April, 2010
Clutching at eurocrats
Well, where does Greece go from here?
Search us, in so far as we were able to decipher official European views following Thursday’s spike in Athens’ debt costs.
As for where Greece is going on Friday? It seems that’s into one-year and six-month T-bills,
National bank of interventionski
A new European central bank turned to currency intervention this week.
As the National Bank of Poland stated simply on its website on Friday:
Narodowy Bank Polski w godzinach południowych dokonał zakupu pewnej ilości walut obcych po korzystnym kursie.
Markets Live transcript 9 Apr 2010
Markets Live chat transcript for the chat ending at 11:25 on 9 Apr 2010. Participants in this chat were: Bryce Elder Izabella Kaminska, FT BEGood morning BEAnd welcome to Markets Live
Dear BlueCrest investor, Bienvenue à Genève! (… and Guernsey)
Spare a thought for Michael Platt.
It’s not exactly the Caymans.
… The Guernsey cow is a more internationally famous icon of the island. As well as being prized for its rich creamy milk, which is claimed by some to hold health benefits over milk from other breeds.
A Greece-y weekend for markets
On Thursday there was some talk of an IMF-led rescue for Greece before the end of the month.
Scratch that.
On Friday, UBS economists led by Stephane Deo think we might get an IMF intervention as soon as this weekend:
China shows some appreciation, soon. How soon?
Oh, can’t we have renminbi revaluation before the weekend, China? Please?
Reuters reports that forwards on the RMB deflated a bit on Friday. Seems traders found a Thursday NYT piece, which declared a rise “very close”
China’s two (terrible) T-bill auctions
Got a spare 5bn yuan?
If you do you can buy the rest of China’s Friday T-bill auctions because . . . no one else wanted them.
Here are the details via the Bloomberg:
In words, that means China failed to find enough buyers for the whole of the two auctions.
The illustrative Maiden Lane I portfolio
Here it is — the ratings composition of Maiden Lane I: the special purpose vehicle created by the Fed to bail out Bear Stearns in 2008. The portfolio’s contents were made public last week.
A few caveats/notes on methodology
We’ve focused on ratings because they’re a quick and simple way to gauge the credit risk of a portfolio.
Further reading
Elsewhere on Friday,
- The fall of AIG, the untold story.
- Lessons from Argentina.
- When Greece became an emerging market.
- “The ironic thing about this Greek tragicomedy is that none of the key dramatis personae are Greek.”
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Now Obama is president with an endgame
So he’s not Jimmy Carter after all, the FT columnist writes. Barack Obama was in Prague this week to sign a strategic arms treaty with Russia’s Dmitry Medvedev. Next week the US president plays host to 50 world leaders to discuss strengthening arrangements for nuclear security.
Snap news
Breaking pre-market news on Friday,
- Swedbank to leave state guarantee programme – statement.
- Michael Page says to improve performance significantly in 2010 – statement.
- John Lewis weekly department store sales rise 30 per cent – statement.
Would you stick with a failed bank?
American Banker on Thursday published a piece on an under-examined phenomenon: how do the consumers of the hundreds of small and regional banks that have failed and subsequently been ‘resurrected’ via FDIC mechanisms react to the process?
Whenever an FDIC-insured bank fails and its assets are transferred to an “acquiring financial institution”,
‘the deterioration in fiscal balances has been structural rather than cyclical’
The credit portfolio strategy team at BNP Paribas is worried.
In a note published on Thursday, the credit analysts mused on Greece’s funding requirements and associated refinancing risk, as well as broader aspects of sovereign risk and the potential for a ‘hung parliament’ in the UK.
Well, where does Greece go from here?
Having watched Greek bonds plunge to new lows on Thursday, as credit default swaps on Greece set new records it was practically de rigueur to consider this as some soft of tipping point.
But a tipping point to what? Analysts stepped in to comment on Thursday — mostly in favour of a new EU-IMF rescue plan.
Chart du jour: The Greek bank deposit plunge
From IHS Global Insight senior economist Diego Iscaro on Thursday, a chart of the total deposits held at Greek financial institutions:
As Iscaro notes, the chart is inspired by the fact that four Greek lenders asked the government for access to the country’s support fund on Wednesday to counter falling deposit levels in the first two months of the year.
CDS report: Greek default not an issue?
“A default is not an issue for Greece”, ECB President Jean-Claude Trichet declared this afternoon. The activity in the CDS and government bond market this morning suggested otherwise. Greece’s CDS spreads reached 470bp at one point,
ECB liquidity monster demands good euro collateral, soon
The Kraken is a mythical deep-sea monster immortalised in the original 1981 version of Clash of the Titans.
As Wikipedia notes the monster is said to dwell off the coasts of Norway and Iceland. However,
Michael Burry’s premier primer
Michael Burry is having a moment. The one-eyed hedgie, who seems to have spotted the subprime problem before anyone else, has shot to fame in the wake of his starring role in the new Michael Lewis tome,
Deutsche Bank, Latvian bridges and EVFs
Risk — the magazine that first reported the story of Goldman’s Trojan currency swaps — has done some digging into how the Latvian capital of Riga managed to “lay their hands on spending money without reporting it as debt”:
On the matter of ECB swap lines…
FT Alphaville featured a guest post at the end of March by BNP Paribas economist Shahin Vallee, who claimed the ECB had agreed secret currency swap lines with Poland and Hungary in October 2009.
When FT Alphaville asked the European central bank about the swap lines,
Want to help Greece? There’s an account for that.
Now you too can help support the Greek economy.
The National Bank of Greece — which is not, by the way, the central bank of the Hellenic Republic — is encouraging visitors to its website to “deposit money into the ‘Solidarity Account’ for the nation’s public debt”.
FCIC TV, Thursday’s schedule
Robert Rubin was busy on Thursday playing down his role in Citigroup’s near-demise…
Chuck Prince, Citi’s former chief executive, was due to give evidence at the Financial Crisis Inquiry Commission’s hearings on “Subprime Lending and Securitization and Government-Sponsored Enterprises”
Trichet: ‘Default is not an issue for Greece’
European Central Bank president Jean-Claude Trichet gave his traditional post interest-rate decision press conference on Thursday in interesting circumstances.
While rates were left unchanged, Trichet spoke amid record plunges for Greek bonds in the markets — and in advance of a new haircut policy which may help Greece.
The Greek tragedy, recapped
By way of context and explanation for Thursday’s Greek carnage in the debt and derivatives markets — in which Greek-bund spreads and Greek credit default swaps spiked to fresh highs — FT Alphaville presents a round-up of its recent Greece posts:
ECB leaves interest rates unchanged
The European Central Bank left eurozone interest rates on hold at 1.0 per cent on Thursday.
As Barclays Capital’s Julian Callow summed it up (our emphasis):
No surprises there, and so attention switches to the press conference,
‘No chance of Greece going bankrupt’
With markets being spooked left, right and centre due to Greece’s ongoing debt travails, it’s good to see the Greek government providing some reassuring commentary to soothe concerns.
As Reuters quoted a Greek government spokesman saying on Thursday (emphasis ours):
Citi’s super-safe CDOs? Puh-lease
Reading the testimony of former Citi heads, at Wednesday’s FCIC hearing, could make one feel all warm and fuzzy inside. Citi, like so many others, was simply caught unaware by the sheer scale of the crisis.
Is this Greece’s point of no return?
Poker game, tipping point — take your pick of the metaphors to be applied to the chaos in Greek bonds on Thursday, as Greek-German bond yield spreads and both five and one-year Greek credit default swaps spiked.
Recovery, OECD style (Germany not included)
Here’s some nice big-picture graphs to pore over on Thursday, courtesy of the OECD’s interim assessment of the recovery in developed economies.
Well, perhaps not so nice for Germany.
The OECD’s take on GDP growth in the G7 economies springs one surprise,
Markets Live transcript 8 Apr 2010
Markets Live chat transcript for the chat ending at 11:18 on 8 Apr 2010. Participants in this chat were: Bryce Elder Izabella Kaminska, FT BEHello BEGood morning BEAnd welcome to Markets Live