Posts from Thursday Jun 28 2012

Spain, seniority, and survivor bias

Update (0445am UK time) — Well, well, well… eurozone leaders did indeed promise not to subordinate Spanish bondholders at the summit, as we assumed they would below. Seniority was “renounced” in the case of Spain.

That phrase suggests a reversion to the original status of official eurozone bilateral and EFSF loans – of being at least pari passu with bondholders. (Though at times the loans have even been subordinated on some points, such as restructuring interest rates. The status is a political football subject to constant change, you could say.) Read more

Productivity post-paradox

We noted in an earlier post that an optimistic near-term scenario for US employment would likely mean productivity growth remaining at its depressed rate for a little while.

The alternative — productivity growth returning back up to pre-crisis trend — would have to coincide with sluggish employment growth unless economic growth were to pick up significantly. Read more

So who made the decision, Bob?

Staring a political storm in the face, Barclays chief executive Bob Diamond writes to Andrew Tyrie MP, chairman of the Treasury Select Committee.

(Excuse the lengthy quoting) Read more

The Closer

ROUND-UP

US stocks staged a late comeback on EU summit hope. The S&P 500 pared losses to close down 0.21 per cent at 1,329.04 (Reuters). The S&P 500 health sector fell 1 per cent after the Supreme Court’s ruling, brought down by insurers. Read more

Greek mattresses seeing capital flight

With a new government in place and market focus shifted to Spain and Italy’s debt issues, Greece has been enjoying a bit of welcome breathing space.

The country’s banks have been seeing steady inflows since the election two weeks ago, according to Reuters (emphasis ours): Read more

In defence of Libor quote-rigging, encore

Right, this one may stick in the throat somewhat but it’s an interesting idea, a variant of which we have heard before.

From JCD Rathbone, of JC Rathbone Associates, (with our emphasis): Read more

Affordable Care Act upheld by the Supreme Court

The Supreme Court has upheld the constitutionality of Obama’s best-known legislative achievement, including that of the individual mandate requiring nearly all American to obtain health insurance. Click here for the opinion.

The key reasoning is that the mandate can be considered a tax that Congress is empowered to impose. Read more

Transacting at Libor, bro

Another quote from the Barclays Libor files – from the CFTC itself:

In addition to the $200 million penalty, the CFTC Order requires Barclays to implement measures to ensure that its submissions are transaction-focused… Read more

Libor, the liquidity consequences

It’s all very well bashing Bob and calling for bankers’ heads.

But we shouldn’t overlook another exceedingly important point about the Libor affair, as picked up by Claire Jones over on the FT’s Money Supply blogRead more

‘Sell Bob’

Barclays, down 16 per cent at pixel…

 Read more

Breaking News

Upon closing of the proposed transaction, News Corporation’s shareholders would receive one share of common stock in the new company for each same class News Corporation share currently held. Following the separation, each company would maintain two classes of common stock: Class A Common and Class B Common Voting Shares.

Upon closing of the proposed transaction, Rupert Murdoch would serve as Chairman of both companies and CEO of the media and entertainment company. Chase Carey would serve as President and COO of the media and entertainment company. Over the next several months, the Company will assemble management teams and Boards of Directors for both businesses. Read more

Goldman Sachs on fewer ‘safe assets’

First of all, a big congratulations to Goldman Sachs for jumping on board the safe assets debate approximately 12 months late.

And, in so doing, challenging (but not really challenging) what we still think is the biggest trend of the post-crisis era. Read more

Markets Live transcript 28 Jun 2012

Live markets commentary from FT.com 

The (early) Lunch Wrap

Good morning New York…

FT ALPHAVILLE Read more

Kill Bob, and other Barclays/LIBOR reaction

A scroll through the comments on any post or article relating to the LIBOR-fixing scandal makes the verdict of the Court of Public Opinion pretty clear: ‘Hang the lot of them.’

But there’s a less emotional requirement here to at least take a stab at the likely financial damage to Barclays et al as regulatory fines are followed by action in the courts. Sandy Chen at Cenkos has done some early maths: Read more

A China half-crash

The Shanghai composite index has now fallen for the past 7 days in a row and is down some 10 per cent since a high on May 4th (click to enlarge):

 Read more

Further reading

Elsewhere on Thursday,

- A former Barcap executive writes… Read more

The London 6am Cut

Barclays was fined more than $450m by US and UK regulators for having tried to manipulate Libor, reports the Financial Times. You can find hilarious examples of the emails between Barclays traders and Libor submitters at FT Alphaville.

The board of News Corp voted to split the company into two after a meeting Wednesday night, reports the Wall Street Journal. There will be a formal announcement on Thursday, according to the WSJ. Read more