Posts from September 2013

The Closer


– Blaming the debt ceiling debate on… the Germans? Read more

Default denial and the dollar

This was Paul Krugman’s guess about what a debt-ceiling fueled government shutdown could lead to:

I’m not at all sure that we’re looking at an interest rate spike; maybe even the opposite. But for sure we should be looking at a plunging dollar, and probably carnage in the stock market too.

Courtesy of Deutsche Bank, here’s the latest change in net dollar futures positioning as of last week: Read more

‘We haz Phorm!’

From a global personalisation technology company that makes content and advertising more relevant to consumers, on Monday…

To date, the Group has incurred cumulative losses of $238.0 million… Read more

Who really (really, really) wants European stocks?

Along with its cheapness (or not), one of the main arguments about European stock markets appears to be whether investors own as many stocks as they should do. Or more importantly, will they buy more?

Bank of America Merrill Lynch stirred the pot earlier this month with a fund manager survey which found that allocations to European equities had reached highs last seen in May 2007: Read more

Markets Live: Monday, 30th September, 2013

Live markets commentary from 

The (early) Lunch Wrap

Italy’s PM seeks to shore up government || Parts of the US government may shut down at midnight on Monday for the first time since 1996 || Twitter prepares to unveil IPO filing ||
Wall Street’s top five banks face $1bn earnings cut || Faltering Chinese factory growth adds to rebound fears || Tories accelerate help for home buyers || Mizuho Financial Group hit by organised crime link fine || CLO issuance hits highest level since before financial crisis || Global banks cautious on Shanghai free-trade zone || Markets Read more

Debt ceiling fandango: the key dates

Ah, how we love the smell of US debt-ceiling drama in the morning.

In a note out on Monday, analysts at Bank of America Merrill Lynch give the chances of a US government shutdown this coming quarter a 30 per cent probability. They add that if it was to occur, it would probably be short-lived with minimal economic repercussions. Also, it’s not like a shutdown hasn’t happened before: it happened once in 1990, as well as once in 1995/1996. It wasn’t the end of the world then, and thus shouldn’t be the end of the world this time either. Read more

Further reading

Elsewhere on Monday,

Wealthy politicians… China vs the US.

Manual scavenging in India, a national shame.

– Should’ve hit Yellen harder, say Summers’ friendsRead more

The 6am London Cut

Markets: “U.S. stock futures and the dollar came under pressure on Monday as a shutdown of the U.S. government seemed increasingly likely, while the euro had political troubles of its own as the Italian government teetered on the edge of collapse. Not helping was a surprise downward revision to activity in China’s factory sector. While the final HSBC Purchasing Managers’ Index (PMI) did edge up to 50.2 in September, that was well down on the preliminary reading of 51.2.” (Reuters) (Bloomberg)

Italy’s PM seeks to shore up government: Enrico Letta is seeking urgently parliamentary support for a new government after centre-right leader Silvio Berlusconi pulled his ministers out of their five-month-old coalition, risking a financial market backlash. (Financial Times) Italian bonds and stocks are suffering. (Financial Times) (FT editorialRead more

Buiter on forward guidance, or, paging Sumner / Krugman / Woodford / Eggertsson / Svensson

‘Forward guidance’ had a poor start in life. It was born as a pleonasm – afflicted with a severe case of redundancy. ‘Guidance’ would have sufficed, as all guidance relates to the future and is therefore inevitably forward. Perhaps some idiosyncratic historians call their subject ‘backward guidance’, and maybe the odd tourist has signed up for instantaneous or simultaneous guidance around some ancient site, but we doubt it. Redundancy as a rhetorical device tends to be used when it is deemed desirable to inflate the importance of someone or something beyond what is fundamentally warranted. Our view is that this also is the case with forward guidance.

That’s the opening to Willem Buiter’s enticingly aggressive and highly readable 17-page note, available ungated at this linkRead more

Reaching for the pitchforks, bubble edition

For all the gnashing and wailing about the dangers of quantitative easing from some of the super rich, the fact remains that owners of capital (ie the rich) have done very well from QE.

Now, as we’ve noted before, plenty of serious people are paying attention to the inequality question, and its not clear what monetary policy can do about inequality even if it should do something about it. But news that US housing is turning frothy again, with San Francisco prices up 25 per cent over the last year, has Albert Edwards of Societe Generale reaching for the exclamation marks. Read more

Reminder: Please complete your Annual Risk Awareness Test

This is another reminder about completing your Annual Risk Awareness Test. Our records show that you have yet to complete the Insider Trading Module.

Please note — for like the 30th time or something — that completion is mandatory. You must complete the test by Friday, October 4th. Read more

Markets Live: Friday, 27th September, 2013

Live markets commentary from 

The (early) Lunch Wrap

George Osborne acts over housing boom fears || Japan CPI grows fastest in almost 5 years || Alitalia approves €100m capital increase || Swaps rules worry industry || Dimon at DoJ for $11bn JPMorgan settlement talks over mortgage securities || Obama and Republicans remain poles apart as twin crises loom || Rabobank to settle over Libor || Regling questions need for debt forgiveness in Greece || Irish house prices rise at fastest pace since property crash || Maersk calls bottom of trade cycle || JC Penny to raise $1bn || US money market funds in French surge || Markets Read more

Margins to save themselves, European edition

In case you hadn’t noticed, European stocks are no longer cheap. Word reaches us from Morgan Stanley this morning that valuations are starting to look “somewhat full”.

Indeed, the median stock in Europe trades on 14.5x forward PE and 18% above the 5-year average – which is the top of the last 20 years range.

 Read more

How I learned to stop worrying and love the bubble

Paul Krugman had an insightful post this week on secular stagnation. It alluded to the fact that bubbles may increasingly be coming to our rescue by inadvertently propping up our economy in a way that usually boosts employment.

An extract:

We might try to figure out why we seem to need leverage and bubbles to have full employment, and try to fix it. More thoughts on that on another day. But what if that isn’t an option?

 Read more

China’s plenum: the bloody versus boring debate

No point in getting too excited about China’s big policy bash — November’s third plenary session of the 18th Party Congress — just yet. It may be a once-in-a-10 year event but it’s probably going to be rather coy on detail.

It’s also important to remember this is the party’s meeting not the government’s and it’s not likely everyone sees eye-to-eye on a host of issues. Never easy getting people excited about changes to the teats upon which they suckle… Read more

Further reading

Elsewhere on Friday,

Looting the pension funds.

– Police busts and fake scholarly articles.

– China’s one child policy as impressive revenue raisierRead more

The 6am London Cut

Markets: Asian stocks are set for a positive end to the week as data from China, Japan and the US boosted confidence in the region. (Financial Times) (ReutersRead more

The Closer


– Studies on African economies from Wiley, free through December 31 (HT Diane Coyle). Read more

I see your millisecond study, and raise you my millisecond study

The world of milliseconds is getting unusual attention this week.

A report by Chicago-based market research firm Nanex argued that trade data showed that asset prices in New York and Chicago moved at exactly 2pm last Wednesday, when the Federal Reserve released its decision on monetary policy. Read more

Stock-taking the economy

In the summer, FT Alphaville attended a retreat organised by fin-tech investor Sean Park, who heads up the venture firm Anthemis. The event introduced us to a number of Anthemis’ portfolio and partner companies, all of whom were somehow connected to disruptive trends in finance.

Among them was a company called TrōvRead more

The sovereign ceiling, redux

Is this hundreds of basis points safer than the Greek government?

You might well ask. Read more

UK households go retro

The UK economy definitely expanded in the second quarter, by 0.7 per cent, the Office for National Statistics has confirmed.

Phew, recovery on track, although as the FT notes, household consumption was slightly weaker than previously thought, a 0.3 per cent gain rather than 0.4 per cent. Read more

Markets Live: Thursday, 26th September, 2013

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York,


Meet the new idiots, same as the… actually these idiots might be worse

To the seasoned finance blogger, US Congressional asshattery lacks the terrifying intrigue it had in 2011.

The world was in worse shape back then. It was pre-LTROs in Europe and high season for Eur-exit speculation, while in the US we were confronting another dispiriting summer slowdown and the legitimate possibility of a double-dip recession. As the possibility that the debt ceiling wouldn’t be lifted in time became frighteningly real, financial markets started flashing signs of acute distress, and consumer confidence cratered. Read more

Further reading

Elsewhere on Thursday,

– Of Madoff’s screw and “colloquial inference.”

– ICAP’s (alleged) criminality is basically just an extension of its core business

– Modern slavery: Nepal to Qatar and back againRead more

The 6am London Cut

Markets: Asian stocks fell for a third day with industrial and health care companies retreating, trimming the biggest monthly advance on the regional benchmark index since January 2012, as fears mounted of the impending showdown in Washington over a possible US government shutdown. (Financial Times) (Bloomberg) (ReutersRead more

The Closer


– Inter-dealer brokers’ inside informationRead more