Posts from Monday Oct 1 2012

The Closer


FT markets round-up: “After a strong start on Wall Street, stocks gave up most of their gains to end the session slightly higher on the day as initial optimism over a better-than-expected report on US manufacturing faded. The FTSE All-World equity index rose 0.5 per cent as the FTSE Eurofirst 300 turned an early loss into a 1.4 per cent gain. On Wall Street, the S&P 500 added more than 1 per cent in midday trading, but pared some of those gains to close 0.3 per cent higher. Away from equities the mood was also generally firmer. The dollar index fell 0.15 per cent, helping gold rise $3 to $1,776 an ounce, the bullion at one point hitting a 10-month intra-day peak of $1,791. Trading in top tier government debt was mixed however, with 10-year Treasury yields down 2 basis points to 1.61 per cent and equivalent Bund yields gained 5 basis points to 1.47 per cent.” (Financial TimesRead more

Hedgie billionaires: we’re a sleeper cell of battered wives headed by the pope…

… or something. You can’t make these people up:

[Anthony] Scaramucci, the organizer of the dinner, told me the next day that the guests had witnessed the “activation” of a “sleeper cell” of hedge-fund managers against Obama. “That’s what you see happening in the hedge-fund community, because they now have the power, because of Citizens United, to aggregate capital into political-action committees and to influence the debate,” he said. “The President has a philosophy of disdain toward wealth creation. That’s just obvious, O.K.? We talked about it all night.” He later said, “If there’s a pope of this movement, it’s Lee Cooperman.”

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Sovereign risk-weighting, face-off du jour

Basel catches European bank capital legislation letting big cross-border lenders play a bit too fast and loose with zero risk-weighting of government bonds for its taste, the FT says.

Well, here’s the key para… Read more

Preemptive fiscal folly

It’s really hard to predict the eventual outcome of the fiscal cliff negotiations that will take place after the elections, but the media reports that there is little enthusiasm for extending the payroll tax cut (in place since January 2011) are starting to pile up.

Annie Lowrey in this morning’s NYTRead more

A Qatari sub-plot?*

A few nervous bid arbitrageurs have their eyes on the Qataris right now — wondering, expectantly, whether the Gulf state’s sovereign wealth fund will now support the takeover merger of equals between Glencore and Xstrata.

The Glenstrata share ratio has been hiked and the Qataris, it is assumed, don’t really care about the size of retention bonuses at Xstrata. But a public endorsement of the deal was noticeably lacking on Monday… Read more

‘Would a return to a gold standard help?’

That’s the title of a note from ING’s chief international economist Rob Carnell on Monday. It had us worried. That is, until we remembered Betteridge’s Law of Headlines and skipped straight to the conclusion:

To wrap up, gold standards may have a long tradition in Europe and the US. But then we also used to send children up chimneys and burn witches. There is little to argue for a return to such practices today.

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US PMI bucks global trend

Something of a surprise given the weakness of the overnight numbers in China and in Europe:

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Cœuré on collateral scarcity

Fact du jour on collateral accepted at European Central Bank liquidity ops, via Benoît Cœuré, ECB executive board member:

...non-marketable assets and above all, credit claims (i.e. normal bank loans) have become the largest single asset class in our collateral portfolio.

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Cofer catch-up time

The glacial pace of FX reserve change continues, as documented by the IMF ‘s “Composition of Official Foreign Exchange Reserves” data which was released on Friday.

Summary: the dollar is still reluctantly loved, the euro is ‘confused’ by the Swiss and everyone is as deep into the ‘others’ as they can be… which isn’t far. Read more

Markets Live transcript 1 Oct 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning, New York…


The man who would be chancellor

The Greeks have to stand by their commitments, but we should give them more time.

That’s Peer Steinbrück, the man who would unseat Angela Merkel as German chancellor, telling Die Welt that anyone pushing for a Grexit doesn’t know what they’re talking about:  “The political and economic shocks would be devastating.” Read more

A pause in export-led growth?

China’s official manufacturing PMI figure was reported at 49.8 for September, an increase from 49.2 in August. Meanwhile, on Saturday the HSBC/Markit Economics PMI was 47.9, confirming the 11th month of contraction — the longest in the survey’s history.

Some China economists have welcomed the official PMI coming within a whisker of 50, but we don’t see a lot to be excited about — it seems indicate little, apart from support for a “new normal” in Chinese growth. The components of the main figure all improved, including the important “new orders” and “new export orders” numbers. However, employment fell slightly to 48.9 from 49.1. Read more

The Glenstrata fudge

Here’s the key bit from Monday’s confirmation that Xstrata’s independent directors are once again recommending merger terms from Glencore…

1.   To approve the New Scheme subject to the resolution to approve the Revised Management Incentive Arrangements to be put to the Further Xstrata General Meeting being passed.  The Independent Xstrata Non-Executive Directors intend to recommend unanimously that eligible Xstrata Shareholders vote in favour of only this resolution at the New Court Meeting; and Read more

Further reading

Elsewhere on Monday,

– What HAVE economists ever done for us? Read more

Weekend news catch-up

Weekend headlines from the FT and other UK media:*

From The FT,
–       RBS’ insurance arm Direct Line is set to miss out on a place in the FTSE 100 index when it lists next month in London’s biggest flotation of the year.
–       An investigation launched by the Competition Commission into the motor insurance industry on Friday will shine a light on murky business practices that regulators allege have ramped up drivers’ premiums
–       India’s government is set to forbid mobile operators from using roaming pacts for third generation services, bringing fresh uncertainty into the nation’s struggling $32bn telecoms market Read more

The 6am Cut London

Xstrata is set to recommend the latest offer from Glencore on Monday, after the miner on the weekend hammered out a novel structure designed to win support from its shareholders. Barring a last-minute glitch, Xstrata’s board will recommend the offer via a proposal that allows investors to support the deal even if they differ over the merits of the multimillion-pound packages designed to retain the company’s top ­executives. (Financial Times)

Asian shares fell after poor data from Chinese and Japanese manufacturing surveys. The MSCI Asia-Pacific was 0.7% lower in late morning Tokyo time. Markets in China, Hong Kong and South Korea were closed for holidays. (BloombergRead more