Friday, April 30, 2010

Today’s Top Stories $GS $SPY $JPM

· GS – a criminal probe is being conducted into Goldman’s trading according to the WSJ; federal prosecutors are looking into whether the company or any of its employees committed securities fraud w/its mortgage trading (recall the NY Post had an article Thurs morning talking about Goldman pursuing settlement talks w/the SEC…..this WSJ article implies the situation could be escalating).   yeah take a look 

· Derivatives language softened in the Senate bill; could preserve swaps phone trading – the latest draft of the bill changes the definition of so-called swap execution facilities; Retaining the status quo may maintain the profits dealers make by trading interest-rate, credit-derivative and other swap contracts.  The new draft deletes the word “trading” from the term “trading facility,”…. A “trading facility,” as defined under the U.S. Commodity Exchange Act, prohibits phone transactions.  Bloomberg 

· Greece - JPMorgan's D. Mackie provides an update on Greece- According to press reports, we will get the details of the Greek support package in the coming few days, possibly as early as the weekend. The key issue still being negotiated is the conditionality.  As far as we can tell, there is no plan at the moment to try and short circuit market dynamics decisively, by introducing a sovereign debt guarantee, for example. 

· Barclays reported disappointing earnings - Barclays has reported a disappointing Q110 PBT of £1,820mn vs. JPMe £2,942mn. Consensus PBT was £2bn. Underlying PBT came in higher at £2,040mn.  Main disappointment lower BarCap revenues.

· UK election next Thurs May 6 - The FT says coming away from Thursday’s PM debate that Cameron is the clear front-runner and “Brown misses his last big chance”.

· On the eurozone eco front, March Unemployment and CPI were inline w/expectations, UK Apr. Consumer Confidence fell further than expected and Spain’s Unemployment rose more than expected (topping 20% vs. St. 19.8%).

· Japan gained today in a) a catch up session and b) on back of the BoJ’s meeting/statement. The BoJ held its benchmark interest rate at 0.1%, upgraded its eco growth forecast and Governor Shirakawa instructed his staff to examine “ways to support private financial institutions in terms of fund provisioning w/a view to strengthen the foundations for economic growth.”

· Ireland may skip its planned mid-May bond auction if yields stay at their elevated current levels; "If in the event they are still demanding the sort of premium we're looking at today we'll have to seriously consider passing on it,"; the country can "easily" skip 1-2 months.  CNBC/Reuters   

· China & the euro – China had been stepping up its investments in European gov’t bonds and relies on Europe as a major export market….”Europe’s debt woes start to complicate China’s money moves”; Europe’s issues have caused tens of billions in paper losses for China and could impact the timing of an adjustment of the yuan/US$ peg   NYT  

· Municipals – Harrisburg PA said it will miss a May 3 bond payment; this time, AGO will make the payment on behalf of Harrisburg; the city is considering bankruptcy (WSJ)  

· Money Flows (from JPMorgan’s E Beinstein) - HG bond funds had strong inflows of $1.2B, up from $880mm the prior week and the first week since mid-March where inflows from the funds reporting weekly exceeded $1B. HY inflows slowed to $219mm from $512mm last week. These data have become more volatile over the past few weeks but the longer term trend is for steady inflows. Equity market inflows jumped to $3.8B last week from $2.2B the prior week. 

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