Posts from Wednesday Aug 15 2012

The Closer


Stocks snoozed into the close. The S&P 500 rose 0.1 per cent to 1,405.42 (Bloomberg). But the S&P Growth Index hit a record high on Wednesday, after rising 13 per cent year to date (Financial Times). In the oil market, Brent crude closed above $116 a barrel, a three-month high (Reuters). Read more

No grain, no pain

A couple of charts from Barclays economists showing the relative contribution of food to headline and core CPI:

 Read more

More good news. Now what?

It is less than a month away from the next FOMC meeting (September 12-13), and Bernanke’s speech at Jackson Hole is at the end of August.

Check this week’s posts at Calculated Risk or this series of charts from Joe Weisenthal for detail, but the short story is that quite a few economic indicators have outperformed expectations in the last couple of weeks. Read more

It’s the capital requirements, stupid

Banks are lending neither to each other, nor to the real economy, in the way they used to. In Europe in particular, loan growth remains subdued. In the UK, there’s a lot of hope riding on the Funding for Lending Scheme to alleviate the situation.

While some of the great deleveraging is a question of reining in past excesses and lax standards, another part of it is regulation-driven. We have no less an authority for that than Mario Draghi, president of the European Central Bank — in the less-remarked bits of last month’s London speechRead more

US Markets Live transcript 15 Aug 2012

Live markets commentary from 

Searching for common ground on a European banking union

With the EC set to outline its proposals for a European banking union in less than a month’s time, leaked documents detailing the initial discussions indicate differences of opinion remain as wide as ever.

A key area of contention seems to be delegation of banking oversight tasks. From Bloomberg (our emphasis): Read more

US Markets Live! 10am New York, London 3pm

Yep — London’s AWOL, but the New York wing of FT Alphaville presses on with Markets Live. We’ll be on at our usual time of 10am New York, 3pm London, talking Standard Chartered, earnings and this week’s heaps of US macro data.

See you there!

Team BoE pins hopes on lending scheme

The minutes of the Bank of England’s last MPC meeting reveal that some members were like hmmm concerning more asset purchases. In BBC headline-speak, that’s “Bank of England MPC members hint at further QE stimulus”. In the actual minutes, it went a bit like this:

For some members the decision was nevertheless more finely balanced, since a good case could be made at this meeting for more asset purchases.

 Read more

ROL over, Cowdery “returns”

From Resolution, the British insurance acquisition specialist insurer acquisition specialist, on Wednesday

Simplifying the governance structure and focus on delivering shareholder value Read more

The less-popular yuan

The reversal of currency flows in and out of China is continuing. The PBoC published data on Tuesday showing that the country’s banks were net sellers of yuan in July, selling Rmb3.8bn or $587m. As the WSJ’s Tom Orlik explains, this means that the banks’ foreign exchange purchases are lower than the monthly inflows from trade and investment, and it suggests some “hot money” is leaving — possibly in part because exporters and importers no longer want to settle in yuan.

Of course this is only a change in the direction of flows — and a small one when viewed in context. The chart below from Chinascope Financial demonstrates how, while the trend has been negative since September 2010 and particularly since September 2011, the banks’ overall forex position hasn’t changed that much in the past year: Read more

The (early) Lunch Wrap

Good morning, New York


Spanish banks increasingly dependent on ECB drip

It doesn’t come as much of a surprise that the Spanish financial sector is having to increasingly rely on ECB funding.

However, data released by the Bank of Spain on Tuesday reveals the sheer speed at which this happened: Read more

The score in Lawsky vs StanChart

It’s -1 all at the final whistle.

That’s plain as day from the statement pushed out by Standard Chartered on Wednesday morning, which follows a statement from the New York DFS overnight. Let’s print them both in full. Read more

The folly of assumptions about EM equities growth

Enthusiasm for emerging markets stocks is perhaps a little dampened of late, along with every other risk asset. But there’s still a widespread and intuitive perception that equities in a fast-growing economy are likely to be a good bet. In fact judging from this report by Bloomberg, there is strong foreign interest in Chinese stocks, which have been in a bear market for well over 18 months (never mind that domestic investors see things very differently).

But the broad assumption that GDP growth equals a good equities opportunity is wrong, according to Morgan Stanley. Read more

Further reading

Elsewhere on Wednesday,

– Happy lost half decade, America!
 Read more

The 6am Cut London

Standard Chartered agreed to pay $340m to settle allegations that it broke US money-laundering laws. The settlement was reached before a potentially bruising hearing was due to take place on Wednesday (Financial Times). The payment to the New York state Department of Financial Services is the largest fine ever collected by a single US regulator for money laundering (Wall Street Journal). (More on FT Alphaville)

Former BBC director general Mark Thompson will become the New York Times’ next president and CEO, after an eight month search by the news company for a new chief (Reuters). Read more