Posts from Friday Mar 18 2011

Further further reading

For the commute home, we wish you a great weekend,

- Treasury + Fed = better QERead more

Bank dividend day

And so it begins, again.

No surprise that the KBW Bank Index and the financials component of the S&P 500 both beat the broader index (red line below) on the day: Read more

100,000-year ‘tail risk’

Ever wondered why there was so much spent fuel in water pools around the Fukushima nuclear plant? We have.

Only we’d never realised the answer’s striking lesson (metaphor?) for tail risk in financial — especially, energy — markets. Read more

The Bank of Japan – almost back to 2004 numbers

The Bank of Japan unleashed ¥28,000bn ($345bn) of fresh liquidity through its emergency quantitative easing operations over the course of the past week.

Which means we’re already not far off from the ¥34,000bn that the central bank was pumping into the market at the height of its QE programme back in 2004/2005Read more

Fallout from a flock of Black Swans

What’s that saying?

You wait for a Black Swan for ages and then three show up at the same time? Read more

Who’s exposed to Japan?

So it begins.

The first research we’ve seen quantifying European bank exposure is out to Japan following last Friday’s terrible earthquake and subsequent nuclear problems is out. Read more

Goldman Sachs says Tips mean (gold) prizes!

Take a close look at this chart from Goldman Sachs:

 Read more

US Markets Live transcript 18 Mar 2011

Live markets commentary from FT.com 

The usual Portuguese bond gyrations

Rumours flew in the market on Friday that the ECB was back to buying Portuguese government bonds.

Well, if they did, and managed to push down Portugal’s sky-high yields for a bit, it appears the yields promptly fought back: Read more

Yen volatility is too much for one bank

And the carry trade/currency weirdness continues:

LONDON (Dow Jones)– U.K. bank Barclays Capital pulled yen prices off its Barx dealing system for a short period Wednesday, as the Japanese currency fizzed to its strongest levels on record, a person familiar with the situation said Thursday. In a spectacular move, the dollar collapsed against the yen at 2100 GMT Wednesday, sinking 4% to hit a record low of Y76.25. Read more

Who’s been buying Japan like crazy?

Here’s an about-turn for the books:

 Read more

The ripple effect reaches local US governments

The municipal bond market has calmed in the last two weeks as the flight from disaster ushers in a return to relatively safe havens.

But as two annual reports released by Moody’s on Thursday make clear, FY2011 and FY2012 could be when the financial crisis finally hits US state and local governments finances full whack. Read more

SocGen on a ‘reasonable worst case scenario’ at Fukushima

It’s a worse-case scenario — Japan’s “slow motion” Chernobyl.

 Read more

Markets Live transcript 18 Mar 2011

Live markets commentary from FT.com 

Egypt’s MSCI countdown

Tick tock, tick tock.

Egypt faces another problem. Read more

Not just a no-fly zone [updated]

Update (1245 UK time): Hold the prospect of any military action for a while, it looks like — flashes via Reuters:

RTRS-LIBYA DECIDES TO HALT ALL MILITARY ACTION-LIBYAN FOREIGN MINISTER Read more

Japan’s trading desks: ‘Situation normal’, BAU or AFU?

What is wrong with this picture?:

Business as usual?! Read more

FDIC sues ex-WaMu chiefs, their wives

The FDIC is seeking $900m in damages from three former executives of Washington Mutual and their wives, according to a recently filed lawsuit, reports the FT. The damages would be the largest sought by the FDIC from individuals related to a bank’s collapse during the financial crisis and would be in addition to $125m that WaMu’s outside directors have agreed in principle to pay the regulator to settle bankruptcy-related claims. The WSJ adds that the suit also accuses the wives of two top WaMu execs of illegally moving assets into trusts in an effort to shield them from legal claims.

Fed poised to ease its grip on the banks

The Federal Reserve is is expected Friday to free some of the nation’s biggest banks from strict oversight—a milestone in the government’s effort to prop up an industry that was in danger of collapsing more than two years ago, the Wall Street Journal says. The Fed will now allow financial institutions that have passed a fresh round of stress tests to run their businesses independent of crisis-era restrictions imposed in 2008, permitting banks to raise dividends and buy back shares.

Japan’s insurers yet to sell foreign assets

Speculation that Japanese insurers will have to sell foreign assets like US Treasuries to meet earthquake damage claims is not gaining traction at home, the FT says. Market participants in Tokyo say insurers have plenty of cash reserves to meet claims, and that liabilities of life insurers would be limited by Japan’s earthquake reinsurance scheme. See also FT Alphaville on Mrs Watanabe, repatriation and a global market dislocation.

Sunrise over Erbil

Just in from Kurdistan, the first pictures of Gulf Keystone’s Shaikan-2 well.

(click for the full slide show). Read more

Oil jumps on fears over Libya and Bahrain

Crude oil prices have recovered from their Japan-related losses after surging on Thursday above $115 a barrel amid fears of an escalation of the conflict in Libya, the FT reports. CE April Brent, the global benchmark, surged to a session high of $115.39 a barrel, recovering from its losses after the earthquake in Japan to again approach two-year highs. By the close in London, it was up $4.30 at $114.90 a barrel. Nymex April West Texas Intermediate rose $3.44 to $101.42.

G7 in rare intervention to weaken yen

The Group of Seven industrialised nations have agreed to co-ordinated currency intervention for the first time in a decade to help Japan recover from its devastating earthquake, tsunami and nuclear crisis, the FT reports. Authorities in Japan, the eurozone, the UK, Canada and the US agreed on Friday to help weaken the yen in a rolling intervention that began at 9am in Tokyo, which immediately pushed the yen down from above Y79 against the US dollar to below Y81. FT Alphaville asks whether Friday’s coordinated G7 intervention will prove to be a one-day wonder?

Fewer Americans file jobless claims

Fewer Americans filed for unemployment insurance last week, and the total number of people claiming jobless benefits fell, supporting the Federal Reserve’s view that the labour market is gradually improving, according to the FT. A separate report showed consumer prices rose faster than expected in February, spurred by rising food and energy costs. See also FT Alphaville on the gap between headline and core inflation.

The Kaupthing share support operation

You’ve read the story in the FT

Lawyers acting for the UK arm of the collapsed Icelandic bank Kaupthing, which is at the centre of a fraud probe, have withdrawn a request to retail entrepreneur Kevin Stanford to repay nearly $2m (£1.2m) as part of efforts to recover funds owed to the bank…. Read more

Scott to leave Goldman board already

Goldman Sachs said H Lee Scott, the former Walmart CEO, would leave the board after only one year of service, reports the FT. The departure comes mere months after Scott concluded his work as one of four directors overseeing a group of Goldman executives charged with reforming the bank’s business practices in the wake of the financial crisis. Bloomberg, citing people familiar, adds that Goldman is seeking a replacement.

Crises trigger second thoughts for IPOs

Companies have been forced to reassess plans for stock market listings in coming weeks, as investors take fright over the effects of the nuclear disaster in Japan and the crisis in the Middle East, according to the FT. The biggest IPO of the year in Europe was pulled at the last moment on Thursday when Denmark’s ISS suspended plans for a $2.5bn share sale. Global Market Group, a Chinese e-commerce company, postponed indefinitely a $132m US IPO that had been due to price on Thursday. Private equity group Apollo has also postponed the start of marketing its IPO, the FT adds.

Risk assets rally with eyes on Japan

Hopes that the Japanese authorities are starting to make headway in their efforts to control the Fukushima nuclear plant are delivering a rebound in riskier assets, the FT reports in its rolling global market overview. The FTSE All-World equity index is up 0.1 per cent  and the Nikkei 225 has risen 2.7 per cent. Havens such as US Treasuries and the Swiss franc are being sold and S&P 500 futures are up 0.7 per cent. Also helping sentiment is a G7 agreement to deliver co-ordinated intervention to weaken the yen.

Japan nuclear crisis appears to stabilise

Emergency crews at Japan’s earthquake-hit nuclear plant in Fukushima prevented the radiological crisis from spinning further out of control on Friday, but their efforts appeared to be too late to prevent contamination of areas around the site, says the FT. Radiation readings in one area roughly 30km from the power station – beyond a 20km evacuation zone that has been in place since Saturday – were 100 microsieverts an hour on Friday morning, more than 200 times normal levels. Meanwhile, the Guardian reports the IEA has urged Japan to give more information on nuclear crisis.

Pointing out Japan’s (Pfandbrief) effects

Pfandbrief, ultra-boring — yet they never cease to surprise in a crisis.

Did you know, for instance, that the bond structures beloved by German banks have some exposure to Japan? Granted, it’s not much — but we think it’s surprising. Read more