Posts from Tuesday May 15 2012

The Closer


Greece is heading for a fresh general election “after its political parties failed to form a national unity government because of opposition from the anti-bailout Syriza coalition. President Karolos Papoulias, whochaired three failed meetings with political leaders in as many days, was unable to bridge differences between Syriza and the two pro-euro parties, the centre-right New Democracy and PanHellenic Socialist Movement (Pasok). A caretaker government will be chosen on Wednesday to oversee the election, expected on June 17,” the FT reports. (Financial TimesRead more

Goldman’s repo “optimizer”

An interesting passage from a recent CreditSights note on Goldman, following a meeting with the bank’s CFO, David Viniar (emphasis ours):

Lastly, Goldman explained that a further defense against a stressed funding situation driven by problems rolling over the repo book was what it referred to as its “secured funding excess.” Goldman noted that it raises repo funding in excess of current financing needs, in order to reduce its secured funding rollover risk. Read more

US Markets Live — now landing on Wednesdays

By popular demand… we’re moving US Markets Live to Wednesday from Friday from now on. This has pleased the rally monkey no end (and for obvious reasons he’s been a little down lately):

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Falling daily trading volumes: not so mysterious?

Kid Dynamite made a good point in the comments of our post on Monday about falling daily US trading volumes: they could just be a correction to the churning frenzy that took place during the crisis, not necessarily a signal that volumes are destined to keep falling perpetually.

And at the end of the first quarter this year, Barry Ritholtz posted this excerpt from a Bank of America Merrill Lynch note (hat tip to Tim Duy for sending it our way): Read more

The foreign-law distinction, encore

Holding foreign-law bonds in preference to domestic-law in peripheral eurozone sovereigns: such a cliché now, they built the Greek PSI around it.

It also made it possible (though it alone did not make it probable) for holdouts in the €435m May 2012 floating-rate note to get paid out in full on Wednesday. Read more

Greece: when the lights go out

The desperate cunning scheme to get Greeks to pay property taxes by bundling them with electricity bills didn’t last long. You guessed it, people stopped paying their electricity bills and now it looks like the power company – which had to be bailed out last month – has stopped even trying to collect the levy.

From Ekathimerini, the Greek daily (emphasis ours): Read more

Credit event of the year…(drumroll)

What would you think if this headline graced your inbox?

Managers triumph at credit event of the year

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Do not trust the FRA-OIS spread!

An excellent point from Don Smith at ICAP on Tuesday.

If you’ve looked at the eurozone FRA-OIS spread recently and wondered why it is so weirdly stable given that Grexit fears are hitting new extremes, there may be a very clear and technical explanation. One that could, as it turns out, be masking weightier problems in the money markets. Read more

Greek coalition talks fail and everybody hits the deck

Right… we *thought* everyone was pretty resigned to the attempted Greek coalition talks breaking down and elections being held again in June.

But then these few flashes hit the wires… Read more

Your handy one-table guide to the cost of Grexit

Courtesy of Eric Dor, Director of research at the IESEG School of Management, Université Catholique de Lille:

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EM correlations, charted

Presenting… the Bermuda Triangle of emerging markets FX!

Sort of. And one for emerging markets credit! Read more

The state of the eurozone, credit edition

Have you been wondering how Greece’s “new” bonds are doing? As in, the ones that were given to all those debtholders when they finally agreed — or were voted into by collective action clauses — the restructuring in March. Well, here they are:

MD140512a Read more

An LNG headache, caused by an unconventional gas headache

Australia, we’ve heard a lot lately, is set to overtake Qatar as the world’s biggest LNG producer by about 2020. The first shipment from the big Western Australian Pluto development set sail last month and things looked somewhat rosy for Woodside Petroleum, its owner and operator.

However a story in today’s Australian Financial Review confirmed what many have been thinking for a while: the proposed expansion of the Pluto project won’t happen. The AFR quotes Woodside chief executive Peter Coleman: Read more

Markets Live transcript 15 May 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…


Greece to pay: no default today

From Reuters:

Greece will pay holders of a 430 million euro bond that matures on May 15, a government official said on Tuesday. Read more

A German GDP beat on a divergent morning [updated]

The German economy grew five times faster than expected in the first quarter of the year, jumping 0.5 per cent. Admittedly expectations were for only 0.1 per cent growth but still, tis cheering news on a wet London morning – particularly considering the 0.2 per cent hit German GDP took in the last quarter of 2011.

The year on year increase was 1.7 per cent, beating expectations of a 0.8 per cent jump, and the German statistics office said growth was supported by an increase in net trade as exports to outside the eurozone gained. Read more

Further reading

Elsewhere on Tuesday,

– Is the ‘wall of worry’ really in bondsRead more

Overnight markets: Down

Asian markets were down early Tuesday. Japan’s Nikkei slipped 1.1%, while Australia’s S&P ASX 200 and Korea’s Kospi both dropped by 0.9% amid fears of contagion from a Greek eurozone exit, says the WSJ. The euro traded near an almost four- month low amid mounting doubts that Greece can avoid an exit, as the region’s finance ministers meet for a second day in Brussels, says Bloomberg.

Asian markets
Nikkei 225 down -113.69 (-1.27%) at 8,860
Topix down -11.43 (-1.51%) at 745.25
Hang Seng down -83.43 (-0.42%) at 19,652 Read more

The 6am Cut London

Asian markets on Tuesday continued to suffer from fears about the eurozone, reports Bloomberg. Spanish and Italian 10-year borrowing costs shot up to their highest levels this year and European stock markets suffered their biggest one-day drop in three weeks. German 10-year bond yields fell to a record low, widening the premium Madrid pays to borrow compared to Berlin to a new euro-era high, says the FT.

Greece’s president Karolos Papoulias has another 48 hours to persuade politicians to join a national unity government or face having to call another election, reports the FT. Antonis Samaras and Evangelos Venizelos, the conservative and socialist leaders, and Fotis Kouvelis, head of a leftwing splinter group, agreed to meet again, along with other party heads although Alexis Tsipras, the leader of Syriza, is not participating. Meanwhile Jean-Claude Juncker sharply criticised other EU leaders for “threatening” Greece with expulsion. Read more