Posts from Tuesday Feb 26 2013

The Closer


The rebound. The Dow managed a triple-point gain to close up 0.84 per cent at 13,900.13, while the S&P 500 rose 0.61 per cent at 1,496.94, aided by Bernanke’s dovish comments. The S&P 500’s still off 1 per cent where it was before the last FOMC minutes (Reuters). Read more

A powerful convexity in short-term Vix futures

Before we comment about the strange behaviour of the Vix this week, we’d like to engage in a bit of a thought experiment.

There are two hypothetical scenarios that we’d like you to consider.

The first relates to the rampant nationalisation of everything:

What happens to market prices and volatility in an economy where government intervention becomes de rigeur every time prices misbehave?

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Beppe Grillo at market’s close

Some thoughts from Beppe Grillo (really):

I’m here on the settee at home. They’ve made me lie down. They don’t want me to have any upsets. They’ve covered me up with one of those checkered rugs. Outside there are the floodlights beaming in through the bathroom window. I don’t know what they want to see. This adventure that we’re having is fantastic…

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Tucker goes Jedi (ish)

Throwing around the negative interest rates idea has become very trendy all of a sudden with Draghi, Praet and Constancio weighing in and, we’d argue, using the threat to substitute for policy impotence.

So, was Bank of England deputy governor Paul Tucker doing the same thing on Tuesday morning in front of a Parliamentary committee? Using a jedi-trick to talk down sterling perchance? It’s not a phrase you use lightly and it seems unlikely he would have whacked it out completely unintended. But it has to be said, if he was going Jedi here, the effect didn’t last all that long. Read more

Keeping New York gasoline prices pumped

This is a cracking *cough* little note from Bank of America Merrill Lynch on soaring gasoline crack spreads… which are being driven by a spate of refinery closures which, as it turns out, are specifically impacting the New York Harbour market, known as PADD I, beyond all others.

This has generally resulted in a divergence in regional prices across the United States (mostly to the disadvantage of East Coast drivers).

As BofAML notes:

Despite being the middle of the winter, US RBOB gasoline crack spreads to Brent crude oil have soared by an astonishing $16/bbl in the past month (Chart 2).

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Food for thought on digital news consumption

With the freedom to publicise at a low cost at will, what place is there for the subset of writers and editors doing this for a living? Andrew Betts, director at FT Labs, opined in a recent TEDx talk that if media organisations are to weather the changing habits of consumers of news and analysis, technological innovations must occur. Read more

The burning of Rome spreads

The political picture in Italy is looking deeply uncertain. We all know that.

But what’s possibly more interesting is the scale of the market reaction to that uncertainty. Read more

Hey, spendy miners, operate Glencore style

Alternate working title: Opec-cartel style

We’ve already heard from Oleg Deripaska on the matter. And we’ve started to see the consequences hit Rio Tinto and BHP Billiton. But the latest “we must rein in supply” Opec-cartel style talk, actually emanates from Glencore CEO Ivan Glasenberg.

Bloomberg has the story ( hat tip to Reuters’ John Kemp) and it offers few cracking paragraphs to say the least: Read more

Markets Live: Tuesday, 26th February, 2013

Live markets commentary from 

The (early) Lunch Wrap

China to tighten shadow banking rules || US seeks maximum fine in BP spill trial || Osborne weighs impact of banks’ bad loans || US senators press EU on Iran sanctions || Rio Tinto warned of possible rating cut || Scientists claim 72 is the new 30 || Yahoo bans working from home || Markets update: Italian impasse rekindles eurozone jitters Read more

Italian post-election misery

In terms of providing certainty, it’s hard to see how the Italian election outcome could have been worse.

From the FTRead more

Further reading

Elsewhere on Tuesday,

– A major lack of Vix convergence.

– Elon Musk mentions the hyperloop again.

– Gasoline’s danger zone. Read more

The 6am Cut London

Italian election spooks markets || Asian stocks fall || Goldman said to be cutting jobs || Big BP trial opens || Rio Tinto warned on rating || Sinopec gets Chesapeake assets cheap || China’s debt bomb || Yahoo CEO bans remote working Read more