Posts from May 2012

The Closer


The Dow Jones Industrial Average had its worst month in two years in May. The index fell 6.2 per cent, the largest decline since dropping 7.9 per cent in May 2010 (Wall Street Journal). Closing down 0.23 per cent at 1,310 on Thursday, the S&P 500 had its worst month since last September (Reuters). Read more

Gold’s Anti-Social Behaviour Order

In our previous post, we attempted to explain to goldbugs why a fiat-based monetary system provides many more benefits to society than a gold-backed monetary system. More importantly, that to dismiss a fiat system is to potentially misunderstand the role of money and gold in society.

As anthropologist and author David Graeber writes in his book Debt: the First 5,000 years: Read more

Debunking goldbugs

Goldbugs don’t just believe in the fundamentals of gold. They worship at the altar of gold.

The goldbug view represents a market philosophy, a doctrine and a belief-system. Read more

Denmark: Stop sending us money

For the second Thursday in a row, the Danish central bank has cut interest rates:

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Glenstrata, the scheme doc

Click image for the full, 136-page doc.

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Meet Mick, the Greedy Miner (updated)

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To hispabono or not to hispabono

For the more reliable the joint liability system, the fewer the incentives that the lower level of government has to economise…

The case for common eurozone bonds taking flak again? Nah. Read more

US GDP and GDI, datapoint du jour

Real gross domestic income (GDI), which measures the output of the economy as the costs incurred and the incomes earned in the production of GDP, increased 2.7 percent in the first quarter, compared with an increase of 2.6 percent in the fourth. For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change.

By contrast a 0.3 percentage point, or $11.4bn, fell off the US economy in the first quarter, according to the BEA’s ‘second’ estimate of real GDP. The annual rate rose 1.9 per cent instead of the first-estimate 2.2 per cent. Read more

China is facing “the strongest outflow pressures for some time”

All that gradual exchange flexibility, and yet the renminbi is only weakening:

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The ECB’s annual Target report for your consideration

Uncontroversial stuff we assume… Read more

The price of French patriotism? A 70% pay cut

Spare a thought for the heads of French public companies who are having to dig deep and find their inner patriot after the new Socialist government issued guidelines limiting CEO pay to 20 times that of the lowest paid worker.

Just a day later Henri Proglio, chief executive at power group EDF, has apparently agreed to what amounts to a 70 per cent pay cut. He earned €1.6m last year – 65 times more than his lowest-paid worker. Read more

Markets Live transcript 31 May 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…


Frogger: Eurozone Crisis Edition

Analogy du jour, courtesy of Gerry Fowler of BNP Paribas’ Equity & Derivative Strategy Team (emphasis ours):

The investment environment right now, especially in Europe, reminds me of the old arcade game of Frogger where the player had to direct their frog safely across a busy motorway and a river full of crocodiles. Despite the normal dangers, success usually required a series of forward and backward moves and sometimes several in quick succession. Sometimes however, the dangers ahead appear so overwhelming that one could easily sit on the side of the road for long periods – much like many investors now.

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Can this really be it for Logica?

Out of leftfield on Thursday:

That’s CGI of Canada offering £1.7bn in cash to put long suffering shareholders in Anglo-Dutch software group Logica out of their misery. Read more

Why Switzerland is the new China

The Swiss have made it abundantly clear that they will defend the 1.20 floor against the euro no matter what:

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Further reading

Elsewhere on Thursday,

– The Matrix plan for Europe. Read more

The 6am Cut London

Investors in Asia continued a rush to safety on Thursday morning, says the WSJ, pushing Hong Kong’s index down and erasing all of its 2012 gains, while the yen jumped to its highest since February. Earlier, US benchmark borrowing costs plunged to levels last seen in 1946 and those for Germany and the UK hit all-time lows as investors took fright at what they see as a disjointed policy response to the debt crisis in Spain and Italy, the FT reports.

Japan’s industrial production rose less than forecast in April, reports Bloomberg, also contributing to lower markets in Asia. Output gained 0.2% from the previous month, when it rose 1.3%. Economists surveyed by Bloomberg expected a rise of 0.5%. Read more

Overnight markets: Down

Asian shares dropped, tracking US stocks, as higher borrowing costs in Spain and Italy increased contagion fears in Europe while Japan’s industrial output trailed estimates, says the FT.

The MSCI Asia Pacific index slid 1.2 per cent, heading for its lowest close in five months. Japan’s Nikkei 225 Stock Average dipped 1.8 per cent, Australia’s S&P ASX 200 lost 1.2 per cent and South Korea’s Kospi Composite index dropped 1.5 per cent. Read more

The Closer


Risk was very much off for US stocks on Wednesday. The S&P 500 closed down 1.43 per cent at 1,313. The S&P has lost almost 6 per cent in May, making the month its worst since September (Reuters). The euro fell to its lowest level in nearly two years against the dollar, dropping under $1.24 (Bloomberg). Read more

Ay, Bankia, nos reimos para no llorar

Some light relief from Wednesday’s ECB mystery. From Bankia’s web siteRead more

Just to close off the European session….

That’s the euro, deteriorating further against the dollar late in the day, London time. 1.2380 at pixel. Read more

Greece: stuck between Iran and Glencore

You know things are tricky when your energy options are Iran, Glencore or blackouts, and then the Iran option is removed.

We’ve known for while that Greece’s reliance on Iranian oil has put it in a difficult situation, at time when banks are pulling letters of credit and Iran sanctions bite. This was an early sign of creditors’ fear of drachma exposure. Read more

Bankia, Spain, the ECB and a proliferation of “mistakes”

So, Bankia is in trouble and no one seems to know what is going on. First, the FT said that:

A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the European Central Bank for cash, was bluntly rejected as unacceptable by the ECB, European officials said.

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US Markets Live transcript 30 May 2012

Live markets commentary from 

China on the eurozone crisis, and vice versa

With the news being all eurozone-eurozone-China-eurozone of late (at least, in our world), interactions between the two — who happen to be massive trading partners — have produced some interesting stories. Which are probably best illustrated with cats and animated gifs.

What Chinese officials say they think about the eurozone and Greece’s place thereinRead more

Spain, Bankia and the credibility problem

Spain’s government has been left looking increasingly desperate/reckless/ineffective by its plans to rescue Bankia, as today’s FT describes:

Mr Rajoy and his government are facing growing domestic criticism over repeated errors of strategy and communication, which that have given an impression that Madrid has run out of ideas on how to handle its financial and economic crises. Read more

“Since the introduction of the euro…”

Click to read circa 350 pages…

Markets Live transcript 30 May 2012

Live markets commentary from 

The (early) lunch Wrap

Good morning, New York…