Posts from Tuesday Oct 2 2012

The Closer


The S&P 500 clawed its way back after brief Spanic. The index closed up 0.1 per cent at 1,445.71, having lost 0.4 per cent on the Spanish prime minister’s denial of an imminent bailout (Bloomberg). Read more

Light vehicle sales and the credit channel

The September US light vehicle sales numbers from Autodata are out, beating expectations for a second straight month:

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The task force vs the banks (finally) (maybe)

David Dayen of Firedoglake has a useful summary of the ways in which the New York Attorney General’s lawsuit against JP Morgan mirrors the previous Ambac case. He concludes on a pessimistic note (our emphasis):

The larger point is this. Not only does there seem to be no new evidence or investigations or legal theories in this case, but the bulk of it was copied off a separate case filed by someone in Schneiderman’s office years ago. Gretchen Morgenson says that the subpoenas in the case all came from Schneiderman’s office in April 2011, long before the RMBS working group ever existed. The Justice Department will apparently try to take some credit for interviewing Clayton Holdings employees in the case, but again, the Clayton Holdings element of this case has been public knowledge through the FCIC and Cuomo’s time as AG going back many years. And if DoJ was so helpful, why didn’t they bring any charges? No federal charges were filed in this case, which represents fairly obvious federal securities fraud. And they have longer statutes of limitations available to them, meaning they would be able to sue for more money, since the cutoff would not be October 2006 but much further back. … Read more

Chipotle Einhorned

A less dramatic reaction than when he told the world to wake up and smell the Green Mountain Coffee, but Chipotle is a modestly-sized company and was already down more than 6 per cent on the year before David Einhorn made the short sale recommendation at a conference today.

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Don’t call it money printing, Rubik’s cube edition

Last week FT Alphaville drew attention to the fact that HSBC had joined the cohorts of the “don’t call QE money-printing” brigade. We thought this was great progress for the mainstream analyst community.

Moreover, we thought their explanation was really good. Read more


Spotted on Tuesday — a market getting itself in a lather as soon as the Spanish prime minister denies that a bailout is ‘inminente’. (Via Google Finance)

Deutsche Telekom to acquire MetroPCS, finally? (Updated)

How best to describe an M&A ‘scoop’ that only lands three years after the due date?

Belated luck/bad luck? Clairvoyant? Plain wrong? Read more

Charting the refining capacity shortfall

This rather nice chart is from Goldman Sachs:

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The EU’s high level experts on banking have spoke

Here’s the Liikanen Report. Click to view.

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A new era for FX

Today carry’s hold on FX has waned as global rates gravitate towards zero, forcing the FX market to react instead to the far more ambiguous implication of QE. By contrast, other asset classes, notably equity markets, provide a cleaner mechanistic link between a given view and a price.

The conclusion is that even if we knew the outcome of future events with certainty, the FX market is not the best place to reflect those views. We have fallen to the bottom of the food chain.

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Private Equity Tales: The Quest for Company Gold

Scrooge McDuck once said: “There’s only one thing that’s better than owning a vault full of cold, hard cash, and that’s swimming in it! I love to dive around in it like a porpoise and burrow through it like a gopher and toss it up and let it hit me on the head.”

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Moody’s on Spanish banks and others on the bailout muddle

The Oliver Wyman report landed last week. The headline was that Spain’s banks would need almost €60bn in new capital and that seven out of the 14 Spanish banks under review failed the ‘bottom up’ test.

The actual recap figure was €59.3bn, falling to €53.7bn because banks are allowed to count in both mergers in which they’re involved and deferred tax assets. We expressed some scepticism about those DTA’s and the rather hopeful proposition that… Read more

Markets Live transcript 2 Oct 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York…


The Russia liquidity house

Quick. Someone grab a samovar! Russian liquidity it is on-tap.

In fact, Russia’s recent liquidity operations have been so substantial, they almost make Chinese efforts look puny in comparison. Read more

RBA, on further inspection, finds glass half empty

Australia’s central bank cut its overnight cash rate by 25 bps today, to 3.25 per cent — close to the crisis-level low of 3 per cent.

It’s interesting for several reasons, one of which is that many strategists didn’t see it comingRead more

Further reading

Elsewhere on Tuesday,

Pre-1900 visions of a cashless society. Read more

The 6am Cut London

NY lawsuit filed against JP Morgan over Bear Stearns MBS: New York Attorney General Eric Schneiderman filed a civil fraud lawsuit against JPMorgan on Monday over mortgage-backed securities packaged and sold by Bear Stearns, which JP Morgan bought in March 2008. The suit seeks unspecified damages and cites $22.5bn of losses were suffered by investors. It is the first action to come out of a working group created by President Barack Obama earlier this year to go after wrongdoing that led to the financial crisis. JP Morgan in a statement it would contest the allegations. Schneiderman’s office said: “We intend to follow up with similar actions against other sponsors and underwriters.”  (Financial Times)(Reuters)(Wall Street Journal)

EU report will call for bank bonuses to be paid in debt: The Liikanen commission, an independent review set up almost a year ago by EU commissioner Michel Barnier, will on Tuesday recommend reforms for long-term pay incentives as well as advocating ringfencing trading activities to make big banks safer. Some of the panel’s most radical measures have been toned down and Barnier will decide whether any of the proposals will be included in his reforms. (Financial TimesRead more