Posts from Monday Feb 11 2013

The Closer


A flat day for stocks: the S&P 500 closed down 0.1 per cent at 1,517. The Dow fell 0.2 per cent. Volume was 20 per cent lower than the three-month average (Bloomberg). Read more

A different case against the skills mismatch argument: irrelevance

Another excerpt from Janet Yellen’s speech today:

This possibility [of a skills mismatch between the skills of employees and the skills demanded by employers] and the unprecedented level and persistence of long-term unemployment in this recovery have prompted some to ask whether a significant share of unemployment since the recession is due to structural problems in labor markets and not simply a cyclical shortfall in aggregate demand. Read more

Fiscal policy and the (delayed?) federal-state divergence

Janet Yellen notes that fiscal policy has been less of a tailwind in the latest recovery relative to the average of four previous US recoveries:

In the year following the end of the recession, discretionary fiscal policy at the federal, state, and local levels boosted growth at roughly the same pace as in past recoveries, as exhibit 3 indicates. But instead of contributing to growth thereafter, discretionary fiscal policy this time has actually acted to restrain the recovery. State and local governments were cutting spending and, in some cases, raising taxes for much of this period to deal with revenue shortfalls. At the federal level, policymakers have reduced purchases of goods and services, allowed stimulus-related spending to decline, and have put in place further policy actions to reduce deficits. … Read more

Oh look the CDS market isn’t working again

There can’t be many credit default swaps written on freshly nationalised SNS Bank. It isn’t among the publicly reported top 1000 single-entity CDS published by DTCC.

Nonetheless the question of whether the Dutch government’s expropriation of SNS subordinated debt constitutes a credit event, triggering payouts on the derivatives, is being debated on Tuesday by the Isda Determinations Committee, which serves as the ultimately arbiter in such cases.

By which we mean, they are debating it again — they decided the first time around to defer the question to get more information or something.

But why should anyone care about some contract that so few parties have an interest in?

Some possibilities below. Mentally circle any that apply. Read more

Cyprus doesn’t want a radical rescue, thankyouverymuch

Are you a Russian company with deposits in Cypriot banks?

Do you feel safe?

Do you read newspapers? Read more

Podcast bleg: what do you want us to talk about?

We’ll be resurrecting Alphachat and folding in the infrequently updated Alphaville podcast into a new format at the end of this week.

Well, “format” is probably too polite, since really it’s just going to be Lisa, Izzy, David and I having a chat about a bunch of stuff. Read more

A sovereign risk factor is born

A familiar saga pops up in the prospectus for Paraguay’s recent US dollar, New York law bond…

 Read more

The Netherlands adds ‘slow-motion bank wrecks’ to list of things it’s known for, right after ‘clogs’ and ‘windmills’

Raise your hand if you didn’t first hear about the way in which the Dutch government took over ailing SNS Reaal on February 1st and think ‘oh, really now?’ along with an arched eyebrow.

The mechanics of the takeover are interesting indeed, but given that two of the four largest Dutch banks have been nationalised, we have a bigger picture question:

How much warning was there that SNS Reaal was on the brink? Read more

Draghi’s pro-LSAPs?

Mario Draghi talked, everyone was a little confused, a little wary… so the euro fell. He OMT’ed the FX market. Clever.

But what if talking isn’t enough? As Capital Economics argue, the power of talk is diminished when others are taking action: Read more

Markets Live: Monday, 11th February, 2013

Live markets commentary from 

The (early) Lunch Wrap

Bail-in proposed for Cyprus || Eurozone finance ministers meet today || Barclays is preparing to cut at least £2bn from its annual cost base of £20bn || Small UK banks complain of risk-weighting disadvantage || US/AMR merger could come this week || Non-EU companies won’t be exempted from data privacy rules || Transit systems in the US north-east are restarting || China has eclipsed the US as the biggest trading nation || The FBI is probing corruption allegations against a subsidiary of EADS || State of the Nation previews || Venezuelan devaluation sparks panic || City job numbers fall 18 per cent || Sweden’s Hakon Invest is acquiring the 60 per cent of shares it doesn’t own in Nordic food retailer ICA AB || Investors dive into euro-yen policy gap || Markets summary || Indonesia is a foreign country… Read more

Further reading

Elsewhere on Monday,

– Um, Japan… what actually happened?

Putin the goldbug.

– It’s the NGLs, stupid. Read more

Indonesia is a foreign country…

… they do things differently there.

If you thought Nathan ‘the Innocent Abroad‘ Rothschild had been badly treated in Indonesia, spare a thought for shareholders of Intrepid MiningRead more

The 6am Cut London

Cyprus bail-in proposed || Barclays to cut at least £2bn from costs || Small UK banks face risk-weight disadvantage || Eurofin meeting today || US/AMR merger could be this week || EU to hold strong on data privacy for foreign companies || Snow affects mass transit in US north-east || City job vacancies down 18% in January || China is world’s biggest goods trader || State of the Nation previews || Asian markets mostly closed Read more