Posts from Wednesday Feb 27 2013

The Closer


Stocks soar to five-year high. Wall Street’s S&P 500 had its biggest one-day gain, or 1.3 per cent, since the start of January, supported by a better than expected survey of durable goods orders (excluding transport). Now at 1,515 points, the New York benchmark was striving to recover last week’s five-year closing high of 1,530. The Dow jumped 175 points, or 1.3 per cent to 14,075, its highest level since Oct. 15, 2007. The FTSE All-World equity index added 0.9 per cent and the FTSE Eurofirst advanced 0.9 per cent. Milan’s FTSE MIB index recovered early losses to close higher on the day. Demand for the dollar fell, with the dollar index sliding 0.3 per cent. Copper declined 0.2 per cent to $3.57 a pound while Brent crude fell 0.7 per cent to $111.95 a barrel (Financial Times). Read more

Has Ivan started drinking what Mick was drinking?

We are talking here about Glenstrata, of course, going ex-Mick Davis and cum-Ivan Glasenberg as soon as the last bits of competition authority clearance arrive…

Ivan has already sent industry tongues a-wag with some off-the-grid comments at a BMO Capital Markets conference in Florida, as reported by Reuters:

What we’ve got to do, when the markets do get stronger, no need to keep building a new asset and let’s keep the market tight for a while…

 Read more

On negative interest rates and hoarding

Okay. Negative interest rates have now gone fully mainstream in the UK thanks to this week’s testimony by Bank of England deputy governor Paul Tucker.

Even the Daily Mail is writing about it.

But a number of major misunderstandings are popping up as a result. So let us try to clear some of them up. Read more

Markets Live: Wednesday, 27th February, 2013

Live markets commentary from 

The (early) Lunch Wrap

Convexity in Vix futures || Deflating shadow credit in China || BoE deputy on NGDP || Italian election aftermath || JPMorgan job cuts || New US defence secretary || Online gambling approved in New Jersey || Visa & Samsung agree on mobile payments || Markets cautious but more stable Read more

Some early morning Bean on NGDP

It’s Charlie Bean, the Bank of England’s deputy governor for monetary policy, on nominal income targets. An old wine in a new bottle apparently, even if it is edging closer to the establishment.

Some excerpts (with our emphasis):

The question is: would outcomes have been materially better under an alternative framework, such as a nominal income target?

 Read more

Deflating shadow credit in China

First, a reminder of the degree to which China’s growth has been increasingly fuelled by credit over the past few years:

China credit to GDP ratio (including shadow financing) - Credit Suisse

The chart above doesn’t quite show it, but non-bank credit growth outpaced bank loans last year. The rise of China’s shadow banking scene has happened very rapidly — much of the growth only happened since 2009. Read more

Further reading

Elsewhere on Wednesday,

– A perfectly fair and reasonable way to rank central bankers.

– Draining excess reserves and the Fed’s exit strategy.

– Who’s going to move on China’s aluminium stockpiles? Read more

The 6am Cut London

Asia ex-Japan stocks higher after Bernanke comments; yen strengthens || Capital problems could affect Co-op’s Lloyds deal || Kuroda probably in, Iwata possibly not || BP says all Macondo players to blame || Hong Kong grows at fastest rate in a year || Barclays loses confidentiality bid on US energy trading dispute || Martin Wolf on austerity’s sad record Read more