HPQ the world's largest IT company by revs, buys Autonomy

Fiscal 2010 revenues of HPQ was $126 billion, making it the world's largest IT company (number 11 in Fortune 500). How long it will remain so depends on management's progress in plans to break up the company.

HP is paying £25.50 per share for Autonomy for all outstanding shares (valuing the company at around £7bn) - a transaction recommended by its Board of Directors. Autonomy has been the subject of bid speculation before (September 2010, when the shares rose 4% when the FTSE was flat, and Microsoft and Oracle were flagged as possible bidders).

Funds seem to react to the move, switching more allocations to tech stocks, interpreting the takeover as a sign of increased M&A activity in the sector. ARM, Microfocus and Blinkx (video search engine) also saw their share prices rise.

References:
The UK takeover code can be found here.

SNB on Intervention Spree as EURCHF heads to 1.0

The SNB has needed to intervene in currency markets to halt appreciation of the Swiss franc (CHF in ISO-speak, or "Schweizerfranken" / "Franken"). Amongst other things, it makes Swiss exports less competitive ("menacing for the export sector" might be one way to express it), detracts tourism (or at least deters tourists from spending) and reduces the value of the SNB's reserves in Swiss francs.

The cause for the recent appreciation has been capital flight into "safe haven" CHF, owing to the US downgrade. The Greek crisis also spurred the acceleration of the CHF.

SNB in 1978 purchased 10.6bn CHF (6.6% of GDP) of foreign currency to weaken the franc, following which the CHF relaxed - a resounding success. At the time, the bank had an explicit exchange rate target against the Deutschmark.

Double Debt Crisis Emergency Talks: US is AA+

Sunday is a day of conference calls for finance officials as the twin debt crises of Europe and the US gets discussed, urged on by S&P's downgrade of US debt rating from AAA to AA+. The US Treasury has retorted with a headline called "the $2trillion mistake" regarding S&P's analysis.

Last week the US avoided sovereign default by raising the debt ceiling. But what is the debt ceiling anyway?

The US Constitution gives Congress the sole power to borrow money on the credit of the United States. Right from founding of Congress to 1917, each debt issuance had to be authorised separately. To provide more flexibility in financing from WWI onwards, the concept of "debt ceiling" was introduced, basically limiting the total value of bonds that could be issued.

The largest holders of US debt are China, Japan, UK and Brazil.

Obama Signs New Debt Bill into Law

Obama has increased the US debt ceiling!!! Senate voted in favour, 74 votes to 26 (74% yes)!

Closure of the News of the World

10 July 2011 - the final edition of the News of the World is printed. The 168 year old newspaper is no more, following revelations of the paper's involvement in phone hacking since 2002. A slogan from the paper in 1910 reads: "Contains more news than any other paper".

NatGas 8.1% Flash Crash in Futures on 8 June

Could electronic algos be to blame for clsoing the New York Mercantile Exchange floor for more than five hours when late Wednesday, when Nymex July natural gas dropped 39 cents, or 8.1 per cent, to $4.510 per million British thermal units?? After a few seconds, it bounced back up but the damage was done - anomalous price move registered.

In the US natgas has risen 15 per cent in the past month, nearing a one-year high of $5 per mBtu, as people switch on their air-cons in the hot weather and power plant masters boost output accordingly.

Copthall Avenue's Rencap enters US equity derivatives business

Rencap has hired Leonard Ellis in New York to lead Equity Derivatives and Structuring out there, picking him up from Capstone where he focused on idea- and event-driven volatility strategies. Ellis also managed equity derivatives at Citi, covering equity swaps, DMA, delta one and exchange market making.