Posts from November 2012

The Weekender

This week on FT Alphaville,

– A Canadian took over FT Alphaville, the first ever foreigner to run the blog in its over 300 years of existence. Read more

The ESM loses an Aaa

Moody’s has cut the eurozone bailout fund’s credit rating to Aa1, and maintained a negative outlook. It also removed provisional Aaa ratings from debt issued by the EFSF.

In a statement, the ratings agency blamed… France, whose own Aaa rating it cut last week: Read more

On trying to read the coming Catalan coalition

Last weekend’s Catalan elections returned perhaps the most difficult-to-read result. Judging by the overall support for separatist parties, there was significant support for at least a referendum on independence. Yet the largest separatist party, the centrist Convergència i Unió, saw its majority in the regional parliament slashed, forcing it to seek a coalition. Read more

A classic Friday meltdown from Santelli

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Don’t kill the old! Just get them to adopt you

We’ve been moaning about the old stealing our jobs for quite a while but we may have been missing an obvious trick. Much like their advanced toilet habits, Japan is leading the way demographically and has come up with an alternate to our more “soylent green” approach to the problem. Read more

Markets Live: Friday, 30th November, 2012

Live markets commentary from 

A sterling inflow

So, would a sovereign downgrade hurt sterling? And if so, how much? It’s hard to model this as historic comparisons are muddy and sterling crosses each obviously carry their own difficulties. Consider this chart from Morgan Stanley, by way of illustration:

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The (early) Lunch Wrap

Indian growth slows to 5.3% || Japan unveils Y880bn stimulus package || Schaeuble presses German MPs to back Greek bailout || Cameron faces fight over press reforms || SAC chief gives testimony on share sales || Slowdown in London’s luxury real estate || Markets update || The ABS hangover, Eurosystem-style || Funding pressure time again || You’re un-Belizeable, encore || When the Doves cry Read more

A negative euro lending rate and year-end funding pressure

If you have euros and want to borrow dollars against them… at the moment, it’s going to cost you.

But… if you happen to have dollars and want to borrow euros against them… you will be paid to do the deal instead. Read more

The ABS hangover, Eurosystem-style

The ECB announced some updates to its General Documentation on Wednesday. The item on ABS modifications caught our eye.

The move in question was first announced last April, and it represented a toughening up of the rules around ABS collateral for borrowing from the ECB. The update therefore isn’t so much a surprise as a reminder of one of the ongoing, but less spoken about, hangovers of the crisis.

Let’s review the situation… Read more

Further reading

Elsewhere on Friday,

– TED’s rules for iBanking life.

– Internet Explorer sucks… less?

– Timmy proposes to end US debt ceiling crisesRead more

The 6am Cut London

Asian shares rise || Japan industrial output posts unexpected rise || Fiscal cliff talks sour || UK banks need more capital, says BoE || What Steve Cohen told the SEC || Thailand’s PTTEP plans $3bn rights issue || British consumer confidence unexpectedly rose || JGB shorts bide their time Read more

The Closer


The Fiscal See-Saw. The S&P 500 closed up 0.4 per cent at 1,415 in choppy trading (Financial Times). Read more

Dove, actually (the sequel)

It was about this time last year that we noted how the voting membership of the FOMC would become more dove-ish in 2012. Of course, at the time we had no idea that Jeremy Stein and Jerome Powell would be appointed and confirmed this year, making the committee even more receptive to Ben Bernanke’s decisions.

Surely this made it easier, at least on the margins, for Bernanke to move in the direction of Evans/Woodford/Sumner, which he finally did at the big September meeting (also helping was what appeared at the time to be another post-winter slowdown in the US economy). Read more

You’re un-Belizeable, encore

Latin American country tells creditors they can’t be serious…

While acknowledging that the Committee’s counter-proposal provides a degree of short-term cash flow relief, the GoB considers it to be wholly incompatible with its objective of placing the country’s debt burden on a sustainable footing – a goal that the Committee itself has indicated it is committed to at various stages. The GoB believes that the counter-proposal ignores Belize’s high overall debt levels, and that it amounts to little more than a short-term fix not dissimilar to the 2007 exercise. Read more

Human sacrifice, the original negative interest rate

The abstract from the latest paper by Peter T. Leeson entitled “Human Sacrifice” (H/T Tyler Cowen at Marginal Revolution): Read more

“We’re from the SEC. Now give us all the money.”

Just make sure you check their badges first. SEC people carry badges, right? …

SEC staff is issuing this updated Investor Alert because we are aware of continuing fraudulent solicitations that purport to be affiliated with or sponsored by the Securities and Exchange Commission, Commission staff, as well as particular Commissioners (including a recent bogus email scam using the name of Commissioner Daniel Gallagher). Read more

So, who’s going to sell their Greek bonds?

Much has been made of the buyback announced as part of the latest Greek debt reduction deal. Mainly because more than half of total debt savings agreed are expected to come from the buyback, according to this leaked doc.

The details of how the scheme is might actually work are pretty thin on the ground, but we know from the leak that the plan is to spend €10.2bn (from the EFSF most likely) buying back and retiring bonds. It is expected that this will lead to a reduction of 11 per cent of GDP by 2020. Read more

Some cliffs are golden

Gold experienced a sizable wobble on Wednesday, so no surprise people are still trying to make sense of it.

The best comment we’ve seen come from Commerzbank and UBS on Thursday who suggest a fat finger or rogue computer algorithm could be to blame for the disturbance… Read more

Yenning for a counter argument

THE YEN IS DOOMED, don’t ya know? And, to be fair, the longer term arguments are hard to fight against but the risk of a near to medium-term yen bounce is significant. Read more

Markets Live: Thursday, 29th November, 2012

Live markets commentary from 

China’s over-investment problem

A new IMF working paper lays out what many China sceptics have been saying for years: the country has too much investment, and households are bearing the costs. Yes, you might have heard this many times on FT AV, from the likes of Michael Pettis and more recently, from George Magnus, but now it’s appearing in venues such as the IMF (even if the paper warns this ‘should not be reported as representing the views of the IMF’). Read more

The (early) Lunch Wrap

Fed is likely to keep buying Treasuries || Fiscal cliff update || Knight Capital subject to two rival offers || Barosso unveils Eurozone survival plan || Japan’s retail sales fall || Bankia to face large losses on subordinated debt || Rio Tinto plans to make $7bn of spending cuts || Moody’s downgrades HP || Miller out of running for SEC job Read more

The death of volatility?

Central bank puts have done a great job of removing tail risks.

Such is the conclusion of the team at Bank of America Merrill Lynch upon analysing the remarkable drop in trade conviction of late.

In FX, the move in volatility has been notable… Read more

FSA approves HKEx takeover of LME

The London Metal Exchange said that the UK’s Financial Services Authority had given approval for its $2.2bn acquisition by Hong Kong Exchanges and Clearing. The transaction is expected to close next week.

But there are still hurdles. First, a court hearing. From the statement by HKExRead more

Further reading

Elsewhere on Thursday,

– Bungee-jumping over the fiscal cliff.

– The procedure of litigating pari passu? Read more

The 6am Cut London

Asian stocks higher on fiscal cliff hopes || Fed seen likely to keep buying bonds in 2013 || Japan’s retail sales fall || Rio Tinto plans $7bn in savings || Stay granted against Argentina debt ruling || Knight Capital has two rival offers || Vivendi has four offers for GVT || Japan must revitalise the BoJ Read more

The Closer


FT markets round-up: “Wall Street rebounded from early losses to end the session on a higher note as remarks by US President Barack Obama and by the Speaker of the House, John Boehner, raised hopes for a compromise on the fiscal cliff. The FTSE All-World equity index rose 0.2 per cent after falling earlier in the day, the dollar reversed course to trade 0.1 per cent lower and gold, which at one point lost $25 in five minutes after a succession of sell “stops” appeared to have been triggered – recovered to stand little changed at $1,718 an ounce. The FTSE Eurofirst 300 index, which was at one point in the red by 0.6 per cent, closed 0.15 per cent higher, while Wall Street’s S&P 500, which was down 14 points to 1,385 before Mr Boehner’s comments, rebounded and closed 0.8 per cent higher at 1,409.” (Financial TimesRead more

Stayin’ alive, Argentina edition

Looks like those emergency bondholder briefs had some effect on the Second Circuit…

IT IS HEREBY ORDERED that the motion by the Exchange Bondholder Group for leave to intervene as interested non-parties for the purpose of appealing orders entered by the district court on 11/21/12 and for the purpose of seeking a stay pending appeal is GRANTED.

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Olam responds to Muddy Waters

Following Muddy Waters’ report on why it’s shorting Olam, released yesterday, the company has released a detailed defence. In fact, it’s 45 pages long… Read more