Posts from Thursday Jun 21 2012

The Closer

ROUND-UP

The FT’s markets round-up: “Stocks and commodities sold off as fears over the outlook for global growth mounted after weak manufacturing data from Germany and China. Some in the market are also expressing disappointment at the US Federal Reserve’s decision not to take aggressive stimulus steps – particularly gold bugs, who have reacted by selling the bullion down by $21 to $1,585 an ounce. Selling accelerated in the US after Goldman Sachs recommended investors to sell stocks, with a target for the S&P 500 at 1,250. The investment bank said in a report the latest US data suggests weakness in the economy has extended into June.” (Financial TimesRead more

The Moody’s bank downgrades

New York, June 21, 2012 — Moody’s Investors Service today repositioned the ratings of 15 banks and securities firms with global capital markets operations. The long-term senior debt ratings of 4 of these firms were downgraded by 1 notch, the ratings of 10 firms were downgraded by 2 notches and 1 firm was downgraded by 3 notches. In addition, for four firms, the short-term ratings of their operating companies were downgraded to Prime-2. All four of those firms also now have holding company short-term ratings at Prime-2. The holding company short-term ratings of another two firms were downgraded to Prime-2 as well.

Morgan Stanley was downgraded by two notches rather than the three which were possible. Nine other banks also lost two notches. Moody’s did downgrade Credit Suisse three notches though. The full list… Read more

‘The AAA almost unreachable’

We’re waiting for Moody’s to come out and downgrade 15 global banks at pixel time. All well-flagged, obvs. Everyone’s watching the collateral calls.

This isn’t just about downgrades though; Moody’s simply doesn’t like the industry’s future as much it used to. Nor will it be counting on government guarantees to the extent of the past. The overall ratings ceiling for banks is going to be lower. Lower than risk-free that’s for sure. Read more

And next at the NY Fed markets desk is… Simon Potter

Just in time to take the reigns of Operation Twist 2…

The Federal Reserve Bank of New York announced today that Simon M. Potter, executive vice president and co-head of the Research and Statistics Group, has been named the new head of the Markets Group by New York Fed President William C. Dudley. The Federal Open Market Committee (FOMC) also selected Mr. Potter as Manager of the System Open Market Account (SOMA). Mr. Potter will begin his new roles on June 30, 2012. He succeeds Brian P. Sack, who steps down on June 29, 2012. Read more

Lunar investing scheme eclipsed* by reality, SEC

Awesome…

The primary principle underlying Persaud’s trading strategy was that the gravitational pull between the moon and Earth affects mass human behavior, which in tum affects the stock markets. For example, Persaud believed that when the moon is positioned so there is a greater gravitational pull on humans, they feel down and are therefore more inclined to sell securities in the markets. Read more

The collective good of demand needs YOU!

From HSBC’s Global Macro Economics team on Thursday:

Matters are being made worse because the world’s savers would rather buy Treasuries than global goods. Read more

AV London branch is off to the pub. Do join us…

Do come along to the Rose & Crown, near Southwark tube, should you fancy an after-work drink. Click on the below for a map:

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The €52bn (or maybe €62bn) Spanish bank clean-up

That’s €51.8bn (how precise) from Roland Berger… and €62bn from Oliver Wyman…

Update — Here are the reports in full (click images for docs): Read more

Koo on German bubbles

Ancestors of the eurozone crisis, with Richard Koo – from the Nomura economist’s latest note (our emphasis):

In 2005, I told a senior ECB official that it was unfair to force other countries to rescue Germany by boosting their economies with loose monetary policy without requiring Germany to administer fiscal stimulus, when it was Germany that had become so deeply overextended in the bubble. The official responded that that is what a unified currency means: because Germany could not be granted an exception on fiscal stimulus, the only option was to lift the entire region with monetary policy. Read more

Local Spanish press: auditors find banks need €65bn

The review of the Spanish banks by the “big four” auditors may have been postponed until September, but there is another!

It’s by Oliver Wyman and Roland Berger, and at pixel time it looked like the Spanish press were reporting that the banking system needs around another €65bn in capital. Read more

The (sovereign) mystery box

Cookie Monster: It a horse! It a cow! It a ball! It a pogo stick! It a rump roast! It a moose!

(Reuters) – The European Central Bank is discussing a medium-term plan to scrap rating rules on euro zone sovereign bonds and instead set their value when used as collateral in lending operations on its own internal assessment, central bank sources said… Read more

China manufacturing PMIs

HSBC/Markit ‘flash’ PMIs were out this morning. The picture is not pretty. From the FT:

HSBC said its Chinese purchasing managers’ index was on track to fall to 48.1 in June from 48.4 in May, which would mark a seven-month low. In dipping further below the 50 threshold, the flash figure, which is the earliest piece of monthly economic data for China, indicates a steepening contraction of factory activity. Read more

Markets Live transcript 21 Jun 2012

Live markets commentary from FT.com 

The (early) Lunch Wrap

Good morning New York…

ALPHAVILLE Read more

A predictable enough Spanish auction

Spain sold €2.2bn worth of short dated bonds and enjoyed some decent demand while yields predictably soared to euro-era record highs. And while it’s reasonable to assume the rally in Spanish bonds over the past few days helped, it has to be remembered that this was a small, very watched auction, and it is likely domestic demand soaked up much of the offering. Not a disaster but not too much to smile about either.

Here is your table courtesy of Reuters: Read more

About that Invensys statement…

Invensys popped almost 27 per cent on Wednesday on the back of some renewed bid speculation. As Paul noted unusually firm speculation has swirled round Invensys for months now and quite a few fingers have been burned as the company consistently failed to supply any confirmatory statements.

The lastest piece of guess-work came via Bloomberg (now updated): Read more

Polling reserve managers

It made headlines when the majority of 80 or so central bankers attending a conference organised by UBS last week reported that they thought at least one eurozone country would leave the currency union within five years:

 Read more

Further reading

Elsewhere on Thursday,

Headline PMI fell from 48.4 in May to 48.1 in June’s initial estimate. Read more

The London 6am Cut

The Federal Reserve decided to extend its “Operation Twist” through the end of the year rather than pursue an expansion of its balance sheet through another round of Quantitative Easing, though the FOMC’s statement at the conclusion of its two-day meeting hinted that further easing remained a possibility at a future meeting.

Shares in Asia ex-Japan were headed lower on Thursday, reports Reuters, after US equities finished trading on Wednesday roughly flat. The Japanese Nikkei was an exception, up roughly 1 per cent at pixel time. The HSBC flash purchasing managers index for China also declined for an eighth straight month, Reuters writes. Read more