Randomly Noted

Not a great day for Bank of America Merrill Lynch. First blow: DJN’s Amy Or discloses that Merrill Lynch didn’t get the mandate to handle all those China Construction Bank shares its parent, Bank of America, sold this week. You’ll recall Bank of America dumped about $7.3 billion of CCB shares as part of its urgent fund-raising efforts. It would make sense for BofA to hand the task of selling millions of CCB shares to its recently acquired in-house investment bank, Merrill Lynch. But Morgan Stanley got the gig. As Amy writes, “By crossing the shares, the U.S. investment bank assumed a market maker role and acted as the agent in both buy and sell sides of the trade.” Her story is headlined “Morgan Stanley Was Agent For Both Sides In CCB Deal -Sources.”  Continue reading…

DJN colleague Steve Wisnefski posted the following blog today – it’s about his own New Jersey house-hunting escapades. Key message is: the housing market in metropolitan New York (which is really what northern NJ is about) is firmer than one might think. Steve got his new house at only a few percentage points under the list price – which is similar to our experience. (And makes me feel better about failing to get a fabulous bargain…) Steve’s blog is headlined, “Lowballing Has Its Limits (Again): “http://newswires-americas.com/markettalk/?p=1896#more-1896  

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Everyone should cheer, of course, whenever the U.S. Securities and Exchange Commission charges an alleged securities bad guy with wrongdoing.

But sometimes you have to wonder what the alleged victimized investors were thinking.

Today, the SEC said it charged two New Jersey men with orchestrating a fraudulent scheme that sold unregistered securities and then supposedly co-mingled the funds investors gave them with a payroll service they also ran. (Click Here to see the press release).

“The SEC is seeking remedies that will protect the interests of not just the defrauded investors but also the customers of the defendants’ payroll business and their employees whom the fraud has put at grave risk,” said James Clarkson, action director of the SEC’s New York regional office, in a press release.

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PIMCO’s chief executive and co-chief investment officer, Mohamed El-Erian, is always worth reading and, in a recent post on the investment company’s web site, he makes some broad and interesting predictions about what will constitute the “new normal” in the global economy and investment world.

Coming on the heels of a PIMCO summit, here’s a summary of what El-Erian had to say about what’s coming. A several year period of sluggish economic growth, too much government intervention for too long and  a banking sector that’s a “shadow of its former self.” Politics will matter a lot.

Here’s a key quote: “For the next 3 – 5 years, we expect a world of muted growth, in the context of a continuing shift away from the G-3 and toward the systematically important emerging economies, led by China. It is a world where the public sector overstays as a provider of goods that belong in the private sector …It is also a world in which central banks and treasuries will find it difficult to undo smoothly some of the recent emergency steps.”

Click Here to read his full post.

Disaster. The big Japanese consumer electronics company reported financial results that were horrible, even for a company you would expect to get badly from a recession that has forced consumers to cut back significantly on buying discretionary items like cameras, TVs and computers. Well, the pullback was much bigger than just in those areas – games, home videos, audio products and semiconductors, to name a handful more. The company is split into four main segments. Here are the horrid numbers: Electroncis lost $2.7 billion in the quarter ended March 31. Sales were down 35.7%. Games lost $25 million. Sales were down 38.7%. Pictures (videos and movies) made $145 million but sales were off 12.4%. Financial services made $10 million on a 47.2% sales increase. Continue reading…

Wal-Mart reported flat earnings today and sales that were a little better than expected. When you take out currency adjustments, its revenue increased about 4.5%, a pretty impressive number given the state of the economy. Clearly what has been happening at Wal-Mart is that shoppers have “traded down” and are looking to purchase less expensive items. So, Wal-Mart’s big challenge – what can they do to keep those new customers who have walked through the door because the price was right? Wal-Mart believes that once shoppers experience value at a lower price point, they will keep coming back. It will likely take more than that, though.

Strange as it seems, some investment bankers in London are getting their first substantial pay raises in many years. According to DJN’s Adam Bradbery, UBS has been raising base salaries for certain executives by an average of 20-30%.  Senior managing directors at Merrill Lynch have received 60% pay increases recently, Adam’s article says.  It seems the banks’ thinking is that by raising base pay (often a small part of overall compensation), they won’t have to pay out such large bonuses in order to retain their good people.  Continue reading…

With Singapore’s StarHub announcing it will soon offer an Android-powered phone from Google by way of Taiwan’s HTC Corp., I decided to find out what this is all about. With a 10-year-old Star Wars-and-Lego-obsessed son, I figured anything with “android” in the name would soon become fodder for dinner-table chit-chat. A few Google searches and I’m immersed in the world of mobility, Linux, “cupcakes,” “eclairs” and Marissa Mayer, who apparently adores cupcakes (the fattening ones) and, by the way, is a high-level engineering executive at Google. (All this by way of the web, so hopefully reliable information.) This disclosure of my ignorance of hot new mobile gadgets is just a segue into the topic of Taiwan’s economy. Today’s MSCI index rejig recognizes the island-nation’s recent share price surge. Taiwan’s weighting in the MSCI All Country World Index will rise to 1.41% from 1.3% at the end of May. It’s the biggest increase for any Asia-Pacific market in the index and could pump about NT$15 billion of additional investment in Taiwan’s stock market, DJN reports, citing Fubon Financial’s Joyce Chang. That’s because exchange-traded funds the world over that track the index will pour proportionately more money into Taiwanese shares. Taiwan’s relative out-performance reflects “an influx of money from investors seeking to capitalize on improving relations between Taiwan and China,” write DJN’s Perris  Lee Choon Siong and Jessie Ho.

A sharp spat erupted about a week ago when it emerged that Japanese pharmaceutical company Eisai Co. might try to kill its big Alzheimer’s drug alliance with Pfizer Inc. Eisai’s position: the alliance’s “change of control” clause allowed it to walk away – with the lucrative drug, Aricept. Pfizer is buying Wyeth, hence the change of control issue. Pfizer, which disclosed Eisai’s challenge in a regulatory filing, vowed to fight back. Today, Eisai, which discovered Aricept and formed a co-promotion pact with Pfizer in the mid-1990s, says it might try to renegotiate the deal with Pfizer rather than ending the relationship altogether. As DJN’s Kaz Shimamura reports from Tokyo, Eisai will be open to negotiate options, including revising the contract rather than cancelation. (Kaz attributes this to Soichi Matsuno, Eisai’s deputy president for global pharmaceuticals. ) For its part, Pfizer would probably prefer to renegotiate and get what it can from Aricept, even at less favorable terms, before its patent expires in late 2010 or thereabouts. Continue reading…