Macaskill on Markets

A US climate bill filled with green credits will create business for banks and provide relief from the backlash against ESG products.

West Virginia state treasurer Riley Moore has opened another front in a campaign by Republican officials in the US against banks that promote ESG policies.

HSBC Asset Management’s head of responsible investing has had it up to here with consultants and regulators lecturing him on climate change risk.

Growing concern in the US that a Greek default could prove to be Europe’s equivalent of the Lehman Brothers collapse threatens to exacerbate trans-Atlantic tensions and spoil trading prospects for global investment banks.

JPMorgan did a fine job in downplaying the significance of its recent payment of $153.6 million to the SEC to settle accusations of fraud over a mortgage-backed CDO squared product from 2007. The SEC had alleged that JPMorgan was negligent in failing to disclose the role that hedge fund Magnetar played in selecting the mortgages in the synthetic CDO, then taking the short side of the credit derivatives trades used to create the portfolio.

The oil markets generate plenty of accusations about skulduggery, ranging from allegations of bribery surrounding production to speculation about suspicious developments in the timing of physical delivery of supplies. But these have been overshadowed recently by conspiracy theories surrounding trading of both precious and base metals.

A couple of extremely well-timed commodity price calls by analysts at Goldman Sachs helped to exacerbate the recent sharp volatility in the asset class and prompted gnashing of teeth at the bank’s rivals.

Strong first-quarter results at UBS might have come just in time to prevent the implosion of its bid to regain a spot at the top table of investment banking.

Goldman Sachs cut out trading completely in the first quarter – at least that’s what the language of its earnings filing indicates. The bank managed to avoid using the t-word at any point in its earnings announcement, although it mentioned clients 29 times and made 46 references to investment.

The strong first-quarter results at UBS might have come just in time to prevent the implosion of its bid to regain a spot at the top table of investment banking.

Goldman Sachs cut out trading completely in the first quarter – at least that’s what the language of its earnings filing indicates.

Morgan Stanley recently unwound credit hedges on monoline insurer MBIA at possibly a big loss. This could hit first-quarter results for the firm’s troubled fixed-income division and compound its reputation as disaster-prone, at least when it comes to credit trading.

The return of Bill Winters to the financial markets was something of a damp squib, at least to those who had come to view him as the once and future king of investment banking.

Has Barclays perfected the art of interest rate alchemy? It seems to think it might be close to mastery of the vagaries of interest rate curve management, judging by statements in its recently released annual report for 2010. Barclays said that interest rate hedges of product balances such as deposits had generated a gain of £1.403 billion ($2.28 billion) in 2010, while comparable hedges of group equity brought in £1.788 billion.

Goldman Sachs posted weak fourth-quarter results in January and released a code of revised business principles that threatened to slow its legendary speed in closing deals.

Recent insider-trading investigations in the US and the UK have focused on bit players by financial market standards. The three hedge funds raided in the US are low-profile firms. Don Chu, the expert network official charged with channelling confidential corporate information, was described in the case against him as a New Jersey resident paid $6,000 a month by his research firm employer – peanuts to a Wall Street player.

The widening insider-trading probe in the US is creeping closer to systemically important financial market players, as subpoenas have been received by hedge funds SAC and Citadel and two big mutual funds: Wellington Management and Janus Capital.

The proposition that if you build an investment banking franchise clients will come was severely tested in the third quarter. Sales and trading revenues were weak for most dealers, though with wide variance between big firms. Results were particularly poor for banks such as Morgan Stanley and UBS that had been rebuilding their investment banking franchises on the assumption that an aggressive push into flow business lines would result in increased client volumes.