Posts from Thursday Jul 12 2012

The Closer

| Jul 12 2012 22:48 | Comment |

ROUND-UP

The FT’s markets round-up: “Investors favoured top-tier government bonds over equities, sending the FTSE All-World equity index down by 1 per cent, in tandem with a drop in most European and Asian bourses. On Wall Street, the S&P 500 index pared some of its initial losses but still closed the session 0.5 per cent lower. The broad measure of US stocks lose more than 2.5 per cent over six days. In contrast, money moved into top government bonds, with the yield on the 10-year US note contracting by 3 basis points to 1.48 per cent, just 4bp above its record low. German Bund yields were also down 4bp to 1.25 per cent.” (Financial Times) Read more

QE3, the market functioning fear factor

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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| Jul 12 2012 20:57 | Comment |

I guess I would add to that, though, that, you know, each of these nonstandard programs does have various costs and risks associated with it with respect to market functioning, with respect to financial stability, with respect to the exit process, and so I don’t think they should be launched lightly. I think there should be some conviction that they’re needed, but if we do come to that conviction, then we’ll take those additional steps.

– Ben Bernanke on further unconventional Fed measures, at June’s FOMC presser. (Page 8 here, in response to Binyamin Appelbaum’s question.) Read more

It’s hotter in Karlsruhe than you think

Masa joined the FT in 2009 and has worked on a number of desks across the paper, including Companies, Markets and Comment. She spent much of 2010 in New York covering the US equity markets. But earlier this year she finally saw the light and moved to Alphaville.

She started her career in the investment banking division at Lehman Brothers in the summer of 2007, timing it perfectly with the beginning of the credit crunch.

She studied philosophy, politics and economics at Oxford University.

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| Jul 12 2012 17:30 | Comment |

Admittedly the words Karlsruhe and German and constitutional court lack any sex factor, but the relative lack of attention the case is getting seems a bit odd to us given what’s at stake. We’d expect the markets to be just a bit more het up about it.

So would Martin Lueck, an economist at UBS, who argues in his latest note that too many investors don’t understand the situation and are just assuming that the court will yield to the markets’/politicians’ pressure and let ratification of the ESM and fiscal compact pass: Read more

Accruing an old lady

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Jul 12 2012 16:50 | Comment |

The UK’s Office for Budget Responsibility is in desperate need of a graphic designer…

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Some more big scary Libor risk numbers to digest

David joined the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012.

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| Jul 12 2012 13:59 | Comment |

It’s been a little while since we had a nice Libor risk estimate so we were delighted when Morgan Stanley’s attempt dropped into our inbox. MS take the Libor risk in three chunks:

1) Regulatory fines (an estimated median 7 to 12 per cent hit to 2012 EPS). From MS (all with our emphasis): Read more

Another ECB muddle (updated)

Paul Murphy is the founding editor of FT Alphaville.

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| Jul 12 2012 11:15 | Comment |

ECB’S BONNICI SAYS DEPOSIT FACILITY FALL ‘ENCOURAGING’
*ECB Overnight Deposits Plunge At Zero Interest
*ECB Says Overnight Deposits Fall to Lowest in Seven Months (1)

Apparent hopes that the ECB’s decision to reduce the rate paid on funds in its deposit facility from 0.25 per cent to zero will magically move money from hoarding banks to the real economy feel premature. Read more

Markets Live transcript 12 Jul 2012

Paul Murphy is the founding editor of FT Alphaville.

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| Jul 12 2012 11:02 | Comment |
This is a Markets Live transcript. Read more

Live markets commentary from FT.com 

The (early) Lunch Wrap

Masa joined the FT in 2009 and has worked on a number of desks across the paper, including Companies, Markets and Comment. She spent much of 2010 in New York covering the US equity markets. But earlier this year she finally saw the light and moved to Alphaville.

She started her career in the investment banking division at Lehman Brothers in the summer of 2007, timing it perfectly with the beginning of the credit crunch.

She studied philosophy, politics and economics at Oxford University.

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| Jul 12 2012 10:46 | Comment |

Good morning New York…

FT ALPHAVILLE Read more

Of baby steps and EBA bank recaps

David joined the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012.

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| Jul 12 2012 09:58 | Comment |

Right, we don’t want to get too “milk and cookies” about this but we have just one or two points to make about the European Banking Authority’s update on its bank recap exercise released on Wednesday. Some detail from the FT (with our emphasis):

European regulators have hailed their exercise to force the continent’s banks to buttress themselves with fresh capital as a resounding success, revealing 27 banks deemed to have a capital shortfall of €76bn last autumn raised a combined €94.4bn by the end of June deadline… Read more

China as a post-capital economy

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jul 12 2012 08:31 | Comment |

By now everyone should be familiar with the argument against China.

We’re talking gaping spare capacity, a real-estate bubble, an import slowdown, short-term dollar shortage, horrible manufacturing stats, commodities over-exposure and well, just see this interview with Jim Chanos for more on how nobody in China earns their cost of capital. Read more

Further reading

David joined the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012.

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| Jul 12 2012 08:16 | Comment |

Elsewhere on Thursday,

- Will regulators get it right on the Volcker Rule? Read more

The 6am Cut London

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jul 12 2012 05:39 | Comment |

Asian stocks fell for a sixth day on news of an unexpected interest-rate cut in South Korea, worse-than- estimated Australian jobs data, adding to negative sentiment about the Fed minutes which showed little sign of aggressive easing plans. The MSCI Asia-Pacific index fell 1 per cent and the won and the Australian dollar both weakened. Markets are also awaiting Chinese GDP data on Friday. (Bloomberg, Financial Times)

South Korea’s central bank lowered the benchmark seven-day repurchase rate by a quarter percentage point to 3%, the first cut since February 2009. (Bloomberg) Read more