As the credit crunch bites, not everything is doom and gloom for everyone...
In a week when JPMorgan Chase, who bailed out Bear Stearns, released estimates of City job losses reaching 40,000, you would have expected a fair amount of pessimism to be circulating in the financial community.
But as ever, it takes two views to make a market. High profile emerging markets fund manager Mark Mobius reckons that the credit problems are nearly at an end, with most of the bad news ‘in the price'. He's been piling into the Bank of China.
In contrast, Morgan Chase is still a bear, expecting capital markets to remain under the cosh for the rest of 2008. The money men won't be consoled by US housing starts hitting a 17 year low, and year-on-year repossessions more than doubling.
Meanwhile George Soros is staying cynical, saying that overall market woes are a long way from leaving the woods. He's also joined the regulation bandwagon, urging official shackling of hedge fund speculators. The party's nearly over, boys!
For some it seems it already is. Hedge fund manager Man Group
(LSE: EMG)
is to sublet one third of its new City office.
Though for some, there's been a very silver lining to the black financial clouds. American hedge fund billionaire John Paulson racked up a cool $3.7bn (£1.85bn) last year in the middle of the mortgage market mayhem. Mr Paulson, ironically a former Bear Stearns managing director, placed the right bets on the subprime woes by selling short, i.e. flogging assets he didn't own with the aim of buying them back later at a lower price.
Good to see that someone's been enjoying himself in the middle of all the mortgage carnage.
Of course if you're been tempted to get away from it all, you'll know how the pound's plunge has made international travelling so much more costly. That didn't stop WH Smith
(LSE: SMWH)
producing 14% first-half sales growth in its travel division.
One retailer dodging most of the bullets, apart from Tesco
(LSE: TSCO)
, is luxury goods group Burberry
(LSE: BRBY)
, who announced a 19% upswing in underlying second half sales, which powered the share price some 11%, the most in the six years since the retailer first floated.
Another credit crunch sufferer to see some sort of daylight was credit checking specialist Experian
(LSE: EXPN)
whose revenues jumped 21% for the six months to March. It was nothing to do with the UK, though, as Latin America saw 40% growth.
After last week's report that Eurotunnel is now in the black, it was good to see that first quarter Eurostar revenues advanced 25% on last year on a 22% increase in passenger numbers. Though unlike the tunnel operator which has a licence to 2086, Eurostar could face competition from a rival passenger service in 2010 as the ‘open access' policy is introduced.
Despite a rising Continental currency, not everything is looking rosy in Euroland. The Evening Standard reported that: "The subprime meltdown has caused the deepest financial crisis for decades in Germany, which is mired so deep that its entire banking structure is under threat of collapse".
Traditional Teutonic caution was abandoned in favour of the supposedly higher returns on offer...until everything went pear (Bear?) shaped. Fears are now growing that overall losses could top €30bn (£24bn) as the dodgy debt deals are fast unwinding.
By the way, Germany has some 2,200 lending institutions. That really is an awful lot of bankers.
Some solace, meanwhile, for Alistair Darling from an unlikely source. Britain could actually afford another Northern Rock-style bailout without damaging its world reputation as a top-rated bond issuer, according to ratings monitor Moodys, as the Rock was apparently an "isolated case".
Interesting to see what Moodys thinks about the Bank of England mortgage bond bail out. I have nothing (polite) to add.
