Posts from Tuesday Jun 19 2012

The Closer


Tuesday’s markets round-up from the FT: “Stocks rose and the euro rebounded against the dollar as optimism brewed that the eurozone’s war chest will be deployed to help troubled members address sharply elevated bond yields. Traders liked the idea that Germany may allow the European Financial Stability Facility to lend directly to troubled eurozone countries. This is seen helping lower bond yields, which have moved sharply higher recently for troubled borrowers such as Spain.” On the other hand, Spanish 12-month paper auctioned off at an expensive 5.07 per cent. (Financial TimesRead more

Problems with extending Twist, and one final preview

Supply and liquidity, to name two obstacles for an extension of the Fed’s policy of selling short-end Treasuries and buying long-dated ones.

Doesn’t mean they’re insurmountable, only that it will be a little more complicated this time should the US central bank take this route. Read more

No rating outlooks please, we’re MEPs

OK. Before reading on… a reminder of how the sausage gets made in EU legislation. Something voted on by Members of European Parliament, or MEPs, still must go to the Council for approval and, quite often, amendment.

With that caveat, some sausage on sovereign credit rating regulation: Read more

Exclusive to all newspapers, EFSF/ESM bond-buying

Reporter: Um, I’ve filed some copy from Los Cabos

Panicked Night News Editor: Well, what’s the news!?!?! Read more

“We are certainly not coming here to receive lessons from nobody”

This is one bad-tempered president of the European Commission.

 Read more

Where the OCC should have looked

Isn’t it a problem if bank regulators depend, seemingly exclusively, on the banks themselves for information? Weren’t trade information warehouses, such as DTCC’s for credit derivatives, built in part to give regulators a bird’s eye view of markets? If so, why the hell does it sound like they aren’t being used?

JPMorgan management have put their hands up since the announcement of $2bn of losses, effectively saying, ‘yeah, whoops, we totally messed that one up. Buck stops here. We’re looking into preventing that from ever happening again. We’ve learned that no matter how good a division’s past performance, one simply cannot ever be complacent.’ They are taking their (very, very sizable) share of the blame. Read more

Russia: oil price down, capitalism up?

So Russia is getting its wallet out again. This is from the FT on Monday:

Russia is setting aside up to $40bn for this year and next to shore up the economy in case the crisis in the eurozone escalates and spreads, and is dusting off a plan that would allow the government to recapitalise the country’s banking system. Read more

Britain doomed, apparently

A warning to Great Britain from UK-based investment fund Hinde Capital (a hedge fund that specializes in precious metals):

We wish to outline the gravity of the situation in which the UK finds itself, and by assessing how we got here we can begin to offer our solutions both for monetary and political reforms. Unfortunately we are deeply concerned that far from being cynics or purveyors of doom, the very harsh reality is that the UK is caught in an intractable spiral of negative outcomes.

 Read more

VaR she blew

Why is CreditSights highlighting JPMorgan’s late-2008 shift from a 99 per cent to 95 per cent confidence interval* in its Value-at-Risk measurement, here?

 Read more

Explain this

IBEX 2.4 per cent higher at pixel time.  Footsie up a ton. Equities celebrating record wides in Spanish bank CDS? That fresh order of QE better arrive…

 Read more

Getting to a Grenegotiation

There’s excitement in Greece today. It may be the day Greece finally gets a government!

From Kathmerini on Tuesday morning: Read more

The risks of dysfunctional money markets

In my remarks today, I would like to share with you some concerns about the present state of the euro area money markets, which are characterised by segmentation between cash-rich and cash-poor banks and a fragmentation along national lines. I would also like to offer some thoughts on how proper money market functioning can be restored.

So starts a recent speech by Benoît Cœuré, member of the Executive Board of the ECB, which should be required reading for everyone interested in the fragmentation of the European money markets. Read more

Stop whinging and go invest in some loans

Tough love from Data Explorers on Monday:

Truly talented investors do not whinge during a ‘risk off’ environment like now. Instead, they find a place where the risk vs. reward pay-off is slanted in their favour.

 Read more

Zew Germans are suffering

Germany’s Zew index has suffered its worst decline in 13 years and while it has never been a perfect indicator this level of decline doesn’t bode well for Germany’s future prospects. This is from the Zew Center for Economic Research (with our emphasis):

The ZEW Indicator of Economic Sentiment for Germany has decreased by 27.7 points to a level of minus 16.9 points in June 2012. This is the indicator’s strongest decline since October 1998. The worsening of the situation in the Spanish banking sector and the insecurity about the outcome of the Greek general election, which had been lasting for most of the survey period, are likely to have contributed to the sharp decline of the indicator. Read more

The strange case of ‘funding-for-lending’ confusion

The market continues to chew over last week’s surprise announcement by the Bank of England and the Treasury about a collaborative funding initiative for UK banks under their joint auspices.

Under the initiative the Treasury will back a “funding for lending” programme, which is intended to reduce borrowing costs to those banks that engage in lending, while the Bank of England breathes life into a previously announced Extended Collateral Term Repo (ECTR), a cross between a UK LTRO equivalent and a credit easing programme. Read more

Markets Live transcript 19 Jun 2012

Live markets commentary from 

FT Alphaville’s inaugural pub quiz & reader drinks on June 21st

It is only two days away. The pub quiz is full, but all are welcome for drinks.

As a reminder, the event is taking place at the Rose & Crown, near Southwark tube. Click on the below for a map: Read more

The (early) Lunch Wrap

Good Morning New York…


Further reading

Elsewhere on Tuesday,

– Top RMBS cases to watch this summer. Read more

The London 6am Cut

Asian shares were headed lower on Tuesday, reports Reuters. This follows a weak trading session for equities in Europe on Monday, when yields on Spanish and Italian debt also climbed. Earlier Monday, data from the Bank of Spain revealed that the non-performing loan ratio of Spanish banks had reached its highest point in nearly two decades, according to the FT.

Greece’s New Democracy party leader Antonis Samaras is trying to get a coalition agreement in principal by Tuesday with the PanHellenic Socialist Movement (Pasok) party and the moderate Democratic Left. The FT cited a conservative advisor saying that Pasok leader Evangelos Venizelos had backed Samaras for prime minister. Read more