FURTHER FURTHER READING
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Here’s a useful assessment of both shadow banking’s relationship to the real economy and how it will be affected by forthcoming regulatory reforms, by strategists at Barclays.
A few thoughts of our own follow the excerpt: Read more
Those seemingly clairvoyant speculators who hoovered up Heinz stock options just before Warren Buffett and 3G Capital of Brazil launched their joint $28bn bid were always going to get nabbed.
And now they have been. Rodrigo and Michel Terpins, Brazilian brothers, have agreed to pay a fine of $3m and forfeit the $1.8m they made cashing in their Heinz options — funds that were frozen in a Swiss brokerage account by the SEC immediately after the trades were noticed, even though the American regulator didn’t then know who was behind the trades. Read more
The FT’s Tracy Alloway and Michael Mackenzie report on Thursday that banks are making contingency plans to deal with the potential impact on the $5tn “repo market” of the US government missing a payment on its debt.
Which basically means determining when we should start treating a US Treasury Bill as a potentially defaulted security. Currently, you could say, the T-bill’s status exists in a quantum state. It could be the best collateral in the world, but then again it might not be. Which one it is depends entirely on an externality, and to some degree how we choose to observe it.
This is probably welcome news given that the role played by distressed collateral and repo markets back in 2008 is still poorly understood. Read more
Live markets commentary from FT.com
Every Federal reserve bank shall have power…
…To buy and sell in the open market, under the direction and regulations of the Federal Open Market Committee, any obligation which is a direct obligation of, or fully guaranteed as to principal and interest by, any agency of the United States.
— Section 14.2(b)2, Federal Reserve Act
Now, reading that carefully…
Does that mean the Fed can’t buy defaulted US government debt? Read more
That’s from Nomura, do click to enlarge. They remain optimists even if they do think a solution will only come in the 11th hour: Read more
Debenhams, a UK department store chain that was once the plaything of private equity, has been back in the market buying up its own stock.
Debenhams plc (the “Company”) announces that on 9 October 2013 it purchased 375,000 of its ordinary shares of 0.01p each through Citigroup Global Markets Limited at an average price of 102.56 pence per share. The highest and lowest prices paid for these shares were 104.00 pence per share and 101.20 pence per share respectively. The purchased shares will all be held as treasury shares.