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
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
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
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
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
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
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
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
Live markets commentary from FT.com
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 fly higher than weather Read more
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.
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)(Bloomberg) Read more
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 Times) Read more
“Mad. Mad. Mad. Bernanke’s gone totally MAD, I tell you!”
“What’s he thinking with QEternity? It’s so inflationary. AGHH!” Read more
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
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
“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
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
Live markets commentary from FT.com