Posts from Wednesday Jan 23 2013

The Closer


Apple’s earnings disappointed with net profit of $13.1bn, or $13.81 per diluted share, flat on the year. Net revenue was $54.5bn compared to $46.3bn a year ago, and Apple sold 47.8m iPhones in the fourth quarter. Both numbers were below expectations, reviving fears that the US smartphone market has matured and that the iPhone’s popularity has peaked (Financial Times). Read more

Yenstimates all over the place

Perhaps reflecting the ambiguity of the BOJ’s announcement itself, strategist forecasts for USD/JPY are ranging from 84 (Brown Brothers Harriman) all the way to 105 (Credit Suisse). A few selections follow.

Credit Suisse: Read more

LTRO repayment bifurcation risk

The first LTRO repayment opportunity is fast approaching. David has already considered how it may or may not impact European lending rates, including the chances of Eonia rising significantly if the repayment is larger than expected.

Yet as we also noted, this is hardly the key concern. Read more

Dying markets, illustrated

Are you in the equities business, needing something to surpress your natural optimism? Ditto ETF traders, those in securitised derivatives, even bonds? Click the following images for the instant, full-sized depressive effect… Read more

Recoveryless jobbification

Some might say it’s labour hoarding; some might say it’s “flexibility”; some might say it’s the gutting of the City. Many would think the UK productivity puzzle goes on, and some would just ponder the strong showing of full-time jobs in the latest figures.

Here’s the view from Nomura’s Philip Rush, with some charts (click to enlarge)… Read more

Job destruction vs unemployment duration by country, 2007 vs 2011

Just passing along this chart (click to enlarge) we came across on page 41 of the big ILO global employment report:

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Koo: I’LL tell YOU when we’re delevered!

Nomura’s Richard Koo is back, suprising us with another note following quickly on his last. But we can see how it happened. Heck, some people are suggesting that the West’s balance sheet recession is over. Read more

Ten per cent of self-identified decision-makers don’t want to talk to you even if the global economic recovery hangs in the balance

Commenting on the survey findings, Bank of America’s Chief Executive Officer Brian Moynihan said,Leaders around the world recognize the value and need for greater global collaboration.

Moynihan displays a certain lack of concern about the 10 per cent of “global decision-makers” who were found to be riding the Steamboat Lonewolf up the Wantspacetothinkippi River in a single occupancy first class cabin, quietly hatching plans to take over the world, according to a survey commissioned by the bank. Read more

NGDP level targeting: Yellen it from the rooftops, but nobody heard

Given the boost that Goldman’s economists gave to the nominal GDP level targeting movement when they endorsed the idea near the end of 2011, it’s probably a good idea to listen to them when they write about the subject (whether you agree with them or not).

NGDPLT itself has many more high-profile evangelists now than it did then: the Fed adopting an Evans Rule was the latest shift in its direction, and of course the idea is being openly debated in the UK after Mark Carney suggested it would be more potent than flexible inflation targeting. Read more

Markets Live: Wednesday, 23nd January, 2013

Live markets commentary from 

The (early) Lunch Wrap

Apple pre-earnings || Correlation, like kryptonite || Severfield-Rowen gets grated || The UK to vote on EU in 2017, says Cameron || Job cuts at Barclays || Microsoft in talks over Dell buyout || IBM beats || Ireland preps for OMT || Fewer class action suits in the US Read more

GMO on China’s subprimey financial innovations

A new and scary note is out about China’s risk from GMO’s Edward Chancellor and Mike Monnelly, who make a good argument that China’s financial system is showing many of the hallmarks of a not-too-distant bubble:

China’s thriving shadow banking system has much in common with the American version, which thrived before Lehman’s collapse: trust loans that finance cash-strapped property developers have a whiff of the subprime about them; wealth management products that bundle together a miscellany of loans, enabling the banks to generate fees while keeping loans off balance sheet, bear a passing resemblance to the structured investment vehicles and collateralized debt obligations of yesteryear; while thinly capitalized providers of credit guarantees are reminiscent of past sellers of credit default insurance.

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The brutalist architecture movement has broken Severfield-Rowen.

This Yorkshire-based structured steel specialists, which counts the Olympic Stadium and the Shard amongst its successful projects, warned on profits on Wednesday and parted company with its chief executive, Tom Haughey. Talks are also underway with the firm’s bankers… Read more

Correlation: the credit trader’s kryptonite

A lot of people think you can just throw a bunch of chaos into a situation and walk away. That is not the case. The most you’re going to get outta that is mayhem. Good disaster, like really muah [kisses fingers], should be catastrophic and that, my friends, takes preparation and patience.

In the case of the synthetic credit portfolio of JPMorgan’s CIO, they had a good three months to build positions that would subsequently cause billions of dollars of losses. Our previous post outlined how, according to the bank’s Task Force Report, the CIO was going to unwind profitable high yield shorts at the beginning of 2012. Instead, the unit ended up building those positions further, along with long positions in the Markit CDX.NA.IG.9 index that were meant to hedge and finance them. Read more

This time, nobody likes Apple

The WSJ talks of “iPhone-like hype” around the next Samsung smartphone model. And Bloomberg notes that in China, iPhones are way behind. It must be that time again!

Yep, Apple reports its first-quarter earnings at 5pm EDT, so feast your eyes on this five-year chart in the meantime : Read more

Further reading

Elsewhere on Wednesday,

– Is there a Google ‘x-phone’ in the pipeline?

– Keep banks out of macro, implores Sumner.

Fundamentals vs panic in a crisis. Read more

A message from Sam

The new Rio boss has a few nice words about his predecessor, followed by a flash of steel, in a letter to staff. And it’s about all you’re likely to hear from Walsh until annual results on Valentines Day. Read it after the jump:  Read more

The 6am Cut London

Cameron to promise EU referendum || Asian stocks fall on stronger yen || Barclays to axe up to 2,000 investment bank jobs || King defends inflation targeting || London sewer could be publicly funded || ‘Inshoring’ is not so big really Read more