Posts from Friday Jun 29 2012

Recaps, so retro

Spot the eurozone country that doesn’t actually have to issue bonds in these closing 5-year bond yields on Friday:

Spain 5.4 per cent Read more

How to regulate Libor, a cheat sheet

Cheat sheet — geddit, dude.

While Bob no doubt breathes a sigh of relief at having survived the morning after, the other twenty banks lawyer up and pray, and the BBA says it’ll be constructive with regulators… Read more

Regulator captured, a case study

The WSJ reported on Thursday that JPMorgan’s regulators will conduct a thorough review of the bank’s models, according to “people close to the situation”.

Thanks to a letter from the the Office of the Comptroller of the Currency to Senator Sherrod Brown, we know that one particular model — the VaR model that JPMorgan’s Chief Investment Office switched to in January 2012, and which failed to alert management to outsized risks the division was taking — did not require regulatory approval before being used. Read more

Barclays’ PR rating: “D”

You’re in a crisis, you want advice, right? Preferably from someone who has experienced a similar crisis.

Step forward Mark Arena. He ran investment banking corporate comms for UBS in London before moving to New York to be the bank’s head of comms there, just in time for the Great Crunch and the near-implosion of his employer. So he has frontline form. Read more

Princeling wealth, encore

Click the face of Xi Jinping (the top spot in the Chinese leadership is his to lose) for another Bloomberg dive into the wealth of the extended families surrounding China’s princelings:

We’d highlight this one because the authorities earlier blocked Bloomberg.com in China on Friday. Read more

A euro reaction

Any pessimism surrounding the eurozone’s latest deal was not being shared by the single currency at pixel time. The euro was up near 2 per cent against the dollar:

 Read more

Grice on traffic-lights and a crisis of regulation

As I watched the intricate social ballet that occurred as cars and bikes slowed to enter the circle (pedestrians were meant to cross at crosswalks placed a bit before the intersection) Monderman performed a favorite trick. He walked, backward and with his eyes closed, into the Laweiplein. The traffic made its way around him. No one honked, he wasn’t struck .Instead of a binary, mechanistic process – stop, go – the movement of traffic and pedestrians in the circle felt human and organic.”

The above quote is from the ever-readable Dylan Grice’s latest missive in which he argues that regulation acts much like traffic-lights, in that it lulls market participants into a false sense of security. Read more

Counting the costs of (potential) Libor litigation

It’s safe to say that Barclays’ £290m fine is just the start of a saga that’s going to drag on for years. More banks are going to be hit with fines, and investors will try to sue wherever they can. Corporate lawyers around the world are rubbing their hands in anticipation of all the fees coming their way (we expect).

Cormac Leech at Liberum Capital has done an analysis of the UK banks’ potential Libor-fixing liabilities should there be comprehensive class-action (as separate from the regulators’ fines). Barclays and RBS would be the most impacted banks by some way. Liabilities could reach 26 per cent of their market values. Read more

On the transfer of risk and the mystery of low yields

It is impossible for all investors to be invested in safe assets all at the same time.

That’s because risk can never truly be eliminated. It can only be transferred or managed. The more people pour into “safe assets” at the expense of “risky assets”, the more they transfer risk into the original “safe asset”. Read more

Markets Live transcript 29 Jun 2012

Live markets commentary from FT.com 

The (early) Lunch Wrap

Good morning, New York…

FT ALPHAVILLE – EU SUMMIT EDITION Read more

The eurozone crisis and the curse of the small print

For every announcement on how to deal with the eurozone crisis, there are as many questions that come to mind as there are statements from politicians. From Eurointelligence’s morning briefing (emphasis ours):

The following are a list of questions that immediately sprung to our mind: Read more

Some EU deal pessimism…

The market is moving up on the back of a quite substantive eurozone deal but, as our inboxes suggest, this is seen as more sticking-plaster than panacea. Essentially, it’s a case of low expectations being surpassed.

The main change is that Spain’s bailout loans won’t have (explicit) seniority status and that bailout funds will (eventually) be injected directly into teetering Spanish financial institutions, meaning Madrid can sweep the burden of the bailouts off its sovereign books. It also looks like rescue funds will also be used to stabilise bond markets. Read more

Further reading

Elsewhere on Friday,

Undooming BritainRead more

A late-night deal…

From the FT’s Peter Spiegel and Joshua Chaffin in Brussels:

Eurozone leaders agreed to radically restructure Spain’s €100bn bank recapitalisation plan, allowing EU bailout funds to eventually be injected directly into teetering Spanish financial institutions, meaning Madrid can sweep the burden of the bailouts off its sovereign books. Read more

The London 6am Cut

The US Supreme Court upheld the constitutionality of the Affordable Care Act, ruling that the individual mandate requiring most Americans to obtain insurance was a tax that Congress was empowered to impose, reports the FT. Some of the reactions to the ruling were… really quite funny, when they weren’t simply wrong.

Anticipated second quarter losses on the trades made by JPMorgan’s chief investment office are in a range of $4-6bn, reports Reuters, while the Financial Times pegs the number at $5bn. Read more

A Ulysees pact, on eurozone seniority

*EURO LEADERS RENOUNCE SENIORITY ON SPAIN LOANS

Specifically Read more