Second Circuit still not Argentina’s biggest fan

With Argentina in default, the pari passu saga has become a long, ludicrous, gruelling standoff — which plenty of financial institutions and Argentina’s restructured bondholders have been trying to escape.

And then running smack into the US court system.

On Friday the Second Circuit Court of Appeals dismissed an appeal by Citibank to get local-law, US dollar-denominated restructured bonds (the ones with the ISIN confusion) out of the pari passu embargo: Read more

A friendly reminder that Yahoo’s core business is worth -$11.6 billion

Alibaba has started trading and its current market valuation is about $227 billion. Yahoo! Inc., which currently owns a little more than 16 per cent of the Chinese conglomerate, is currently valued at just over $40 billion. Yahoo also owns a 35 per cent stake in publicly-traded Yahoo! Japan, which currently has a market cap of about $23 billion.

Let’s do some arithmetic to see how much Yahoo’s core business is currently worth: Read more

The BABA pop, snapped

Just for the record…

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Anti-Abacus, anti-BISTRO and anti-balance sheet synthetic securitisation


Close your eyes, lay back and imagine yourself as a regulator at the US Securities and Exchange Commission (do we have to? -ed). Read more

It wasn’t QE that caused a collateral scarcity this summer

The Liberty Street Economics blog of the Federal Reserve Bank of New York provided a good analysis this week of the summer’s UST settlement fails spike.

For those unfamiliar, settlement fails in US Treasury securities rose to their highest level in more than five years in June, with DTCC figures reaching more than $1.2 trillion in gross fails for the month:

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When break-even inflation expectations are falling…

George Saravelos at Deutsche Bank has looked at Eurozone inflation break-even rates and worries that the ECB may be losing control:

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You call that a balance sheet expansion?

“Too Low To Resuscitate Optimism” indeed…

From BofAML on the definitely underwhelming, potentially stigmafied TLTRO pickup (our emphasis):

When gathering all the comments made by banks on their participation at today’s operation, we find that the major banks in Spain, Italy and Greece have requested a total of €40bn, i.e., 40% of their Sep+Dec available allowance (Exhibit 1, page 4). After extrapolating this to the whole banking system in each of the three countries and including estimates for Portugal and Ireland, we find that the periphery could have accounted for as much as €61bn, out of the €82.6bn borrowed yesterday.

This leaves an estimate of €21.7bn for the take-up by core banks, representing as little as 9% of their available allowance (Table 1). To derive a more precise estimate of the country breakdown, we have to wait for each national central bank to release the details of their end-of-Sep balance sheet. This should happen starting from early-October (with Italy, Finland and Belgium the first to report).

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Markets Live: Friday, 19th September, 2014

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York,


Cult Markets: When the bubble bursts

This is Jean-Paul Rodrigue’s stages of a bubble chart:

This is a chart of the price of Bitcoin from the BoE: Read more

Further reading

Elsewhere on Friday,

- We are a camera, the rise of GoPro.

- “Obama’s neglect of Federal Reserve appointments is, in some ways, mysterious.”

- From the lips of Michael Woodford.  Read more

The 6am London Cut

The Cut, The Survey: The 6am Cut, Lunch Wrap and Closer emails will soon be relaunched in enhanced form. We want to ensure we’re providing only the most useful data, news and views — taking this short 2 minute survey would help us do that.

Looks like a No in Scotland. The FT Live blog here, but at pixel with most of the counting done, this is how it stood:

 Read more

The Closer


- The disruption myth. Read more

The return of the American borrower

The Federal Reserve’s latest flow of funds data shows that US households have rediscovered their credit cards, and lenders are eager to oblige them. Just look at this:

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Henley demoted at Oracle as Ellison refuses to retire

Generalised exec deckchair shuffle at USS Oracle, out of the blue on Thursday…

The Oracle (NYSE: ORCL) Board of Directors today announced that it has elected Larry Ellison to the position of Executive Chairman of Oracle’s Board and appointed him the company’s Chief Technology Officer. Jeff Henley, who has served as Oracle’s Chairman for the last 10 years, was appointed Oracle’s Vice Chairman of the Board. Read more

A Scot vote bonus for Long Room members

Sorry we can’t offer this up to the open web, but if you are planning to stay up to watch the Scottish independence vote, and you also have access to the usual place, check this handy little excel download. Read more

Slowly, very slowly, getting China’s house in order?

Oh look, China’s property market has worsened again:

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Markets Live: Thursday, 18th September, 2014

Live markets commentary from 

The (early) Lunch Wrap

Scotland votes || Easyjet increases dividend, fleet || Bayer to float plastics business || Dubai regulator restricts Espirito Santo activity || News Corp takes Google opposition to EC || Dollar and Sterling up Read more

Un petit TLTRO

This is well below the €100bn-plus forecasts that were consensus…

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Chicken Kiev

After Russia instituted its ban on western food imports in August, we noted there was a risk the measures could end up hurting average Russians just as much, if not more, than European farmers.

We also noted that propaganda dynamics could make it hard for westerners to discern the truth with regards to what was really going on. Read more

Buybacks, dividends, Modigliani and Miller

This provocative table from Edward Hadas at Breakingviews, along with a recent article appearing in The Economist, reminded me of an analysis I used to do in investment banking when clients would ask about the differences in value creation between share repurchases vs. dividends.

 Read more

Further reading

Elsewhere on Thursday,

- Keynes, Norman and the Macmillan committee.

- One bank’s cost is another firm’s revenue.

- The Darwin economy – why Smith’s invisible hand breaks down.

- The real Olive Garden scandal.  Read more

The 6am London Cut

The Cut, The Survey: The 6am Cut, Lunch Wrap and Closer emails will soon be relaunched in enhanced form. We want to ensure we’re providing only the most useful data, news and views — taking this short 2 minute survey would help us do that.

Markets: The Asia-Pacific response to the Federal Reserve’s policy update was mixed, with Japanese stocks soaring but other major indices in the red. Thanks to a weakened yen Tokyo’s Nikkei 225 rose 1 per cent to 16,049, on track for its highest closing level since early January. (FT’s Global Markets OverviewRead more

Video: FOMC reaction

We talked to the FT’s US markets editor Michael MacKenzie just after the FOMC presser ended. See also the reactions from James Mackintosh and Robin Harding.

The Closer


- Clive Crook thinks Scotland should vote Yes, while John Kay thinks the economic arguments about independence are irrelevant and overblown Read more

Maths and the FOMC

The dot plot might include two downward pointing arrows to offset the two hawks dissenting from the Federal Reserve statement today, but there’s a growing group expecting a lot of rate hikes next year.

I’ve highlighted two clusters on the Fed’s “dots” showing where they expect rates to end next year and 2016: Read more

Macro Live, Fed presser edition

Live markets commentary from 

FOMC statement for meeting of September 16-17, 2014

A few quick takeaways:

– The “considerable time” phrase stayed, as did “significant underutilization of labor resources.” Read more

Reminder: Macro Live for FOMC presser starting at 2:25pm EST

Just passing along the same info as earlier today…

A potentially pivotal FOMC meeting wraps up today, after which Janet Yellen will take questions from the media. Read more