US stock markets remained closed on Tuesday as the Sandy clean-up began on the East Coast. NYSE, Nasdaq and BATS announced that their stock, options and derivatives markets would reopen for business on Wednesday. Sifma has recommended that US bond markets also reopen on Wednesday (Financial Times, Wall Street Journal). Early equity volume is expected to be strong as investors make end-of-month portfolio adjustments.
The storm’s toll: at least 30 deaths across eight states, and six million people left without power. Some 750,000 are without power in New York City (Full updates: New York Times, Financial Times, Wall Street Journal). Read more
The verdict is still out as to how much the Bank of England’s latest attempt to boost the economy is actually working. There are indications that Funding for Lending is helping ease credit flows, but we won’t know how attractive the low-cost financing actually is to banks until the FLS usage data for Q3 is released on December 3. It’s hoped that it will get up to £80bn of extra credit into the economy.
The scheme was launched this summer, and on Tuesday the BoE published a full list of participating banks along with their total lending to UK households and ‘private non-financial corporations’ (as of end of June). A total of 17 new institutions have got onboard since the launch, mostly building societies, but the Co-Op, Clydesdale and Tesco were also new joiners. HSBC is not on the list. Read more
On Monday night, FT Alphaville had the pleasure of chairing a discussion on “Socially Useful Banking“. The key speaker was none other than Bank of England’s executive director for financial stability, Andy Haldane. His speech was entitled “A leaf being turned“.
Since we were there for the evening, and moderating the lively Q&A, it’s been interesting to see what angles the papers have taken on it. Here-under a headline digest: Read more
Grant Capital Partners is being shut down. This hedge-fund manager wind-down is brought to you by Geoff Grant, one of the same gentlemen behind Peloton Partners’ enormous fall.
Fun fact from the FT’s Sam Jones:
Grant Capital eschewed the asset-backed securities and heavy leverage that led to the downfall of Peloton and focused on highly liquid instruments such as currencies, bonds and interest rate derivatives.
While funds that specialise in trading mortgages have enjoyed some of their best returns in the past two years, global macro funds have floundered.
Oops. Read more
The Swiss bank has wasted no time in starting the cost cutting programme it announced just this morning. Some people learnt of this when they tried to enter their offices on Tuesday morning, only to discover their passes weren’t working.
Our hedge fund sources also tell us that many of their UBS contacts “have red dots on their B’berg” this morning, meaning they’re not logged in. It sounds like sales staff have generally been the first to go. Read more
So the Bank of Japan basically did what what was expected of it as did the yen, which gained 0.5 per cent against the dollar as traders saw massive selling of dollar-yen going through as the Bank’s decision hit the wires.
So far, so predictable. We thought UBS’ Paul Donovan summed up the BoJ’s move fairly well:
Japan saw the Bank of Japan defy government pressure to increase the asset purchase program by JPY10tn. They increased it by JPY11tn. No doubt this will be as effective as all the previous actions which have already raised the level of the BoJ balance sheet to 32% of GDP.
But the increasing pressure that is being piled on the Bank by the government is worth drawing attention to. As well as the Bank’s attempts to shift it right back to the government. Read more
BP raises dividend || Apple shakes up senior ranks || UBS slashes costs || BoJ eases policy for second month || Markets update Read more
On Monday the centre-right Liberal and centre-left Labour parties in the Netherlands managed to pull together a coalition agreement after 47 days of talks. It contained a limit to the tax deduction on mortgage interest, which some economists say distorted the Dutch housing market. There are also changes to benefits and taxes, but the thing that caught one FT Alphaville reader’s eye was this line of the agreement:
De hoogte van de maximale variabele beloning binnen de financiële sector wordt wettelijk vastgelegd op 20 procent van de vaste beloning.
We’re translating this as: “the amount of variable pay for workers in the financial sector will by law be capped at 20 per cent of fixed pay.” Read more
An update on the Sandy-related damage, market closures, and the alert about the Oyster Creek nuclear plant. Read more
Elsewhere on Tuesday,
– Sandy photos: Sorting the fake from the real.
– “Fresh infighting” within Chinese Communist Party ahead of big transition.
– Hugh Hendry on God, gold, China and Treasuries and how he has no idea where stocks are going. Read more
Hurricane Sandy hits US east coast hard || Markets shut for second day || BoJ increases asset purchase programme, rates steady || PBoC makes record daily injection || Nissan chief warns about China expansion || Barclays civil Libor case to go ahead || Royal Mail to hire 1,000 || Martin Wolf replies to John Taylor on US recovery Read more
The photo above was taken by Bloomberg’s Nick Summers, and it shows a large part of Lower Manhattan is now without power, having been shut off by Con Edison to “protect both company and customer equipment, and allow for quicker restoration after Hurricane Sandy passes”. Read more