Posts from Monday Jul 2 2012

Hoping history repeats itself, ISM crash aftermath edition

The magnitude of the decline in this morning’s US ISM reading was surprising, though the decline itself wasn’t.

And although there was hardly a silver lining in the report itself other than the employment index — see Joe’s two posts this morning and the reliably excellent Counterparties roundup for more — history suggests at least one reason not to panic too much over it (for the US — everyone else should consider panicking). Not yet, at least. Read more

The Closer

ROUND-UP

A bad ISM is good for Fed easing, US stocks seemed to say on Monday. The S&P 500 rose 0.25 per cent to 1,365.51 while the Nasdaq closed up at 2,951.23, a 0.55 per cent gain, reversing their lows (Reuters). Read more

More on GS and the relevance of safe assets

Izzy already did a great job giving the house sentiment about the dismissive Goldman Sachs note on safe assets, but we wanted to add a few quick points.

This isn’t just gratuitous piling on or a therapeutic exercise or a reflexive defence of our earlier posts. To the extent that others hold what we believe are the note’s misconceptions, it’s best to discuss them out in the open, loudly if need be. Read more

How to sound contrite (as a potential kid poisoner)

There’s a lesson here for Bob and others in banking bother. It comes from Andrew Witty, chief executive of GlaxoSmithKline, after paying $3bn to settle the largest ever case of heathcare fraud in the US….

Today brings to resolution difficult, long-standing matters for GSK. Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made. Read more

Libor manipulation and the invisible whistle

There was a piece in the Telegraph on Sunday that may well sum up the thoughts on the Libor scandal of many who worked, or are still working, in banks. It’s called “Libor scandal: How I manipulated the bank borrowing rate“. It gives a sense of how it is that a hell of a lot of people didn’t question the manipulation of the rate.

Frankly, anyone with a Bloomberg terminal in 2008 would have been in on this, as one could see that the rates various banks had submitted did not reflect where they could fund. Deals were getting torn apart all over the place because no one could ramp up funding at a decent rate, despite what those screens said. Read more

‘These events’

From the pen of Barclays chief executive, Bob Diamond, to the bank’s employees. (H/T BBC)

(Excerpts) Read more

It’s an ESMergency

There’s nothing FT Alphaville likes doing more on a New York morning than rooting around the ESM Treaty.

So when you see headlines like this (via Reuters) Read more

The China OMG moment

It seems that lately every time we come back from holidays look around, people are becoming ever more freaked out about China. Josh Brown has possibly the best headline of the latest lot. Josh’s shock and awe was prompted by a Barron’s cover story on China which we agree is a very good read, although it covers a lot of ground that’s already appeared here, among other places. Nomura’s 1-in-3 chance of a hard landing call, the economic imbalance, misallocation and over-capacity, property bubbles, Nicholas Lardy, unfavourable demographics, bad loans being rolled over, rising wages, capital outflows, and… you get the idea. Plus this eye-catching quote from Jim Chanos:

“I’m being conservative when I say that the coming bust in China‘s real-estate market will be a thousand times that of Dubai,” Read more

About Friday’s WTI price surge…

Late last Friday afternoon, WTI crude futures experienced one of their sharpest price increases since the Libya crisis of last year:

 Read more

Markets Live transcript 2 Jul 2012

Live markets commentary from FT.com 

The (early) Lunch Wrap

Good morning, New York…

FT ALPHAVILLE Read more

China’s inventory-building masking a bigger demand slump

Lest anyone get too jubilant about the eurozone summit outcomes (not that there’s much chance of that anyway). The HSBC/Markit Economics PMIs for China inched a little lower to 48.2 from 48.4, and the trajectory of the index is looking like this:

HSBC - China PMI - history Read more

A bit less whip, a bit more bazooka in the eurozone week that was

The economics team at RBS summarise the announcement from the EU summit last week that surprised to the upside, while putting it in context:

We expect a successful resolution to this crisis through a series of small steps, with sovereignty pooled and houses put in order before the strong finally embrace the weak, because one big bazooka solution will take the pressure off in the periphery and therefore prove politically unpalatable in core. Read more

Agius: “I am truly sorry…”

Here are the Marcus Agius comments on his departure from Barclays…

2 July 2012 Read more

Further reading

Elsewhere on Monday,

- What economists should know about modern money creation, by Manmohan Singh. Read more

Weekend news catch-up

Weekend headlines from the FT and other UK media:*

From The FT,
-       Cameron orders review of interbank rates
-       Barclays ignored warnings on rate rigging
-       The High Court dismisses lawsuit brought by a wealthy Israeli-Russian businessman against Lev Leviev
-       Tony Blair plans to significantly expand his boutique financial and government advisory service over the next five years
-       RBS Chief to forgo bonus after debacle
-       Ecclestone still in prosecutors’ sights: Any action against the F1 Chief may affect a planned flotation Read more

The 6am Cut London

Barclays chairman Marcus Agius will resign this morning. “The buck stops with me,” he will say in a statement which will also praise the bank’s executive team, the FT reports. Sir Michael Rake, chairman of BT and the most senior independent Barclays director, has been mentioned to shareholders as a possible replacement. The question is whether it will satisfy public anger at the bank and its chief executive Bob Diamond after the Libor scandal. Over the weekend it emerged Diamond was a party in a conversation with deputy BoE governor Paul Tucker in 2008, which was described in the Libor investigation. (Financial Times)

China’s June PMIs were poor: the HSBC/Markit Economics number was 48.2, down from 48.4 in May. The official PMI figure published on Sunday was 50.2, down from 50.4 the previous month. The components of both indices pointed to weakness in new orders and exports. The readings suggest GDP growth has fallen below the important 8% level, and more stimulus measures are expected. (Financial TimesRead more

An email arrives announcing a bid…

[Update: the offer has been withdrawn..."recent publicity around the proposal has made it difficult to proceed".]

… and you’re an established but struggling department store operator (think a rubbish John Lewis) and obvious bid target. You’ve never heard of this bidder, but they insist they’re for real. What do you do? Read more