Posts from Wednesday Jul 10 2013

The third arrow’s lofty aim: the cases for and against optimism

From a Credit Suisse strategist note, first a reminder of what’s in Shinzo Abe’s ‘Third Arrow’ for rescuing the Japanese economy:

■ Bring investment back to pre-crisis levels (an 12% increase from current levels); Read more

The Closer

FURTHER FURTHER READING

- Goodbye Juncker! Read more

FOMC minutes for meeting of June 18-19, 2013

They’re out, and here is the segment of the participant discussion on asset purchases that everyone is curious about (further updates to follow as we make our way through them): Read more

The WTI carry unwind

The fixed income team at Credit Suisse have a good note talking about what’s really driving WTI backwardation. Small hint, they don’t think it’s much to do with Egypt.

They put the backwardation down to three things. Read more

The Turkish inversion

That’s the Turkish two-year yield rising above the 10-year earlier on Wednesday — chart via Reuters:

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Cash for copper in China (or whack-a-mole financing)

Kate’s post on the June China trade data mentions that commodities imports were the only bright spot (although it’s a somewhat dubious bright spot if it indicates a resurgence in investment). It turns out that copper imports were particularly strong, recording a 9.7 per cent year-on-year increase in June, a rather large change compared to a 14.6 per cent decline in May.

Goldman point us to one compelling reason why that might be the case. It’s basically another case of whack-a-mole financing in China. Hit over-invoicing over the head and up pops ‘Cash For Copper’ (CFC) financing. Read more

The hand of GOFO strikes again

The gold market is abuzz with the news that gold forwards (GOFO), otherwise known as the gold lending rate, have returned to negativity this week. It’s significant because the last time this happened was in 2008 (click to enlarge):

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Introducing the SRM, mangled at birth

Yep, another euro acronym that may or may not take real form.

Notwithstanding resistance in Berlin, President Barroso and his team in Brussels have published details of the Single Resolution Mechanism which the European Commission wants to see as part of an eventual banking union across Europe. Read more

One very large divergence please (with a dollar chaser)

According to Nomura, since 1980, there are only two periods of economic divergence — between the US and Europe and the UK — comparable to what we are observing currently.

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Markets Live: Wednesday, 10th July, 2013

Live markets commentary from FT.com 

The (early) Lunch Wrap

China’s June trade data pointed to a deeper slowdown || Saudi Arabia and UAE prop up Egypt regime with offer of $8bn || Brussels sets up clash with Berlin over banks || Bakries offer to sell Bumi stake || J.P. Morgan review finds errors in debt-collection lawsuits || Rupert Murdoch has been summoned to reappear before the culture, media and sport select committee || The BoJ is unlikely to ease further this year || German and French companies to benefit from lower borrowing costs || The US government has officially designated AIG and GE Capital as “systemically important” || Markets wrap || FTAV’s latest Read more

Gaffe TV

Here’s the moment, on Reuters Video on Tuesday (03:54 on the countdown clock) , when Germany’s Asmussen said… Read more

Why China’s June trade data are almost unremittingly bad

The short answer: the June trade numbers missed expectations by a long way, and the details did nothing to provide reassurance. Here’s a long-ish term view, courtesy of SocGen:

China June 2013 trade from 2005 - SocGen

Coming so soon before the Q2 GDP data, which is due next Monday, the data have raised the possibility — noted by the FT’s Simon Rabinovitch — that China might actually miss its growth targets for the first time in 15 years. Read more

Further reading

Elsewhere on Wednesday,

- The set up for the collapse in oil prices.

- Terminator 2-style liquid metal can now be 3D printed.

- It’s a big week for the Big Four accounting firms in China. Read more

The 6am Cut London

Asian stocks slightly higher || Big miss on China trade data || EU set for Germany clash on bank resolution || Murdoch summoned back to select committee || BoJ easing expectations fall || Germany, France benefit most from ECB policy || AIG and GE Capital ‘systemically important’ || US bank capital rules unveiled || Why China won’t buy the world Read more