MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Monday, May 21, 2012
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6:54 PM Hampton Roads Bankshares (HMPR) is raising up to $95M through a combined $50M common stock private placement and a public rights offering at $0.70 per share. Shares -15.9% AH. 1 Comment
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5:12 PM Property insurer Old Republic (ORI) announces a partial leveraged buyout and planned spinoff of its Republic Financial Indemnity Group's stock which will establish RFIG as a separate publicly-held company. ORI +5.6% AH. 2 Comments
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4:43 PM Spain's banks are likely to have property-related losses in the €216-€260B range, says the IIF, which used the experience of Ireland's banks as a benchmark. The lenders have thus far reserved about €110Bm, and will generate more this year, but could need €50-60B in assistance from the government. 1 Comment
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2:29 PM Goldman Sachs downgrades XL Capital (XL -1%) to Sell, believing XL’s professional liability-heavy book, along with last year's hiring ramp-up, will make it difficult to see margin expansion despite moderately improved pricing. "Margin improvement at XL will lag peers with a lower expense load or without books of business that require fixing." Comment!
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1:35 PM JPMorgan's CIO losses can't be described "in any way as a hedge," says hedge fund giant Michael Platt, whose BlueCrest capital was on the other side of the trade. "It's a trading loss. They deliberately put the positions on." "They're not out of those positions," he says and will face further losses if Europe continues to deteriorate. 9 Comments
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1:19 PM The chairman of the CFTC confirms speculation that the agency is investigating JPMorgan's (JPM -2.6%) $2B+ trading losses, which are tied to credit derivatives. With several other government agencies probing the blunder, the words "broth," "cooks," "spoil" and "too many" spring to mind. Comment!
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12:51 PM Hedge funds and P-E firms have accumulated almost €60B to acquire loans from European banks that are looking to consolidate their ops, a PWC survey shows. Investors, most of whom are from the U.S., are particularly interested in loans backed by commercial real estate. 1 Comment
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12:24 PM The FDIC sues JPM, C, BAC, and DB in New York, acting as receiver for Strategic Capital Bank which claims $11M in losses in MBS-related losses. 3 Comments
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11:09 AM The NY Fed will carry out the auction of $1.67B of CDO's from Maiden Lane III on Thursday after delaying the sale last week because of additional information that hadn't "been made available to the bidders." The auction is one of two planned sales from Maiden Lane III. 1 Comment
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11:00 AM Mortgage REITs recover, led by a bounce Newcastle (NCT +3.4%) following its secondary, American Capital (AGNC +2.7%), and Annaly (NLY +1.8%). The sector got "Einhorned" last week when he called it expensive, noting yield-desperate Japanese owned 9% of REITs and were beginning to pull money out. 2 Comments
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10:09 AM More Dimon (now in the Q&A): "It isn't a Greek default that is a problem, it is Greece leaving the euro," as this starts to give the rest of Club Med ideas. As for the suspension of the buyback, he says the CIO loss knocked the bank off the "glidepath" to Basel III. Comment!
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9:49 AM More from Dimon: He says the bank is suspending its share repurchases, but intends to continue the dividend. The cancellation of the buyback is interesting given the bank's announcement of a $15B program in March and previous Dimon comments about buying low. Shares are off about 28% in 2 months and now red for the year. 6 Comments
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9:42 AM "Hopefully by the end of the year we will make this something we don't need to talk about," says Jamie Dimon (JPM), speaking at a conference (talking about the CIO losses, not the bank's role in the FB IPO). He says the bank has no plans on regularly updating the progress of the unit's losses. Shares -2.2%. 1 Comment
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9:03 AM Morgan Stanley, -1.8% premarket, is the outlier amongst the big banks this morning. Usually a proxy for European troubles, MS may be taking a hit due to its lead underwriting position for Facebook. Those underwriting fees and more may be gone due to the money it spent propping the IPO above $38 Friday (now $36.80). Comment!
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8:10 AM JMP Securities cuts the TBTF banks due to the European crisis, with analyst David Trone's base case scenario (60% chance) seeing a Greek exit, but no contagion. He sees just a 10% chance Greece stays in the EMU. That leaves 30% for exit, but with contagion. 3 Comments
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7:19 AM The Bank of Greece "adamantly" denies a published Sunday report alleging plans to restrict deposit withdrawals and impose capital controls. Curious. The date of the BoG press release is the 19th, Sunday was the 20th. 2 Comments
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4:35 AM JPMorgan (JPM) is the biggest buyer of European home-loan bonds, and investors are worried the bank is planning to pull back from the market following its CIO disaster. The European mortgage-bond market could see significant volatility, as JPM's investments are nearly 9% of the size of the Dutch and U.K. mortgage-bond markets it’s been focusing on. Comment!
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Sunday, May 20, 2012
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10:05 PM The top risk officer in JPMorgan's CIO, Irvin Goldman, was sacked by Cantor Fitzgerald in 2007 after presiding over trading losses that led to a regulatory probe, say sources. Goldman was never directly accused of misconduct, but was apparently mirroring his Cantor prop trades in his personal account. Goldman was demoted from his position at JPM last week. 2 Comments
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9:51 PM Nassim Taleb emerges to weigh in on the JPMorgan trading loss, and sounds tired of being proven right. "They don't seem to know what they're talking about when they're talking about risk ... What Mr. Dimon said is nonsense, they are using the wrong tools. It's not a fluke ... the entire apparatus is based on a big illusion ... it's a business they should not be in." 8 Comments
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9:18 PM NASDAQ OMX (NDAQ) CEO Robert Greifeld acknowledges the trade confirmation and order cancellation issues that plagued the Facebook (FB) IPO, and which may have hurt its performance by preventing institutions from buying in. He adds the NASDAQ plans to change its IPO auction process on account of the woes. Update: Greifeld adds up to 30M shares worth of trades were affected by the glitches, a small percentage of the 580.6M shares that were traded. 9 Comments
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