Posts from Thursday Jan 31 2013

The Closer


FT markets round-up:A strong January for global stocks has finished meekly as an unexpected bout of caution over the US economy triggers a mild retreat of some benchmarks from cyclical highs. There has been renewed selling of the Japanese yen late in the New York trading day with the currency hitting Y91.56 against the dollar, its weakest level since June 2010. The proximity of the payrolls report was fostering the tentative mood in markets, delivering softness in industrial commodities and a stall in recently buoyant growth-sensitive currencies, but a mixed reaction across highly-rated fixed income products. Gold is cheaper by $14 at $1,663 an ounce. The FTSE All-World equity index is down 0.2 per cent after the Asia-Pacific region, excluding Japan, lost 0.3 per cent. The FTSE Eurofirst 300 drops 0.6 per cent, and Wall Street’s S&P 500 has settled 0.3 per cent lower and is back under 1,500.” (Financial Times)  Read more

Joining the Establishment, UK NGDP targeting edition

Getting a favourable leader in the Economist is pretty Establishment, surely.

At the very least, it’s interesting that the red-top weekly has managed to endorse and explain a fairly specific nominal GDP target for the Bank of England. Read more

Belgium and the LTRO

LTRO-porn continues… this time it’s semi-core.

As we noted before, the higher than expected repayments by banks of the Long Term Refinancing Operations to the ECB might also push up the amount of paper in circulation as collateral which was tied up in carry trades is returned to banks. That would put pressure on markets which benefitted from the LTRO cash.

What we didn’t think of was Belgium. Poor thing. Read more

Banks vs babies

Yep, China again.

Here’s a table from a fresh IMF paper pondering the country’s Lewis Turning Point, the moment when people streaming into cities from farms will be fully absorbed, industrial wages will take off, and — an estimated 350m jobs later after it began — the era of cheap Chinese labour will end. Click to enlarge. Read more

The perpetualisation of debt

FT Alphaville has just returned from the Danish Institute for International Studies’ conference on central banking in Copenhagen.

The theme was “central banks at a crossroads” — which we thought was particularly apt — and discussions ranged from collateral-backed finance and shadow banking to central bank independence. Indeed, many thanks to the DIIS for having us.

But one presentation, we would have to say, stood out more than most; that of Anat Admati, George G.C. Parker professor of finance and economics at Stanford Graduate School of Business, who’s out with a new book this month entitled “The Bankers’ New Clothes“. Read more

Ware the currency wars

You gotta roll with fashion:

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China’s two paths to urbanisation

China’s growing demographic challenges have been well documented and their economic impact much discussed. So how about urbanisation being touted as the solution?

After all, more people working in cities generally means more productive workers, hard to argue with that. But Beijing’s traditional policy of encouraging urbanisation through greater infrastructure investment is getting ever diminishing returns. If the government really wants more people to move to the cities, argues Wei Yao at Société Générale, it must start treating its new urbanites better. Read more

Reforming RWAs, some reading

As promised

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Spain finds €40bn hidden in sofa

In our last post, we covered up-to-date figures on some of the major components of the headline Spanish deposits number. Here we discuss a new component that will come into play over the next few months. In fact, it might have already been a factor in November’s number.

It’s the €40bn of previously undeclared assets of Spanish residents! The finance minister announced last week that this was simply hiding in a sofa (or possibly multiple sofas), and it wasn’t all that hard to find once they went to the trouble of removing all the cushions. Or, something like that…

OK, actually it’s the amount that came to light through the government’s tax amnesty that closed on November 30th, 2012. But hey, that would have been a hell of a couch, eh? Read more

Markets Live: Thursday, 31st January, 2013

Live markets commentary from 

The (early) Lunch Wrap

Costs drag Deutsche Bank to €2.2bn loss || FSA targets banks on interest rate swaps || Chinese hackers target New York Times || US economy slips into reverse || Chinese steel mills face tax pressure || Russia concerned over Israeli air strike || Markets update: a pretty meek finish to a very strong month for stocks Read more

Spanish deposit figures disclaimer: now updated through December ’12!

The measurement of Spanish deposits is whatever you want it to be! Or at least it sometimes seems that people regard it as such.

FT Alphaville has previously discussed how hard it is to meaningfully interpret this number. The last time we went there, to try to explain various underlying components of the figure and which direction they’re travelling, the media was aflutter with tales of deposit flight.

Now, there are stories of deposits and capital returning… and we need to add further driving factors to the headlines. What with the tax amnesty that unearthed some €40bn of previously undeclared assets of Spanish residents, as announced by the finance minister last week, and all. Read more

Further reading

Elsewhere on Thursday,

– No, a robot won’t take your job, says robot.

– Some genuine creative destruction.

– Patents were a problem in Thomas Jefferson’s day too.  Read more

The 6am Cut London

Asian markets fall on US GDP and Japan’s industrial production || FSA to investigate annuities market || Rio says Mongolian mine on track after halt report || MPs criticise Barclays’ bonus culture || Split over blame for West Coast fiasco || Governments can’t blame companies for tax evasion Read more