Car-policy slash drives rise. Here’s a reminder for Joe Hockey and Tony Abbott about the cost of axing the Labor Party’s last budget move to tighten taxation of salary-sacrificed cars and packages (around $1.4 billion over four years). Joe and Tony decided to junk that policy soon after being elected in late 2013 in their full, brief flush of power. Their justification was helping the Australian car industry, which Tony and Joe promptly helped to close through a combination of inept policy explanation and bumbling arrogance. This morning salary packager and fleet manager Smartgroup raised its half-year earnings guidance 35% ahead of its annual general meeting later today. That boost is a direct result of two things — the axing of the Labor changes (which cost the budget vital revenue growth) and the boom in car sales, especially luxury cars, since the start of this year.

Smartgroup’s biggest contract is with the Defence Department — it accounts for 20% of the business and is due to expire in June. Defence pay has been in the news recently, with the government trying to stiff employees and then grudgingly allowing a small rise — while asking service people to return to Iraq.

Another big client is the WA Health Department. Talk about irony on irony — a salary packager and fleet manager mining the taxpayer purse to benefit shareholders? Of course, Smartgroup’s chairman is former Macquarie banker Michael Carapiet. — Glenn Dyer

Fortescue loses face. According to media reports this morning, a desperate Fortescue Metals finally got a $US2.3 billion bond refinancing away overnight — but not before it was forced to pay through the nose. According to the reports, the bond will cost Fortescue a massive 10.25%. The seven-year non-callable (meaning the buyers can’t ask for early repayment) bond was issued at a yield of 9.7% (itself pretty onerous), but was discounted (to get buyers interested) to produce a yield of 10.25%. That’s junk territory.

The successful issue raised less than the $US2.5 billion sought in March, which ended up being pulled because Fortescue didn’t like the yields it would have to pay — reported to be around 8.5%. Now it’s paying much more, a sign of the company’s desperation. So much for all that confidence last week when it issued its March quarter production report. This bond is repayable in 2022, which extends the company’s debt profile and lessens the debt burden for the next couple of years. So Fortescue has raised less at a higher yield — call that a big loss of face and the cost of corporate ego. Not helping this issue was the move yesterday by ratings group S&P to downgrade Fortescue’s credit rating — ouch! — Glenn Dyer

Flash Cash Guy faces the music. Is this the long-awaited sequel to Trading Places? Rogue trader, or inspired but flawed genius? More questions than answers continue to be asked about the Flash Crash Guy, Navinder Singh Sarao (AKA The Patsy?), 36, from Hounslow in West London, now awaiting extradition to the US where he will stand trial in an Illinois courtroom.

There he will face one count of wire fraud, 10 of commodities fraud, 10 of commodities manipulation and one of spoofing (known as “throwing the book” in hope of scoring a hit). On what we know so far, this whole story is a spoof of Trading Places, by far the best movie made on financial markets, not spoofing E-mini futures. After a hearing of several hours, Sarao was freed on bail of 5,050,000 pounds ($A9,804,550).

Sarao is an atypical market rogue trader — he made money instead of losing it, like Nick Leeson did at Barings in the mid ’90s, or Jerome Kerviel who cost Societe Generale 4.9 billion euros, or Kweku Adoboli who lost UBS $US2.3 billion. The Yanks claims Sarao made a profit of $US879,000 on the day of the Flash Crash and notched up $US40 million in total, which he put in tax havens.

Rather than The Flash Crash Guy, more like The Flash Cash Guy, according to the latest explanation from the stumbling American regulators still trying to explain the May 6, 2010, sudden collapse of the Dow Jones Index. — Glenn Dyer