Posts from Thursday Jul 26 2012

The Closer

ROUND-UP

Markets rallied and reversed some of the losses from earlier this week after Mario Draghi said that he within the ECB’s mandate, the central bank “is willing to do whatever it takes to preserve the euro and, believe me, it will be enough.” (Wall Street Journal) Of course, we’ve heard “whatever it takes” from Draghi several times before (Real Time EconomicsRead more

De-friending a rating…

Facebook’s second-quarter $1.18bn revenues arrived more or less in line with the consensus of $1.16bn. (It earned 12 cents per share, though made a loss of 8 cents in GAAP terms because of costs related to employees’ shares and the IPO.)

Whoopee. Read more

Who’s bluffing about a Grexit?

The recent utterings from Europe’s political elite regarding a Greek exit from the euro and reports that the IMF is ready to walk away have been hard to read. To what extent are these warnings pure postulation? The timing is rather suspicious, given that they have coincided with the Troika delegation’s visit to Athens to assess how the austerity programme is coming along.

On the other hand, if they reflect the mood among the policymakers, there is reason to be worried, especially given how freely and eagerly they are now discussing a potential exit. Read more

There is a disturbance in the UK funding curve

FT Alphaville has already referred to the weird phenomenon of unsecured funds trading through secured funds in the UK this week, as reported by ICAP.

By definition, secured borrowing should be cheaper than than unsecured. Read more

Implementation, implementation, implementation

Then and now the key to the door of the eurozone’s success survival, especially given the currency union’s propensity for contagion.

There may be a relief rally because of utterances by European Central Bank President Mario Draghi, but speaking on behalf of investors: it’s hard not to feel a bit let down lately (understatement). Read more

MMFs flee. Again.

Earlier this year, while LTROs-have-saved-Europe sentiment was still a (fleeting) thing, US money market funds began gently easing back into eurozone banks.

But as we noted then, it was fickle money, with exposures of much shorter duration than last year. Read more

How things change, China FX manipulation edition

Mitt Romney, aspiring US president-to-be, has notoriously declared that if he ever takes office he will immediately name China a “currency manipulator”.

This, of course, is an ironic turn of events, given that China stopped being an outright currency manipulator a while ago. Read more

Top quant to next generation: you suck

OK, who woke up on the wrong side of the fat-tailed distribution?

It would appear that top quant Jesper Andreasen did. Here, according to Risk Magazine, is how the head of quantitative analytics for Danske Bank views recruiting the next generation (emphasis ours): Read more

Draghi on *that* transmission mechanism

Some interesting comments via Reuters from Draghi on Thursday (H/T Marc Ostwald at Monument Securities):

11:13 RTRS-ECB’S DRAGHI SAYS IF PREMIA ON GOVT BORROWING HURT MONETARY POLICY TRANSMISION, THEY COME WITHIN OUR MANDATE Read more

Markets Live transcript 26 Jul 2012

Live markets commentary from FT.com 

The (early) Lunch Wrap

Good morning, New York…

FT ALPHAVILLE Read more

Buiter’s now predicting Grexit probability of 90%

Citi’s iconoclastic chief economist Willem Buiter and team are seeing a very high likelihood of a Greek eurozone exit in the not-too-distant future, and a sovereign bailout likely for both Spain and Italy this year.

From their latest global update (our emphasis): Read more

Further reading

Elsewhere on Thursday,

- The slow decline in earnings expectations. Read more

The 6am Cut London

Nomura’s CEO and COO will step down to take responsibility for a widening insider trading scandal at the Japanese bank, according to the Nikkei. Kenichi Watanabe and Takumi Shibata had faced growing criticism over their handling of a series of insider trading incidents, and had also been under pressure over the lossmaking overseas businesses after the Lehman Brothers acquisition, which they led (Financial Times)(Bloomberg). The resignations were approved by the board on Thursday, according to sources (Reuters).

South Korea’s growth rate fell to its lowest level in three years in Q2, as its export markets struggled and consumer sentiment flagged. The annualised growth rate of 2.4% in the June quarter was the slowest since Q3, 2009. The data will strengthen expectations that a second interest rate cut next month will follow a surprise cut two weeks ago (Financial Times). Read more