Posts from Thursday Sep 20 2012

The Closer


FT’s markets round-up: “Stocks, commodities and growth-focused currencies retreated after a batch of disappointing economic data reminds investors just why central banks have been so active of late.The FTSE All-World equity index fell 0.5 per cent after the Asia-Pacific region fell 1.3 per cent. Wall Street’s S&P 500 closed fractionally lower after a mostly negative session, with sentiment not helped by data showing that US weekly jobless claims fell by less than expected and a fifth month of contraction in mid-Atlantic factory activity. Traders trimmed positions in riskier assets and moved into perceived havens. As a result, copper fell 1.2 per cent to $3.78 a pound, while the euro declined 0.6 per cent to $1.2964 and the commodity-sensitive Australian dollar fell 0.6 per cent to $1.0407.” (Financial TimesRead more

The Kocherlakota Rule

It’s Fed speech week, but rather than spending much time supporting or criticising last week’s decision by the FOMC, Minneapolis Fed president Narayana Kocherlakota has instead drawn inspiration from Charles Evans and introduced his own conditionality-based “liftoff plan”:

As long as the FOMC satisfies its price stability mandate, it should keep the fed funds rate extraordinarily low until the unemployment rate has fallen below 5.5 percent. … Read more

The Governor, live [updated]

A quick plug for Channel 4 News’ live – live! – interview with Mervyn King, just airing at pixel time. Click pic (via Faisal Islam) for feed. Guesses for how many times the Bank of England governor mentions uncertainty and/or Aston Villa etc

Update (1930 UK time) — And it’s ended. All in all, a pretty safe performance from the governor, breezing through Jon Snow’s questions on bank regulation and Vickers, trotting out the black cloud of uncertainty on the eurozone, and generally facing down Mrs Watson’s complaints about low rates and pensions. Read more

QuEstionable effects on FX charted

The dollar index is now up 0.4 per cent since the Fed announced QE3 and up 0.3 per cent against the euro after having lost near 1 per cent initially. The euro is now back under $1.30. Meanwhile the yen has gained 0.7 per cent against the dollar and 1.4 per cent against the euro since the Bank of Japan put its moderate amount of stimulus into the field. Go figure:

 Read more

Un-Belizeable debt restructuring [updated]


It sounds almost pleasant if you ignore the gritted teeth and the fact we don’t know how much they actually paid (our emphasis): Read more

The new head of the Financial Services Roundtable

(Big hat-tip to Max AbelsonRead more

A bear, squeezed, but unrepentant

That would be straight-talking Nomura strategist Bob Janjuah. Just a small taste of his latest missive to clients…

We are four S&P closes away from being stopped out on the bearish call outlined in my August note . It seems – let’s see how this week plays out – that we were wrong to believe that central bankers would not become so “political”. As we have captured around 300 S&P points in the sell-off that began in early April (1422 to 1275) and the rally that began in early June (1275 to 1425), and as the S&P traded at 1425 on the day my August note with its 1450 S&P stop was released, the extraordinary central bank actions of the last few weeks has resulted in a very small hit to „our year to date‟. As said, however, my stop loss will be triggered on this Friday’s close if the S&P is still above 1450. So my stop-loss and I are at the mercy of the next four days’ price action. Real-world risk takers/investors may choose to exercise any such stop sooner but I will wait/accept the risk. But to reiterate, if the S&P closes above 1450 on Friday, the bear call of August is closed and initially at least I‟d choose to go flat/neutral on a tactical basis. If my stop-loss is NOT triggered by this Friday’s close – a possibility, but not a probability – then I will write again, but my initial sense in such an event would be that the half-life upside cycle is even shorter then I currently think and has already played out. Let’s see. Read more

Markets Live transcript 20 Sep 2012

Live markets commentary from 

The (early) Lunch Wrap


Spanish auction – damned if you do/don’t: Madrid has tipped a toe into the 10yr debt market and found the water isn’t as cold as it once was. It managed to get away a larger-than-planned issue of €3.9bn 3yr and €859m 10yr paper on Thursday with borrowing costs on the longer-term paper falling markedly alongside decent demand. However, as David’s post notes, the 3yr stuff was a new issue with the yield coming in near enough to this year’s average while the offering of the 10yr paper was small and oh-so-cautious. Read more

Spanish auction: damned if you do/ don’t

Spain has tipped a toe into the 10yr debt market and found the water isn’t as cold as it once was. They managed to get away a larger than planned issue of €3.9bn 3yr and  €859m 10yr paper on Thursday with borrowing costs on the longer term paper falling markedly alongside decent demand.

However, the 3yr stuff was a new issue with the yield coming in near enough to this year’s average while the offering of the 10yr paper was small and oh-so-cautious. Read more

Beyond happiness

Economists love assessing preferences.

In doing so they look to happiness and satisfaction, searching for the point at which the rational agent’s need for more is finally satiated. The idea is described as the law of diminishing marginal utility. The more of something you own the less utility and satisfaction it provides, thus the greater your incentive to trade it for something else. Read more

Further reading

Elsewhere on Thursday,

- The American retail investor not convinced by QE3. No, SirRead more

China flash PMIs: manufacturing is still slowing, but a little more slowly

Presenting the latest HSBC/Markit Economics China flash PMI

…and it’s still bad, just not as bad as last month: 47.8 compared to August’s final reading of 47.6 are the scores on the doors. Read more

The 6am Cut London

Asian stocks came under pressure after rising in the previous session on Japan’s monetary easing measures even though China’s manufacturing activity stabilised this month. The MSCI Asia Pacific index slipped 0.2% with Japan’s Nikkei 225 Stock Average down 0.5%, South Korea’s Kospi Composite index off 0.4% and Australia’s S&P/ASX 200 index 0.3% lower. (Financial Times)

China flash PMIs show slightly slower contraction: The preliminary reading was 47.8 for a manufacturing purchasing managers’ index released today by HSBC  and Markit Economics. It compares with a final 47.6 last month and points to the longest run of readings below 50 in the survey’s eight-year history. (Bloomberg)(StatementRead more