Posts from Friday May 2 2014

Rating P2P

The ratings agencies are wondering how to apply their business models to the growing world of P2P loans.

From Standard & Poor’s this week:

Standard & Poor’s believes the novelty of this sector and its wide range of players presents unique challenges in assessing the overall risks in future P2P loan securitizations. We monitor developments in this nascent sector from a cross-sector vantage point and draw upon our experience in rating various types of consumer, commercial, and structured debt.

P2P lending is evolving, and it’s still too early to know what the industry will look like in its more mature state. As with any young and untested market, we believe there are issues that need to be addressed before we can assign ratings. Some of these issues are P2P companies’ lack of performance histories through full economic cycles, uncertainty about their long-term commitment to the business, and their financial stability, operational risks, servicing quality, and loan credit performance in a downturn. We also consider the unproven ability and capacity to comply with new and ongoing regulatory and legislative requirements.

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April Payrolls: 288k, jobless rate 6.3%

Surprise! Biggest jump since January 2012. Consensus had been for 215,000. The jobless rate is at its lowest level for more than five years.

Upward revisions to prior months also. February goes from +197k to +222k, March from +192k to +203k, making this the third month of jobs growth above 200,000. Read more

The Fed’s future management of short rates

As expected, this week’s FOMC statement was mostly a snoozer, but the notification of a closed-door meeting on Tuesday to discuss “medium-term monetary policy issues” at least gave Fed-watchers something to ponder.

We might need to wait for the minutes before discovering the purpose of the meeting, but one reasonable guess is that it was to further discuss the Fed’s eventual exit plan, a favourite FT Alphaville topic. Read more

Markets Live: Friday, 2nd May, 2014

Live markets commentary from FT.com 

The (early) Lunch Wrap

RBS profits up, shares follow || Pfizer offers £50 for AstraZeneca, but is rejected || Ukraine hostilities escalate || BASF eyes shale investment || Markets quiet ahead of jobs data Read more

Former Herbalifers on film

It’s not just ABC News which has cameras. Bill Ackman’s Pershing Square will unveil a documentary on Friday, with interviews of individuals and families who tried out the Herbalife multilevel marketing plan.

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China, the US, and PPP: a pretty poor parallel

Much is being made of China being about to pass the US as the world’s biggest economy — and of China’s fight to massage down the figures.

We hate to side with Chinese statisticians, but at the very least Beijing may well be right to play down the comparison in its local media.

Here are a couple of surprises which come out from using similar adjustments to the PPP calculations used to show China’s economy is bigger (using the IMF’s World Economic Outlook database)…

  • In 1980, Greece and Gabon (which was in default on its debt from 1999 to 2005, but has lots of oil) were ranked above the UK for PPP-adjusted GDP per person. Before adjustment they were about a third poorer.
  • East Timor, on the IMF’s 2014 estimates, is ranked as richer on PPP-adjusted GDP per capita than Poland, Estonia or Hungary – and is ranked only 1.4 per cent poorer per person than Portugal, its former colonial master. It has discovered oil, boosting GDP. But before the PPP adjustment, GDP per capita is put by the IMF this year at $4,669 vs $14,166 a head for Portugal.

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US payrolls preview

As of this morning, the consensus expectation for today’s employment situation report in the US was for a 215,000 gain in payrolls a decline in the unemployment rate to 6.6 per cent (from 6.7).

Given the ongoing debate about labour market slack, the figures for average hourly earnings and the length of the workweek are also important. Read more

Video: manufacturing, construction, and the US labour market

We continue tinkering with video ideas. This one is a tl;dr version of a long earlier post on the US construction and manufacturing sectors.

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Further reading

Elsewhere on Friday,

- The rise and rise of the salt water school.

- Should governments run budget surpluses?

- Death of the URL.

- Bears climbing the wall of worry. Read more

The London 6am Cut

Ukraine PM warns of ‘most dangerous 10 days’: “Ukraine’s interim prime minister said on Thursday his country was entering its “most dangerous 10 days” since independence in 1991 and was struggling to counter pro-Russian separatists on the verge of taking over the industrialised eastern heartland. Arseniy Yatseniuk, in an interview with the Financial Times, accused Moscow of plotting to foment more clashes during the May Day holidays when nostalgia for Soviet victories and achievements tends to peak.” (Financial Times)

Third Point puts pressure on Dow Chemical: “Third Point, the hedge fund led by activist investor Daniel Loeb, has raised the pressure on Dow Chemical to improve shareholder returns, setting out a detailed critique of the company’s strategy. In a letter sent to its own investors on Thursday, Third Point said that Dow had taken some “shareholder-friendly actions”, but had still failed to address concerns that it was “under-earning its potential in its petrochemical businesses”.” (Financial TimesRead more