Posts from Friday Jan 11 2013

Why the fund flow data should make you cautious

It’s a big theme: investors of all colours have reportedly been pouring money into equity funds of late. In fact, over the past week money has been flowing into stocks at the fastest rate since September 2007, according to EPFR.

Which should give all investors pause for thought. Read more

Nothing surprises us anymore

A h/t to Mark Dow for the spot. That’s Citi’s US Economic Surprise Index threatening to turn negative after a decent run in positive territory.

 Read more

The great eurozone yield convergence

H/T to Martin Malone of Mint Partners for this vivid illustration of how the differential between “core” and periphery sovereign yields has tightened. Read more

EuriBORE: the recommendations, the fat fingers, the inconsistencies

ESMA (European Securities and Markets Authority) and the EBA (European Banking Authority) got together to make recommendations to the EEBF (Euribor-European Banking Federation) about Euribor. All the acronyms that start with E were there. It was quite the party, we’re told. Like, the EFSF got sooo drunk and nearly bailed out the Spanish government! The ESM was seriously not amused.

Anyway… Read more

The wonders of the FX universe

Dark matter may more commonly be associated with physics, space exploration and Professor Brian Cox, but, according to Deutsche Bank’s FX strategist George Saravelos, there’s a good chance that it’s becoming a recognisable force in the world of foreign exchange too.

Of course, whilst you need complex structural analysis of the universe to detect the real dark stuff, in FX its presence is arguably more easily sniffed out. Mostly, says Saravelos, via the closer inspection of short-term derivative flows and the murky parts of balance of payment statistics. Read more

Unemployment: it’s not all back to the 1970s, but a serious chunk of it might be

You know what doesn’t often conjure images of economic happiness? The 1970s, that’s what. And the argument coming from some quarters right now is that Europe, or at least its periphery, is heading back into such a period of stagnation and chronic inflation with unemployment leading the way. Read more

Markets Live: Friday, 11th January, 2013

Live markets commentary from 

The (early) Lunch Wrap

Japan unveils Y10.3tn stimulus package || RBS eyes bonus pot to recoup Libor losses || Cold weather fuels Chinese inflation || Eurozone leaders gather in Cyprus || Brussels takes tough stance on Google || ECB hails financial market ‘normalisation’ || Markets update || Alphaville Read more

Is Saudi Arabia starting to panic?

Some excellent market commentary from Olivier Jakob at Petromatrix on Friday morning regarding the current state of oil market (dis)equilibrium and the potentially precarious position of Saudi Arabia. Read more

The negative rate bluff

Negative rates, as we’ve discussed before, are a funny thing.

On the one hand they can send an immensely powerful message. On the other hand they have the power to seriously and dangerously disrupt core economic mechanisms by magnifying the physical hoarding incentive — this helps to create a negative feedback loop that ultimately crowds out capital and leads to voluntary capital destruction. Read more

Further reading

Elsewhere on Friday,

– The trouble with the coin is that it might work too well.

– Is China manipulating the cotton market?

– If the only constraint on growth in an IP economy is brain capacity…. Read more

The 6am Cut London

Japan unveils Y10.3tn stimulus: Japanese prime minister, Shinzo Abe, unveiled a Y10.3tn ($116bn) economic stimulus package that the government expects will lift the country’s gross domestic product by 2% and create 600,000 jobs. Y3.8tn will go towards disaster prevention and reconstruction after the March 2011 tsunami and earthquake, while Y3.1tn will be allocated for wealth creation, through measures to improve the competitiveness of Japanese industry and stimulate innovation. Another Y3.1tn will go towards social security such as healthcare and education as well as regional revitalisation.(Financial Times)(Bloomberg)

China’s inflation accelerates after cold spell: The CPI index rose 2.5% in December from a year earlier, compared to a 2.3% median estimate from economists surveyed by Bloomberg. November rise was 2%. The nation’s coldest winter in 28 years pushed up vegetable prices in particular. (Bloomberg)(Financial TimesRead more