Sunday, July 01, 2007

Weekend News

The U.S. regulatory crackdown on insider trading is missing widespread abuses in the $4 trillion options industry, undermining everyone from Goldman Sachs Group Inc., the world's biggest securities firm, to Citadel Investment Group LLC, the $14 billion hedge fund manager.

Interactive Brokers Group Inc., which handles 20 percent of all U.S. options trades, lost as much as $25 million in the first quarter to investors who may have violated laws by using non-public information to trade. Market makers PEAK6 LLC and AGS Specialists LLC say insider trading is costing them at least 10 percent of annual earnings. Bloomberg

Apple Inc.'s initial iPhone sales may have met analysts' top projections, suggesting Chief Executive Officer Steve Jobs will reach his goal of making mobile phones as profitable to the company as computers and the iPod.

Shoppers bought as many as 200,000 units the first day after the iPhone went on sale June 29, according to Global Equities Research in San Francisco. Analysts' estimates ranged from 50,000 to 200,000 units. Bloomberg

The Carlyle Group is in discussions with Virgin Media, the British cable company whose largest investor is Richard Branson, over a potential bid worth around $20 billion, a person familiar with the negotiations said today.

The talks are still early and may not lead to a bid, this person noted.

As the coffers of American buyout firms have swelled over recent years, the firms have become more aggressive in seeking out targets beyond the United States. On Saturday, two American private equity firms partnered with the Ontario Teachers’ Pension Plan to win Bell Canada, that country’s largest telephone company, for 51.7 billion Canadian dollars ($48.8 billion), the largest leveraged buyout ever. NY Times

Manufacturing activity in China expanded at a slower pace in June, according to a survey of purchasing managers released today.

The Purchasing Managers' Index fell to 54.5 from 55.7 in May, the China Federation of Logistics and Purchasing and the National Bureau of Statistics said in an e-mailed statement. That was the lowest reading in four months. China Daily

There is a rather dispiriting resemblance between the latest credit crunch and the bursting of the dotcom bubble.

Ahead of each, there were plain warnings not just of what would happen but how and why. All that was missing was when.

But there is one fresh angle this time. The market has been struck by the disturbing notion that credit derivatives might not be worth what they were supposed to be.

This should hardly be news to anyone who read Warren Buffett’s broadside against derivatives four years ago. There is no market, he pointed out, for complex derivatives. So instead of being marked to market, they are marked to model – or in some cases, marked to myth.
Financial Times

Asian countries were warned on Monday against complacency that another Asian financial crisis could not hit the region.

"It is important that we make sure that we do not become overconfident that a crisis can never happen," said Thailand's finance minister, Chalongphob Sussangkarn.

He was speaking at a forum in Manila to mark the 10th anniversary of the Asian financial crisis, which was triggered by a large outflow of capital toppling an overvalued Thai baht. Reuters

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