Posts from December 2012

FT Alphaville enters hibernation mode. Back on January 2nd

It’s that time of year we’ve all been looking forward to. That time when you leave the office with good intentions and a pile of papers. All that stuff you’ve been meaning to read for ages that there just hasn’t been time for. And, of course, you try to use the office printer because the one at home is just so damn slow and the cartridges are so expensive (can’t just be us).

There are also dreams of clearing up the inbox, replying to friends who messaged ages ago (we’re so sorry!), and maybe fixing some things around the flat.

So. Much. Ambition.

Also we hear some family members expect to see us when taking breaks from reading? Could just be a rumour.

From all of us at FT Alphaville, we wish you an enjoyable and relaxing crossover to 2013. We ♥ you guys for making the site what it is. Read more

The FT Alphaville podcast, with Dylan Grice

Welcome to FT Alphaville’s extraordinarily infrequent podcast… (click through for the podcast link).

 Read more

Ah, ah, ah, ah, staying alive… as a pop star

The influence of pop stars is leveraged by their fame. It’s not only about the music, but also about the lifestyle. Unfortunately, what that sometimes includes is substance abuse, which can in extreme cases lead to premature death.

While that in itself is tragic, the effects of leverage and inter-linkages with the star’s substantial fanbase can lead to system-wide shock, e.g. Kurt Cobain. Read more

The (early) Lunch Wrap

Fiscal Cliff ‘Plan B’ collapses || ICE to buy NYSE Euronext || Bolder UK bank reforms encouraged || Ex-banker arrested in US over Olympus fraud || US planning Whale sanctions || US banks may face rise in bad loan provisions || Khuzami to leave SEC || Research in Motion shares slump Read more

Further reading

Elsewhere on the end of the world,

– Flash, aha, we’ve only got 14 hours to save the S&P 500.

– A definition of full employment.

– Playing Taxes Hold ‘Em.  Read more

The 6am Cut London

‘Plan B’ collapse draws fiscal cliff nearer: Republican House leaders failed to get a vote held on a ‘Plan B’. The failure has led to increased pessimism over whether a deal can be struck, and “marks a serious miscalculation on the part of Mr Boehner, who hoped the measure’s passage would increase his leverage in talks with Barack Obama”. It was unclear how efforts to reach agreement would proceed, with the House adjourned until December 27 and the Senate, apart from meeting for a few hours this afternoon, effectively doing the same. (Financial Times)(Washington Post)

Asian shares and US futures slumped on news of the ‘Plan B’ collapse, while the Yen rose. (Bloomberg)(Financial TimesRead more

Republican fiscal cliff ‘plan B’ abandoned

From the FT:

The fate of US negotiations to avert the fiscal cliff were thrown into turmoil after efforts by Republican leaders in the House of Representatives to pass their back-up plan to avert most of the tax hikes collapsed amid a conservative backlash.

 Read more

The Closer


FT markets round-up:“An apparent pause in the substantive negotiations on the US fiscal cliff is leaving many equity benchmarks becalmed near recent highs. The FTSE All-World equity index is up 0.1 per cent as Wall Street’s S&P 500 closes 8 points higher at 1,444, kept aloft by a rebounding Philly Fed factory activity survey and stronger-than-expected US home sales data. The FTSE Eurofirst 300 closed fractionally firmer after the Asia-Pacific region was also barely changed. The euro is up 0.1 per cent to $1.3242 – earlier flirting with an eight-month high near $1.33 – as the dollar index drops fractionally.” (Financial TimesRead more

Another look at US household formation, and why it matters

James Sweeney of Credit Suisse has written one of the more optimistic (and convincing) notes we’ve come across about the near-term trajectory for US housing.

Its optimism is based mainly on its analysis of expected household formation growth, which Sweeney finds has been underestimated by most observers. The note includes a good discussion of the ways in which healthy household formation growth can have powerful multiplicative effects throughout the rest of the economy. We’ve covered much of this ground before, and of course don’t forget to follow Calculated Risk and Karl Smith, who anticipated these trends before anyone else. Read more

Christmas credit caroling with Matt King

A holiday tradition from Citi’s credit strategist, hat tip to Tracy Alloway for passing along:

Walking in a credit wonderland Read more

Gary Gorton and Andrew Metrick have a few questions about securitisation

And by “a few” we mean “fourteen”.

And by “fourteen” we mean “more than fourteen” because each “question” is more like “a bunch of questions” or in some cases “stuff that Gorton and Metrick wonder about but have not actually stated in the form of a question”.

Anyways, we bolded the main bits from each below, and you can find the full paper via NBER  Read more

Decoding that Basel securitisation proposal, one annoying acronym at a time

The financial crisis demonstrated how the treatment of securitisations under the Basel framework was some combination of delinquent and a massive enabler of rating agency (and bank) mis-modelling. No wonder then that it only took until July 2009 to get the duct tape out, i.e. release “enhancements” to Basel II, commonly known as “Basel 2.5”.

Now that the committee has had time to truly, madly, and deeply think it over, it’s time for… drumrolla consultative document on which comment will be sought by March 15, 2013. Oh, it’s on now. Read more

Markets Live End of Term Special: Thursday, 20th December, 2012

Live markets commentary from 

The (early) Lunch Wrap

Greece faces ‘make or break’ year || BoJ adds Y10tn to easing programme || UK retail sales flat in November || Beijing criticises US ‘political checks’ || ICE in talks to buy rival NYSE Euronext || Carney to receive £250,000 for housing || Markets update || A grumpy Christmas video to you || What’s bugging gold? || Mind the rate risk Read more

What’s bugging gold?

We made the case a few weeks ago that the gold price may have reached its choke level and that it was arguably capped from that point on. One good indicator of this, we noted, was the divergence between the gold price — which had been flat-lining for some time — and real interest rates.

It’s also hard to ignore gold’s reaction to the latest Fed announcement, which has been intriguingly bearish to say the least Read more

Further reading

Elsewhere on Wednesday,

– It’s a damn long list… Read more

The 6am Cut London

BoJ expands asset purchase programme Y10tn || Asian shares fall || Fiscal cliff talks sour || NYSE/ICE tie-up talks || Carney to get £250k housing allowance || Apax gives up on €9bn target for new fund || Indian shadow banking Read more

The Closer


FT markets round-up:”Global stocks are trading near 17-month highs even as investors are having their faith in a US budget deal sorely tested. The FTSE All-World equity index is up 0.2 per cent to 225, its loftiest level since July 2011, after the Asia-Pacific region added 1.1 per cent and as the FTSE Eurofirst 300 continued its good run of form. The Europe-wide barometer gained 0.4 per cent as Germany’s Dax index closed in on a five-year high. Wall Street’s S&P 500, though, is threatening to thoroughly spoil the party. It ended down 11 points at 1,436, accelerating into the close and dashing hopes that it will soon break to new four-year highs.” (Financial Times) Read more

Mind the rate risk

Central banks have kept rates ultra-low since the financial crisis, trying to stimulate economic growth. Whether one regards this as successful or not, one can agree that it has costs. A line item with a particularly nasty looking question mark above it is a corporate bond bubble. Read more

A grumpy Christmas video to you, from FT Alphaville

Do you know what you’re getting for Christmas?

Well, it seems that Santa has dropped off a video of bunch of bloggers who are a bit miffed at how certain stories were covered in 2012 — our gift to you, dear readers.

So turn up the volume, or get those earphones out! Clickety clickRead more

Markets Live: Wednesday, 19th December, 2012

Live markets commentary from 

The (early) Lunch Wrap

Spotlight swings to interdealer brokers || German business confidence rises again in December || Greek bond bet pays off for hedge fund || Lloyds expects Sandy hit of up to $2.5bn || US party leaders test fiscal cliff plans || Sants secures £3m package at Barclays || China dispute hits Japanese exports || Market update || UBS pays up || The three ‘muscateers’, captain ‘caos’ and Superman Assemble || What China really wants Read more

What China really wants

China announced last week that its State Administration of Foreign Exchange would remove the $1bn limit for foreign sovereign wealth funds, central banks and monetary authorities buying Chinese assets through the Qualified Institutional Investor Programme (QFII).

David referenced that this might turn out to be pretty significant as reserve managers are currently desperate to diversify their holdings out of euro and dollar.

But there’s another important factor to consider too. China is not a benevolent agent which just does things for the sake of pleasing other people. If it chooses to act you can bet your bottom yuan that it’s because it suits its own interests to do so. Read more

The three ‘muscateers’, captain ‘caos’ and SUPERMAN Assemble (at UBS)

The competition is on! Sure, UBS is already ahead of Barclays in the FSA fine stakes, but will the inevitable embarrassing communiques beat “done for you, big boy”? Opening gambit from the FSA’s Final Notice to UBS on Wednesday morning (emphasis ours):

For example, on 18 September 2008, a Trader explained to a Broker: “if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today … I will f[**]king do one humongous deal with you …

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Some colour on UBS’ ‘unquantifiable’ Libor misconduct [updated]

The FSA’s component of the UBS settlement relating to Libor and Euribor was £160m — the largest fine it has ever imposed.

The UK financial regulator made some revealing comments on the Swiss group’s transgressions, which it says “involved a significant number of employees and occurred over a period of years in a number of countries”: Read more

Further reading

Elsewhere on Wednesday,

– The dirty secrets of economics education.

– How entertainment was industrialised.

– Fiscal cliff offers and counteroffers, charted. Read more

UBS pays up

UBS will pay a total of CHF1.4bn ($1.5bn) — or, more than three Barclays — in fines and profit disgorgements related to Libor and Euribor claims. The payments will go to US, UK and Swiss regulators. The bank has also warned of losses totalling about CHF2 to 2.5bn for the fourth quarter, largely due to the settlements and provisioning, although CHF500m related to its restructuring.

Here is the statementRead more

The 6am Cut London

Asian shares rise || Hedge fund reaps $500m on Greek bet || Geithner told of Libor fears in 2008 || Japan’s exports fell in November || Knight agrees to Getco offer || Cerberus to sell gun company stake || Basel may tighten ABS risk weight models || Watching for unintended consequences in 2013 Read more

The Closer


FT markets round-up: “Optimism on a US budget deal to avert the fiscal cliff and good news from the eurozone is encouraging investors back into risky assets and sending stocks to near 17-month highs. Wall Street’s S&P 500 kept its momentum through the day ending up 1.15 per cent and trading barely 20 points of a fresh five-year peak. When combined with a 0.4 per cent gain for the FTSE Eurofirst 300 and a 0.5 per cent rise for its Asia-Pacific peer, it has taken the FTSE All-World equity index up 0.9 per cent to 224.96, its highest close since the end of July 2011. The bright mood extended to the euro currency, which is up 0.4 per cent against the dollar to $1.3221, after Standard & Poor’s upgraded Greek government debt.” (Financial TimesRead more