Posts from Wednesday Apr 4 2012

The Closer

Round-up

A day of No-QE capitulation selling? Silver fell 6.7 per cent and gold for June delivery fell 3.5 per cent, moving on receding prospects of stimulus from the Federal Reserve (Wall Street Journal). The S&P 500 fell one per cent to 1,398 (Bloomberg). Read more

Hannam, spun

Just when we were considering launching the Ian Hannam is Innocent OK? campaign, this crosses our radar…

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Why QE is being mis-sold

Ah, the elusive liquidity trap. Does it exist? Is it here? And what does it mean for monetary policy?

Those are critical questions which are not currently being addressed by policymakers, according to a new paper by Paul McCulley and Zoltan Pozsar, presented at the Banque of France on March 26. In fact, many policymakers, they say, are still under the mistaken belief that no such thing as a liquidity trap exists. Read more

“The FSA is not about justice, it’s about justifying their existence.” Discuss

The statement above comes from reader WEB, in a comment on Tuesday’s post concerning the public hanging of Ian Hannam, the heroic JP Morgan Cazenove banker fined by the FSA for supposedly distributing price sensitive information in two emails.

Scrolling through the related comments here on FT Alphaville and also elsewhere on FT.com, opinions would seem to fall into three camps: there’s the ‘screw him, he’s just a bankster’ brigade; then there’s the view that the FSA is fairly imposing its rulebook; and finally there are those who think the FSA is out of order here and maybe out of control more generally. Read more

The return of the US manufacturer

The US manufacturing PMI released by the Institute of Supply Management (ISM) on Monday beat expectations, coming in at 53.4. But that’s not what we really want to talk about here. Instead, we want to ask the question that the team at Bank of America Merrill Lynch asked themselves in an impressive 73-chart, 43-page report last week. Namely: is US manufacturing in the early stages of a renaissance?

There is a popular image of the sector as being in perpetual decline due to offshoring. However, at least some of the alleged decline had more to do with other sectors growing and thus decreasing manufacturing’s share of GDP as a percentage. Read more

The joys of auditing a China short target

Let us know if you can make sense of this boardroom drama at Nasdaq-listed e-learning company ChinaCast Education:

As previously disclosed in a Form 8-K dated March 26, 2012, the Company terminated Ron Chan as chief executive officer and effected his resignation as a director. In connection with his termination, the Company actively sought to reach Mr. Chan to conduct an orderly transition of his management functions to interim chief executive officer Derek Feng. This transition was meant to include, among other things, the return of the company seals, business licenses and financial seals of the Company’s Chinese subsidiaries relating to its e-learning and training services business and one of its universities, which items the Company believes are in Mr. Chan’s possession or persons under his direction. Under PRC law, the company seals, financial seals and business licenses are necessary for these Chinese subsidiaries to enter into contracts, conduct banking business, and take official corporate action, including registering the change in management with the relevant authorities in China. Mr. Feng and interim chief financial officer Doug Woodrum made a number of unsuccessful attempts to contact Mr. Chan in connection with his termination to conduct this orderly transition. Read more

That Spanish auction

For those who missed it, these were the results of Wednesday’s Spanish bond auction for debt maturing in 2015, 2016 and 2020 respectively — the first auction since the country’s “extreme” budget was announced on Tuesday:

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Markets Live transcript 4 Apr 2012

Live markets commentary from FT.com 

The Lunch Wrap

Good morning, New York

FT ALPHAVILLE Read more

The audacity of (Alex) Hope

The FSA has been busy. With all of the excitement surrounding the fine and resignation of JP Morgan Cazenove Capital Markets Chairman Ian Hannam on Tuesday, another arrest maybe didn’t get the attention it deserved.

From the FSA’s press releaseRead more

Further reading

Elsewhere on Wednesday,

- It’s not how big the austerity measures are, it’s how you do it that matters. Read more

Overnight markets: Down

Asian markets
Nikkei 225 down -138.52 (-1.38%) at 9,912
Topix down -11.72 (-1.38%) at 839.30
Hang Seng up +268.72 (+1.31%) at 20,791

US markets
S&P 500 down -5.66 (-0.40%) at 1,413
DJIA down -64.94 (-0.49%) at 13,200
Nasdaq down -6.13 (-0.20%) at 3,114 Read more

The 6am Cut London

- Asian share markets fell after the Fed’s minutes showed only two out of 10 voting members saying further easing “could become necessary”. (Financial Times) The Nikkei fell abruptly below 10,000 to hit a four-week low, triggering fears Tokyo’s equities rally is over. (Reuters)

- The ECB is expected to resist pressure to signal it’s exiting crisis measures at its meeting on Wednesday. (ReutersRead more