This week on FT Alphaville,
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Update after the close: It closed green(shoe) at $38.23 according to Bloomberg data. But not until after a few moments close to $38.00, as seen below earlier…
The last twenty-four hours have brought us some interesting insights into the JPMorgan chief investment office’s $2bn loss story. The FT revealed that the CIO has been a huge player in certain structured asset markets. Some surmise that the trading activity from the unit has been so big that if it ceased participation in those markets, it could damage what liquidity there is in them.
There was also a story, this one written by the WSJ, about how CEO Jamie Dimon reacted when the stories about the “London Whale” first surfaced (pun intended). The article described how the positions were then investigated (internally) and the decision taken to delay a regulatory filing until the exact positions were better understood. Read more
This is careless. The Bank of England has managed to lose Adam Posen, the outspoken American dove on the Monetary Policy Committee. He’s off to the Peterson Institute in Washington, from whence he came three years ago, taking over as president of the renowned think tank from Fred Bergsten.
John Kemp at Reuters has made the point that Posen may in any case have decided not to seek a second term on the MPC when his current stint expires in August. In March last year, in a Guardian interview, he said that if he was proven wrong in his calls for more quantitative easing in Britain he would change his vote and retire from the committee. Read more
Swiss franc traders have been pretty bored of late, with the euro/Swiss franc flatlining for months. But it seems they’ve had some rare excitement this week: someone out there is buying as many euros against the franc as traders care to offload.
Naturally, everyone is assuming this buyer is the SNB — in disguise. Read more
Wine is not something FT Alphaville often writes about but we all need a break from the euro crisis, and this chart caught our attention. It’s the Liv-ex Fine Wine 50 index, which tracks the daily price movements of the most heavily traded commodities in the fine wine market – Bordeaux first growths. It has fallen off a cliff in the past few months.
Live markets commentary from FT.com
Is the slowdown in China’s electricity output growth a sign that the life is going out of the country’s economy?
It’s not been the only poorly-performing economic indicator out of China recently — there’s also trade, housing sales and new lending, to name a few. But power output growth fell in April to 0.7 per cent year-on-year growth — a slowdown by a factor of about 10 from the previous few months. Bank of America Merrill Lynch’s China economists say the importance of power output is overrated. Read more
Zee 2, 5 and 10-year yieldz are still compressing…to fresh all-time lows.
The Spanish government called for investor calm on Thursday as shares in Bankia tumbled nearly 30% and Moody’s conducted a sweeping downgrade of other lenders, reports the FT. The deputy finance minister Fernando Jiménez Latorre said it was not true there was a deposit flight. Moody’s downgraded 16 Spanish banks, with three-notch cuts for the “Big Three” lenders – Santander, BBVA and La Caixa. Fitch also warned that it might place all eurozone sovereign ratings on negative watch following a re-run of Greece’s parliamentary election in June. And the government in Cyprus announced it would underwrite a €1.8bn capital raising by Popular Bank of Cyprus, a move analysts said could force the tiny island nation to seek bailout assistance from Brussels.
Facebook shares priced at the top end of an increased range of $34 - $38 each, raising $16bn and making it the biggest tech IPO ever, says Bloomberg. Some experts predict the strong IPO pricing will tamp down any first day “pop”, reports the FT. Read more
Asian stocks fell, with the region’s benchmark index erasing the year’s gains, South Korea’s won weakened and Japanese bond yields slid to the lowest since 2003 as Europe’s debt crisis worsened and on poor US factory data, says Bloomberg.
The MSCI Asia Pacific Index slipped 2.2% as of 11:28am in Tokyo and is down 0.8% this year. Standard & Poor’s 500 Index futures were little changed. The euro dropped to a four-month low, heading for a third weekly decline and South Korea’s won lost 0.9%.Japan’s 10-year-note yield fell 2.5 basis points to 0.82%, while similar-maturity Treasuries approached a record low. Oil traded near a six-month low. Read more