Posts from July 2013

The Closer


– China RMB internationalisation debate hosted by Euromoney. Read more

FOMC statement, 31 July 2013

The tweet-length translation of Wednesday’s FOMC statement:

“Sorry, but we’re saving any juicy taper-hint deets for the minutes, and otherwise we’ll see you in September.”

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Goldman explains concept of queueing

When a lot of customers want to get their property out of the warehouse at the same time, a line forms…

Although Goldman is ready to swap you if you don’t like queueing in the LME warehouse system. Statement’s here. This is how it ends: Read more


Much excitement on Wednesday on alleged news (via CNBC) that George Soros has taken a big stake in the much discussed food supplement business Herbalife. Here’s the auto-update chart on Wednesday. At pixel the price was up 7.9 per cent at $64.70.

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Floating Treasuries, finally

If you really, really want to see the US Treasury’s final rule on its issue of floating rate notes (from the beginning of next year, using 13-week T-bills as a reference rate) — here.

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To catch an iron ore thief

Nicholas Colas at Convergex offers some interesting insights on diamond deflation in his Wednesday note.

First, he points out that the Cannes diamond heist was not necessarily the most cunning economic crime of all time, since diamond prices are under pressure at the moment — mainly due to a fall in Chinese and Indian demand. Moreover, diamond prices have a lot in common with their base metal counterparts (his emphasis): Read more

Those US GDP revisions…

This is what $560bn or so of newly-discovered US economic output looks like.

Yes it’s the latest BEA estimates/revisions of US GDP.

They’re out — and with 1.7 per cent growth in 2013’s second quarter, and 2012 growth revised up to 2.8 per cent from 2.2 per cent at the last estimate, they’re fairly good. Read more

The great pornwall of Britain

Pints, royals, strawberries and cream, bulldogs, cricket, fry-ups, football hooligans, and porn filters. All things British. The last item on the list being a recent arrival announced by Prime Minister David Cameron in a speech last week.

The filters will require an active selection to be able to view porn — plus anything that gets misidentified as porn — on one’s home internet connection.

Now, given that many Brits seem barely able flirt without the aid of alcohol (sorry!), one wonders exactly how many people will go to the trouble of getting the filters removed… but allow FT Alphaville to note that we kinda put “porn” in at least a couple of headlines over the last year. Just FYI. Read more

Markets Live: Wednesday, 31th July, 2013

Live markets commentary from 

The (early) Lunch Wrap

SEC charges former Santander exec and judge with insider trading || EADS to be renamed Airbus || BoE helped sell looted Nazi gold || Tourre trial told of ‘land of make believe’ || Global fertiliser shake-up after cartel falls apart || EU unemployment rate falls || JPMorgan to pay $410m to settle power probe || Schneider Electric to acquire Invensys for £3.4bn || Markets Read more

Time to rebuild dollar longs?

Here’s a chart that caught our eye on Wednesday morning (click to enlarge):

It comes via George Saravelos at Deutsche Bank and shows the surge in short-term flows. Read more

Further reading

Elsewhere on Wednesday,

– The real cost of sitting on cash.

– Winning the Afghan War with a new Silk Road.

– What is the payment structure of gold? Read more

A guide to the conceptual US GDP changes

The BEA’s comprehensive benchmark revisions to the national income and product accounts will be released later today, and they’ll include the major conceptual changes announced earlier this year.

If you want a straightforward summary of the changes and how they matter, we recommend Robin Harding’s piece from Monday. (And remember that the annual benchmark revisions, also to be released today, will affect numbers going back to 2010. Look for GDP and GDI, which had diverged markedly in the year through the end of Q1, to be revised towards each other.) Read more

The London 6am Cut

SEC charges former Santander exec and judge with insider trading: “US securities regulators brought a new round of cases of alleged insider trading ahead of BHP Billiton’s failed bid for PotashCorp, filing fraud charges against a former high-ranking executive at Banco Santander and a former Spanish judge. The Securities and Exchange Commission sued Cedric Cañas Maillard, a Spanish citizen and former executive adviser to Santander’s chief executive, and his friend Julio Marín Ugedo, a former judge in Spain, for allegedly making a total of $1m in illegal profits after trading in advance of the planned 2010 take.” (Financial Times)

BoE helped sell looted Nazi gold: “The Bank of England played a vital role in one of the darkest episodes in central banking history, facilitating the sale of gold looted by the Nazis after their invasion of Czechoslovakia in 1939. According to a hitherto unpublished history of the BoE’s activities in and around the second world war, the UK’s central bank sold gold on behalf of the Reichsbank – which Germany’s central bank had seized from its Czech counterpart – after the UK government had frozen all Czech assets held in Britain following the Nazi invasion.” (Financial TimesRead more

The Closer


– What’s an idea worthRead more

In Europe, the case for… optimism?

An early trickle of cautiously hopeful research notes about Europe’s economic situation has become a monsoon in the past week.

It follows the not-atrocious PMI and bank lending surveys, the ECB collateral rule changes meant to shift more credit towards the SMEs, the expectations-beating Spanish unemployment numbers, and a few other data points. Read more

Inflationistas and the global supply shock

Here’s a funny thing.

There was an amusing altercation between self-declared Austrian Peter Schiff (of “I see inflation everywhere” fame) versus The Money Illusion‘s Scott Sumner on Monday. It happened on Larry Kudlow’s show on CNBCRead more

Tchenguiz vs Grant Thornton

Is Vincent Tchenguiz the greatest legal mind of his generation? Almost certainly not. But his determination, evocative of a children’s game show contestant, is formidable.

Indeed, since being wrongfully collared by the SFO in early 2011 as part of their investigation into Kaupthing, the failed Icelandic bank, Tchenguiz has treated the hallowed workshop of British justice as his private version of Fun House, the 90s after-school TV hit that reflected a generation’s E-number giddiness. In the place of mulleted perma-enthusiast Pat Sharpe, a team of luxuriantly wigged QCs have watched Tchenguiz charge gleefully through the courts, snatching up legal goodies. Read more

Depositor defusal, Cyprus edition

Q. How do you approach a sleeping depositor in a Cypriot bank?

A. Very slowly: Read more

Russia’s LTRO (or LTROski, if you insist)

This is something we should have already picked up on. Russia’s central bank has its own LTRO going on and it had its first auction on Monday. Twas a little disappointing.

First, a catchup from Nomura: Read more

Markets Live: Tuesday, 30th July, 2013

Live markets commentary from 

The (early) Lunch Wrap

Barclays has revealed a £12.8bn hole in its balance sheet as it announced a £5.8bn rights issue || China’s central bank has injected money into the financial system for the first time in nearly half a year || Euro-area economic confidence jumps to highest in 15 months || Japan’s industrial production rate fell the most since the March 2011 earthquake || US cities edge towards hiring again || Italian banks’ loan books being quietly reviewed || JPMorgan Chase was expected to announce a settlement with the USFERC || Deutsche’s net income fell 49 per cent || UBS buys back toxic fund from SNB || BP revealed poor second-quarter profits || Appetite for subordinated bank debt grows || Markets wrap || FTAV’s latest Read more

Already-strong case for Yellen strengthens further, and a word about the inanity of “market” preferences

Not that we needed more convincing, but…

With the exception of certain commentators who get paid ostensibly to act like inveterate morons, nobody has doubted Janet Yellen’s record of analytical prescience in the past decade. Read more

A great China reckoning might not happen in quite the way you’d expect

A couple of weeks ago we asked some questions about what a further slowdown in Chinese growth might mean, and at what point it becomes a ‘crisis’. There’s a little bit of semantics and a vast amount of moving parts in answering this, but the point is that although the underlying picture of China’s economy looks extremely vulnerable, there are many ways in which a crisis might not erupt in quite the way — or at quite the speed — that some commentators seem to be expecting.

With that extremely broad-brush intro to a very complicated and murky subject done, we’ll point out a couple of people who, unlike us, are actual China experts and have provided some interesting perspective in the past few days. Read more

BARC, priced to go

You’ve got to admire the audacity of Credit Suisse, Deutsche Bank, BofA Merrill Lynch and Citi: they’ve agreed to underwrite the £5.8bn Barclays rights issue, pitched at 185p on a 1-for-4 basis. Read more

Further reading

Elsewhere on Tuesday,

Fear of a female fed chief.

– Silicon Valley startup crowd is becoming an actual cult.

– Why wasn’t China’s last local government debt audit good enoughRead more

The 6am Cut London

Asian shares rise || Mixed Japan data on industrial output; unemployment falls || Barclays plans £5bn+ rights issue || Italian banks’ loans reviewed || JPMorgan’s $400m energy market settlement imminent || Subordinate bank debt issues rose sharply in H1 || US MMFs like European banks again || Pettis on the true China growth rate || European cross-border bank equity solution Read more

The Closer

FT markets round-up: “Financial markets adopted a broadly cautious tone as a big week in terms of central bank meetings and economic data releases got under way. The Federal Reserve, the European Central Bank and the Bank of England are all scheduled to unveil policy decisions this week while a heavy schedule of global macro data will culminate on Friday with July’s all-important US non-farm payrolls report.” (Financial Times)

Publicis and Omnicom face hard sell: “Investors have given a lukewarm reaction to the proposed $35bn merger of Publicis and Omnicom, as the creation of a new Franco-US leader of the global advertising and marketing industry faced scrutiny from clients, regulators, rivals and analysts. The unexpected combination of the industry’s second and third largest companies by revenue, with a promised $500m of annual synergy benefits after five years but no premium for either company’s shareholders, left shares in Publicis up only 0.25 per cent at €59.50 as trading closed in Paris. Omnicom shares closed 0.55 per cent lower at $64.75 in New York.” (Financial TimesRead more

Markets: mind the central banks but otherwise we’ll see you in September

The ECB, BOE and Fed all meet this week, though expectations vary about what will emerge from each:

The Fed: The FOMC seems unlikely to announce anything major regarding its possible tapering strategy until September, though as always its post-meeting statement will be scrutinised for changes regarding the committee’s outlook for the economy. Some private sector strategists think the Fed could introduce a tapering schedule as soon as this week’s meeting without actually beginning to taper. But given the obviously unanticipated and unwelcome market reaction to Bernanke’s comments about tapering in the latest meeting, we doubt it. If anything, the minutes to this meeting will probably be more interesting than the statement itself. Then again, the FOMC has surprised us before, so we could turn out to be wrong. Read more

France sallies forth into pari passu case, shows more esprit than Washington surrender monkeys

Quelle blague with the pari passu saga, sometimes.

You go to all this effort to scare off the IMF from so much as bleating some tame reservations to the Supreme Court about how a ratable payment of holdouts by Argentina might hurt global ‘policy’ on sovereign debt restructuring. Despite ‘policy’ being something many expected the fund to look at.

Then you watch the French swoop in anyway. And they’re much fiercer than the IMF was going to be. Read more