March, 2010
Beware, repo rates are on the rise
It’s been less than a month since the Federal Reserve resumed its Supplementary Financing Programme in a bid to begin draining liquidity, but the effects are already creeping into the rate market.
Note the rise in overnight dollar-Libor rate here:
SAVE THE FAN CHARTS!
The Bank of England’s (in)famous inflation fan charts are at risk!
In a Monday lecture, Mervyn King, the bank’s governor, mused on how the BoE communicates information to the masses. Horror of horrors,
Trojan speculators, or, one headache for the Greek authorities
“We are in a state of war, in a battle against special interests, both at home and outside Greece. It is a battle against speculators and for transparency, so that markets are at the service of the people,
Further reading
Elsewhere on Tuesday,
- All about women and Wall Street.
- Financial markets –> fairness. Really.
- Nicholas Taleb, Nero Tulip and Fat Tony.
- The Japanese population cliff.
- Goldman CDOs exonerated? Maybe not.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
George Magnus: Renminbi reform is just the start for China
The friction between Washington and Beijing over exchange rates is about to get a lot worse,
Snap news
Breaking pre-market news on Tuesday,
- Babcock reaches agreement on terms of acquisition of VT Group – statement.
- Legal & General posts final results; final dividend up 33 per cent – statement.
When regulation fails, regulators turn to…more regulation
What do regulators do in the face of overwhelming evidence that they have failed at their jobs? They dust themselves off and try again, obviously.
Here’s American Banker on Monday:
Acknowledging that regulatory guidance to limit banks’ concentration in commercial real estate has failed,
Beware Greeks bearing (un)prepared statements
Greek’s political leaders appear to have something of a way with words.
In February, the deputy prime minister Theodoros Pangalos bemused eurozone watchers when he lambasted the quality of the European Union’s leadership and accused Germany of failing to apologise for wartime offenses.
We hope you know what you’re doing, Liberia
Did you get your fingers burnt by mortgage-backed securities in the US subprime bubble? This may give you a jolt. Fresh from the op-ed pages of Liberia’s Daily Observer, emphasis ours:
The modernization of Liberia through a community-based development can begin at an alarming rate if the government of Liberia can provide end loans,
CDS report: Rolls run smoothly
European credit spreads were wider as the markets transitioned smoothly into new contracts. The Markit iTraxx Europe Series 13 index was at 82.5bp on its first day of trading, about 3.5bp wider than series 12.
The Citigroup chairman doth protest too much
Or is this damning Vikram Pandit with faint praise? Via Reuters on Monday:
RTRS-CITIGROUP INC <C.N> CHAIRMAN PARSONS SAYS PANDIT ‘HAS DONE A TREMENDOUS JOB’ AS CITI CEO – BLOOMBERG TV
CITIGROUP CHAIRMAN PARSONS SAYS PANDIT HAS SUPPORT OF THE BOARD – BLOOMBERG TV
And finally,
Chart du jour, commodity speculator edition
The ever watchful Sean Corrigan at Diapason Commodities drew our attention on Monday to the state of outright net speculative length in crude products on the Nymex.
Here’s the chart:
The chart shows the value of all net speculative length in crude-related products on the Nymex charted against combined implied daily demand.
The UK is an EM trade
Alongside sterling’s weakness and a smattering of M&A, one of the reasons the UK has shown a clean pair of heels to its peers in Europe since the start of the year is its relative internationalisation.
Chinese justice and the Rio Tinto four
It’s the case all foreign investors into China should be watching: Rio Tinto v China.
After nine months of very little news but much sabre rattling, the pace has stepped up noticeably. As Bloomberg reported on Monday:
The bubble in British railways, 1830s edition
The following ars technica headline caught the eye of FT Alphaville on Monday: ‘Historian finds tech bubble that didn’t pop (180 years ago)’.
Ars cited a fresh batch of research by Andrew Odlyzko, author of a paper with an even more intriguing headline,
The ECB’s ‘rubbish’ collateral, analysed
Analysts at Italy’s UniCredit have conducted a thorough analysis of European banks’ use of the ECB’s liquidity operations and the type of assets pledged as collateral duringthe crisis.
Their clear conclusion is the quality of assets used in this fashion decreased markedly as the crisis unfolded,
I am Shiva, destroyer of market confidence — not
Someone killed the rally in London’s markets on Monday, and the Reserve Bank of India is a suspect – but FT Alphaville fears a miscarriage of justice.
(Shiva is the Hindu god of destruction and benefaction,
Markets Live transcript 22 Mar 2010
Markets Live chat transcript for the chat ending at 12:21 on 22 Mar 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHGood morning NHand welcome to Markets Live
The costs of closing a stockbroking business
Another unpleasant surprise for the shareholders of ICAP, the inter-dealer broker run by outgoing Conservative party chairman Michael Spencer.
From RNS on Monday:
ICAP plc, the world’s premier interdealer broker and supplier of post-trade services,
The CDS market has faith in eurozone unity
FT columnist Wolfgang Münchau is increasingly skeptical.
Martin Tayler, the former CEO of Barclays, is concerned.
But there’s one place where eurozone unity is still, or rather was of March 18, being priced in:
Is China on the verge of a commodities unwind?
The debate over China’s prospective inflationary path continues to intensify, with worries mostly focused on the effects of a loose lending policy and the dispersion of capital spending.
One area that potentially counters such talk,
The World’s Local (Small) Bank
That’s HSBC, in case you hadn’t guessed (or seen the advertising campaign).
In spite of being the largest non-Chinese domiciled bank in the world by market cap ($180bn), the World’s Local Bank only has double-digit market share in one place:
What is a ‘basically stable’ renminbi?
The superior man is modest in his speech, but exceeds in his actions.
- Confucius, The Analects, Chapter IV
China’s leaders have long been known for their pragmatically gnomic political sayings.
So much for diversification…
. . . and decoupling for that matter.
We’re being facetious, of course. A new academic paper from McGill University asks whether “…the potential for international diversification” is disappearing,
Further reading
Elsewhere on Monday,
- JGB yield curves get steeper.
- A blast of the trumpet against Ernst & Young.
- “Dear Audit Committee member…”
- Europe’s porcine debt rollover problem, visualised.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: US financial reform ignores wider terrain
Current proposals for financial reform inspire little confidence, says the FT columnist.
Snap news
Breaking pre-market news on Monday,
- Icap to close most of its cash equities business in Europe and Asia – statement.
- Forth Ports announces increase in the value of property assets, has agreed to meet bidding consortium – statement.
FTfmonAV
Highlights from Monday’s FTfm.
Alarm over commodity ETP returns
Investors may not fully understand that when the market is in contango the performance of ETPs can dramatically undershoot that of underlying spot commodity prices
UK must act on tax to win domicile war
If the UK wants to benefit from being a hedge fund domicile of choice,
Reasons to be miserable, UK edition
Andrew Garthwaite of Credit Suisse has come over all Krona-esque on the sterling.
From his global equity strategy note:
We think that £/$ could weaken to 1.35 as we believe seven factors are worse than the US: