$$$ Banks set to cut 10-15% of staff as markets take toll on revenues [FT]
$$$ Dow Jones Up: Mission Accomplished! [Jeff Matthews]
$$$ WeatherDesk: Happy Ending [The Beach]
$$$ The only man in America who will give you a loan [WallStrip]
Archive for August 2007
$$$ Banks set to cut 10-15% of staff as markets take toll on revenues [FT]
Barclays announced today that it “rescued” a $1.6 billion debt fund run by Cairn Capital after it was unable to raise money in the credit markets, a situation that Barclays would undoubtedly take credit for, if only creating a discredited market were something to brag about (which, in some circles, it is, just not those in which the Barclettes move). Separately, the bank, blaming the proverbial “technical breakdown,” borrowed a sizeable amount of money (£1.6bn ) from the Bank of England yesterday, for the second time in two weeks.
Barclays claims that “[the bank] itself is flush with liquidity.” But does its appeal that everyone “quit your bitching and leave us alone or someone’s going to get hurt” (actual statement: “In these challenging times the dramatisation of such situations is of no help to markets, their members or their customers”) seem a bit defensive for an organization that doesn’t have a care in the world? Some think the lady doth protest too much and are demanding answers. James Harding would care to know:
Why was it just Barclays that found itself scrambling for funds? Why could Barclays not find lenders in the commercial market? And why was it that, if the Crest settlement system was to blame, other banks did not also go running to the Bank of England?
It’s getting kind of late in the day and we’re about to close up shop for the weekend, otherwise we’d obviously provide groundbreaking answers (and more) to all those questions. For now, we leave you with one of our own, that might actually put this thing to bed– substance abuse? (Don’t act like it’s not the logical conclusion.)
Barclays Rescues $1.6 Billion Cairn Capital Debt Fund [Bloomberg]
Barclays admits borrowing hundreds of millions at Bank’s emergency rate [The Guardian]
Barclays and the interbank market [Financial Times]
Transparent lack of transparency [Times Online]
The entire week has been a prelude to this morning’s speech by Fed chairman Ben Bernanke. But late last night we learned that President George Bush would upstage Bernanke by announcing a new policy just an hour after the release of Bernanke’s speech.
Rather than pretend we know what this all means, we’re just going to open this thread up to comments from our readers. You’re smarter than us anyway.
Who needs the best striker in the world (Thierry Henry) when the real power in English Premiership football is in getting backed by a Russian oligarch? From DealBook:
Russian mining magnate Alisher Usmanov has acquired a stake in Arsenal from David Dein, the club’s former vice-chairman and a close ally of manager Arsene Wenger. The sale of the 14.6 percent stake for 75 million pounds ($152 million) may fuel speculation that Mr Usmanov, who has made much of his fortune in the steel industry, may eventually mount a takover bid for the north London club.
English football is becoming like Battle-Bots (or one giant pissing contest) for Russian magnates, as Chelsea has been annoyingly good since Roman Abramovich bought the team in 2003.
(Pictured – The Arsenal SLR-105, a Bulgarian AK variant)
Russian Steel Magnate Buys Arsenal Stake [DealBook]
Do you agree with Forbes’ list of the 100 most powerful women? Merkel is #1, fine, but Oprah below the CEO of Rite Aid (the logic here is that America’s housewives need their prescription refills to tolerate the massive emotional swings required of an Oprah viewing without lighting themselves on fire)? Ruth Bader Ginsburg below the CEO of Sara Lee (deliciousness is never un-constitutional). Hillary Clinton below ‘I am important in my own special and deserved way’ Melinda Gates? Queen Elizabeth II at #23 (ok, we don’t know if we’d put her higher or lower, but we love the fact that her occupation is “Queen”). The ghost of Nina Wang conspicuously absent from the list? No Melanie Griffith’s character from “Working Girl”? No Rosie the Riveter?
Forbes’ List of Most Powerful Penis-Lackers Contains Some Unexpected Surprises [Defamer]
The World’s 100 Most Powerful Women [Forbes]
Baidu and Yahoo China, two of the most popular search engines in China, facilitate the country’s near 100% rate of downloaded music that is stolen. That’s right, almost all music downloaded in China is stolen (more proof that the Chinese are smarter than us). Other search engines in China, like Google China, don’t have a built-in mp3 download tab, and are pissed that they can’t gain search engine market share.
The International Federation of the Phonographic Industry (and the world of tomorrow), a consortium that includes reps from Sony BMG, Universal and Warner, is on the case, suing nearly everyone in China. The organization reportedly wins 90% of its lawsuits, but loses suits against the big boys like Baidu, which entrenches the current search engine pecking order by crippling the little guy… with slaps on the wrist. Since the averages damages awarded per lawsuit amount to $130 (yes, dollars), getting sued isn’t that big of a deal to a budding search provider. The IFPI spends about $13k per case, which is a bold profit shucking initiative that only the record companies could dream up.
In other search engine news, Google and Yahoo have teamed up with Mercedes to allow each search enginge’s map services to be sent to your car, if your car is a Mercedes. You know the state of auto-navigation is in trouble when car GPS systems are Google mapping a destination. The service will be available on the S-class, CL-class and entire 2008 C-class lineup.
Deaf to Music Piracy [BusinessWeek via Valleywag]
Google, Yahoo to direct your Mercedes [News.com via Valleywag]
Bush to Expand Government Role to Deal With Subprime (Bloomberg)
Well, so much for that whole ‘Bush is an Austrian let the chips fall where they may’ thing. The prez has established a new plan whereby the federal government will insure mortgages for delinquent, subprime borrowers, allowing them to refinance at better rates. And while they’re at it, maybe they can extend the life of their mortgage to 70 years, just to get the monthly payment down to something manageable. It’s almost tiresome to cry ‘moral hazard’ at this point, but what the heck “Moral Hazard”! Anyway, we wanted a compassionate conservative, so this is what we got.
McGraw-Hill replaces president of Standard & Poor’s (Reuters)
Despite the fact that S&P has performed absolutely flawlessly during this whole credit debacle, with all blame resting on some faulty models (bad models, bad!), McGraw-Hill has decided to replace the unit’s President. You might, however, be tempted to call the move window dressing, since the new president is another top S&P executive. This is not quite what’s meant when they say ‘change starts from within’.
Dell reports 2Q earnings jump (Thomson Financial)
Thank god for the laws of physics. Eventually things fall so hard, with so much crap hitting so many fans, that things will reverse themselves, at least a little. Over the past couple years, Dell has been hit by accounting scandals, desisting threats, terrible customer satisfaction, exploding batteries, product lameness, questions about stock buybacks, et. al. ad nauseum. So, eventually the company had to come through with a decent quarter. That they did, beating analyst estimates on the back of respectable (but by no means amazing) sales growth. Hats off.
Mexico Prepares to Allow U.S. Trucks to Cross Border (Bloomberg)
We must’ve been on a different planet for the past 12 years, because we were under the impression that this is what NAFTA was all about. Apparently that part was blocked. Anyway, good news for free traders and truck lovers. Now, about that privately-owned highway connecting Mexico to Canada…
$$$ I just filed a leave from work before burnout strikes. I’m [was] a banker, had been single for quite some time now and would like to unleash my other (wilder) side. Willing to try person of any background as long as you are psychologically balanced. [Craigslist]
$$$ Bin-Laden Trades [thestreet.com]
$$$ Eric Bolling Bolts CNBC’s Fast Money for Fox? [The Big Picture]
Sponsored by the Financial Times.
The volatility trend continued today. The Dow Jones Industrial Average took a nosedive after the opening bell, recovered midday to the greensward and then fell right back down into the river of red. It closed down 50.56 to to 13238.73. The S&P stumbled 6.12 to 1457.64. Technology stocks did better, boosting the Nasdaq Composite. It gained a bit to close up 2.14 at 2565.30.
Share of Wall Street financial companies took a pounding. Bear Stearns, Goldman Sachs Group, Merrill Lynch and Morgan Stanley tumbled down after Lehman Brothers Holdings cut earnings forecasts for the firms.
It’s the penultimate day before the long Labor Day weekend, and volume was as light as you’d expect.
“My main question today wasn’t what I should trade. It was how I could get one of my vendors to invite me out to the Maria Sharapova match tonight,” one trader told us. We told him to get us a ticket too.
Market intelligence from people who aren’t off for Labor Day: FT Alphaville.
You know a product is failing when it loses its all important “verb replacement” status. For example, in the fledgling days of inclusive DVR cable packages, we would still say we were Tivo-ing something. Tivo’s emergence as a verb was a combination of a good product name, good marketing (for the opposite of this, see Hulu) and a rooting interest in the ingenuity of a small-ish company stealing thunder from the cable giants.
Since its methodical destruction by the cable giants (wait, you mean I don’t have to connect this awkwardly to a land line, I don’t need another box, and I don’t have to pay a large upfront fee for the box?) the fickle TV-viewing public acquiesced, and begrudgingly de-verbed Tivo. Now that the cable giants got us all hooked in on the cheap paying an extra monthly sub fee, they’re starting to raise rates accordingly, and we “DVR” our favorite shows.
Tivo is taking a hit today, down almost 10%, based on the following, from Seeking Alpha:
There are several factors at work in today’s slide. For one thing, revenue came up short of expectations – and so did guidance for the fiscal third quarter. For another, the company took an unexpected $11.2 million inventory writedown for standard definition DVRs, a casualty of its shift to a focus on high-definition DVRs. The company also suffered a net loss of 19,00 “TiVo owned” subscribers, disappointing investors who had expected to see at least a modest increase in subs.
There is some potential sunshine amidst the Tivo gloom – with the comapny’s new focus on HD-DVR and a Comcast New England deal expected to start rolling out in September. For now, the bears are feeding.
It’s almost always a smart play to bet on verbs. You knew Google reached ubiquity when people started using Google as a verb, and this happened well before the IPO. Yahoo never became a verb, and is trying desperately to reposition itself in the tech space. Facebook has been annointed verb status, while leaving behind MySpace in the predicate race. Clearly the long bet is on facebook. Also – does anyone say they “Xeroxed” something still? It seems the world has quietly gone back to saying they “copy” things again.
TiVo Slides on Weak Revenue, Subscriber Losses [Seeking Alpha]
William Porter earlier this week sold nearly 5% of his shares in the International Securities Exchange, one of the leading electronic options exchanges, according to documents obtained by DealBreaker. Porter, who also founded E*Trade and sits on its board, was one of the founders of ISE. He served on the board until term limits forced him to leave recently. Although he is the third largest holder of ISE shares, the sales have not yet been disclosed.
Porter sold over 95,000 shares for around six million dollars. The average share price was near $66 dollars. Prior to selling these shares, he owned around 5.1% of the company and will likely be required to file a Schedule 13D report noting the sale with the SEC. These sales appear to bring him just below the 5% threshold for reporting to the SEC, so subsequent sales will not need to be disclosed.
The ISE is currently the subject of a takeover bid by Eurex, Deutsche Börse’s derivatives arm. A spokeperson for ISE said that the company believes the transaction will close in the fourth quarter.
William Porter could not be reached for comment. The International Securities Exchange said it did not comment on trades in its shares.