Posts from Thursday Jul 19 2012

‘If this is going to unravel…’

Oh, those international accounting standard-setters. Such drama queens.

On Wednesday, the International Accounting Standards Board (IASB) and its US counterpart, the Financial Accounting Standards Board (FASB), held a joint meeting to discuss impairment. Read more

The Closer


Stocks continued to rally today, with the S&P 500 rising 0.27 per cent on the back of several upbeat corporate earnings reports (Financial Times). Read more

Goodwill to all men, and Microsoft

Microsoft posted the first quarterly loss, of some $0.06 per share, in the company’s publicly-listed history on Thursday. Its flagged $6.2bn writedown of goodwill on the acquisition of aQuantive got the blame.

(Actual underlying earnings were $0.73 per share, while net cash generation is worth highlighting: $31.6bn) Read more

LSE, finally forced to look east?

After a day of roiling rumours, James Quinn and Ben Harrington at the Telegraph told us on Thursday that Singapore Exchange is in merger takeover talks with the London Stock Exchange.

While the tale includes the usual escape chutes (“banking sources indicated that any form of formal offer is still some time away,” etc) the idea has a clear ring of truth to it. Maybe. The talks are said to have grown out of discussions on the large cap cross-trading agreement between London and Singapore, unveiled just a week agoRead more

Finland’s Spanish swap

Fresh from being debated in an extraordinary session of the Finnish parliament…

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Ye olde (ironic) collateral crunch

The Atlanta Fed has dredged yore (or at least some of it) to bring us a paper that goes to the Amsterdam Crisis of 1763 to find a shadow banking precedent for the collapse of Lehman and the subsequent policy responses.

They wanted to answer two questions: Would a different pre-crisis regulatory environment have increased market resiliency? And what if governments and central banks had displayed a lesser response to the Lehman failure? Read more

Libor and bezzles

At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks. This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions of dollars… In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.

A classic quote from The Great Crash, by J K Galbraith. “Enormously improved” always reads more than a little sarcastic. Read more

Hysteresis in the UK

The U.K. economy has been flat for nearly two years. This stagnation has left output per capita a staggering 14 percent below its precrisis trend and 6 percent below its pre-crisis level. Weak growth has kept unemployment high at 8.1 percent, with youth unemployment an alarming 22 percent.

The effects of a persistently weak economy and high long-term unemployment can reverberate through a country’s economy long into the future—commonly referred to by economists as hysteresis. Read more

Spain, a bailout master doc

A little bit of confusion about this one on Thursday.

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Markets Live transcript 19 Jul 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…


Retail lending, mitigate thyself

European retail lending as a dying bank business model walking — charts via McKinsey, in this new report by the consultants:

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Lloyds co-ops with the Co-op to shift Verde

António Horta-Osório is surely a little happier this morning after he looks to have finally gotten rid of the 632 branches known as Project Verde which the European Union had ordered he shift as a condition for approving government aid. The EU had given him till 2013 to complete the disposal. Read more

Further reading

Elsewhere on Thursday,

– The 2012 financial olympics.
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The 6am Cut London

Regulators are focusing on at least four of Europe’s biggest banks in Libor investigations, “suspecting that Barclays’ traders were the ringleaders of a circle that included Crédit Agricole, HSBC, Deutsche Bank and Société Générale. Evidence of links between traders at all four banks and Barclays’ former euroswaps trader Philippe Moryoussef is under scrutiny, people involved in the process have told the Financial Times.” All the banks declined to comment beyond previous statements confirming their co-operation with regulators over the broader investigation. The traders concerned either could not be reached or declined to comment. (Financial Times)

Bank of America delivered improved 2Q net income after cost cuts that included the loss of 20,000 jobs, but suffered a spike in claims for faulty mortgages. Net income of $2.5bn was up from a loss of $8.8bn in the same period last year. Diluted earnings per share of 19 cents beat analysts’ estimates of 15 cents and compared with a loss of 90 cents last year. Net revenue rose from $13.5bn a year ago to $22.2bn. (Financial TimesRead more