Posts from Friday Aug 17 2012

The Weekender

This week on FT Alphaville,

– Bundesverfassungsgericht was word of the week. Read more


The US Treasury chose to combine its announcement to begin receiving all of the profits from Frannie, with another that the GSE portfolio will be unwound more quickly than before.

You could interpret that as a kind of bullish long-term bet on the housing market. Read more

The decline of “real money” trading

So US equity trading volumes are now at four-year lows. Or five-year lows. Whatever, they’re low, but it’s also August.

Something to keep in mind as the global risk asset rally — which appears driven by some combination of better-than-expected-but-not-that-awesome US macro data and… talking from European policymakers — continues. Read more

Frannie est mort, vive le Frannie

So farewell then, 10 per cent Fannie and Freddie senior pref dividends.

 Read more

Reading between the swap regulation lines

Sigh. Banks aren’t so keen on many a new regulation. One can tell from the way that they are already avoiding them. We do mean “avoid” here, as opposed to “evade”, as some are reading new swaps regulation in the US in a rather generous way.

On October 12, a raft of new rules around swaps will take effect. Dealers, and potentially other financial institutions, will have to register with the CFTC as “swap dealers” or “major swap participants” where relevant. With the registration as a swap dealer come a host of requirements around business conduct and also trade reporting. Read more

Greece, Portugal and Spain really have benefitted most from the euro

Has the single currency been good to you? It’s a question sure to inflame people across Europe, many of whom seem to believe they’ve suffered while others have made out like bandits.

The answer is pretty straightforward, according to Paul Donovan at UBS. If you look at the growth in household real disposable income between 2000 and 2010, those living in peripheral countries have benefited the most. Read more

Derivatives industry no likey new margin requirements

A survey of financial market participants most likely to be negatively affected by new regulations on uncleared swap trades revealed that they don’t like this new-fangled way of doing things at all. No, no, they really don’t.

The completely predictable result was published in an article in Risk on WednesdayRead more

BHP’s untimely dilemma: shrinking cash flows

As low cost producers, with arguably the best resources  in the world, it’s little wonder that BHP Billiton and Rio Tinto are shipping as much iron ore as they possible can from their mines in the desolate Pilbara region of Western Australia.  Assuming a $7/tonne freight rate, Lex estimates, the landed iron ore price in China would have to fall to $37/t before Rio lost out.

So even with the iron price at a near three-year low of $112 , Rio and to a lesser extent BHP are making a killing and will continue to do so as higher cost producers (mainly Chinese) fall by the way side. Read more

The (early) Lunch Wrap

Good morning New York…


The cold-hearted market in Lonmin stock

Thirty five dead, shares off 3.4 per cent at pixel time on Friday…

 Read more

Further reading

Elsewhere on Friday,

– Things aren’t so bad, out in the country. Read more

The 6am Cut London

Most Asian stocks rose and the MSCI Asia-Pacific index rose 0.2% to near a three-month high, after US housing permits rose to a four-year high. (Bloomberg)

The White House is again studying a release of strategic oil reserves. The US administration is looking to see whether petrol prices fall after Labor Day on September 3, as they historically have done. A co-ordinated international release was discussed earlier in the year but shelved when prices fell (Reuters). Oil demand is robust despite sluggish global economic growth (Financial Times). Read more