...one Q4 GDP revision later and futures break down to new depths...

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With Allen Stanford generating even more interest in the media than his certificate of deposits there is nowhere in greater need of some cheer than Antigua where his offshore business headquarters sits and where 5% of the population are employed by him.

Well, they got a very tiny sliver of comfort yesterday (and that's a Bloomberg report no less) when the region's cricket team performed the Great Escape from what was certain defeat. But, obviously, in the Grand Scheme of Economic Things this is small beer.

Or is it? It being Friday (as in TGIF) some quirky research came up with the chart below:

Have a good one.

NB: Image cropped from original photo by Andres Leighton (AP). Link here to it and other shots of the match.

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When I saw this yesterday on the Dow Jones wires from French glass and building material manufacturer Compagnie de Saint-Gobain SA...

Saint-Gobain said a technical issue was delaying the release of its full-year earnings. Saint-Gobain had been due to release its full-year earnings for 2008 after market trading close Thursday, before 1715 GMT.

...I very nearly posted a comment to the effect that shareholders should look out. But it might always have been true so why jump the gun?

In the end it seems the company had €1.5bn technical rights issue reasons to delay which, now sorted, will:

"anticipate its future financing needs and maintain strict financial discipline in a challenging economic and financial environment" (link)

Good thing there is a credit crisis and recession to blame for otherwise someone might suggest the cash call is really as much about covering that unanticipated and strictly undisciplined (for a recidivist like Saint Gobain, that is) price fixing fine of €896m the company got last November.

Share price reaction?

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The quiet, seething feud this site has with the official propaganda marketing arm of real estate agents in France looks set to end.

The latest quarterly letter, Residential Property in the Eye of the Hurricane, from La Fédération Nationale de l'Immobilier marks a break with previous complacent efforts and has patently been written and considered by different authors than prior FNAIM output.

Couple of interesting graphs in that report cutting property price trends by region and house/apartment split:

A crucial feature of the latter chart is the IDF point. That is Ile de France, or the Paris region, long perceived as virtually impregnable to the forces of property price declines. Recognition by sellers here that pricing flexibility cannot be denied will start to boost anaemic transaction volumes. Eventually anyway.

Equally interesting, although I cannot readily explain it, is the strength of Bourgogne. The export market must be seriously overpaying for its wines...

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NB: As of 10h00 Western European time. Latest data are futures.

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In October 2007 British Land announced, with a whiff of contemptuousness, that it was withdrawing from sale the Meadowhall Shopping center because:

"the uncertainty in financial markets has made the prospect of realising an appropriate value unlikely"

British Land were asking £1.7bn and at the time this Kübler-Ross inspired graphic appeared here.

As many others at the time also observed it seemed clear enough that the commercial property shock was just beginning. So cut-a-deal-while-you-can looked an apt move. Instead, British Land went counting on market forbearance to right things and fetch them 2006's prices (in exactly the same way banks across the globe are counting on regulatory forbearance today to fetch them something like the fair values at which they are carrying various dung piles).

Time has now run out on that strategy. Last week British Land managed to sell a half interest in Meadowhall for £588m. This implies a total value of £1.18m, 30% less than what they wanted 16 months ago. Interestingly, it is also only 85% of the value the center was being carried at in the interim accounts. I say "interestingly" because the market was informed by CEO Stephen Hester in February 2008 that the firm had "taken a hatchet across the board” to carrying values. A small, cuddly and possibly rubber-edged hatchet it seems.

Now, it's fair at this time to assess if British Land has actually made money (at least in terms of capital gains) with Meadowhall rather than constantly harp on about certain aspects of their PR. They acquired the center a decade ago for £1.07bn. In real current money that's circa £1.25bn. Well, you can work it out from there.

What is bothersome, and I realise this is puritanical, is the praise heaped upon the CEO Stephen Hester for his stewardship of the company, a tenure encompassing the miscalculation - and I think that is a more than fair label - of the aborted Meadowhall disposal. The recent deal, by new CEO Chris Grigg, provides only £170m in cash and came mere days before the launching of a rights issue of £740m. The new chief, I would suggest, is paying for the immobilisation/denial of his predecessor (now to be found in the role of a very well-paid civil servant running the Royal Bank of Scotland) in October 2007.

Course, the official word is that they are not in any distress whatsoever - the cash call simply enhances a strong balance sheet and positions them to take advantage of the marvellous market opportunities appearing everywhere.

Proving the counter factual is, of course, not possible. Yet the view that selling in late 2007 instead of holding out would have been financially superior bears much scrutiny.

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My chief concern this week is not financial markets where, in a continuing and remarkable piece of co-ordinated globalisation, authorities seem bent on convincing themselves, broken record-like, that spending other people’s money (the more the merrier) is the solution. No. There is a test match beginning in the Caribbean today where the West Indies takes on England in Jamaica (preparations at left).

Unfortunately, even in the Caribbean the financial crisis intrudes. Last Friday the region’s largest conglomerate saw key pieces of its empire collapse. Trinidad’s CL Financial has been forced by the country’s central bank to cede control of large portions of its insurance, investment banking and brokerage operations in a massive (here a relative term) bailout (pending passage of necessary legislation).

Don’t expect to see this story on Bloomberg. However, in US dollar terms CL Financial control over $16bn of assets (albeit on their own valuation); and their Trinidad assets alone are worth over a quarter of the country’s GDP. This is a major regional story.

Across the West Indies governments are frantically claiming the locally registered holdings of CL Financial are independent and untouched. So please don't withdraw your savings. But, in some cases, these claims are disingenuous mentioning only the companies seized by the Trinidad government but not the links to CL Financial itself.

Yet, for anyone looking at the parent company accounts (qualified last time) they will see a conglomerate that has had no short-term liquidity for at least the last two reporting periods - indeed, it has been negative. This inability to meet third-party withdrawals is the root cause of the bailout. CL Financial has long been a walking insolvency candidate and one the Trinidad authorities have tried to reign in since 2004. The country has been placed on negative credit watch as a direct result of the bail out.

This suggests that all CL Financial subsidiaries should look carefully at any monies lent back to the centre and what such monies are now worth - or whether they are even recoverable (pending the inevitable "restructuring" of CL Financial).

For example, the accounts for the group's Barbados-based insurance operations for the entire eastern Caribbean (Clico International Life insurance Ltd) show loans to parent and ultimate parent companies of over US$50m, more than 10% of the insurers’ asset base. The notes to the accounts of course only offer basic detail. The bulk of these loans may be very safe (although parts are labeled "unsecured"). But there is as yet no clarification from the insurer's management as to who is the ultimate counter party. In fact, the topic of potential holes being blown in the balance sheet has not even been broached.

In the glaring absence of that, and with some family monies concerned, it is hard not to conclude in the case of Clico that the combination of:

  • its astoundingly aggressive underwriting of annuity premiums (with some portion of these contracts perhaps "guaranteeing" clients fixed future benefits);
  • a net cash-free, walking zombie parent; and
  • a desperately poor asset market since 2008 that has eroded the capital bases of insurers everywhere;
is setting up its claims of robust financial health for a testing time.

NB: Freebie for the game. Buy Jerome Taylor match runs at 32 on IG Index.

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