Posts from Friday May 7 2010

Papandreou: ‘We can do this. We must do this. We will do this together’

Here’s the Greek prime minister’s statement to Friday evening’s Eurogroup heads of state and government meeting in Brussels. It’s short and rather moving.

Click to enlarge. Read more

SEC/CFTC: ‘Yes, yes, we’re on the case…’

Joint statement out of US regulators on Friday regarding Thursday’s Flash Crash. Operative pars:

…We are devoting significant resources and expertise to this effort.

 Read more

Everyone should have expected the French inquisition

Arrêtez-vous, spéculateurs!

Taking a page from the playbook of their counterparts in Spain and Germany, France’s financial regulators say they intend to use any means necessary to crack down on evil, unpatriotic, rumour-mongering speculators. Read more

‘The tension between masses and elites is every bit as intense…’

This might well make you shudder – a  penetrating think piece by George Friedman of Stratfor, the global intelligence firm. He argues that what we’re in is a global crisis of political legitimacy.

ExtractRead more

Dave’s worry list

From Gluskin Sheff’s ever-cheery David Rosenberg on Friday:

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Some tightening for the weekend

It seems CDS players are happy not to hold positions open through to Monday.

Prices from MarkitRead more

CDS wrap: Carnage

Carnage. We’ve become inured to days of extreme volatility in the credit markets but today was extraordinary even by recent standards. The Markit iTraxx Europe index was trading at 146bp, an astonishing 26bp daily move. It closed at the paltry level of 134bp. The Markit iTraxx Crossover was 80bp wider at 620bp and is currently trading at 600bp, “only” 60bp wider. The Markit VolX Europe, which measures 20-day volatility in the Markit iTraxx Europe index, now stands at 83%. At the beginning of April it was just 39%.

Markit chart of CDS indices Read more

‘We aren’t dinosaurs. Dinosaurs made oil. WE EAT OIL FOR BREAKFAST.’

The wits at the Awl have published a guest op-ed by ‘The Machines’, on the small matter of that Wall Street flash crash.

An extract: Read more

Smell a re-write?

From Prudential Financial on Friday…

John Praveen’s Global Economic Outlook sees global economic growth on track to broaden and strengthen in Q2 with improving growth outlook in Eurozone and U.K., while U.S. and Japan remain solid and Emerging Economies growth remains strong. However, the worsening Greek crisis and fears of its contagion to Spain and Portugal carry risks for the global recovery.

 Read more

Rumours of ECB bailout calm markets

One of the grimmest weeks on European bourses since the dark days of late 2008 ended with a slight melt-up on Friday, compared to earlier losses — thanks to rumours of a European Central Bank rescue.

Flashes at the European close, via Reuters and emphasis FT Alphaville’s: Read more

Insta-outrage, politicians and the flash crash edition

As the Dow Jones Industrial Average fell off a cliff on Thursday, FT Alphaville wondered: how would US politicians react?

The answer was not long in coming. Within 20 minutes of the close on Wall Street, the office of Senator Ted Kaufman — a well-oiled PR machine if ever there was one — released the following statement: Read more

The dead, dead cat bounce

Oh dear. Equities got ugly again on Friday.

First, the FTSE 100, which dropped 200 points before climbing back to -175 at pixel time, as this chart shows: Read more

US April non-farm payrolls rise 290k, beat forecasts

US non-farm payrolls rose by 290,000 jobs in April, the Bureau of Labor Statistics said on Friday. Economists surveyed by Bloomberg had forecast a gain of 190,000 jobs and Reuters had forecast a gain of 200,000 after March’s rise of 230,000 jobs.

The gain was the largest since March 2006. Read more

‘A 12th ‘sigma’ event if there is such a thing’

Dennis Gartman, author of the daily investment letter of the same name and contributor to CNBC, has been in the markets a while.

But never in his entire trading career does he seem to have encountered anything like Thursday’s Wall Street plungeRead more

How to roll debt, Spanish style

That, at least, is what Spanish news website Cotizalia was alleging regarding Spain’s successful — albeit expensive — debt rollover on Thursday.

As the FT reported: Read more

Nasdaq – “It wasn’t us”

From a press release issued by the US exchange on Friday:

The NASDAQ Stock Market Had No Technology or System Issues Associated With Yesterday’s Trading Between 2:00 and 3:00 p.m. Eastern Time.

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Rage against the machine, the soundtrack

Well, this brings a whole new meaning to open outcry. With a tip of the hat to Zero Hedge, these were the sounds from the S&P 500 pit, as the machines rose up and the Dow plunged (click through to listen):

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So, has the UK voted for a downgrade?

Gilt futures cut losses on Friday after a mild panic over the emergence of a hung parliament — first as a possible Conservative-led coalition firmed up, and then as rating agencies soothed concerns that the UK’s AAA credit is in doubt.

First, the June gilt future was trading at 116.38 after a Moody’s statement, according to Reuters — almost one full point up from beforehand. As Moody’s saidRead more

Citic to Credit Agricole, CLSA: How’s your Chinese?

China’s growing interest in western financial institutions has taken an intriguing twist with Crédit Agricole’s joint venture deal with Citic Securities, China’s largest brokerage, agreed in a memorandum of understanding signed this week.

The Wall Street Journal described the deal as “an interesting experiment in the testing ground of China’s capital markets”. Read more

Markets Live transcript 7 May 2010

Live markets commentary from 

HSBC’s US arm to post first profit since 2007

HSBC’s first-quarter profit was “well ahead” of last year as the US unit posted its first profit in three years, Bloomberg reported on Friday. “It is too soon to declare victory, but the improvement in the quarter is testament to the actions of our management team since we identified the problems in the U.S. consumer finance market,” Chief Executive Officer Michael Geoghegan said in a statement. He added that underlying pretax profit would be “comfortably ahead” of the first quarter of 2009 and that reported pretax profit will drop because of an exceptional movement on the fair value of the bank’s debt.

RBS losses narrow as impairments fall

Royal Bank of Scotland on Friday reported a narrowed loss for the first quarter of 2010 but cautioned that its recovery could still be retarded by global economic and market volatility, reported the FT. The state-controlled bank posted a £248m net attributable loss for the first three months of the year, a reduction from the £902m it lost in the corresponding period of 2009. The improvement was partly the result of reduced loan impairment charges, which amounted to £2.68bn during the quarter, down 14 per cent on the fourth quarter of 2009.

Fearful Wall Street session spooks investors

A fearful and shambolic session on Wall Street haunted global markets on Friday as investors tried to absorb political reverberations from the streets of Athens to the polling booths of Britain, the FT reported. The FTSE All-World equity index fell 0.9 per cent on Friday, taking the loss over the past four days to more than 7 per cent. The euro gained ground, but remained near 15-month lows versus the dollar, while sterling fell following an inconclusive general election. Commodities stayed under pressure and highly-rated government bond yields clung to five-month lows as investors shrank from risk. Gold held to the $1,200-an-ounce level.

Gilts fall in hung parliament uncertainty

UK government bonds and sterling fell early on Friday as investors worried about the prospects for economic recovery under a hung parliament and contagion affects from the US and Europe, the FT reported. Early optimism on the results from the UK general election faded as the FTSE 100 fell by more 1 per cent in opening trade after the sharp falls in US stocks, while gilts and sterling also remained under pressure from the European sovereign debt crisis.

UK election ends in hung parliament

David Cameron was facing the prospect of a constitutional stand-off with Gordon Brown on Friday morning over who would get the keys to Number 10 as a hung parliament in the UK appeared inevitable, the FT reported. The Conservative party leader insisted that Labour had “lost its mandate to govern” as the Tories made big gains in the general election and comfortably overtook Labour as the largest party in the House of Commons. But Mr Cameron faced an agonising wait before learning whether he would need to rely on other parties to support a Conservative administration.

‘UK votes for downgrade’ (updated)

The results are in and . . . in the words of BNP Paribas: the UK may just have voted for a downgrade.

The results of Britain’s general election, at pixel-time, look like this: Read more

Gilts react to hung parliament

So, Britain is set for a hung parliament.

Connect the dots on these flashes, via Reuters: Read more

Silver linings beyond the euro crisis and yen gyrations

The extreme currency gyrations of the last 24 hours have thrown the yen, euro and dollar in the spotlight, following Thursday’s collapse of the euro to an eight-year low against the yen and below $1.25 against the dollar, reports FT Alphaville. Sterling and UK gilts are also on the front line, amid deep investor uncertainty surrounding the outcome of the UK election. Read more

Citigroup: Don’t buy this dip

As the market tries to figure out what the hell happened after 14.00 EST on Thursdaywas it the trading robots or a fat finger — Tobias Levkovich of Citigroup has issued a warning to clients:

In the S&P 500 over time, we cannot find strong evidence of sharp snap backs that reward investors for taking on more risk.

 Read more

Overnight election reaction action

Nothing’s certain in the British general elections yet . . .

While we wait for a more decisive outcome, here’s a sample of the market reaction so far. Read more