Posts from Wednesday Aug 8 2012

The Closer


The S&P 500 eked out another day of gains, closing above 1,400, while the Dow rose for a fourth day, its longest stretch since June (Bloomberg). Read more

All eyes on asset encumbrance in Europe

Fitch has published an in depth analysis of encumbrance on EU bank balance sheets on Wednesday — a key talking point given the market’s current focus on such senior debt, such as covered bonds, repos and central bank funding.

The results are interesting because, by and large, they show there aren’t any real trends at all. Read more

US Markets Live transcript 8 Aug 2012

Live markets commentary from 

Reminder: US ML at 10am, 3pm in London

Yeah. London Markets Live’s still watching the Olympics, but New York presses on.

The latest on StanChart, Disney earnings, the Bank of England’s updated growth forecast, some baseless QE3 and US election speculation (hey, it’s August), and whatever hits the tape in progress — yep, it’s August, but that’s no excuse to cancel US Markets Live. Join Izzy, Joseph and Cardiff for a transcontinental special edition. At the usual place, starting 10am EST, 3pm BST.

What’s StanChart’s plan B?

With the 17 per cent drop in share price on Tuesday, the market was effectively pricing the possibility that Standard Chartered could lose its New York banking license, and with it its ability to clear dollar transactions.

But the stock is up 7.5 per cent at pixel time on Wednesday. Some re-thinking is clearly underway. Read more

Gold Oil meets Minmet (updated)

Strange goings on at Gold Oil, the London-listed penny dreadful that has no gold and precious little oil (as yet).

Having been suspended on AIM at the end of June when angry shareholders tried to clear out the board, we got a general update on Tuesday which included news of two new directors. This is ahead of a fresh clash between investors and management at another special shareholders meeting this Friday. Read more

Chinese banks’ Weapons of Mass Ponzi

We wrote last week that China’s shadow banking system was reflecting and, to an extent, contributing to a growing liquidity risk which in turn is being exacerbated by net capital outflows. Since then, there have been some interesting revelations on the domestic liquidity management, especially in shadow banking, and especially especially in wealth management products.

To recap, wealth management products or WMPs are a little like a term deposit, only they offer Chinese investors a more appealing rate of return than a normal bank deposit (which will deliver a negative real return) and it can be backed by assets — effectively, an informal securitisation. Read more

Silver linings, and all that

The ‘doomsday’ effect from the incessant flow of media negativity towards global economics is actually serving to motivate our people to becoming ‘fanatical’ about transactional margin improvement and removing wasteful activities and expenditure. The Company as a whole is relishing its successful recovery since early 2009 and has no intention of allowing its current dynamics to slip. For example, each business team is now competing with each other on achieving the highest percentage of trading profit reflected in cash. The focus on ‘Continuous Improvement’ is absolute, as is the objective to offer more product choice to existing loyal customers. As a result, two new extensive product ranges have now been sourced from low-cost manufacturers and will be promoted strongly in H2 of this financial year.

That’s from a trading update from London-listed Trifast, “a leading international manufacturer and distributor of industrial fastenings and category ‘C’ components.” Read more

How to kill a bank, Denmark edition

To all those still defending negative interest rates — arguing that the stimulative effects will outweigh the costs to banks — we bring you the following from Tina Mortensen at Citi on Wednesday:

Denmark — FSA urges banks to charge customers more and to cut costs deeper to stay competitive. Following the introduction of negative interest rates, Danish banks are struggling to maintain their interest rate margins. At the same time, the economy has still not recovered from last year’s funding crisis and the fallout of a burst housing bubble in 2007. Read more

Golden deposit troubles in Poland

The official rate in Poland is 4.75 per cent.

Yet, across the Polish high street a slew of so-called ‘para-banks’, regularly offer interest rates in excess of 8 per cent. Read more

Ace Greenberg in da house!

Today, in another episode of Isn’t Retirement Fun?, former Bear Stearns chairman and JP Morgan Vice Chairman Emeritus Ace Greenberg comments on a previous episode wherein former Citigroup CEO Sandy Weill said that the Glass-Steagal Act should (effectively) return, thereby breaking up the big banks.

Greenburg appeared on Bloomberg TV because as a retiree he’s available at conveniently short noticeRead more

The (early) Lunch Wrap

Good morning, New York…


In the matter of New York vs London…

Arguing over which city is the world’s premier financial hub is so pre-crisis. For years now the debate has been Who is the Most To Blame For This Godawful Mess? And how? But that got boring and no-one went to jail.

So now it’s time for Who’s Got the Worst Regulators? Read more

Norges Bank’s curious dilemma

Most finance ministers would give their right arm to be in the same position as Sigbjørn Johnsen, their Norwegian counterpart. But even very rich countries have problems…

What it boils down to is that Norway has lots of things lots of people want. Namely oil, currency and houses. The result is a growing property bubble alongside a fast appreciating currency, which the central bank is struggling to control due to a catch-22 associated with hiking interest rates — (higher rates help to curb the property boom but only exacerbate the currency appreciation problem). Read more

Further reading

Elsewhere on Wednesday,

– JPMorgan takes the gold (in the derivatives league table). Read more

The 6am Cut London

FT Global Markets Overview: “Asian markets advanced for a third day, with Japanese shares in the lead, as investors snapped up resource stocks amid renewed optimism about the global economic outlook. Global stocks and other growth-sensitive assets gained momentum amid a string of better-than-expected earnings reports in the US and Europe, and hopes that central banks will provide additional stimulus to ailing economies.” (Financial Times)

Japan’s H1 trade deficit was a record Y2.5tn ($31.8bn), five times higher than a year earlier, as soaring fuel bills after the Fukushima nuclear crisis were compounded by lower exports (Financial Times). Read more