Posts from Monday Apr 22 2013

Ratings agency puffery

Not our argument — McGraw-Hill’s.

An interesting tack is taken in its lawyers’ motion to dismiss US charges of civil mortgage fraud against Standard & Poor’s, as filed on Monday… Read more

The Closer


FT markets round-up: “Wall Street managed to put aside an initial bout of nervousness over the quarterly earnings season and instead focused on the prospect of continued central bank liquidity, after the G20 waved through Japan’s attempts to stimulate its economy. The endorsement of Japan’s aggressive quantitative easing policy initially put the yen back on the defensive, although the dollar subsequently faltered as it neared Y100, But strategists said a breach of that level now looked almost inevitable. As US trading drew to a close, the dollar was weaker against the yen, having risen as high as Y99.88 at one point. The yen’s initial bout of weakness gave fresh momentum to Japanese equities, with the Nikkei 225 Average climbing 1.9 per cent to its highest close in nearly five years. This, in turn, gave an early boost to European stocks. The FTSE Eurofirst 300 rose as much as 1 per cent before paring its advance to end 0.2 per cent higher. In New York, the S&P 500 rose 0.5 per cent after a choppy day’s trade, as US investors digested quarterly results from the likes of Caterpillar and Halliburton.” (Financial TimesRead more

Spending vs saving in US households

Obviously it’s important to know the extent to which household debt reduction in the US has come from voluntary decisions versus how much has come from involuntary charge-offs.

The knowledge leads to a better understanding of inequality trends and measurement problems.

But within the more limited realm of voluntary debt reduction, it’s also helpful to explore the ways in which competing circumstances can influence households’ decisions to save and spend. Read more

The consent of the (bondholder) governed

Sometimes, the courts of England and Wales taketh away when it comes to the law on restructuring bonds and getting debtors out of holes. And other times they giveth.

A landmark decision by the England and Wales Court of Appeal on Monday falls under the latter… Read more

What scheduling conflict?

At some point, Ben Bernanke made appointments on his personal calendar stretching from Thursday 29 August to Saturday 31 August.

And he didn’t think: “Hey, I’m the world’s most important central banker. Is there anything that could possibly be going on at that time that involves people like me? You know, like a symposium at some rando place in Wyoming that journalists refer to as ‘idyllic’ and that takes place at the exact same time every year? If so, I should probably leave the slot open.” Read more

No more nitroglycerine


…the UK is a must to avoid. Its Gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks for bond investors. In addition, its interest rates are already artificially influenced by accounting standards that at one point last year produced long-term real interest rates of 1/2 % and lower.

 Read more

Breaking bad inflation expectations

A pattern is evolving in the world of inflation expectations.

It goes something like…

QE/government intervention is announced, people interpret this as inflationary, risk-on mentality ensues, a good opportunity to lock-in yield is provided for anyone who recognises the yield curve is mispriced — in the sense it is pricing in too much inflation/higher interest rates — the expectations turn out to have been misplaced, the curve corrects, confidence is lost until a new round of QE or government intervention is announced.

And so on. Read more

Markets Live: Monday, 22nd April, 2013

Live markets commentary from 

The (early) Lunch Wrap

The US economy will officially become 3% bigger in July || Italian president Giorgio Napolitano was re-elected on Saturday || Banks pull back from risky regions || BaFin puts Reits in turmoil || U.S. box office heroes proving mortal in China || China’s slower Q1 growth is a ‘normal’ effect of structural reforms || Three more executives leave ENRC || G4S to quit key Israel contracts amid protests || Audit regulator calls for end to anonymity || ABB, the Swiss engineering conglomerate, is to buy US renewable energy company Power-One for $1.03bn in cash || Betfair rejects £910m CVC approach || Markets roundup || FTAV’s latest Read more

China’s post-modern macro data (or, when Q1 is not Q1)

It turns out that China’s official statisticians might not have adjusted for 2012 being a leap year in the Q1 accounts. Plus, there have been big sampling changes that render the numbers even more subjective than we thought…  Read more

Further reading

Elsewhere on Monday,

The jobless trap.

– The unscientific method.

All that math and the expert problem. Read more

The 6am Cut London

Japanese stocks rise sharply as yen weakens || UK banks say FLS extension not enough || New Italian president to pursue coalition government || US economy to be 3% bigger on new measure || Europe’s politicians resigned to years of low growth || Slower Chinese growth a ‘normal’ cost of restructuring || Policymakers press on with austerity Read more