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
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.
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.
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
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
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
Live markets commentary from FT.com
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
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