Posts from Thursday Nov 22 2012

The Closer


FT markets round-up: Encouraging signs from the Chinese economy helped buoy global equity and commodity prices and offset fresh uncertainty over the outlook for the eurozone. But activity was relatively light given the closure of US markets for Thanksgiving. Hopes that China would avoid a hard landing were boosted by a preliminary November reading on the HSBC-Markit manufacturing purchasing managers’ index of 50.4. By contrast, the latest PMI data from the eurozone did little to soothe concerns that the region remained stuck in recession. A well-received auction of Spanish sovereign debt also helped sentiment towards riskier assets, analysts said. The more optimistic mood helped push the euro higher. It briefly touched $1.29, its highest for a fortnight, and reached a seven-month high versus the yen. Read more

Poker with Judge Griesa, part one

For the complete experience of Judge Griesa ordering Argentina to pay holdouts in full and, even more importantly, extending duties to comply with that order to a very wide range of third parties…

Make sure to read his opinion on the pari passu basis; then the amended order to pay; and also — and a red rag to the bull for a government which is very unlikely to make that payment — a ruling that “threats of defiance” from Buenos Aires have pushed him to December 15, 2012 as the due date. No waiting around for the gavel to strike, here. Read more

Magnus on China’s investment cliff

For the benefit of all, George Magnus of UBS sums up the chief problem now facing China in one neat mathematically charged paragraph:

The maths are problematic. If investment is 50% of GDP and the growth rate falls from 15% to say, 5% per annum, consumption growth has to accelerate from about 8% to an unprecedented 12% per annum or so if the underlying GDP growth rate is to stay at 7.5%. You can do the maths of alternative scenarios at leisure, but the bottom line is that rebalancing requires investment to grow more slowly than GDP, and consumption significantly faster over an extended period of time. Otherwise the model isn’t changing.

 Read more

Sohn Conference cheat sheet

Hedge fund managers piled into the Marriott on Grosvenor Square earlier this week for London’s first Sohn conference. The headlines were dominated by Carson Block’s announcement that his next target was Olam International, but we wanted to give you a quick run through what the others had to say. Read more

OK, who tied the FSA’s hands to the mast…

Section 348 of the Financial Services and Markets Act 2000 is what the FSA refers to when one calls to get information on most things that are of interest. Their hands are tied. Even if they are bursting to share information, they can’t. Should it be this way? Read more

European banks: same, same, and eventually different

Nothing like systemic risk to bring the banks together. The crisis at times left little between them. Eventually though, the market will start to differentiate more. As Huw van Steenis and his colleagues at Morgan Stanley put it in a recent note Read more

Markets Live: Thursday, 22nd November, 2012

Live markets commentary from 

The (early) Lunch Wrap

Brussels set to clear Glencore-Xstrata || GM buys Ally Financial foreign units || Santander considers IPO of its US car financing unit || Fed’s Williams says plenty more bond-buying to be done || Renault plans to expand in Spain || Olam sues Muddy Waters after accounting questions || Argentina loses bond payout bid || Sony and Panasonic junked Read more

A Chinese recovery, but for how long?

For quite a while now we’ve been wondering whether a quite bullish forecast by Nomura’s Zhiwei Zhang and Wendy Chen will prove correct. They believe that China’s Q4 GDP growth will be 8.4 per cent — a big jump from 7.4 per cent last quarter. Not surprisingly, today’s flash PMI has made Zhang more confident in his forecast.

We were rather sceptical when first considering it in October, because a lot of Zhang’s argument related to the local government plans that were being announced in great number in the third quarter of this year. Read more

Further reading

Elsewhere on Thursday,

– Not much sympathy for Kweku.

– Osborne said what about banks?!

No likey hedge fundsRead more

A turnround in the China manufacturing PMIs*

*The unofficial ones, that is — the official PMI survey went above 50 last month and now it looks like the HSBC/Markit Economics PMI survey will do the same in November. Today’s preliminary (aka ‘flash’) PMI number for November was 50.4; the best in 13 months. However the indications about domestic and export demand contradict those shown in the latest official survey. Read more

The 6am Cut London

China HSBC PMIs break through the 50-mark || Asian shares rise, except in Shanghai || Ally Financial sells foreign units to GM || Santander may IPO US car loans unit || Renault to hire more Spanish workers || Argentina loses bond payout bid || ‘Excessive plasticiser’ in Chinese liquor Read more