Posts from Friday Feb 18 2011

Further further reading

For the commute home or while celebrating your favourite President,

- Flash, not the saviour of the universe, says report. Read more

El-Erian vs Bernanke – FT Tilt

Ben Bernanke took his moveable feast of easy money to Paris on Friday — but Mohamed El-Erian is not pleased with what the Fed Chairman had to say.

You can find out why over on FT Tilt — for free and without registration (but you know, if you want to sign up…). Read more

The Irish banking angle in muni bonds

This is a bit of a curio given the muni market’s wider problems and controversies over investor disclosures, but it’s perhaps a lesson in microcosm. From Fitch on Friday:

Fitch Places Muni Bonds on Watch Negative Based on 2/18/2011 Placement of Allied Irish Bank on RWN Read more

Webvan man unloads after hours

If you thought Alphaville wouldn’t be watching the RNS feed at 6.30pm on Friday night Mr Steiner, CEO of Ocado, you were sadly mistaken.

We were and spotted your sneaky sale of 2m shares. Read more

Guest post: Wanted – a new carbon sheriff

Last month Europe’s carbon trading industry was rocked by a series of cyber thefts — including the stealing of €10m worth of European Union emissions allowances (EUAs), which took place in Prague. Daniel Butler, a broker for a Czech-based carbon trader, was instrumental in breaking the story. Here, Butler gives his view of the nascent carbon trading industry.

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More for less, regulatory edition

A late (for Congress) night on Thursday left the Obama administration’s budget request for the SEC in tatters. According to Politico’s David Rogers:

Democrats failed to restore $131 million for the Securities and Exchange Commission, facing new responsibilities under Wall Street reforms enacted in the last Congress. Read more

Your chance to quiz CME Group

If you’re keen to find out more about the causes of this…

 Read more

The shape of things to come, Centamin Egypt datapoint [updated]

Ructions in Centamin Egypt shares at pixel time (via Reuters):

 Read more

One (short-term) view on Portugal

Portuguese bonds have seen a pressured week — what with speculation the country could soon request a bailout and general indecision amongst EU policymakers.

But so far rates on short-term borrowings have been pretty capped. Read more

Markets Live transcript 18 Feb 2011

Live markets commentary from FT.com 

Miserable like it’s 1994, in Britain

It’s Friday, so we shouldn’t be doing this but … it’s misery (index) time!

Société Générale has an update of the infamous index, which was first developed in the 1970s by American economist Arthur Okun. Basically it measures inflation plus unemployment, which means it can act as an indicator of the dreaded stagflation. Read more

China raises reserve requirements

China’s central bank has increased lenders’ reserve requirement ratios for the second time this year, by 50bps, a statement on its website said. The increase is the latest move to mop up liquidity in China’s banking system, following persistently high inflation, Reuters reports. Tightening had been widely anticipated in Chinese money market rates, Bloomberg reports. Metals and other commodities dipped as the announcement was made. Reserve requirement ratios will now stand at 19.5 per cent — however, some banks appear to have been asked to post additional reserves over recent weeks, the WSJ says.

The hidden message in Asia’s FDI flows

Figures this week showed surging foreign direct investment in China — up 23.4 per cent to $10bn in January from a year earlier. But they hide a number of key trends — including a steady shift in the direction of Japanese and Korean FDI, away from China to other emerging economies of the region.

Macquarie Securities picks up on this in a research note suggesting that China’s reduced tax incentives and higher labour costs have been driving the shift in Japanese and Korean intra-regional investment flows over the last couple of years. Read more

Europe rattled by high ECB borrowings

Demand for emergency loans from the European Central Bank has stayed at unusually high levels for a second day in a row, increasing fears that an institution is in trouble, the FT reports. Figures on Friday showed that borrowing through the marginal lending facility, which charges penal interest rates and tends to be used by banks in difficulty, rose to €16bn on Thursday, after hitting €15.8bn on Wednesday from €1.2bn on Tuesday. The average this year has been just €100m. FT Alphaville suspects that the cause could be the ECB moving Irish bank borrowings from its own liquidity operations to emergency liquidity assistance from their national central bank. Either way — expect the borrowing to remain elevated into next week.

‘BoE rolls hand-grenade under ONS inflation,’ JPM says

Buried a bit deep in Wednesday’s inflation report from the Bank of England — a little from BoE governor Mervyn King to the UK’s Office for National Statistics (ONS).

The central bank is now claiming that CPI inflation may have been “biased down” between 1997 to 2009, because of a 2010 change in the way the ONS interprets clothing and footwear prices. So basically, the BoE says that measured inflation is now running 0.3 per cent higher than otherwise because of the ONS — convenient for a central bank under the kosh for failing to meet its inflation target (for ages). Read more

Brazil bourse sees big profit rise

Brazil’s BM&FBovespa, Latin America’s largest exchange operator, said net profit rose nearly 30 per cent last year compared with a year earlier amid an increase in trading volumes as investors flock to the country’s fast-growing economy, the FT reports. Results of R$261.5m net profit for the fourth quarter, which come as the BM&FBovespa and the Shanghai Stock Exchange are preparing to sign an agreement for closer co-operation on Monday, beat a Reuters survey of six analysts that predicted net profit of R$255m. The results are a sign that BM&FBovespa’s quiet move to go global has been paying off, especially as other bourse scramble to build a worldwide reach through a rash of mergers, Reuters adds.

Regulators ‘looking at’ Apple subscriptions

Antitrust enforces have begun looking at rules announced by Apple this week allowing it to take a 30 per cent cut from publisher subscriptions made through its iPhones and iPads, people familiar with the matter have told the WSJ. Interest from the Justice Department and the Federal Trade Commission is at a ‘preliminary stage’ and might not develop into a formal probe, the sources added. Nevertheless, Apple has attracted attention on both sides of the Atlantic: European regulators said they were ‘carefully monitoring the situation’ on Thursday.

Sigma-tic cotton prices

A nearly 10-sigma move in cotton futures since last July — or something which should happen once every 1 x 10^22 trading sessions, according to Sean Corrigan:

Madoff clean-up fees set to top $1.3bn

The army of lawyers and consultants helping to recover funds from Bernard Madoff’s $19.6bn fraud stands to earn more than $1.3bn in fees, according to new figures that detail the cost of liquidating the huge Ponzi scheme, the FT says. The biggest payment is set to go to Baker Hostetler, the law firm where Irving Picard, the court-appointed trustee charged with recouping money for Mr Madoff’s victims, is a partner. Mr Picard has recouped about $7.6bn for Mr Madoff’s victims, nearly half of the $19.6bn losses suffered by investors in the scheme – a high recovery level compared with similar frauds.

Bahrain funerals promise more unrest

Mourners gathered in Bahrain’s capital on Friday for the funerals of protesters killed in a security clampdown, the FT reports. The burials could become further flashpoints between angry Shia youths and the police, after the military took control of the capital. In spite of the show of force, analysts are concerned that the heavy-handed government response could lead to a sustained bout of violence. That prospect will worry Saudi Arabia, Bloomberg says — the kingdom also has a restive population of Shia subjects, who live in its main oil-producing area. While this minority are far from prime revolutionary material, the unrest in Bahrain suggests how quickly things can change, FT beyondbrics says.

SEC looks at mutual fund muni holdings

The SEC is investigating whether high-yield muni bond mutual funds are overstating the value of illiquid, high-risk holdings, the WSJ says. Sources said that the Commission was concerned that investors in the fund could have been misled about the real value of the their investments. Mutual funds in the sector have been hit by investor withdrawals as the wider muni market falls, selling off high-yield muni debt to raise cash. Around $24.7bn of net outflows have been recorded since late November. Junk muni bonds are a small part of the overall $3,000bn market, totalling no more than $54bn in value. Nevertheless, the SEC is looking at so-called ‘tobacco’ and ‘dirt’ bonds which can go for years without changing hands, sources said.

The EM retreat continues

And so… the rotation out of EM equities into DM equities goes on.

Data from Citigroup: Read more

Dimon to get first cash bonus since 2008

Jamie Dimon, JPMorgan Chase’s chairman and chief executive, will receive a cash bonus in addition to stock for the first time in three years for 2010, reports the FT. Mr Dimon’s stock award – comprised of $12m in restricted stock that cannot be sold before January 2013 and about $5m in options on shares that cannot be divested for at least five years – was in line with the 2009 award. In addition to restoring its chief executive’s cash bonus, JPMorgan is also fleshing out plans to ‘claw back’ bonuses from traders who underperform. Mr Dimon would be charged with deciding “clawbacks” for members of the bank’s top management if he determined that their performance had been “unsatisfactory for a sustained period of time”, a regulatory filing from the bank said.

Shale gas a bubble, Gazprom says

The surge in US “unconventional” gas production is a “bubble” and gas prices will rise sharply in the next few years, the export chief of Russia’s Gazprom has said, the FT reports. Alexander Medvedev, deputy chief executive of Russia’s state-controlled gas company, likened the shale gas boom to the internet bubble, “which first blew up enormously and then flattened itself out to some rational and logical size”. Of course, moves to shale gas production have cramped Gazprom’s hopes to export its gas to the US market. Nevertheless, analysts believe that Medvedev’s forecast will prove accurate as gas producers drop out of the market and coal also rises in price.

China home prices keep on rising

Sixty-eight of 70 Chinese cities have recorded home price increases from one year ago, suggesting that government measures to curb speculation have had little effect, Bloomberg reports. Home prices in Beijing rose 6.8 per cent, while in ten cities, prices increased by more than ten per cent. Regulations including larger downpayments and increased property taxes appear to have done more to reduce transactions than deflate prices, said analysts. The data and methodology of China’s property price index has been widely criticised in the past for understating problems — and sadly this year’s version is little different, despite promised changes, says the WSJ.

Clues to the eurozone’s €15.8bn fat finger

Fresh from the European Central Bank on Friday morning, some clues to the mystery of Thursday’s €15.8bn ‘fat finger’ tapping of eurozone liquidity.

Headlines off of Bloomberg: Read more

Japanese mortgages: rarer and riskier

By now you’ve perhaps heard about the ticking, aging timebomb underneath Japanese government bonds. Or predictions of a negative savings rate. Or sovereign downgrades.

But what of the super safe Japanese mortgage market? Read more

Further reading

Elsewhere on Friday,

- Desperately seeking searchRead more

Pink picks

Comment, analysis and other offerings from Friday’s FT,

Jeffrey Sachs: To end the food crisis, the G20 must keep a promise
Soaring commodities prices once again haunt the world economy, director of the Earth Institute at Columbia University. The global recovery has seen prices surge. Many commodities are near or above their 2008 peaks. Maize is an astounding $290 per tonne, and oil is back above $100 a barrel. Soaring food and energy prices now pose severe economic, political, and social risks in developing countries. Read more

Snap news

Breaking pre-market news on Friday,

- Anglo American says Tarmac to merge with Lafarge’s UK business; announces results — statement and statement. Read more