Posts from Tuesday Jun 12 2012

The Closer


Spanish ten-year bond yields surpassed the euro-era high that was previously reached in November of last year. And although short-term borrowing costs remain lower than they were then (when money markets seized up), two-year and five-year yields also spiked. Meanwhile, Angela Merkel made some cautiously supportive statements about moving towards common European banking regulation, but “stopped short of backing a region-wide resolution scheme, which Berlin fears could burden the country with joint liability for other’s debts,” reports the FT. (FT Alphaville and Financial Times). Read more

Tsipras in the pink pages

And the Syriza leader is talking tax, ahead of Greece’s weekend election.

The people of Greece want to replace the failed old memorandum of understanding (as signed in March with the EU and International Monetary Fund) with a “national plan for reconstruction and growth”…

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The eurozone as monetary crisis

The charts come from David Beckworth:

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Seniority in Spain — *good news* for bondholders?

As we all wait for an actual Spanish bailout loan doc, and what it might say about that ESM seniority

Here’s some seriously intriguing, counter-intuitive food for thought from Barclays’ Piero Ghezzi. From a Tuesday note: Read more

When productivity normalises

As you’ll find in an economics textbook, labour productivity growth is driven by some combination of:

1) improvements in human capital, such as a more-educated or more-experienced workforce, Read more

Does this Justin Bieber transaction pass the smell test?

Little more than a year has passed since Justin Bieber, the internationally renowned two-time Grammy nominated star and undisputed king of social media, announced his first fragrance.

Christened “Someday,” the scent reportedly became the number one fragrance launch of 2011 in US department stores. Read more

Eurozone bank deleveraging, datapoints du jour

Click the pic for the 135-plus pages of the ECB’s latest Financial Stability Review…

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Banks seek to offload risk on insurers

Now when and where did that last happen…

In Tuesday’s FT, Brooke Masters reported on a rather novel approach that some banks are trying to take in order to reduce their capital requirements. The trick is to reduce the predicted loss that would be experienced if a borrower were to default. This is effectively done by getting an insurer to guarantee the future value of the collateral held as security for the loan. Read more

The market for “independent thinking”

We were NFI on the occasion of the 39th annual Thomson Reuters Extel survey awards ceremony, held at London’s Guildhall on Tuesday. But we shouldn’t allow that to stop us sharing the results.

Highlights: Read more

Bonos, bashed

Two days into Spain’s declared intention to borrow maybe-senior official loans to recap its banks, and the 10-year Spanish bond yield has already breached a eurozone record (chart via Reuters):

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Greek politicians ♥ Spanish bank bailout

The Spanish bank bailout, aka “failout”, may have been shrugged off by the markets on Monday but it seems to have given encouragement to Greek politicians as they prepare for the weekend’s elections.

The thinking broadly seems to be, if there’s room for manoeuvre/more cash for Madrid, why not for Athens! Read more

Redefining labour

This is the third installment in FT Alphaville’s “Beyond Scarcity” series, a somewhat radical look at the impact of technological progress and efficiency on the volume of goods and services being produced by the system, asking whether “abundance” could now be a key determinant of deflationary forces in the western world.

On top of this, we have considered the role played by “artificial scarcity”, whether imposed wittingly or unwittingly by industry participants as a counterweight to such deflation, and to what degree such measures could now be running into scalability issues. In short, whether there is a limit to how much artificial scarcity private organisations can impose to counteract deflationary forces of abundance, without experiencing diminishing returns. Read more

A banking union “no go” summary

A few things that are worth being taken together. First from José Manuel Barroso in the FT (with our emphasis):

All 27 EU countries should submit their big banks to a single cross-border supervisor as part of a banking union to be enacted as soon as next year, the president of the European Commission has urged. Read more

Markets Live transcript 12 Jun 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…


That Spanish revolver

Genius pic from A Lightening War for Liberty

Spanish bailout in one photo Read more

Now they’ve shut Italy off from the markets…

Was this part of the plan? Italian 10 year at 6.20 per cent on Tuesday, and rising?

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Another (potential) irk for Spanish bondholders

This is what prospective investors in Spanish sovereign debt have to consider, writes Gary Jenkins of Swordfish research:

That they are subordinated; Read more

Further reading

Elsewhere on Tuesday,

– Have we arrived at a financial singularity? Read more

The 6am Cut London

Asian markets joined the post-euphoric slump over Spain’s bank bailout on Tuesday, reports the FT. The MSCI Asia Pacific index lost 0.8 per cent with Japan’s Nikkei 225 Stock Average off 1.7 per cent and South Korea’s Kospi Composite index down 1.3 per cent. Hong Kong’s Hang Seng index shed 1.1 per cent while China’s Shanghai Composite index lost 0.6 per cent.

José Manuel Barroso called for an EU-wide banking union in an FT interview, saying it could be achieved without a treaty change. Read more

Overnight markets: Down

Asian stocks fell, with the MSCI Asia Pacific Index retreating from a two week high amid concerns the Spanish bank bailout won’t tame the European debt crisis, says Bloomberg.

The MSCI Asia Pacific Index fell 0.9 per cent to 112.46 as of 12.42am Tokyo time. Japan’s Nikkei 225 Stock Average (NKY) declined 1 per cent. South Korea’s Kospi Index slid 0.9 percent. Hong Kong’s Hang Seng Index and China’s Shanghai Composite Index both lost 0.8 per cent. Australia’s S&P/ASX 200 Index added 0.4 per cent. Read more