Posts from Monday Oct 22 2012

The Closer


FT markets round-up: “Worries about corporate profitability continued to affect investor sentiment, leaving stocks struggling for any great traction. Other gauges of risk appetite were also under pressure as the CBOE Vix index – which measures market volatility – jumped 3.7 per cent. The dollar index, which tends to fall when traders are more sanguine, was little changed as gold added $7 to $1,727 an ounce. Still, demand for US Treasuries also fell, pushing the 10-year yield up 5 basis points and back above 1.80 per cent. The FTSE All-World equity index fell 0.4 per cent as a rally for the FTSE Eurofirst 300 failed, leaving it down 0.4 per cent at the close. Stocks in the Asia-Pacific region slipped 0.2 per cent. New York’s S&P 500 dipped as much as 0.6 per cent earlier in the session, but trimmed losses in the last half hour of trading as tech stocks rebounded. The index closed fractionally higher following its 1.7 per cent tumble on Friday.” (Financial TimesRead more

A Better Partnership

Because the deal has been exclusively revealed repeatedly and over a number of weeks, few seemed too excited by news on Monday that BP and its oligarch ‘partners,’ Alfa, Access/Renova, have finally agreed the terms on which they will sell TNK-BP to Rosneft.

In return for making Rosneft the world’s largest oil company by reserves, AAR get $28bn in cash for their 50 per cent stake, while BP come away with $25.9bn for their 50 per cent. Read more

Buba still unimpressed with ECB

The Bundesbank used its latest monthly report to reiterate its criticism of ECB bond-buying activities, warning that it delays the necessary adjustment process in the euro region. It also said that the German economy may contract in the current quarter. Happy days! Read more

Keeping Nama where it is

Ireland: Eurostat is withdrawing a specific reservation, expressed in April 2012, on the data reported by Ireland, relating to the statistical classification of National Asset Management Agency Investment Limited (NAMA-IL). On the basis of documents provided by the Central Statistics Office of Ireland, NAMA-IL is majority privately-owned, following the sale by Irish Life of its stake in NAMA-IL to a private investor. This is a necessary condition for a special purpose entity to be classified outside the General Government sector, pursuant to Eurostat’s decision of 15 July 2009 on public interventions during the financial crisis.

That’s from Monday’s Eurostat release on European government debts and deficits. Monday, perhaps not coincidentally, also saw names put on the announced sale of Irish Life’s 17 per cent stake in Nama Investment Ltd. Read more

Crisis Spotting, Czech style

Best source a wet towel before clicking on this latest working paper from the European Central Bank…

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China’s potentially tepid money outflows

There have been a few estimates of large scale capital flight out of China recently that don’t exactly tally with other signals. The strength of the yuan is among them, though it admittedly may be explained by myriad other factors.

Capital flight has largely been calculated by movements in China’s FX reserves, with reference to other variables such as the trade surplus, FDI and movements in exchange rates. Read more

Is ‘uncertainty’ really that big a deal?

In attempts to explain why companies (particularly in the US) are so reluctant to invest and hire of late, the word “uncertainty” will usually make an appearance. “Policy uncertainty” is generally seen as the enemy of business confidence, and the combination of post-crisis regulatory reforms and ever-increasing partisanship in the US Congress make it a very big theme of late. Intuitively it makes sense that uncertainty would affect business decisions, but can that be separated from the effect of actual economic activity itself? Read more

Markets Live: Monday, 22nd October, 2012

Live markets commentary from 

The (early) Lunch Wrap

Japan trade data || Progress Energy Resources acquisition blocked || The EU budget || MF Global most actively traded bankruptcy claim || Worries over Windows 8 || TNK-BP || Negotiations with Iran to enter US presidental debate || RBS Citizens Financial Group Inc. || Market Update Read more

The US bright spot

It seems odd — and it may well be short-lived — but the US is beginning to shape up as a rare bright spot in the world economy.* Or indeed almost the only bright spot in the world’s economy, except for the Gulf petro-states. That is, if you were to base such an assessment solely on Japan’s September export data, released on Monday.

Japan’s preliminary September trade data tell a story not dissimilar to China’s — exports to Europe are slowing (unsurprisingly) by a lot, down 26 per cent for the month, year-on-year. Read more

Japanese exports not hurt so much by islands dispute as general global malaise

So far, the dispute with China over the Senkaku/Diaoyu islands doesn’t seem to have hurt Japan’s exports to China as much as the headlines might suggest. True, as Dow Jones points out, exports to China were 14.1 per cent lower than in September 2011. However Nomura’s fixed income strategists Naokazu Koshimizu and Asuka Tsuchida note that exports to China actually rose 0.5 per cent compared to August, “suggesting to us little sign of an impact from anti Japan protests in September”. Read more

Further reading

Elsewhere on Monday,

– QE3 starts… here.

– This is what money is.

– Do MMTers think governments are like households? What do you think? Read more

The 6am Cut London

Asian shares lower || Japan’s exports fall 10.3% in September || Merkel to warn Cameron over EU budget veto || Rajoy boosted by Galicia poll result || Lloyds considers ditching bonuses || ADM bids for GrainCorp || RBS pressured to sell Citizens Financial || Weekend news catch-up Read more