April, 2010
Behold the debt spiral
There are many different types of spirals in the natural world. Here are just some:
One characteristic true to all is a curvature that winds progressively further out from a central point — getting larger and larger and larger as it goes.
Junk bank rally
Here’s a banking data point in the context of that model-breaking, crisis-forgetting, junk-crazy, dash-for-trash.
From Barclays Capital’s excellent first-quarter US bank results preview:
The earnings season kicks off for our coverage on April 14th with JPM.
Further reading
Elsewhere on Thursday,
- Deutsche Bank, Riga and muni derivatives.
- And more on muni CDS.
- Who controls the Bank of Japan?
- Madoff’s apartment is about to get creepier.
- Regarding the decline in birth rates…
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: The iPad’s scary counter-revolution
Can the iPad can “save publishers”? I think the answer to that one is “yes and no”,
Snap news
Breaking pre-market news on Thursday,
- BA, Iberia sign long-awaited merger agreement – statement.
- M&S Q4 sales growth tops forecasts – statement.
- Spain’s Banesto reports €211.5m Q1 net profit – Reuters.
Citi’s CDO woe: it’s all the consultants’ fault
Accountants and auditors – you can relax (though not for too long, because Repo 105 can’t just be shrugged off).
For a moment at least, the spotlight will turn to the consultants. As the FT reported on Wednesday:
US consumer credit, re-crunched
January, it seems, was a blip – albeit a bigger blip than first believed. But the trend in shrinking consumer credit in the US looks to have reasserted itself: figures released on Wednesday show consumer debt falling at an annualised rate of 5.6 per cent during February.
‘This might just be one of the most important communications by the ECB in its short existence’
The pressure is on Jean-Claude Trichet.
On Thursday at 13.30BST, the ECB president is due to explain the euro central bank’s new-fangled collateral policy, which is of some relevance to Greece and its stressed banks.
CDS report: Greece wider than Iceland
The European credit markets widened today as the worsening Greece situation wore down the resilience shown in recent days. Greece’s spreads soared through the 400bp barrier and hit 415bp today, its widest level since the beginning of February.
Subprime: it’s back in the headlines
A pair of subprime mentions caught FT Alphaville’s collective eyes on Wednesday.
First up, Alan Greenspan, who testified to the US Financial Crisis Inquiry Commission that ‘it was the global proliferation of securitized US subprime mortgages that was the immediate trigger of the current crisis’.
Spanish debt data point du jour
Delinquency rates for Spanish small to medium enterprises have begun to stabilise, Fitch reported on Wednesday.
While this is fairly good news, the data seem to underline how far Spain still has to go in solving its private debt problem,
Euro-denominated highs of the day
Renewed concerns over the Greek debt crisis saw the euro drop to its lowest level against the dollar in more than a week on Wednesday.
But euro investors should not be too fearful.
After all, there’s always the prospect of investing in assets that are notching up successive euro-denominated highs.
More on China’s overcapacity issue
FT Alphaville has wondered about the effects of lingering industrial overcapacity in key Chinese sectors before, especially in connection with commodity prices.
Now the Chinese government looks to be taking action.
FCIC TV – catch it now
Go here to watch Alan Greenspan blame everyone/thing but himself. Prepared testimony to the Financial Crisis Inquiry Commission available here.
The FT’s Simone Baribeau is live blogging the proceedings over on Money Supply.
The Goldman variations, annotated
After a statement of the aria at the beginning of the piece, there are thirty variations. The variations do not follow the melody of the aria, but rather use its bass line and chord progression. Because of this the work is often said to be a chaconne.
Markets Live transcript 7 Apr 2010
Markets Live chat transcript for the chat ending at 11:20 on 7 Apr 2010. Participants in this chat were: Bryce Elder Izabella Kaminska, FT BEGood morning. IKGood morning from me too
The Chinese SIV
SIVs? Subprime?
Meet China’s Local Government Investment/Financing Vehicles (LGIVs/LGFVs).
Independent Strategy came up with one of the most headline-worthy characterisations of the vehicles, dubbing them China’s own brand of SIV-like structures.
[South Africa 2010] World Cup beer goggles = 180bps
A World Cup without beer is like cricket without Pimm’s.
Or a night out in Essex without an alcopop.
But how much does hosting a World Cup football tournament actually boost local beer sales?
According to Sanford Bernstein analysts Trevor Stirling,
JP Morgan, I put a spell on you
There’s nothing like hard times to bring out the bank-bashing craziness.
And JP Morgan is no stranger to recession-induced weirdness. For instance, in 1933, in the midst of the Great Depression, John Pierpont Morgan Jr.
Further reading
Elsewhere on Wednesday,
- Debating a First Solar short and social utility.
- Greece, the IMF and the fatal flaw.
- How everyone talks their book.
- The predictive content of commodity futures.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Evaluating the renminbi manipulation
The incumbent superpower has blinked in its confrontation with the rising one: the US Treasury has decided to postpone a report due by April 15 on whether China is an exchange-rate manipulator.
Snap news
Breaking pre-market news on Wednesday,
- Peabody continues talks with Macarthur shareholders – Reuters.
- Renault-Nissan agree partnership with Daimler – Bloomberg.
- Dragon Oil cancels plans for restructuring – statement.
Hoenig, perma-hawk
The Federal Reserve on Tuesday published the minutes of the FOMC meeting held on March 16.
Voting against the prepared statement on the day, of course, was one Thomas M Hoenig, who clearly wants more wriggle room inserted into the committee’s public prose:
Introducing the Wolfexchange…
This one slipped us by over Easter: Martin Wolf has a new online home on FT.com – Martin Wolf’s Exchange.
Martin promises to post, on a fortnightly basis, on a subject that’s he currently thinking about and to invite wider discussion.
CDS report: Greece under scrutiny (again)
Greece’s CDS spreads spiralled upwards today, providing a reminder that the sovereign’s problems are far from solved. The country’s spreads rose to 400bp, 50bp wider than Thursday’s close and the first time it has reached this key level since Feb 24.
UK graduates <3 Goldman Sachs
Bad press and Jamie ‘Most Dangerous Man in America’ Dimon be damned. The UK’s graduating classes have spoken, and for those who see themselves as heirs to Gekko, Goldman Sachs is their would-be employer of choice.
Greek bonds break records, mostly just break
Ooh, this is grisly. Via Reuters on Tuesday:
RTRS – GREEK/GERMAN 10-YR GOVT BOND YIELD SPREAD HITS 406 BPS, NEW EURO LIFETIME HIGH
RTRS – OTHER PERIPHERAL EURO ZONE SPREADS AGAINST BUNDS ALSO GENERALLY WIDER
RTRS – GREEK 5-YEAR CREDIT DEFAULT SWAP RISES TO 377.3 BPS FROM 347 BPS IN NEW YORK ON APRIL 2 – CMA DATAVISION
Greek 5-year CDS,