Posts from Thursday Jan 17 2013

The Albanese years (updated)

A final word on Thursday’s defenestration of Rio boss Tom Albanense (via JP Morgan).

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The Closer

ROUND-UP

US stocks hit a five-year high, housing starts hit a four and a half-year high. The S&P 500 rose 0.56 per cent, closing at 1,480.95. It is now 5.2 per cent below its all-time high set in October 2007. Housing starts shot up 12.1 per cent last month (Reuters). Weekly initial jobless claims also fell to a five-year low at 335,000 (Bloomberg). Read more

Getting on with life after the “policy vol crunch”

Taken together, the policy vol crunch and regret factor must be putting the remaining bears in a paroxysm of remorseful fear.

He’s very quotable, Nomura’s Kevin Gaynor. Read more

Footnote 74: FACEPALM

Oh, my, my, my. From JPMorgan’s Task Force Report into the London Whale with its billions of losses in synthetic credit, this footnote:

74 Late on April 6, [JPMorgan CFO] Mr. Braunstein also received an e-mail from Mr. Venkatakrishnan, via [JPMorgan CRO] Mr. Hogan, stating that Mr. Venkatakrishnan had noticed that the notional exposures at CIO were very large, totaling about $10 trillion in each direction.

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Will Cyprus be bailed out by gas?

We’ve been writing about Cyprus for a while, since the country has been scampering after Greece down the road to a bailout.

But there are differences, big differences, between the two, and not just the obvious ones such as the size of bailout needed and Cyprus’ inconvenient Russian connection.

The main one, argue Michael Michaelides and Harvinder Sian at RBS, happens to be Cyprus’ gas reserves. That’s should make the unpalatable task of bailing the country out go down a lot more easily – if the politicians have the foresight. Read more

Franc-ly we’re delighted, said the SNB

Here’s the Swiss franc at its weakest level against the euro since the Swiss National Bank put its cap into place in September 2011:

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BHP against the iron ore price

Here’s a cracking little story from Reuters on what seems to be BHP Billiton’s single-handed attempt to prop up the iron ore price this week.

As they reported on Thursday:

SINGAPORE, Jan 17 (Reuters) – BHP Billiton, the world’s No. 3 iron ore miner, bought 100,000 tonnes of the raw material on the spot market in a rare move that traders interpreted as a strategy by producers themselves to stem a decline in prices as Chinese demand thins. A rally that carried iron ore prices to 15-month highs last week was a boon for miners such as BHP , but took the market by surprise, scaring off buyers in top consumer China.

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A tempest in a spreadsheet

The Task Force Report into the billions of dollars of losses racked up by JPMorgan’s Chief Investment Office has revealed a number of things, not least of which are some impressive spreadsheet errors.

Impressive enough, perhaps, to be worthy of inclusion in the European Spreadsheet Risks Interest Group’s list of Horror Stories.

(Yes, there is such a group and a massive H/T to reader Justin Cormack for informing us of it. Justin, we hope you don’t want to work for JPMorgan.) Read more

More on “substantially” and the Fed

We still think the minutes of the December FOMC meeting — specifically their revelation that “several” committee members believe asset purchases should be slowed or stopped by the end of this year — were wrongly interpreted by some as a hawkish shift.

Bernanke explained at the September presser that asset purchases, purpose of which he said was “to increase the near-term momentum of the economy”, would continue until the outlook for labour markets had improved “substantially”. Read more

Markets Live: Thursday, 17th January, 2013

Live markets commentary from FT.com 

The (early) Lunch Wrap

Rio Tinto’s chief Tom Albanese has stepped down || Virtually all Boeing 787 Dreamliners have been grounded || Gas workers in Algeria sized by militants || French troops begin Mali ground campaign || UK developers warn of FSA ‘slotting’ rules || Some yen clarification from Japan’s economy minister || HP rebuffs acquisition inquiries || Singapore acts to avert property bubble || Iraq, BP considering Kirkuk field deal || Research rewrites global trade data || Fisher voices doubts on Fed bond buying || Wall St banks put brake on bonuses || Deutsche derivative helped Monte Paschi mask losses || Markets summary  Read more

Izy’s making an appearance on Markets Live

Obviously, there was no chance of keeping Kaminska away once the Rio story broke.

So FTAV’s commodities specialist will be joining Bryce and Murphy on Markets Live, our regular markets chat, at 11am on Thursday. Read more

Koo, Posen, and other Abenomics dissenters

Abenomics: it’s as divisive as it is fun to say.

We should start this round with Adam Posen, who used to sit on the Bank of England’s Monetary Policy Committee and penned an Abenomics op-ed in the FT on Wednesday. Read more

Oh, Rio, Rio….

Nothing short of an RNS fit for framing from Rio Tinto this Thursday morning:

Rio Tinto expects to recognise a non-cash impairment charge of approximately US$14 billion (post tax) in its 2012 full year results. These impairments include an amount of approximately US$3 billion relating to Rio Tinto Coal Mozambique (RTCM), as well as reductions in the carrying values of Rio Tinto’s aluminium assets (mostly Rio Tinto Alcan (RTA) but also Pacific Aluminium) in the range of US$10-11 billion. The Group also expects to report a number of smaller asset write-downs in the order of US$500 million. The final figures will be included in Rio Tinto’s full year results on 14 February 2013.

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Further reading

Elsewhere on Thursday,

- The currency wars are good for precious metals.

- Ideology as cognitive bias.

- Why you want a woman to manage your money. Read more

The 6am Cut London

Virtually all Boeing 787 Dreamliners have been grounded by aviation regulators worldwide, after an incident with an ANA flight on Wednesday. US regulator, the Federal Aviation Administration, ordered operators of the super-advanced jet to stop flying until they could prove their batteries were safe. Shortly afterwards, regulators in all regions with airlines that operate Dreamliners — Japan, India, Chile and Europe — also ordered a halt to flights of the model. (Financial Times)(Wall Street Journal)

Asian shares declined and the yen strengthened on Thursday. The MSCI Asia Pacific was poised to fall for a second day after touching a 17-month high earlier this week. The Nikkei Stock Average headed for its biggest two-day drop since November 2011 after the yen reversed its losses. (BloombergRead more