Posts from Tuesday Apr 24 2012

The Closer


Equity markets finished modestly higher, while sales of government debt in several periphery countries earlier in the day went reasonably well, calming markets. (Financial TimesRead more

Europe’s new house

Via SocGen, click to expand, but careful not to blow on it — it gets creakier the higher up you go:

Sterilisation, money market funds, and anti-stimulus

We’ve written extensively about the problems facing US money market funds, the motives behind the Fed’s adding them to its list of reverse repo counterparties, and how sterilisation of further QE was an idea likely floated with MMFs in mind.

We won’t do a full recap here, but the idea is that with rates low and their margins incredibly thin, money market funds have been competing for a limited amount of collateral against which to lend in repo markets. Read more

SEC charges Egan-Jones

Washington, D.C., April 24, 2012 — The Securities and Exchange Commission today announced charges against Egan-Jones Ratings Company (EJR) and its owner and president Sean Egan for material misrepresentations and omissions in the company’s July 2008 application to register as a Nationally Recognized Statistical Rating Organization (NRSRO) for issuers of asset-backed securities (ABS) and government securities. EJR and Egan also are charged with material misrepresentations in other submissions furnished to the SEC and violations of record-keeping and conflict-of-interest provisions governing NRSROs.

Full SEC Order here. The regulator has alleged that Egan-Jones made a material misrepresentation in claiming to have rated government debt and ABS — and that it hadn’t — when making its NRSRO application, and that conflicts of interest were present: Read more

Her Majesty’s government and M&A

Presenting Exhibit KRM 18, submitted to the Leveson Inquiry (click pic for doc):

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To bin or not to bin the FTT

It’s all gone a bit quiet on the financial transactions tax front but Algirdas Šemeta, the European Union’s tax commissioner, wants you to know that the idea is still very much alive.

In an interview with Die Zeit, the German daily, he said he’s not giving up on the idea that “derivatives must also be covered by the tax” in order to reach a compromise at the EU level. He also seems to think that: Read more

The Leveson inquiry — suddenly very interesting

Hurry! You’ve already missed a lot of James Murdoch’s testimony about the BSkyB bid’s travels through the corridors of the British government. Click pic for feed:

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Once upon a time in Italian banking

In a land called Italia, where Savers saved, and Borrowers wanted to borrow from the Savers, there were some Banks.

The Banks took the savings from the Savers, and lent some of it to the Borrowers. And as long as the spread on the interest rate paid to the Savers was less than that paid by the Borrowers, all was well and peaceful in Italia. Read more

A super contango in fear

This is a guest post for FT Alphaville by Theo Casey, a columnist at Futures & Options World, blogging on the back of FOW’s European Equity Options conference in Amsterdam.

The year is 2017. Read more

Markets Live transcript 24 Apr 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York…


Glencore, an investigative report

Kudos to Foreign Policy for spending a year investigating Glencore.

Did you know, for example, that the name “Glencore” comes from: GLobal ENergy COmmodities and REsources? According to Foreign Policy, this was actually considered a secret (bizarrely enough). Read more

Political upheaval all round?

Now that austerity-related political risk has reared its unhappy head in the eurozone, it’s worth pondering yet again the fiscal goals that the area aspires — well, sort of — to reach.

Last December, we posted some charts of Eurostat data (via MacroBusiness & Naked Capitalism) highlighting which eurozone countries would have exceeded the limits set in the new European Fiscal Compact — an offense that will be punishable by fines when* the treaty is adopted: Read more

And a Spanish contrast…

Spain saw pretty good demand at its Tuesday morning auction of short-term debt, but its borrowing costs nearly doubled.

From Reuters with our emphasis: Read more

A Dutch auction and an old rivalry

Netherlands got its (very small) sale away in undramatic fashion following the collapse of its government. From Reuters:

The Netherlands sold 1 billion euros of 3.75 per cent notes maturing in 2014 at an average yield on 0.523 per cent and 995 million euros of 4 per cent bonds maturing in 2037 at an average yield on 2.782 per cent.

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The consummation of the Shell♥Cove romance?

From this morning’s RNS (with our emphasis):

Further to the announcement of a possible offer by Shell Bidco for Cove on  22 February 2012, the boards of directors of Cove and Shell Bidco are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Shell Bidco for the entire issued and to be issued share capital of Cove. Shell Bidco is an indirect wholly-owned subsidiary of Shell incorporated in the Netherlands. Read more

Further reading

Elsewhere on Tuesday,

– Wanna talk risk to the banking sector? So, interest rates… Read more

The 6am Cut London

The Netherlands is in turmoil after the government collapsed at the weekend, says the FT. The spread between Dutch and German bonds widened to 72 basis points – the highest since the eurozone crisis began. Together with the first-round French presidential election results and poor eurozone PMI data, uncertainty over Europe sent equity markets lower on Monday, with Asia also registering falls on Tuesday.

Wal-Mart is the subject of a US Justice Department criminal investigation after a report on the weekend about allegations of corruption at its Mexican subsidiary, reports Bloomberg, citing a person familiar with the probe. The company’s shares closed almost 5% lower on Monday. Read more

Overnight markets: Down

Most Asian shares lost ground for a fourth consecutive day as political uncertainty in France and the Netherlands, coupled with poor economic data from the region, revived concerns about the eurozone, says the FT.

Exporters in Tokyo were pressured by a stronger yen, with Honda Motor down 1.2 per cent, Nissan Motor off 1 per cent, and Canon 1.2 per cent lower. Financials also took a hit in  Japan and Hong Kong. Read more