Posts from Monday Apr 8 2013

The Closer

Stocks ended higher in light volume. Alcoa stock fell 1.1 per cent after-hours following its earnings, while the broader Dow Jones Industrial Average closed up 0.33 per cent at 14,613.48 (Reuters).

Margaret Thatcher, Britain’s first woman prime minister and the grocer’s daughter who helped launch the City’s Big Bang, has died at 87. “The world has lost one of the great champions of freedom and liberty, and America has lost a true friend,” President Barack Obama said. World leaders joined in tribute, while at home politicians reflected on her uncompromising liberalisation of the UK economy and financial markets, still controversial 30 years on. Thatcher had been in ill health since 2002 (Financial Times, Reuters, Bloomberg, Wall Street Journal). Read more

CNBC: Ron out of town

Just last May, Bill Ackman was all:

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Charts du jour, labour force participation kill the old edition

Self-explanatory, and they come via RBC Capital Markets:

A cybernetic ledger

Economists, anthropologists and historians have debated the nature of money for generations. It is fair to say there are many conflicting opinions.

In 1997, Narayana Kocherlakota, the current president of the Federal Reserve Bank of Minneapolis, however, made an enigmatic observation. He argued money was not, as commonly understood, a store-of-value, a unit of exchange or even a unit of account, but rather “a primitive version of memory”Read more

Inequality and monetary policy

Coincidentally (or not), three speeches that exemplify a renewed focus on inequality have been given in recent weeks by the three women on the Federal Reserve Board – Governor Sarah Bloom Raskin, Governor Elizabeth Duke, and Vice Chair Janet Yellen.

That’s an observation from Neal Soss of Credit Suisse in a note released at the end of last month, writing that inequality has increasingly appeared on the radar screen of monetary policymakers. Read more

Be excited, be, be excited: BoJ edition

Seemingly everybody is benefiting from the Bank of Japan’s decision to splash the cash. Peripheral bond yields in Europe have fallen and high-yielding carry targets such as Mexico and Brazil are being touted as destinations for Kuroda’s cash.

Where that cash ends up will in many ways define the success or failure of the Abe/ Kuroda push since what really matters is what happens after the cash has left the BoJ. Read more

BitCult

The price of BitCoin soared to newly extreme levels on Monday. The Bitcult units were last seen trading at the not at all ridiculous value of $195.

Chart courtesy of Bitcoin Charts.

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Productivity, “reindustrialisation” and the US profit share

US industrial production has grown at least twice as fast as GDP since the start of the recovery.

Onshoring” work because wage differentials are narrowing plus falling electricity prices because of shale gas = more growth, so… great! Maybe? Read more

Get your free bank deposit insurance here

William Cohan has a furious column about Mary Schapiro, joining Promontory Financial Group just four months after stepping down as chairwoman of the SEC.

She’s joining about 100 other former regulators at Promotory and the gist of Cohan’s complaint is that Schapiro and others are cashing in outrageously here. Having served up a soup of overly-complex regulation while in office, these former regulators are now selling their inside knowledge on how to navigate the regulatory thicket. Read more

Risk limits are made to be broken

FT Alphaville is (still) poring over (and enjoying) the staff report from the Senate Permanent Subcommittee on Investigations on the JPMorgan “whale” trades in its Chief Investment Office that lost the bank over $6bn. It takes a lot of coffee awhile to get through all 597 pages of exhibits along with the 307-page report, and all the glorious footnotes, so please kindly bear with us.

As it stands, the more we read, the more dirt we turn up. And the uglier we realise this whole episode was, the more we become concerned: if this happened at JPMorgan, where else could it happen?

The below on risk limits serves as a case in point. The tl;dr version in graphs below, but first from the staff report (emphasis ours): Read more

Markets Live: Monday, 8th April, 2013

Live markets commentary from FT.com 

The (early) Lunch Wrap

Portugal announces fresh austerity cuts to offset court ruling || Alcoa kicks off US earnings season today || Pyongyang suspends Kaesong operations and may conduct nuclear tests || Luxembourg hints at relenting on bank secrecy || MUFG in talks to buy Deutsche US loans || Greece’s NBG-Eurobank merger suspended || Xi vows to protect foreign business || China’s local government debt could be twice as big || China opens Aussie dollar direct trading || IMF welcomes Bank of Japan policies || Lew to press Europe leaders over growth, austerity || Markets wrap || FTAV’s latest Read more

Further reading

Elsewhere on Monday,

- Will Intrade members roll the dice one last time?

- Borrowing ≠ Debt.

- Scott Sumner’s short intro course on money.

- Bird flu battle, in pictures. Read more

The 6am Cut London

Japan stocks soar further, yen touches 2009 lows as BoJ begins longer-dated purchases || Shanghai, Hang Seng dampened by bird flu fears || Portugal PM risks backlash with new austerity cuts || Luxembourg hints at relenting on bank secrecy || US earnings season begins today || Central banks buy riskier assets Read more