Saturday, January 2, 2021

FT Alphaville's Markets Live: The Fall of Lehman

On Wednesday I inadvertently promised some of  the old Markets Live links. The paragraph:

Throughout the weekend we'll post some of the more memorable snips, including the collapse of Northern Rock in 2007 and the Great Financial Crisis of aught-eight - aught-nine. Also scheduled are some of our favorite posts by Bryce Elder and his attempts to keep everyone from getting sued for libel or other forms of definition of character....

was in the original 2019 post but what the hay, here's what was going on September 15, 2008 (and later):

November 10, 2019
FT Alphaville's Markets Live: The Fall of Lehman

This is the first time that we have to resort to one of the public archivers as the three Markets Live posts that September Monday (and Battle of Britain Day) are among the lost, known only to God. (and the NSA and GCHQ. and the Russians and the Israelis)
Markets Live had three sessions September 15th 2008 and the direct links are a bit truncated:

Crisis Live - I - transcript 15 Sep 2008

11:02 am
PM Calm down.
That's it, just Paul's disembodied head and the exhortation to calm down. 
Here's the rest of the story, they lead with a follow-up on a very accurate market rumor ML relayed on Thursday the 11th:

Crisis Live – I – transcript 15 Sep 2008
Markets live chat transcript for the chat ending at 12:16 on 15 Sep 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)
PM Calm down.
PM This is Markets Live, FT Alphaville’s daily markets chat.
NH Hyperventilation Live
PM Neil’s here. He’s had his regular rocket fuel breakfast.
PM And we might be joined by some other colleagues – Sam, Stacy, Bryce.
PM Should quickly say that we are currently planning to have a second ML session today.
NH Pencilled in for 2pm – to cover the run up to the New York open.
NH But if we suddenly discover – say – an AIG conf call happening at, say, 1pm, we will open up then.
NH Right now we are planning to run for an hour.
PM So what shall we talk about?
NH Dunno really, Er………….
PM How about being super smug and printing this:
Sept. 15 (Bloomberg) — BASF SE, the world’s largest chemicals company, agreed to buy Ciba Holding AG for 6.1 billion Swiss francs ($5.5 billion) to better compete in the market for paper additives by increasing scale.
BASF will pay 50 francs in cash for each Ciba share, 32 percent more than the closing price on Sept. 12, the Ludwigshafen, Germany-based company said in today. Shares of Basel, Switzerland-based Ciba climbed 29 percent to 49 francs.
NH Oh, Murphy, you make me embarrassed. Looks like we’re showing off.
PM Nah – stick it to Goldman!
Ciba’s shares have rallied by c.26% on M&A speculation and comments from an activist shareholder calling for a change of chairman (Reuters/Dow Jones, September 5, 10). As discussed in our report (M&A back in focus, published Sept. 3) we expect speculation but believe it is unlikely Ciba will become a target in the near term due to its high leverage and weak competitive position. Further, its provisions may restrict a takeover
including limiting voting rights to 2%, Novartis owning the Ciba brand and certain environmental provisions passing to Ciba from Novartis in the event of a change in control. As a result, we downgrade to Sell (Neutra
PM That was from Richard Logan at Goldman Sachs, responding to a story here that ….er….. BASF was going to bid at 50 chf for CIBA,
NH this missive went out on Friday and wrecked the stock price for an hour or two
NH Poor guy. I don’t think he understands our Bandit rating.
PM Think you are right. Its one thing to say Goldman V Markets Live – -Goldman will win.
PM But this was Goldman V No1 – and that’s a no brainer.
NH there was only ever going to be one winner
PM Let’s be clear here.
PM is the Story Oracle.
PM is right.
NH Always.
NH Or just about always, in any case.
PM We have had situations in the past where bid plans have been cancelled and the company has refused to confirm the existence of the plans.
PM But trust us No 1 is good, really. good
NH No10 on the other hand is not so good – in fact he and similarly ranked bandits are lousy. Follow their tips and you will lose all you money.
PM Anyway, enough of that.
PM Well done Neil. That was a direct hit.
PM Shame it didn’t make the paper.
NH hmmm, don’t get me started on that
Then it is time for some other names:
PM Okay
PM Lehmannnnnnnnnnnnnnnnn
PM A(L)IGee – In da bin!
NH Merrill Lynch – thundering herd heads for abattoir
NH Bob’s bank Barc
PM Woof!
NH Wwhere do we start on this?
PM Well, we could start briefly with woof bank, Barclays.

Our link to the second session had the same problem with terseness:

NH Hi, we are back
But going to the archive we see that Neil has staged a coup in the textbook South American manner, seizing the means of communication:
Markets live chat transcript for the chat ending at 14:00 on 15 Sep 2008. Participants in this chat were: Neil Hume (NH) Paul Murphy (PM) Stacy-Marie Ishmael (SMI) Sam Jones (SJ) Bryce Elder (BE)
NH Hi, we are back
NH waiting for the ML “Town Hall” with Thain to start
NH not sure where Paul is
NH buy Stacy is here
NH since we were last on air
NH market has recovered small
NH FTSE 100 now down 248.8 points at 5,167.9
NH banks have rallied
HBOS (HBOS:LSE): Last: 218.75, down 63.25 (-22.43%), High: 254.75, Low: 179.60, Volume: 138.21m
Royal Bank of Scotland Group (RBS:LSE): Last: 207.25, down 26.65 (-11.39%), High: 224.50, Low: 194.90, Volume: 124.22m
Barclays (BARC:LSE): Last: 308.75, down 41.75 (-11.91%), High: 331.50, Low: 280.50, Volume: 99.88m
And as if stimulated by the action in the banks Mr. Murphy appears
PM I’m back im back
NH right, Merrill saying conference call in now 11.00am eastern
PM Hang on – its over a BoA
PM Hang on the web
NH right heading there
PM We cant get on to the bleeding site (well i cant)
PM I am in
PM getting the reg gufff
PM Here’s the link
NH right am in
PM Global scale blah blah...

And for session three the play-by-play of the U.S. open:
Markets live chat transcript for the chat ending at 15:34 on 15 Sep 2008. Participants in this chat were: Neil Hume (NH) Paul Murphy (PM) Sam Jones (SJ) Bryce Elder (BE)
NH Right we are back for a third time today
NH Crisis Live III
NH and if AIG actually says something there will be Crisis Live IV
NH so we await the opening on Wall Street
NH before that
NH this just gone up on WSJ
Government officials and Wall Street executives over the weekend discussed speeding up new protections against short-selling, a person familiar with the matter said. Securities and Exchange Commission Chairman Christopher Cox assured Wall Street chiefs amid a series of frantic weekend meetings over the fate of Lehman Brother Holdings Inc. that the SEC would institute protections soon, this person said. Wall Street firms earlier this summer successfully lobbied the SEC to restrict certain types of short sales for 19 financial companies.
NH so, it’s still the fault of those evil short sellers
PM Okay — Futures are pointing to a 340 point fall on the Dow at the opening
PM Sorry — 350
NH Sam has gone the S&P stuff
NH just going through it
PM 11075
NH and one other thing
NH we don’t have US prices
PM at this terminal
NH so Stacy is acting as our blue button and shouting out the prices
PM btw — futures can be WAY off early Dow
NH right here we go
NH tin hats on
PM remember that the Dow constituents are slow to open
PM one
PM by
PM one
PM So the trend takes a little while to build, index wise
PM Our current price down 90 point at 11331
NH 2,207.23 -54.04 (-2.39%
NH that was Nasdaq
PM Stacy is providing the prices
NH AIG is down 45% at $6.70

That concludes our look at Markets Live minute-by-minute reporting of  history as it happened.
We'll be back with one or two of our ML favorites.
Special thanks to a couple toilers (who shall remain unknown whether they like it or not) for everything from research to colorizing the individual NH's and PM's.
FT Alphaville's Markets Live: The Great Financial Crisis, Day 1
FT Alphaville's Markets Live: The Great Financial Crisis, Day 0
FT Alphaville's Markets Live: The Fall Of Northern Rock
FT Alphaville's Markets Live: The Missing Early Transcripts
FT Alphaville's Markets Live: Was Apple's Decision To Stop Reporting Unit Volume a Tell? 

One final non-ML vignette. With the Lehman bankruptcy landlords around the world were suddenly faced with a tenant who not only couldn't honor its long-term leases but which couldn't make the October rent payment. We're talking hundreds of millions to billions of dollars.

Via a five year look-back post, a story we had put up in 2008:
Today In the Financial Crisis, September 16, 2008: The Unluckiest Guy in the World 
...Songbird Estates through their majority-owned Canary Wharf Group was Lehman's London landlord.
The lease, on over one million square feet of office space, was at the equivalent of $72.82 per square foot, a big chunk of money it accounted for 15% of Songbird's annual revenue.

Fortunately the Songbird risk manager had the foresight to insure the Lehman rent payment but the dénouement reads like the world's worst 'good news, bad news' joke.

Here's the headline:
Lehman's U.K. Landlord Says AIG Insures Rent Payments (AIG; LEH)
The original link has broken but if interested here's the story.