| Global News Coverage for Investment Professionals |  |
- Lehman sues Barclays to get back asset "windfall"
The estate of Lehman Brothers and a trustee for the bank's brokerage filed a lawsuit against Barclays in an attempt to claw back as much as $10 billion. The U.S. bank claims the U.K. bank received billions of dollars in assets after the collapse of Lehman. "The sale transaction was secretly structured from the outset to give Barclays an immediate and enormous windfall profit," lawyers for Lehman said. Financial Times (tiered subscription model)
(17 Nov.)
, Bloomberg
(17 Nov.)
- Audit faults New York Fed in negotiations with AIG
An audit conducted by Neil Barofsky, special inspector general for the U.S. government's Troubled Asset Relief Program, criticizes negotiations between the Federal Reserve Bank of New York and counterparties of American International Group. The audit says the New York Fed should have used its leverage as supervisor of some of the trading partners to persuade them to accept reduced prices on AIG contracts. The Fed defended its actions, saying its intervention "was designed to prevent a systemwide collapse and achieved that end." The Wall Street Journal
(16 Nov.)
, The New York Times
(16 Nov.)
- Global policymakers debate contingent-convertible bonds
Bank of England Deputy Governor Paul Tucker voiced support for contingent-capital bonds, known as CoCos, to play a role in recapitalizing banks. Federal Reserve Chairman Ben Bernanke also endorsed the type of hybrid bonds, which convert into equity when the issuer reaches a predetermined level of stress. Critics warned that some bond investors might avoid CoCos because they are not allowed to own equity. Tucker suggested that the bonds could be a beneficial part of a contingency plan. The Wall Street Journal
(17 Nov.)
- European Commission finds Oracle-Sun merger problematic
The European Commission said aspects of the merger between Sun Microsystems and Oracle are anti-competitive. The commission cited database giant Oracle's acquisition of Sun's MySQL. Oracle defended its position, saying MySQL is an open-source database and thus available to all. The commission's statement is not a final ruling on the merger. EurActiv.com
(16 Nov.)
- Analysis: Dozens of banks in trouble despite TARP aid
Despite receiving capital injections from the U.S. government's Troubled Asset Relief Program, at least 27 banks have either been seized or threatened by regulators. Government officials knew some of the lenders were on the verge of collapse when they awarded them TARP funds. The situation raises questions about how the $700 billion TARP is being managed. Treasury officials defend the agency's management of the program. The Wall Street Journal
(17 Nov.)
- Asian markets slip as U.S. dollar continues decline
Concern about weakness of the U.S. dollar and its effect on exporters dragged down most Asian-Pacific markets Tuesday, although mining stocks rose on Monday's record-high price of gold. Japan's Nikkei 225 lost 0.6%, Australia's S&P/ASX 200 fell 0.5% and South Korea's Kospi Composite declined 0.4%. Hong Kong's Hang Seng Index inched down 0.1%, China's Shanghai Composite gained 0.2%, New Zealand's NZX 50 slid 1.3% and Taiwan's Taiex dropped 0.8%. The Wall Street Journal
(17 Nov.)
- Bond market sees surge of corporate issuance
A surge of issuance pushed bond sales to $42 billion this month. Companies are taking advantage of low interest rates to raise funds. Some will use these funds for acquisitions, while others will keep the money and build up cash to finance growth. "It's an additional sign of the normalization process," said Kevin Flanagan, fixed-income strategist at Morgan Stanley Global Wealth Management. "It's a welcome development for credit markets and the economy." MarketWatch
(16 Nov.)
- Low interest rates in U.S. fuel run on gold
The price of gold hit a record $1,139 per ounce Monday, and analysts said a run on the precious metal might not be over. To find a ceiling for gold, one has to look at the adjustment for inflation. On Jan. 21, 1980, gold hit a record $825.50 per ounce. Adjusting for inflation, that equals $2,163.62 an ounce today. The price increase is because investors "are becoming increasingly uncomfortable with [Federal Reserve] policies and all the liquidity sloshing around in the global economy," said Joe Foster, portfolio manager for the Van Eck Global International Investors Gold Fund. CNNMoney.com
(16 Nov.)
- Berkshire Hathaway takes stakes in Exxon, Nestle
Billionaire investor Warren Buffett's Berkshire Hathaway took stakes in oil company Exxon Mobil and food producer Nestle, according to a regulatory filing. Berkshire owns about $95 million in Exxon shares and $161.5 million in Nestle. The company also increased its shares in Wal-Mart Stores. "Berkshire is increasingly looking for companies that are world-leading brands," said Tom Russo, a partner at Gardner Russo & Gardner. Bloomberg
(17 Nov.)
 | Transcripts and Events Now Available
TheMarkets.com's comprehensive platform now offers transcripts and events data for over 5,000 companies—directly alongside premium equity and fixed-income research from hundreds of brokers, consensus and broker-level estimates and more. See why our platform delivers a 98% satisfaction rating. Start here. |
| Economics |  |  |
|
- BoE official calls end to U.K. recession
Andrew Sentance, a member of the rate-setting committee of the Bank of England, said a number of factors suggest "the U.K. economy has moved on to a recovery track and growth has resumed in the second half of this year." The fact that GDP had shrunk 0.4% in the third quarter was contradicted by other evidence, Sentance said. "A very significant fiscal tightening is necessary to rebalance the U.K. economy ... cutting the government deficit will be a major challenge for the British economy as we move through the coming recovery phase of the economic cycle," he said. The Times (London)
(17 Nov.)
- Deflation concern grows in Japan
Though the Japanese economy saw its highest growth in two years during the third quarter, indexes of demand fell sharply, spurring concerns of deflation. The domestic demand deflator, a measure of price levels excluding the cost of imports, dropped 2.6% in the third quarter compared with the same period last year, according to the Cabinet Office. It was the worst decline since 1958. Bloomberg
(16 Nov.)
- China already experimenting with floating yuan in Hong Kong
Belief that China's yuan is undervalued, giving the country an unfair advantage in global trade, has been a sore spot for the U.S. for some time, but the concern grew when unemployment kept increasing in the U.S. China has pegged its currency to the U.S. dollar at 6.83 to the dollar since July 2008. What has been largely overlooked is that China already is experimenting with floating the yuan, in Hong Kong. "The currency is more or less already convertible in Hong Kong," said Julia Leung, undersecretary at Hong Kong's Financial Services and the Treasury Bureau. "This is a good way of testing international demand." CNNMoney.com/Fortune
(16 Nov.)
- Fed "attentive" to dollar's falling value, Bernanke says
Federal Reserve Chairman Ben Bernanke gave a carefully hedged assurance that the central bank is paying attention to the falling value of the U.S. dollar. "We are attentive to the implications of changes in the value of the dollar," he told the Economic Club of New York. Bernanke said the Fed will "monitor these developments closely." He also said the Fed intends to hold interest rates at historic lows to help fuel economic recovery. The Washington Post
(17 Nov.)
- Eurozone companies suffer from strong currency
Companies in the eurozone are suffering from the high value of the euro against most other major currencies, third-quarter earnings reports shows. Excluding financial-services and oil companies, eurozone firms suffered a collective sales drop of 12.5% and a decrease in profit of 27%, according to ING, which examined 311 companies. "The strong euro is exerting a lot of pressure and causing some competitive problems for European companies against American ones, and the pressure will continue to mount," said Gareth Williams, an equity strategist at ING. Financial Times (tiered subscription model)
(16 Nov.)
| Geopolitical/Regulatory | | |
|
- Obama, Hu begin talks with safe topics, avoid currency issues
U.S. President Barack Obama and Chinese President Hu Jintao have avoided the sensitive topic of currency-exchange rates during Obama's visit to China. Some congressional leaders said Obama should use the occasion to pressure China to allow the yuan to rise in value against the dollar. But Obama has struck a largely conciliatory tone since arriving in China. Bloomberg
(16 Nov.)
, Xinhuanet.com (China)
(17 Nov.)
, Reuters
(17 Nov.)
- Russia to face a stronger EU after Lisbon Treaty process
Russia will face a stronger EU in negotiations once the region is streamlined and modernized by the Lisbon Treaty, analysts and diplomats said. With a permanent president and a foreign-policy chief speaking as a single voice for the EU, Russia will have fewer opportunities to take advantage of differences among member states. The Moscow Times
(17 Nov.)
| Financial Products | | |
|
- Invesco Trimark launches ETF-mutual fund hybrids in Canada
Invesco Trimark introduced in Canada a series of funds that are essentially part exchange-traded fund and part mutual fund. The hybrids contain versions of PowerShares ETFs that trade on U.S. exchanges. Analysts said the hybrids likely will get a warm reception from Canadian financial advisers, some of whom were prevented from offering ETFs because they were licensed to sell only mutual funds. Morningstar Canada calculated that the total fee for the hybrids will range from 1.65% to 1.9%. Financial Post (Canada)
(16 Nov.)
, Morningstar
(16 Nov.)
| | |
|
