Icap’s Chris Clark alerts us on Friday to the fact that European liquidity markets are already preparing themselves for a potential liquidity squeeze come the end of the year.
As he notes:
Month-ends have become increasingly significant events for the Eurozone repo markets over the second half of this year as levels of excess liquidity have diminished and market rates have slowly edged higher. This Thanksgivings Day/November month-end liquidity hump has proved a tricky one for the market to manoeuvre, but already attention is focusing on the impending year-end as evidence stacks up to suggest funding might be problematic for some.
The Financial Conduct Authority has written to the banks, suggesting that they think long and hard before enforcing contractual terms agreed with their small business borrowers.
The WTI-Brent spread is at a record wide of almost $20 per barrel. This isn’t, of course, what was supposed to happen.
As JBC Energy wrote on Thursday: Read more
Live markets commentary from FT.com
Josh Brown, aka the Reformed Broker, is pleased to see his favourite of all the earth’s charts, updated by the Stock Trader’s Almanac.
Far be it from us to stand in the way of good chart, or the majestic sweep of history, but we’re going to admit to some confusion on this one (click to enlarge). Read more
Elsewhere on Friday,
- Computers are getting creative.
- The darn WTI-Brent spread just won’t close.
- Black Friday madness begins. Read more
Markets:Australia’s markets fell into the spotlight after the nation’s government rejected a multibillion-dollar bid for Graincorp, the agricultural group, while miner Rio Tinto revealed further cost-cutting measures that heightened concerns over the health of the country’s mining sector. Heavy selling of the Australian currency saw it fall 0.44 per cent against the US dollar to $90.65, its lowest level since September 3. The benchmark S&P/ASX 200 index slipped 0.3 per cent, while Graincorp’s shares opened 26 per cent lower. (Financial Times) Read more
We noted that the shift from Bitcoin into other crypto alternatives, which give early adopters a better chance at pilfering wealth from suckers, had already begun.
We referred, for example, to the rise in Litecoin. But this was foolish. We were thinking too small. There are so many other virtual choices on the market. Read more
Remember Sir Terry Leahy, driver of the Tesco retail steamroller for more than a decade? New stores, lower prices, chug chug chug.
Well, we wonder if we should be paying more attention to what he is up to these days, after Kingfisher, owner of the B&Q DIY retail chain, offered profits on Thursday that the market and analysts judged disappointing. Read more
Declaring victory by press release on Thursday, the Bank of England announced that it will re-focus its funding for lending scheme towards small businesses next year.
The current scheme expires at the end of January, and a day after the ECB floated its own funding-for-lending trial balloon, the UK central bank has said that it will carry on, but “with incentives in the scheme skewed heavily towards lending to small and medium-sized enterprises (SMEs).”
Major thanks also to the housing market boom (our emphasis): Read more
Live markets commentary from FT.com
Biden to raise China’s ‘unsettling behaviour’ in visit || Rio Tinto to expand Australia iron ore production operations || Cameron in U-turn on plain packaging for cigarettes || US Regulators schedule dates for Volcker vote || SAC’s Steinberg asked for ‘proprietary information’, court told || E&Y to pay $99m to settle Lehman litigation case || Barclays to pay NY trader $2.1m || Guangdong to launch carbon permit market || Vale has agreed to pay Brazilian authorities R$22.3bn || Judge clears American-US Airways merger || Markets Read more
A couple of things worth noting, for those interested in the virtual pump-and-dump campaign that is Bitcoin.
1) The Chinese Bitcoin premium has seemingly abated. Read more
Presenting Italy, a central plank in the argument for a new vLTRO or at least an extension of what we already have:
A useful chart from Citi on Thursday morning (which you may click to enlarge), on the recent rise in bank holdings of sovereign debt. Read more
Elsewhere on Thursday,
- Bertrand Russell’s chicken — Thanksgiving relevant.
- The trouble with economics is economists.
- Frome hoard meet Docksway hoard. You’ll have plenty to talk about I’m sure. Read more
Markets: Wall Street cheer crossed the ocean to push Japanese stocks to a six-year peak and saw Hong Kong stocks flirt with near three-year highs. (Financial Times) Read more
FT Alphaville wishes its US readers a happy Thanksgiving holidays.
FURTHER FURTHER READING Read more
Euromoney reports on Wednesday that Citigroup is attempting to revive “leveraged super seniors,” a type of synthetic CDO not seen seen the financial crisis. We take a (no doubt unhealthy) interest in all things LSS, given our previous experience helping out on this series of Financial Times stories. The stories involved three former Deutsche Bank staff who blew the whistle on the way the German bank was allegedly valuing so-called “gap risk” on $130bn worth of LSS of trades. Read more
When things get too expensive, imperfect substitutes become increasingly appealing.
It happened to oil with natgas and shale. It happened to gold with copper and silver. Now it seems to be happening with Bitcoin as well.
So while Bitcoin traded through $1,000 on Wednesday (depending on which exchange or service you use to acquire Bitcoin: it was $1,035 on MTGox, $922 on BTC-e at pixel time), more interesting is the recent surge that’s taking place in the value of alternative crypto currency Litecoin: Read more
It’s well known that Japanese society is ageing, rapidly. Here’s the trend charted, by Nomura’s Kyoichiro Shigemura. Click to enlarge,
And could it be a job for the special one?
A republic since 1910, Portugal elects its President every five years and the next election is not until 2016. But EconoMonitor floats an interesting idea, while considering the possibility of a monarch for the former kingdom. Read more
Live markets commentary from FT.com
Cardiff made a nice point on Tuesday that financial innovation, much like evolution, always finds a way. We have stressed before that that’s because risky lending — i.e. lending to the most distressed who are prepared to pay for it the most — also always finds a way.
So, in what form did the most recent spell of risky lending take place in? Read more
German Chancellor Angela Merkel’s conservative alliance has struck a deal to form a coalition government with tits arch-rival || Compass is to return || £500m to investors || The recently listed Royal Mail said first half profits were higher || Israel and the European Union resolved a four-month diplomatic dispute over new EU rules that prohibit public funds from going to Israeli entities located in territories claimed by the Palestinians || The Federal Reserve pressed JPMorgan to distance itself from its metals warehousing business more than a year ago || Markets || FTAV’s latest Read more
Yes, we said that the Herbalife sell case would be the next installment of our series on the company, but we interrupt that train of thought to bring you this fascinating piece of due diligence.
I went to see your health and scientific center, and the dedication of your scientists there and how they were thinking there about how they could create a product that actually did what it said it was supposed to do. And to make sure is it was absolutely dedicated to a scientific basis, that it understood what it is in peoples bodies that requires them to have certain nutrients, and I was very impressed, truly impressed.
Have an expansive ECB toolkit courtesy of Deutsche (click to enlarge):
On that note, here’s Reuters on Wednesday:
The European Central Bank is considering a new long-term liquidity operation available only to banks that agree to use the funding to lend to businesses, a German newspaper reported on Wednesday, citing sources.
Should “circumstances matter” be the new “incentives matter”?
Think of poverty’s influences on decision-making as falling into two categories.
The first includes the combined psychological and brain-chemistry effects, all the ways in which poverty can affect the mind as it makes choices. The second is through the nature of the choices themselves, which differs from that of people with means. Read more
Elsewhere on Wednesday,
- From the mouth of Vaclav Smil.
- Cinda, squaring the triangle.
- The new litmus test for right-wing sanity. Read more