Posts from Tuesday Jun 26 2012

The Closer


The FT’s markets round-up: The FTSE All-World equity index rose 0.3 per cent after an earlier decline, and copper fell 0.2 per cent to $3.31 a pound, pointing to a still-struggling commodities sector. Gold was down $12, at $1,572 a troy ounce. The S&P 500 has fluctuated just above the gain line, helped by data from Case-Shiller showing US house prices in April rose for the third consecutive month, but hampered by news consumer confidence is at its weakest level since January. The benchmark index rose 0.5 per cent to 1,319 points. (Financial TimesRead more

Good News and Bad News

That’s 1211 Avenue of the Americas, New York. Read more

Charts and fact du jour, US personal income edition

From a new CreditSights note on US personal incomes:

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What’s been pushing up US repo rates?

A few things, actually — it’s not all Operation Twist.

Dealer holdings of US Treasuries have been climbing since the middle of last year, enlarging the pool of collateral for counterparties and coinciding with the rise in overnight repo rates: Read more

China’s remarkable short USD position

Remember the days when Chinese banks used to routinely drain dollars from Chinese corporates? The days when the Chinese corporate sector was a net dollar seller?

Those days, it seems, may have very abruptly come to a halt. Read more

A Cyprus liquidity switch

The world’s 81st-biggest island fell off the European Central Bank’s collateral lists on Tuesday. At least its sovereign debt did.

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Houston, we have an overcapacity problem

This. Is. A. Hydrocracking read. We bring you:


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Credit derivative crowdsourcing #fail

The credit derivatives industry has gone through the mother of all clean-ups over the last four years. It has standardised. The build-up of redundant contracts has been kept down. Hell, people even know which counterparties they are facing these days!

To make it even easier, there are quite specific rules to deal with various mechanics. Is it time to give the industry a pat on the back for a job well done? Read more

Of housing booms and busts

And why Norway’s property market is still looking ever so slightly peaky.

First, some charts courtesy of Alan Ruskin at Deutsche Bank which point to those countries which maybe haven’t seen the end of their house-price pains. The first chart shows the pain already taken: Read more

News Corp, split reaction

News Corp’s share price at pixel time:

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On price stability during an ‘abundance shock’

Everybody loves price stability.

Everybody expects price stability. Read more

Pricing the German costs of a euro break-up

Calculating the benefit to Germany from eurozone membership has been attempted numerous times, and proven rather hard to pin down. But what about the opposite? The costs to the country of a euro break-up? Given the importance of Germany’s support to the survival of the euro project, this is a big question, with a tonne of political baggage attached.

The German ministry of finance has done just such an analysis, according to Der Spiegel, and found that the costs of such a break-up and the re-introduction of the D-Mark would lead to an up to 10 per cent fall in GDP in the first year. Unemployment would surge to its record high of over 5m. Read more

Markets Live transcript 26 Jun 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…


Towards a genuine economic and monetary union, or something

Click the image for the full document:

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Four days that supposedly sunk Singer and Friedlander

My word, this is pointless. Even by FSA standards. Click to read.

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Murdoch to do the splits? Really?

At the age of 81, we’d rather Rupert not attempt this in public. But what should we make of the WSJ’s story on Tuesday that News Corporation, the Murdochs’ parent company, is considering splitting in two?

The usual people claiming to be familiar with the situation say a plan is being considered whereby News Corp’s film and television interests would be carved off, leaving its newspapers, book publishing and education businesses as a separate entity. That would leave 20th century Fox, Fox News and the Fox broadcast network separate from newspapers, such as the Sun and the Times of London, as well as the HarperCollins book publishing business. Read more

The Spanish bank buy-back riddle

So, this is a bit odd. Why would some Spanish banks, which have such high capital needs right now, have been engaged in fairly significant share repurchases over the past few months?

Spanish banks such as Bankia and BBVA have been buying their own stock in increasing quantities since February, with Banco Popular much more active than the rest recently. Read more

Further reading

Elsewhere on Tuesday,

– Learning by being taught: this is what banks doRead more

The London 6am Cut

Asia shares were slightly down in Tuesday trading after the Moody’s downgrade of Spanish banks and the news that Cyprus had requested a bailout, reports Bloomberg.

A proposal to move Europe closer to a fiscal union by giving more powers to Brussels will be discussed at this week’s EU summit. According to the Financial Times, which viewed a draft repor, the EU would gain “far-reaching powers to rewrite national budgets for eurozone countries that breach debt and deficit rules”. Read more