20120701-181306.jpgGood morning

The headlines:

  1. Diamond’s in the Rough.

    Link: After all that noise – out of a job, in front of a committee.

    First the chairman, then the CEO – followed quite quickly by the COO.

    The delights of political pressure.

    Other than that, not much has changed. Mr Diamond will appear in front a parliamentary committee to explain himself. Politicians will continue to call for a change in the way that Libor is calculated*.

    And there’ll be a new CEO with a new pay package who will soon be eager to augment it.

    *Under a type of cost-benefit analysis that involves only the most immediately-understandable costs and the most immediately-understandable benefits. Which will immediately disregard the impact that it could have on the trillions of dollars worth of contracts currently in existence.

  2. GlaxoSmithKline gets a record $3 billion fine.

    Link: phraudulent pharmaceuticals.

    It will also plead guilty to “illegally promoting prescription drugs” as well as “failing to report safety data”. Just under $1 billion of the fine is for criminal charges.

    In true to form style, the market reacted with a 1.7% increase in GSK’s share price.

  3. JP Morgan under investigation for power market manipulation.

    Link: electric shock.

    So the US power system. Every day, grid companies solicit bids for the next day’s power supply allocation from electricity suppliers. JP Morgan Ventures Energy Corp. is just such a supplier.

    It seems that in the solicitation, JP Morgan demanded too high a price for its electricity supply. Or, at least, some of its “bidding practices” were considered unfair by the grid operators in California and the Midwest.

    The Fercers at the FERC** have announced that this resulted in $73 million in improper payments.

    Are we joking? This isn’t news. It’s a rounding error. In response to which JP Morgan’s share price dropped 40 cents (or 1.1%).

    The market is mad and we should all buy JPM shares. Because $73 million is NOT 1.1% of the company’s value.

    **US Federal Energy Regulatory Commission

  4. BlueMountain makes a return.

    Link: off the boss’s former boss.

    In other JPM news, BlueMountain Capital Management LLC increased its annual return from 5.4% to 9.5% after helping JPM unwind some of those whale trades.


    The “people in the know” are saying that Andrew Feldstein, the former JPM exec who runs BlueMountain, “has no ego” and “is a very modest individual”.

    I myself have raised a sceptical eyebrow. Because I’m not sure what the link is here: the man bet against JPM and profited, then helped JPM unwind their position by helping them take losses, and profited, and now he’s just a good guy.


  5. Apple to make an iPad mini to challenge the Nexus.

    Link: it’s called an “iPhone”.

    The plans aren’t public though. Except that I read about it on Bloomberg.

  6. South Africa’s Treasury appoints firms to assist in sukuk sale.

    Link: Islamic bonds.

    South Africa is hoping to tap the Islamic industry’s $1 trillion worth of assets.

    Interestingly, the issue has been delayed in the past. Because Islamic bonds don’t do interest. So a “sukuk” is constructed as a set of assets sold to a special purpose company by the issuer, which are then rented back in lieu of interest.

    I’ve always thought that this is “letter” and not “principle” stuff. Interest is just rent paid on using your money. Rent is just rent paid on using your asset. Money is an asset. Ergo…

    But Shari’ah law aside, the SA government had to return to the drawing board when it realised that its laws didn’t permit the sale of asset-backed securities.

    Asset-Backed Securities.

    Those sound familiar…

  7. Manchester United is to make an initial public offering in the USA.

    Link: to raise cash.

    “The US Market has ability to provide cash”.

    Yes – that’s generally the point of an IPO.

That’s all for now.
Have a good day.