Posts from Thursday Aug 30 2012

The Closer


From flat to down (a bit) for US stocks. The S&P 500 closed down 0.78 per cent at 1,399, its first trip below 1,400 since August 16. It hasn’t moved more than 1 per cent in either direction since August 3 (Reuters). Read more

Bain, Bane, geddit

Protesting private equity monster points menacingly at Alphavillain. The scene at Bain Capital’s NY outpost, Madison Ave and 57th, ahead of tonight’s starring role for the firm in Romney’s convention speech.

MMFs still fleeing eastwards

The rivals rely on each other in potentially unstable ways. The US Treasury estimates that 105 money market funds with total assets of $1tn could fail in the same way as Reserve Primary if any of their top 20 counterparties defaulted. The latter include many European banks – 30 per cent of the assets of money market prime funds are European bank debt.

That’s from John Gapper’s column on the failure of the Securities and Exchange Commission to tame the $2.6tn US money market fund industry. Cardiff also has a few words to say on the topicRead more

Portugal and a second bailout

Chalk this one up to the ‘second bailout, no PSI‘ trade, maybe — Portuguese government bonds have been a top performer so far this year.

So, as for that second bailout… Read more

The rapid march towards urbanisation

In our first post in this series, we examined the widely-held belief that China’s steel demand will continue to rise at a rapid rate. FT Alphaville, along with others, contend that such forecasts are on shaky ground. This is, in part, because of the dubiousness of one of the underlying assumptions: that China will rapidly urbanise more of its population. (Here’s a very recent example of this argument, from Stephen Roach.)

The proportion Chinese living in urban areas just passed the 50 per cent mark in the past year but, the story goes, there is more to come. This will in turn mean more industrialisation, more modernisation, a bigger and consuming middle class and of course more GDP growth. In other words: Read more

Converging competitiveness and balance sheet recessions

Nomura’s Richard Koo is back to bang the balance-sheet-recession-drum and has taken a look at falling unit labour costs across the eurozone periphery and where they are likely to meet Germany’s as they creep upwards.

(This is the good type of convergence.) Read more

The ever-increasing hunger for steel

It used to be an accepted fact that China’s appetite for steel and steel’s main ingredients — primarily coking coal and iron ore — would continue to rise sharply, not just in absolute terms but at an accelerated pace.

Annual steel consumption had been expected to rise from 2011’s 680m-plus metric tonnes to 1bn metric tonnes by 2020. This forecast has been a mainstay of many China-related predictions for some time, particularly in the mining sector. It was still being cited by BHP Billiton in March, even while the miner’s head of iron ore surprised many with a bearish tone. Since then, however, the world’s two biggest miners began to back away from it and this month Rio Tinto is talking about 1bn tonnes of steel by 2030 — a hazily far-off date. Read more

Markets Live transcript 30 Aug 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York,


The latest in the eurozone, in bullet points

FT Alphaville caught a sniffle this morning. As a result of which, our 6am London Cut newsletter was sent out later than usual. We’re sorry.

One newsletter that did get sent out on time was the morning update from Eurointelligence. So if you can’t be asked to shuffle through all the latest headlines on the eurozone, just scan through the bullet points below. (And apols again for the morning disruption.) Read more

Further reading

Elsewhere on Thursday,

– Short-selling bans no worky, says New York FedRead more

The 6am Cut London

Mario Draghi said it was justified for the ECB to use “exceptional measures” as part of its mandate to keep prices stable in the eurozone, in an apparent rebuff to German criticism. “Fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools,” Draghi wrote in German newspaper, Die Zeit. Many details of the ECB’s bond-buying programme appear yet to be fleshed out ahead of the September 6 announcement. (Financial Times)

Barclays is facing a fresh criminal probe as the SFO investigates payments the bank made as part of its 2008 capital raising. Barclays in a short statement on Wednesday night said the SFO had commenced an investigation into payments under certain commercial agreements between Barclays and Qatar Holding LLC”. (Financial Times) Read more

In defence of the iron ore price floor (and Fortescue)

This comes via Charlie Aitken, one of Australia’s better known and certainly most vocal stockbrokers. He’s also an iron ore bull.

The note follows a meeting with Fortescue Metals Group and starts with iron ore and the spot market. (Emphasis throughout ours). Read more