Posts from Wednesday Sep 5 2012

The Closer


FT markets round-up: “The euro reversed initial losses to firm 0.3 per cent to $1.2601, leaving the single currency in line for its highest close in two months. The FTSE Eurofirst 300 added 0.1 per cent, recovering from opening losses. In New York, the S&P 500 closed with a minor decline of 0.1 per cent. Copper rose 1.4 per cent to $3.52 a pound as the dollar index fell 0.1 per cent. But the FTSE All-World equity index declined 0.3 per cent, held back by a 1.3 per cent fall for the Asia-Pacific region, where the mood was distinctly less chipper. Action in currency markets illustrated the source of traders’ initial bearishness: global growth worries. The Australian dollar fell 0.3 per cent to drop below the $1.02 level for the first time in six weeks after the country’s second-quarter GDP expanded less than expected.” (Financial TimesRead more

More questions pre-Draghi

There are some obvious questions going into Draghi’s meeting on Thursday after a few of the early details were reported today — What will be the terms of conditionality? Where on the curve will the buying be concentrated? — and we’ve got a few more.

This isn’t meant to be a comprehensive list, so don’t jump down our throats if we’ve left any out. And we also recommend this Money Supply post last week by Claire Jones, which covered some of what’s below in more detail. Read more

Draghi, Spanish banks, and revisiting the collateral issue

As you mull over the leaked reports of what Draghi might say on Thursday and its implications for Spain’s banking system (and many other things), here’s an updated and stunning note on recent Spanish capital flight generally from Nomura:

The main conclusion from looking at the details of the country-specific balance of payments within the eurozone is that Spain is in a category of its own. While there are some outflows in countries like Portugal and Italy, the size of these outflows is not nearly as large as in Spain. On a 3-month rolling basis, Italy’s outflows represent about 15% of GDP currently, while they represent about 50% of GDP for Spain. Read more

Ireland’s similar case for banking treatment

After taking a look at Spain’s yearning for some debt relief we thought a look at Ireland was only fair.

For reference, the numerous capital injections made into Ireland’s banks now come to 41 per cent of GDP. That looks like this: Read more

“Nokia looked like they launched a camera today, not a smartphone”

Between Helsinki and New York, the latest Nokia product launch with Microsoft did not go down terribly well on Wednesday. Here’s the Nokia share price, trading below €2 at pixel…

 Read more

Happy birthday Swiss franc floor: we salute you

That SFr1.20 level will be one year old tomorrow. (We’d buy it a cake but it will probably bring its own.)

 Read more

Some more Draghi-day prep

Draghi-day is getting a big lead-up. Markets just jerked (and then came back a fair bit) on the back of another tid bit. From Bloomberg (with our emphasis):

European Central Bank President Mario Draghi’s bond-buying proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said. Read more

The ECB’s possible Portugese gambit

Draghi-day is just around the corner and JPM’s Malcom Barr is of the opinion that the ECB might just kick off its move by purchasing short-dated Portuguese sovereign debt.

Heck, why not? The arguments to intervene are simple enough. Read more

The oil-bound

Robert Campbell at Reuters makes some great points on Wednesday about the diminishing influence of SPR-release talk.

Like us, he compares the SPR, and its releases, to central-bank type operations for the oil market — but notes that what might be deemed the SPR transmission mechanism is now being clogged up: Read more

Markets Live transcript 5 Sep 2012

Live markets commentary from 

The ‘mystery Libor’ precedent

By now everyone is well aware of the flaws associated with the Libor-setting process. As yet, however, no alternative has been deemed full-proof enough to replace it.

The search for a better system, however, is on. Read more

The (early) Lunch Wrap

Good morning New York…


Oh, for the days of bacon counter banking

Here’s the chief executive elect at the soon-to-be-fangled Financial Conduct Authority, wanting it all back like the old days. Bless.

We all know what it is like to walk into a bank to do something simple, like pay a credit card bill, only for the person behind the counter to ask if you would like to extend your credit, take out more insurance or look at their competitive mortgage rates? To be honest, I only have a credit card to shop online, I have all the insurance I need and the mortgage on my house is fixed. Read more

Deepwater Horizon payout risk haunts BP, again

At pixel time, BP’s shares were off 3.7 per cent after this FT report that the Department of Justice may attempt to prove gross negligence or wilful misconduct led to the 2010 Deepwater Horizon disaster:

  Read more

Further reading

Elsewhere on Wednesday,

- Michael Woodford is actually in an NGDP strategy space holeRead more

The 6am Cut London

Asian shares fell for a fifth consecutive session on concerns about US economic growth, following weak manufacturing data from the world’s largest economy, while Australian miners took a hit from falling iron ore prices. The MSCI Asia Pacific index dipped 0.5 per cent with Japan’s Nikkei 225 Stock Average down 0.6 per cent, South Korea’s Kospi Composite index off 1.2 per cent and Australia’s S&P/ASX 200 index 0.7 per cent lower. (Financial Times) The US manufacturing sector contracted for the third straight month in August, the longest slide since the recession ended, in line with recent data showing a pullback in business spending. (Financial Times)

The US Department of Justice intends to prove at trial that gross negligence or wilful misconduct by BP caused the 2010 Deepwater Horizon disaster in the clearest statement yet that they are seeking the maximum possible penalties from the company. The company was seeking a resolution for a total of about $15bn, but if the DoJ can establish gross negligence, the penalties under the Clean Water Act would be up to $21bn, with compensatory and punitive damages would come on top of that sum. (Financial TimesRead more

The spent force in iron ore?

We are, of course, talking about Fortescue Metals Group, the self-styled New Force in Iron Ore.

In spite of Tuesday’s cost cutting measures and Wednesday’s US$300m sale and leaseback of a power station, its share price has taken another shoeing. Read more