Posts from Thursday May 9 2013

The Closer


Equities pause as focus shifts to FX: “Wall Street’s run of record highs finally came to an end as the focus shifted to the currency markets following the dollar’s first break above the Y100 level for four years. The dollar’s move came against a backdrop of increasing policy accomodation from the world’s central banks, most notably the Bank of Japan and the Federal Reserve. The data did little to bolster US equities as signs of fatigue began to show following five successive record closing highs for the S&P 500. The index fell 0.4 per cent while the FTSE Eurofirst 300 index closed a fraction lower, and the Nikkei 225 Average in Tokyo fell 0.7 per cent. Gold lost ground. with selling on the back of the claims data accelerating as the dollar strengthened. The metal fell $16 to $1,457 an ounce.” (Financial Times) Read more


There was big news early Thursday morning when Fannie Mae announced that it will be paying the Treasury a whopping $59.4bn dividend, just a day after Freddie Mac announced a more modest but still welcome $7bn payment.

The big payout is mainly a result of Fannie’s recognition that it will be profitable enough in the future to possibly using some $50bn in deferred tax assets — or as it writes in its earnings announcement: “Release of Valuation Allowance on Deferred Tax Assets “. Read more

USDJPY 100, eh?

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It’s not finance, it’s Cy-fi

Nanex, the market analysts who like to create visual representations of the markets, have animated half a second of trading activity in Johnson & Johnson stock. The results are quite intoxicating to watch:

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Welcome to Saudi America

WTI crude prices are on the rise, but only at the expense of Brent’s premium. The spread between the two crude grades shrank below $8 this week, its lowest since January 2011.

But what’s really striking is the rise in US crude output, which has risen 57,000 barrels a day to 7.37m — its highest level since February 1992.

If one chart speaks a thousand words in this regard, it’s the following one from the American Enterprise Institute’s Carpe Diem’s blog, charting data from the US Department of Energy:

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(Possibly) balance-sheet insolvent issuers, rejoice

Some light securitisation reading on Thursday; actually, more like some general ‘how much of western capitalism might be insolvent, anyway?’ reading.

It’s the UK Supreme Court’s judgment in the the Eurosail case.

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The Great Squiggle of central banking

Behold — an illustrative chart from Morgan Stanley’s global economics team (click to enlarge):

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Tesla’s rise and the credit connection

This has been the breakout performance of electric car maker Tesla in the last month or so:

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Fed ponders widening its bear hug to let in FMUs

Something that missed our radar back in March was the Federal Reserve’s proposal to allow systemically important FMUs (financial market utilities) to establish accounts with the central bank and thereby get paid interest on their reserves, much like the primary dealers.

This sounds unsexy as it is, but the quick background here is that the Dodd-Frank bill empowered the Fed to supervise those FMUs that are designated systemically important by the Financial Stability Oversight Council. And along with the added supervision, those FMUs would be allowed to open the reserve accounts with the Fed. Read more

“We find ourselves in the unique position of being in both an offer period and in the process of an official SFO inquiry…”

Spare a moment for Felix Vulis, chief executive of embattled miner ENRC. At pixel time, Kleinmanwire was reporting (exclusively, obvs) that both Deutsche Bank and Morgan Stanley have resigned as brokers to ENRC.

In the middle of a possible takeover bid and a very real SFO investigation… Read more

Asian currency wars, exporting deflation and the house price bind

Bank of Korea has done its bit to stoke the currency wars…

Although they insist that it’s not. From BAML’s Jaewoo Lee:

In the press interview, the Governor cited a few main changes since April which led the BoK to cut in May rather than in April: the supplementary budget was finalized; many central banks, including the ECB, turned to easing mode; and the easing can help further with improving sentiments. The Governor, on the other hand, stated that today’s decision was not a response to the yen weakness, contrary to the often-voiced speculation.

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Markets Live: Thursday, 9th May, 2013

Live markets commentary from 

The (early) Lunch Wrap

Tesla Q1 profits tops forecast and lifts sales outlook || Dubai Group agrees $6bn debt deal with bank committees || Sony swings to profit || Nokia Unveils $99 Asha Smartphone || FCC to consider using satellite airwaves to facilitate inflight internet || EU gets protectionist over cheap Chinese solar panels || || Chinese inflation nudged higher in April || Yields on junk bonds reach new low || Energy watchdog warns JPMorgan || Former Enron CEO Jeffrey Skilling’s jail term could be shortened || Dubai Group agrees $6bn debt deal with bank committees || Markets Read more

Fobor on film

Here’s Deutsche’s Jim Reid on junk bonds — where both defaults and yields are now far lower than they were in the 1980s — in Thursday’s Authur’s note:

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Further reading

Elsewhere on Thursday,

– The most important economic story that people aren’t paying attention to.

– Don’t take his advice.

– “Something happens to your brain after a big bonus“. Read more

The 6am Cut London

Asian stocks ex-Japan rise, yen strengthens || Bank of Korea cuts || China CPI rises, PPI falls further negative || New City regulator swoops on ‘transition management’ || News profits rise on cable || JP Morgan to be fined over energy || More on sub-5% junk yields Read more