Tell German Lawmakers Greece May Need More Aid. Bundesbank President Axel Weber told German lawmakers that Greece may need more aid than the 30 billion euros ($40 billion) promised by the European Union as the government in Athens struggles to push through planned spending cuts, two people present at the briefing said. Weber, citing television footage of Greek demonstrators, expressed concern that sections of the Greek population either don’t care or fail to appreciate the seriousness of the situation their debt-laden country faces, the two people said on condition of anonymity because the briefing in Berlin today was held in private.
- Greece Debt Swaps at Record as Icelandic Ash Smothers Aid Talks. The cost of insuring Greek sovereign debt against default surged to a record after the travel disruption caused by Iceland’s volcano delayed talks to help resolve the country’s debt crisis. Credit-default swaps on Greece’s borrowings jumped 34 basis points to 472, according to CMA DataVision. The premium investors demand to buy 10-year Greek government debt over benchmark German bunds rose to the most since before the euro’s debut. European Union and International Monetary Fund officials are scheduled to travel to Athens on April 21 to start negotiating conditions for a 45 billion-euro ($61 billion) bailout package for the country. “There is an intensifying concern that even after receiving support, Greece’s problems won’t ease,” said Philip Gisdakis, a Munich-based strategist at UniCredit SpA. The difference in yield, or spread, between Greek and German 10-year government debt widened 31 basis points to 461 basis points 3:04 p.m. in London, the most since October 1998, according to Bloomberg generic prices. The cost of insuring Portugal’s government bonds against losses also rose. Credit-default swaps on the country’s debt increased 11 basis points to 207, the highest since Feb. 9, according to CMA DataVision. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments rose 2.1 basis points to 96, the highest in more than a week, CMA DataVision prices show. The cost of protecting European corporate bonds from default also rose, with the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbing 10 basis points to 422, according to JPMorgan Chase & Co.
- Leading Economic Indicators Index in U.S. Rose 1.4%. The index of U.S. leading indicators rose in March by the most in 10 months, a sign the economy will keep growing into the second half of the year.
Wall Street Journal:
- Hedge Funds Merge to Survive Shake-Out. Expect to see an uptick in hedge fund consolidations — the buying and selling of management teams and assets — as the desire to survive pushes some hedge funds into the arms of stronger peers. After the devastating losses of 2008 and outflow of funds from the hedge world, investors want the security of bigger firms and prime brokers are getting finicky about the funds they service. Selling out or merging can be a life-saver for smaller or less well-established managers. A record 1,471 hedge funds liquidated in 2008, and 858 hedge funds burned out in the first nine months of 2009, estimates Hedge Fund Research Inc.
- Moody's: Commercial Real Estate Prices Decline On Month In Feb. U.S. commercial real estate prices declined 2.6% in February, the first month-to-month decline in four months, a move Moody's Investors Service described as unsurprising. Managing director Nick Levidy noted from November to January, commercial real estate prices increased a combined 6.3%. But Moody's hadn't viewed the growth as sustainable. On Monday, it attributed February's price drop, in part, to continued low volume and a larger portion of repeat-sales sales considered depressed. Transaction volume also declined sequentially by about 10% as measured by dollars, according to Moody's. Meanwhile, the proportion of all repeat-sales which have been classified as distressed increased from 4% in 2008 to nearly 20% in 2009, and has continued to climb in the first two months of this year, rising to just under 32% in February.
- AIG(AIG)-Goldman(GS) Trades Should Be Probed by SEC, Cummings Says. The regulator suing Goldman Sachs Group Inc. for fraud should widen its probe to determine whether securities backed by bailed-out insurer American International Group Inc. were improperly created, said two lawmakers. It is “not beyond the realm of comprehension” that Goldman Sachs misled investors on collateralized debt obligations apart from the one cited last week by the Securities and Exchange Commission, Democratic Representatives Elijah Cummings and Peter DeFazio said in a letter to be sent to SEC Chairman Mary Schapiro. AIG, rescued by the U.S. in 2008, insured about $6 billion of Goldman Sachs CDOs named Abacus.
- SEC Probe Widens. Deutsche(DB), UBS(UBS) and Merrill now feeling the heat. Goldman Sachs CEO Lloyd Blankfein may not be the only one in the glare of the Securities and Exchange Commission's spotlight. After slapping Goldman with fraud charges Friday, the SEC is now investigating transactions structured by other big players in the mortgage-securities market, including Deutsche Bank, UBS and Merrill Lynch. The Wall Street watchdog's probes likely center on whether anyone at the banks failed to disclose important aspects of these transactions to investors, the linchpin of the SEC's case against Goldman. "Given the allegations here, if they get rejected, it could destroy their careers," said one former SEC official. "I think this is a bet-the-farm, break-the-bank type bet for both sides." If successful, Schapiro and Khuzami will be credited with having bagged a whale of an opponent, a firm that has been at the center of speculation and suspicion, but has never been tagged. The SEC could use the win. Ever since the financial crisis unfolded, the agency has been portrayed as having been asleep at the switch, missing red flags in the Bernie Madoff Ponzi scandal, and, according to another report issued Friday, flubbing chances to go after Texas financier R. Allen Stanford, who's also accused of running a Ponzi scheme. And when the agency actually has gone after firms or people, it's logged few successes. The Goldman case isn't likely to be a slam-dunk. Sources say Blankfein, who's said to be miffed that he was caught off-guard by Friday's suit, plans to "fight [the SEC's charges] to the death."
- Shack Sale Talk Heats as CEO Eyes Pay'Day'. The signal is getting stronger. Despite denials, indications are growing that RadioShack is gearing up for a sale that would hand CEO Julian Day a huge payday. Sources say private-equity shops already are circling and rival gadget retailer Best Buy is a possible acquirer. A RadioShack spokesman didn't respond to a request for comment. But sources said JPMorgan Chase has won the job of leading the sale process, and fresh evidence is turning up that the process is quietly advancing. In a securities filing late last week, RadioShack said it hasn't repurchased any of its shares this year despite a $290 million authorization.
Wired:
- Why Intel(INTC) Wants to Get Into Energy. Intel showed off an experimental device last week in China that could someday substantially cut the costs of wiring homes and offices for energy efficiency, one more step in the company’s foray into energy. The device is a server/sensor that monitors the power consumption of the various appliances in a home or small commercial building in real time. The device then sends the data, via Wi-Fi, to a phone, PC or a home energy management console, like the one Intel showed off at CES earlier this year. “Turn-on and turn-off signatures are like fingerprints,” said Justin Rattner, Intel’s chief technology officer in an interview. “Compressors, motors, TVs, stereos — all of them have a unique signature. It is relatively easy to train the system to recognize these things.” In the first stage, these devices will merely provide data to home energy consoles, but over time, remote control capabilities will be added so that lights can be turned off or thermostats turned down — either by a person or a computer — to save energy. Think of it as a Digital Mom (”Did you turn the lights off in your room…,” etc.) without the guilt. Intel will work with Flextronics(FLEX) to get the first commercially available versions out later this year.
- Hedge Funds in SEC's Cross Hairs. John Paulson and his hedge fund firm Paulson & Co. may not have been named in the SEC’s complaint filed Friday against Goldman Sachs and one of its employees. But the regulator’s elaborate details about the hedge fund giant’s role in crafting its portfolio of bad mortgages to then sell short is a chilling reminder that hedge funds have clearly been placed in the cross-hairs of the current SEC administration. In the past year, SEC chairman Mary Schapiro, enforcement head Robert Khuzami and New York bureau chief George Canellos have made it clear that they are looking closely at the hedge fund world. So are federal prosecutors.
- Ohio Schools Pension Increases Direct Hedge Fund Investments. The Ohio School Employees Retirement System will boost its direct hedge fund investments by 50%, enriching its current managers by almost $300 million. The $9.5 billion public pension plans to increase the size of its direct hedge fund investing program to 9% from 6%, Pensions & Investments reports. Most, if not all, of the new money will go to the more than 30 hedge funds already in the system’s employ, among them Bridgewater Associates, King Street Capital and Viking Global Investments.
- iPhone 4G Will Sport Apple(AAPL)-Designed Chip, Sources Say. Surprising few, it seems Apple will deploy its own unique processor within the fourth generation (ceramic-backed?)
iPhone , industry sources have confirmed. In a report looking at the impact of Apple’s move to produce its own ARM-based processors on former mobile chip maker, Samsung, The Korea Times confirms Apple’s plan to use its own chips inside future iPhones. "iPhones have been using Samsung Electronics-produced APs that were partially designed by Apple engineers. But Apple has decided to use its own AP (Application Processor) starting for its 4G models," a high-ranking industry executive told The Korea Times, Monday.
- 56% Support Repeal of Health Care Law. Support for repeal of the recently-passed national health care plan is proving to be just as consistent as opposition to the plan before it was passed. The latest Rasmussen Reports national telephone survey finds that 56% of likely voters nationwide favor repeal, while 41% are opposed. Those figures include 48% who Strongly Favor repeal and 29% who Strongly Oppose it.
- Chris Dodd Won't Commit to Dropping $50 Billion Fund. Senate Banking Committee Chairman Chris Dodd (D-Conn.) declined to commit Monday to eliminating a $50 billion fund criticized by Republicans as perpetuating bailouts from the Wall Street reform bill, saying only that he would consider any “good ideas.
- Doctors Pursue House, Senate Seats. In an election year dominated by health care, dozens of candidates for Congress have a catchy campaign slogan at their disposal: Send a doctor to the House. Forty-seven physicians — 41 Republicans and six Democrats— are running for the House or Senate this year, three times the number of doctors serving in Congress today, according to a USA TODAY review. An influx of doctors to Congress could alter the landscape for future debates over Medicare and rising insurance premiums months after lawmakers approved President Obama's 10-year, $938 billion health care law. Physician candidates start with at least one political advantage: voter confidence. A Gallup Poll in March found 77% of Americans trust doctors to do "the right thing" on health policy.
- Siemens Arm Warns of European Insolvencies. Heinrich Hiesinger is in his element at Light & Building, an industrial trade fair in Frankfurt. The chief executive of Siemens’ industrial arm excitedly explains the German engineering group’s newest technology – such as its contributions to the “smart grid”, which is poised to revolutionise energy usage. But when discussing investors’ recently upbeat expectations for a fast industrial recovery, the 49-year-old engineer takes a more sober approach. “What we see is a very mixed picture. Our short-cycle businesses have passed the trough, but other divisions are still in the downturn,” he says in an interview with the Financial Times. Mr Hiesinger adds his voice to a growing chorus when he warns of a wave of insolvencies among European industrial companies, some of which are suffering from an 18-month order drought and a lack of financing: “We already see a slight increase of the insolvency rate in our customer base.”
- UK Public Sector Job Cuts of 500,000 Forecast. The public sector is likely to shed 500,000 jobs during the next five years as the next government gets to grips with public spending to curb the £167bn ($255bn) budget deficit, the Chartered Institute for Personnel and Development warns on Monday. John Philpott, the CIPD’s chief economic adviser, said a 10 per cent reduction in the 5.8m core public sector workforce was probable, “dwarfing anything implicit in the election manifestos”. Mr Philpott said it would be misleading to suggest the pain of job loss could be eased by pay cuts or short-time working.
- Businesses Protest EU Plans on Hedge Funds. Hundreds of small company bosses have written to European Union lawmakers protesting at the possible consequences of the proposed rules to regulate hedge funds and private equity funds, as the latest round of lobbying over the controversial regulations intensifies. Hedge funds are also expected to warn this week about potential protectionism which could result from the EU plans as G20 finance ministers meet in Washington. The letter to MEPs comes from more than 350 small company managers and owners who enjoy private equity and venture capital support. They warn that the rules could affect this support – and give an advantage to small companies backed by other sources of finance, from family money to single wealthy owners. They claim that the cost of complying with the proposed rules would be around £30,000 ($45,700) a year which they claim is “a very significant outlay for SMEs”. The signatories – drawn from businesses across Europe – say much of the debate has focused on hedge funds but maintain the effects will be much broader. “This is about the real economy,” they tell MEPs. Hedge funds, meanwhile, continue to complain that the likely way funds and managers outside the EU will be treated is protectionist.
- For All the Frothing, Nothing Has Been Done About Banks. The financiers gamble knowing that the taxpayer will always bail them out.
- Greece's economy may shrink more than 2% this year and average inflation will reach 3%, citing an unreleased report from Greece's central bank. The bank cites high public debt and low competitiveness as primary issues of concern.
- China's commercial banks have halted revolving loans after regulators began investigations into funds flowing into the stock market, citing commercial bank officials. Banks are also barred from providing consumer loans to individuals that have stock trading accounts with the bank, according to the report. Lenders are also barred from providing short-term loans to companies that are clients.
- Chinese exporters will suffer if the country's currency gains even less than 2% against the U.S. dollar, citing an official from the Ministry of Commerce. The official cited the result of the government's "yuan stress test."
No comments:
Post a Comment