Chancellor lets Branson buy NorthernRock - Good or Bad for Taxpayers?

Branson attempts to make a "silk purse out of a sow's ear", by paying £747m cash for the bank, a third of which will be funded by the state. Branson's Virgin Money is investing together with Stanhope Investments, a unit of the Abu Dhabi national fund. The deal comes 5 months after UK finance minister George Osborne (aka Chancellor of the Exchequer), who studied Modern History at Oxford, put N-rock up for sale.

A word on the role of the Chancellor..it is one of the FOUR Great offices of State, which comprise, the Prime Minister, the COTE, the Foreign Secretary and the Home Secretary.

James Callaghan (PM: 1976-1979) is the only person to have served in all four offices. Prior to PM he was Chancellor (1964-1967) wrestling with BoP deficit and speculative attacks on GBP. He was ousted by Maggie Thatcher's Conservatives in 1979 following the "winter of discontent".

UKFI (UK Financial Investments) manages government stakes in bailed-out banks, established shortly after the collapse of Lehman Brothers. Sir David Cooksey (creator of Advent) joined as Chairman the following year, his background is both engineering and financial entrepreneurship.

"Super Mario" Monti steps up to Italian plate

Mario Monti, a former EU commisioner (who earned a reputation as an attacker of monopolistic visions and vested interests, e.g. blocked the merger between GE and Honeywell in 2001), is stepping into the space left by Silvio Berlusconi (owner of A.C. Milan), and forming the next Italian cabinet. Mario studied at Bocconi in Milan and Yale (a very old college founded in 1701), under James Tobin (Nobel Prize, 1981).

3Q 2011 Profits are "Turning Point" for BP

3Q profits came in at $5.14bn - near tripling of the replacement cost profit in same period 1 yr ago."Replacement cost profit" is an accounting practice for reporting profits in the oil industry. BP is still paying for the cleanup in the Gulf of Mexico and compensating victims.

MS Debt More Risky than Bank of America, says CDS

495 basis points is the highest level it's been in 2.5 years, implying a cost of $495,000 a year to insure $10m of Morgan Stanley bonds for 5 years (more expensive than Bank of America). At 500bps premium, bonds are regarded to have junk status, say Markit. Shares in MS fell 10% to $13.51. The main driver for the concerns is MS' exposure to European bank debt, in particular France.

Nat Gas trading around $3.87

Price is per MMBTU (per million BRITISH thermal units - the MM being a legacy of Roman times when M denoted 1,000. Hence MM is one million or one thousand times one thousand). Look how Natgas futures on NYMEX are doing here.  ONE BTU is roughly 1,055 Joules, so 1 MMBTU must be a BILLION JOULES.

Recap question: When is a million equal to one billion?  Answer: when converting MMBTU into Joules. 1 MMBTU (million BTUs) is one billion Joules.

Standard contract size for Henry Hub natural gas is 10,000 MMBtu.

We can think of energy also in terms of light. A 100 Watt light bulb consumes 100 Joules/second.  in one minute, consume 6,000 Joules, roughly 6 BRITISH THERMAL UNITS.

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.