Posts from Tuesday Sep 18 2012

The Closer


FedEx shares fell 3.1 per cent after it cut its forecast for the 2013 fiscal year, an outlook which helped to send the rest of the market struggling to post gains. The S&P 500 closed down 0.13 per cent, at 1,459.32 (Reuters, FedEx). Read more

David Viniar retiring as Goldman CFO

From the bank on Tuesday

NEW YORK, September 18, 2012 — The Goldman Sachs Group, Inc. (NYSE: GS) today announced that Harvey M. Schwartz, the global co-head of the Securities Division, will become Chief Financial Officer at the end of January 2013. After a distinguished 32 year career at the firm, including 12 years as the Chief Financial Officer, David Viniar has decided to retire and will join the Board of Directors as a non-independent director at that time. The firm expects to appoint additional independent directors to its board in the near term. Read more

FOMC doves speak first

A cheat sheet for the hawk-dove breakdown on the FOMC (click to enlarge, via Credit Suisse):

 Read more

The OMT and ‘limits’

Well, this is good news… Reuters have corrected their copy on what had sounded like confusing remarks made on Monday by Luc Coene, Belgian central bank governor, about the maturities of the debt the OMT will buy. (It had certainly confused us, in an earlier version of this post – sorry.)

He also said parts of the new programme’s design meant there were built-in limits to how much it could spend. Read more

RIP (old) RPI and hello a happier Chancellor

The Office for National Statistics is out to get the Retail Price Index… or at least the part of responsible for the ‘formula effect gap’. But before we get to the sexy stuff — involving gilts and clauses and all — a quick statistical primer is called for.

The RPI began life as a compensation index, developed as an aid to protect ordinary British workers from price increases associated with WWI. It didn’t become the main domestic measure of inflation until much later. Read more

Do bailed-out banks remain bad, while good banks behave better?

The trauma and cost of a public rescue must surely teach the bank management concerned to behave in a more prudent manner, right?

Wrong, according to a recent Bank of International Settlements paperRead more

Great Tips-pectations

US 10-year Tips breakeven rates are surging, and talk of a revival in inflation expectations is, understandably, doing the rounds.

But we’re not entirely convinced that it is that simple. Read more

We’ll settle this internal devaluation question quicker than we thought

Unable to benefit from currency depreciation, the peripherals have been urged to seek other ways to improve their balance sheets by means such as ‘internal devaluation’ — regaining competitiveness by lowering costs, particularly wages.

One of the criticisms of “internal devaluation” is that it’s a slower method of improving competitiveness than an old fashioned currency devaluation. There are also questions about whether it even works. Read more

Australia counts its commodity price chickens

Forecasting is a tricky thing. The latest quarterly update from Australia’s Bureau of Resources and Energy Economics predicts iron ore prices will average A$101 a tonne in 2013:

Iron ore and coking coal price forecasts through 2013 - BREE  Read more

Markets Live transcript 18 Sep 2012

Live markets commentary from 

Mann speed record for banking report set

John Mann, the battler from Bassetlaw, is back with the results of his very own banking inquiry.

The Labour MP set up the alternate inquiry after expressing his displeasure at the omission of fellow committee member Andrea Leadsom and his good self from the specialist Libor inquiry because they were “too outspoken”. The words “whitewash” and “farce” also made an appearanceRead more

The (early) Lunch Wrap

Good morning New York…


A negative spin to crude’s mysterious slide

People are still scratching their heads over what possibly sparked crude oil’s sell-off in the middle the US trading day on Monday.

Explanations in contention include: fat fingers, SPR talk and general illiquidity due to the Jewish New Year. Read more

Further reading

Elsewhere on Tuesday,

- Romney said stuff that really wasn’t good for his campaign. Read more

The 6am Cut London

Anti-Japanese protests spread across China: Thousands of Chinese protesters gathered outside the Japanese embassy in Beijing on Tuesday, some hurling water bottles at the heavily-guarded facility, and Japanese companies in China braced for an escalation of demonstrations over a territorial dispute between the two countries. Canon, Toyota, Honda and Mitsumi have all suspended some operations while Fast Retailing’s Uniqlo shops and many 7-11 stores are also closed. September 18 is the anniversary of Japan’s 1931 occupation of parts of mainland China. US election campaign criticisms of China and the White House’s decision to seek trade sanctions against China for illegal auto industry subsidies is further complicating the picture. (Financial Times)(Reuters)(Wall Street Journal)

US inflation expectations have risen sharply after the Fed’s QE3 announcement. Expectations for US inflation over the next 10 years rose as high as 2.73 per cent on Monday, based on the difference or the “break-even rate” between nominal and inflation-protected Treasury debt. It was the highest intraday break-even rate since May 2006. (Financial TimesRead more

FoRescued Metals Group (updated)

Australia’s third biggest mining company has got some much needed breathing space from its lenders.

The new A$4.5bn lending facility extended by Credit Suisse and JP Morgan is secured! Read more