Posts from Wednesday Feb 19 2014

The Closer


- The macroeconomic challenge. Read more

This is (beyond) nuts. When’s the crash?

in exchange for an aggregate of 183,865,778 shares of Parent’s Class A common stock (valued at $12 billion based on the average closing price of the six trading days preceding February 18, 2014 of $65.2650 per share (“Specified Price”)) and $4 billion in cash… In addition, upon Closing, Parent will grant 45,966,444 restricted stock units to WhatsApp employees (valued at $3 billion based on the Specified Price). Read more

FOMC minutes to January: little guidance on the eventual new guidance

The January FOMC meeting, Bernanke’s last, had an uneventful outcome: the taper would continue at the same pace, while the statement itself had only mild changes to the economic outlook.

If the minutes to that meeting were slightly more interesting, this passage is the reason (paragraph broken up for easier reading): Read more

How to better understand labour force participation, eventually

It’s a big day for Fed-watchers, with the FOMC minutes to the January meeting just out and Fed speeches by three district presidents (Dennis Lockhart, James Bullard, John Williams).

We’ve referred often to the dueling research papers of recent years debating whether the fall in the labour force participation rate has been mainly secular vs cyclical. Read more

Ukraine $1,984,838,000 5.00 per cent Notes due 2015 — and the burning tyres therein

Moscow doesn’t send tanks into revolting former vassals any more. It sends dollars.

For anyone who decides to follow the money when it comes to Ukraine’s split between the EU and Russia, the consequences can sometimes be grimly surreal when it gets to the prosaic matters of bond finance. Read more

An announcement from Blurred Group

blur Group today announced an expansion of its global finance and payments teams as it scales processes and systems to support the next phase of blur’s growth. There are extended remits for existing team members and new senior appointments in the Projects & Payments function and in blur’s Southern California strategy team.

Good news, eh? There’s more… Read more

KKR My Best Friend Cayman Topco Limited

Pets at Home is the latest addition to the pipeline of high-quality initial public offerings set to greet the Great British investing public, according to the FT:

It plans to raise £275m from the offering, which it will use to pay down debt. It will also use £325m from new banking facilities to cut debt. The group plans to have net borrowings of £275m when it comes to market. Read more

Affordability backwards

So, mortgages are more affordable because interest rates are low, right? Pick your chart provider and timespan of choice, but it is a well worn argument in favour of higher house prices: afford bigger mortgage, buy bigger more expensive house.

Not so fast. There is a case to be made that basing the analysis on the size of the initial payment is a form of mass delusion.

You see, the logic of affordability has its roots in the 1970s, but it is the reverse effect of something most people will have to fish out of the intellectual dustbin where the Taylor Rule and other inflation related analysis now molder: money illusion. Read more

Markets Live: Wednesday, 19th February, 2014

Live markets commentary from 

The (early) Lunch Wrap

Markets: European stocks are opening flat following a mixed session in Asia as investors express wariness over the pace of growth in the world’s biggest economy. Recent soft US data leave the dollar trading at its lowest level this year and this is encouraging funds into government bonds, nudging down yields. Industrial commodities are a touch weaker as “risk appetite” wanes.  Read more

UK drunkenness, tabulated

Click for the figures…

 Read more

The practicalities of EU QE

Actually, it’s a €1.5tn question… at least according to SocGen. But it’s not very clear if that matters considering the barriers to euro area QE are so high.

We don’t suppose the killer argument in favour will be that “an ECB QE programme of €1.5 trillion could lower the 10y Bund yield by 100bp, pushing it down close to the 10y yield of JGBs (0.6%)”, though it’s worth a shot. There might be more mileage in pushing the Dax angle. Read more

More on Abenomics and the wage-employment tradeoff

The recent economic news out of Japan hasn’t been encouraging.

The FT’s Jonathan Soble writes that export growth in particular has disappointed given the decline in the yen, and accounted for much of the shortfall in Monday’s release of Q4 GDP: Read more

Further reading

Elsewhere on Wednesday,

- Explaining theory to mom.

- In defence of blunders.

- Discussing tech progress and deflation using loaves and fishesRead more

The 6am London Cut

Markets: Asian equity markets pulled back in response to more signals that the US economy slowed down last month. US equities were held back from reclaiming record highs after a survey of US homebuilder confidence saw its biggest monthly drop on record, blamed on snowstorms that hit the eastern seaboard. A reading of New York state manufacturing conditions also disappointed. (FT’s Global Markets OverviewRead more