Posts from Thursday May 10 2012

The Closer


US equities finished in the black for the first time in more than a week, following a marginally positive performance in Asia and Europe. But as the FT reports, “any new-found optimism is being contained by worries about the eurozone’s difficulties and the health of the global economy, following weak Chinese trade data”. (Financial TimesRead more

JPMorgan: whale harpooned?

From the bank’s first-quarter 10-q, just out:

Since March 31, 2012, CIO has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the Firm previously believed. The losses in CIO’s synthetic credit portfolio have been partially offset by realized gains from sales, predominantly of credit-related positions, in CIO’s AFS securities portfolio. As of March 31, 2012, the value of CIO’s total AFS securities portfolio exceeded its cost by approximately $8 billion. Since then, this portfolio (inclusive of the realized gains in the second quarter to date) has appreciated in value. Read more

The US labour market and the middling middle

The sweet spot — you’re young, Hispanic, have a college degree, work in mining, are married and live in North Dakota.

It’s a rare combination, of course, but these are the characteristics commonly found among people who have found jobs in the difficult US labour market since February 2010, according to ConvergEx analysts. Read more

You cannot be Syriza!

If Greece ends the reform process it has undertaken, then I can’t see that the respective tranches [of aid] can be paid out.

— Guido Westerwelle Read more

Goldman loses to Bank of America in the least Q1 negative-revenue trading days contest

They had one, BofA had none — sorry, we couldn’t resist the tease. From Goldman’s first-quarter 10-q:

 Read more

Decoding the latest OTC derivative BIStimates

Just when someone’s gone and put a decent dataset together, someone has to go and mess it up. Thanks, Spain and Australia. Really, thank you. None of us really cared that much anyway about the data being comparable from one period to the next. Whatevs.

— FT Alphaville’s Internal Monologue

 Read more

Buiter says bring out the helicopter

Here is a lengthy and ambitious shopping list from Willem Buiter and Ebrahim Rahbari at Citi. Essentially, they want central banks to do more…. much, much more, including (with our emphasis):

(i) reducing rates, first by lowering them all the way to zero (UK and euro area), then by eliminating the effective lower bound on nominal interest rates (all four currency areas) [essentially: go negative, my friends] Read more

GKP threatens to sue speculators (the bad kind)

“Live by the sword, die by the sword” does not translate into Kurdish, it seems.

Gulf Keystone Petroleum Ltd. (AIM: GKP) Read more

Brent reigns supreme

Back in early 2011, a very intriguing thing happened in the oil markets.

As if by magic — (well, over the period of about a couple of months) — the market collectively and spontaneously moved from using WTI as its primary benchmark for pricing product spreads over to the Brent contract. The era of the “Brent crack” was born. Read more

Markets Live transcript 10 May 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…


The growth of the shadow economy, charted

When the economy is tanking the shadow economy benefits. That’s the theory and a new study into the rise of the grey economy, from Ceyhun Elgin and Oguz Oztunali of Bogazici University and presented at VoxEU, seems to add weight to the argument.

The author’s put together a 161-country panel dataset over the period 1950 to 2009 (using the multiple indicators and multiple causes method) which attempts to estimate the size of the shadow economy in various regions. Read more

Further reading

Elsewhere on Thursday,

– If Facebook is worth $100bn, then Apple is worth $2.7tn. Read more

Overnight markets: Mostly down

Asian shares were mixed amid lingering concerns about Europe’s debt crisis although sentiment was boosted by positive profit guidance from Toyota, says the FT.

The MSCI Asia Pacific index was up 0.2 per cent while Australia’s S&P/ASX 200 gained 0.3 per cent. Japan’s Nikkei 225 Stock Average was down 0.5 per cent, falling below 9,000 for the first time since February and South Korea’s Kospi Composite index receded 0.5 per cent. Read more

The 6am Cut London

Spain has taken a 45 per cent stake in Bankia, reports the FT, and the country will force its banks to set aside tens of billions of euros in additional provisions against property loans as part of a fresh restructuring plan for the country’s lenders. The plan will be announced on Friday and is expected to require more than 30bn in new provisions for the whole sector. Questions were being asked about the wisdom of having created and floated the Spanish lender in the first place, says the FT separately.

Deutsche Telekom is considering a deal that would combine its T-Mobile USA business with MetroPCS Communications, a US wireless provider, reports the FT, citing two people familiar with the matter. The deal is not final but could see Deutsche Telekom pursue a stock-swap transaction that would give it control of the new entity, which would be US listed. Read more