Posts from September 2012

FTfm on AV

Some highlights from Monday’s FTfm.

Value of Nobles Crus wine fund questioned
The wine fund, which is one of the world’s biggest wine investment funds, values its holdings at much higher prices than those used by 10 of its rivals Read more

FSOC pushes ahead on MMF reform

UPDATE: A Treasury official got in touch with us after reading this post to explain a little more clearly what happens next.

First a bit of background. Dodd-Frank section 120 authorises the FSOC “to provide for more stringent regulation of a financial activity by issuing recommendations to the primary financial regulatory agencies to apply new or heightened standards and safeguards… if the Council determines that the conduct, scope, nature, size, scale, concentration, or interconnectedness of such activity or practice could create or increase the risk of significant liquidity, credit, or other problems spreading among bank holding companies and nonbank financial companies, financial markets of the United States.” Read more

Black clouds, and Fitch

Fitch judges the risk of a fiscal financing crisis to be negligible…

But the rating agency still cranked up the negativity on the UK’s AAA rating on Friday. They affirmed it, but have been on negative outlook since March. Read more

Coy Chinese elephant reveals ever slimming ankle

We’ve written about the idea that global FX reserve growth might be creeping back up very recently. However, the evidence remains circumstantial; we saw the reserve manager enter the house after fighting with his neighbour but we didn’t actually see the killing blow.

Citi’s Steven Englander, for example, argues that the same uptick in risk that has brought the dollar index down 5 per cent since July will have been accompanied by an increase in reserve accumulation. Risk-on with a weakening dollar equals reserve growth. Read more

Those Spanish stress test results

Seven (many already nationalised) lenders, comprising 37 per cent of Spanish banks’ loan portfolios, failed and need more capital. Seven lenders passed.

It’s almost €60bn, as initial estimates had suggested in June. Read more

Accorinti and others v ECB

Big props to Bloomberg for putting this little-known case on the radar (don’t worry, we’ll explain):

 Read more

HSBC: Don’t say printing!

This is reassuring (or not – we can’t decide). The Global fixed income strategy team at HSBC *believe* they’ve come up with a non-consensus view on the effects of QEternity:

Our non-consensus view is that QE3 will drive US Treasury yields to new lows

 Read more

Compare and contrast, crude stock edition

From BNP Paribas’s Harry Tchilinguirian and Gareth Lewis-Davies on Friday.

The latest crude and product stock position in the United States: Read more

A week of Spain-related excitement is not over just yet

Spain has been grabbing the headlines all this week and while it may be Friday afternoon, the excitement isn’t over just yet. Moody’s is widely expected to announce whether it’s going to downgrade Spain’s Baa3 credit rating (possibly to junk) Friday after the European markets close. Oliver Wyman’s second audit of the country’s banking system should come out around the same time.

Ahead of all that we wanted to talk you through a quick recap of the latest developments because, as UBS strategist Justin Knight rightly points out, “the areas of concern are now becoming numerous” and it’s making the question of when Spain might request aid increasingly complex. Read more

Welcome to FT Betaville

FT Alphaville is in testing-mode!

We’ve been working behind the scenes with FT Labs to improve the site, and we’re very excited about how it’s been coming along. Want to take a test drive? Read more

European repo is on the rise

US money market funds are still cautious about building up exposure to European banks.

However, according to Fitch’s latest Macro Credit Research report on Friday, they seem much more confident about building up exposure on secured terms. As a result, repos as a percentage of exposure to European banks is on the rise to new post-crisis levels: Read more

“As the only person in the room who has apparently never written a line of computer code…”

Presenting, a rather charming tale from Nicholas Colas, group chief market strategist at ConvergEx, who recently attended an algorithm-themed conference, and discovered — to his surprise — that quants aren’t really like regular people.

(Emphasis from Colas.) Read more

The ‘Tin Man’ and the ‘Johor shuffle’

First there was Copper Fingers. Then there was Choc Finger. Later we had The Whale.

What all of these traders respectively had in common (and no, they weren’t all Bond villain rejects) was that they all became the markets they were trading. Read more

Markets Live transcript 28 Sep 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York…


You can’t stand under my umbrella… ella… ella…

No clouds in my storms
Let it rain, I hydroplane into fame
Comin’ down like the Dow Jones
When the clouds come, we gone

We Roc-A-Fellas
We fly higher than weather

 Read more

Introducing New Libor [Updated]

The massive flaws in the method of setting Libor and similar rates are probably familiar to most FTAV readers by now — as are the challenges of coming up with a better replacement.

The review led by new FSA chief Martin Wheatley set out to either “strengthen Libor” or “find an alternative to Libor”. Read more

Further reading

Elsewhere on Friday,

– On the great mirror stagnation. Read more

The 6am Cut London

Libor will be overhauled – but not replaced – under reforms to be announced today by FSA managing director Martin Wheatley. The rate will still be based on a survey of banks, but more banks will be involved; bank staff submitting the rates will be approved by the FSA; rate submissions will be kept confidential for three months; five of the currency rates will be dropped along with 130 of the 150 daily fixings. The rate setting process will be overseen by an independent, regulated administrator to be selected by Lady Hogg, who heads Britain’s Financial Reporting Council. (Financial Times)

Asian currencies rose and stocks markets swung between gains and losses on Friday, as positive sentiment about the Spanish budget was tempered by poor data from Japan and Korea. Riskier currencies such as the Australian dollar, the euro and commodities drifted higher as the dollar remained defensive. (Reuters)(BloombergRead more

The Closer


FT markets round-up: “Stocks on both sides of the Atlantic rose, with Wall Street snapping a five-day decline after Spain released much-awaited 2013 budget details and hopes built for additional stimulus measures by China’s central bank. The gains came after a surge in eurozone fiscal tensions and a batch of lacklustre economic data weighed on growth assets in the past week. The FTSE 300 closed higher in Europe and the euro resumed gains after details on Spain’s 2013 showed the country will focus on spending cuts instead of higher taxes. The single currency was trading 0.4 per cent higher and back above the $1.29 level as the FTSE All-World equity index rose 0.9 per cent. Still, Madrid’s Ibex stock index closed 0.2 per cent lower.” (Financial TimesRead more

Research in comMotion

What a strange week it’s been for Research in Motion.

Last Friday the company had another of its periodic power outages, and on the same day that Apple launched its new iPhone no less. Read more

Geithner encourages FSOC to pick up ball dropped by SEC

We’re talking about money market fund reform, of course.

It was just August 23 that Mary Schapiro threw up her hands when it became clear that she wouldn’t get the necessary two additional votes from SEC commissioners for her proposal after an intense lobbying effort by the industry. Read more

The expectations bluff

“Mad. Mad. Mad. Bernanke’s gone totally MAD, I tell you!”

“What’s he thinking with QEternity? It’s so inflationary. AGHH!” Read more

Behind the headline, Spanish deposits edition

Data from the European Central Bank showed that €74bn of deposits left Spain in July. This was a 4.7 per cent drop from June, which seems rather a lot for just one month. The figure for August, released on Thursday morning, revealed that a further €17bn had headed out the door.

While this so-called deposit flight is being reported as putting pressure on the Spanish government, the data behind it isn’t quite as concerning as one would imagine. Read more

Where Spanish deposit numbers come from

“Spanish deposit flight extends though August”, reports CNBC soberly. “Spain’s Quiet Bank Runs Continue”, reports Slate with considerably more latent drama.

It must be time for the monthly ritual of watching Spain’s banks lose more funding, thanks to the latest figures on deposits released by the European Central Bank this Thursday morning. Read more

Would you rather be in steel or iron ore, right now?

It’s not a great choice, if you’re in China. From Reuters today is confirmation that Baosteel has suspended production at a Shanghai plant that has capacity to make 3m tonnes a year of steel.

“The government’s infrastructure investment may only improve sentiment … I don’t expect a big lift in steel demand,” Zhang Dianbo, assistant president of Baosteel, told reporters at an industry conference in Dalian on Thursday.

 Read more

A Spanish shopping list [updated]

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HSBC: This is now about structural woe

If you’re seeking a counter view to the one expressed on Thursday by a Bear in a Bath, look no further than the latest note from Stephen King’s team at HSBC.

Some great stuff from the global head of economics today, including thoughts about the UK’s productivity puzzle, the US jobless recovery, the pointlessness of QE and whether a structural shift may under way. Read more

Markets Live transcript 27 Sep 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…