April, 2010
From CDOs to EMs – what could go wrong?
File this under ‘looking bubblicious’: according to a Reuters report on Monday, “displaced credit experts” have shifted their focus away from CDOs and other structured products to emerging markets in South America and Asia.
A minority risk
UK elections, like UK budgets, tend to be a non-event as far as the UK stock market goes. That’s a consequence of all political news being pre-spun into share prices and/or the fact that London stocks have a distinctly international air.
Markets Live transcript 6 Apr 2010
Markets Live chat transcript for the chat ending at 12:29 on 6 Apr 2010. Participants in this chat were: Bryce Elder Izabella Kaminska, FT BEGood morning BEIt’s 11.30am, so it’s time for Markets Live
Moody’s downgrades Iceland’s ratings outlook on Icesave
The prospects for Iceland were looking slightly bleaker on Tuesday, as Moody’s downgraded the country’s ratings to negative from stable on “uncertainty over external liquidity”.
Moody’s said the country’s recovery was also threatened by delays in the resolution of the country’s Icesave dispute.
FT Alphaville Markets Live advisory
Please be advised that Markets Live, FT Alphaville’s daily roam around the markets, will begin at 11:30 a.m. BST on Tuesday, April 6.
The session, hosted by Bryce Elder, will also be cut short to half an hour.
Investors really ♥ junk. We mean really.
When people talk of junk bond rallies (and they have been talking – a lot) what junk are they referring to exactly?
The standard index for high-yield bonds, or US corporate bonds rated below investment grade,
Further reading
Elsewhere on Tuesday,
- Tired of the bears? Here’s one for the bulls.
- Forget the MPC. Do we need an FPC?
- The original sin of Repo 105.
- The hedge funder’s children’s book.
- ‘I saw the crisis coming.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Cameron’s Tories point to isolation
If David Cameron is elected prime minister of Britain next month he will be, in some ways,
Snap news
Breaking pre-market news on Tuesday,
- Reserve Bank of Australia’s Stevens raises key interest rate to 4.25 per cent – statement.
- NYSE’s European dark pool Says Q1 trading surges – Bloomberg.
WSJ vs Bloomberg on credit investors’ risk appetites
Both Bloomberg and the Wall Street Journal ran interesting — if ostensibly contradictory — pieces on the bond market on Monday.
First the news wire on the appetite for step-up bonds:
Bond Buyers Demand Record Downgrade Protection:
Greece’s deputy PM: Nothing to see here, but over in Portugal…
Greece’s politicians are a rich source of quote fodder, and as FT Alphaville has argued, not all of their pronouncements are self-defeating.
But gosh, they do seem to enjoy Schadenfreude.
Consider the following report by Reuters on Monday:
Further reading
A special, out-of-NY edition for the five of you at work today
Elsewhere on Easter Monday,
- ‘Tim Geithner should consider changing his name to “Stradivarius”, because the Chinese have played him like a fiddle.’
- When prop traders turn hedgie.
Should the world’s biggest investment banks (re)capitalise their UK units?
Over the weekend, the UK’s Sunday Times trumpeted: “world’s biggest investment banks ordered to inject billions”.
The story suggested the Financial Services Authority (FSA) wants global banks “to ensure that their British businesses hold enough capital to be able to stand on their own two feet if their parent companies suddenly stop trading.”
March non-farm payrolls rise by 162,000, fewer than expected
US non-farm payrolls rose by 162,000 jobs in March, the Bureau of Labor Statistics said on Friday. Economists surveyed by Reuters had forecast a gain of 190,000 jobs after February’s drop of 36,000.
The unemployment rate held steady at 9.7 per cent for the third straight month,
FT Alphaville’s Easter schedule
FT Alphaville will be running a limited service over the Easter holidays, reacting to breaking news only.
Please be advised that the Asia, New York and European cuts will return to a normal schedule by Tuesday,
Being John Malkovich means suing the Madoff estate for $2.2m
Not an April fool’s joke: actor John Malkovich was a client of Bernard Madoff’s, and on Thursday, he sued the Ponzi schemer’s estate to recoup his investments.
(For what it’s worth, other Hollywood Madoff losers include Steven Spielberg,
Daimler settles with SEC, DOJ over global bribery charges
Daimler, the German carmaker accused by the the US Department of Justice of multiple counts of bribery, and facing similar charges brought by the SEC, on Thursday reached a settlement with both parties.
CDS report: Ship of fools
Ireland has been held up as an example of a country ready to suffer pain in tackling its acute fiscal situation. Austerity – surely one of the most overused words in recent months – was embodied by its 2009 budget,
[Ireland's Bad Bank] The Enig-NAMA variations
An important step, said the IMF. ‘An ingenious mechanism,’ Moody’s opined.
Just as well. Ever since Ireland’s National Asset Management Agency (NAMA) announced large haircuts on the toxic loans that will be transferred to it,
The year so far in sovereign CDS: a non-hysterical view
Shock, horror — credit default swap dealers haven’t liked the whiff of grapeshot from recent proposals to ban their market, not one bit, and they’ve been trading accordingly.
As Barclays Capital analysts observe in a note on Thursday updating on a previous calm take on CDS,
Credit where it counts?
*Poof* That is the sound of US bank credit evaporating.
Or maybe, a giant *Pop* would be more apt given the credit frenzy pre-2007.
Gluskin Scheff’s David Rosenberg estimated in February that $740bn of bank credit had evaporated since the credit crisis began.
Markets Live transcript 1 Apr 2010
Markets Live chat transcript for the chat ending at 12:18 on 1 Apr 2010. Participants in this chat were: Bryce Elder Izabella Kaminska, FT Joseph Cotterill BEGood morning. BEWe’re having technical issues.
In the Fed we TruPS
Wading through 161-pages of CUSIPS takes a while.
But here’s something that caught our eye from the Federal Reserve’s Maiden Lane I portfolio — the special purpose vehicle it created to buy up assets from the failed Bear Stearns:
The IMF on Germany’s Bank-Asset-Berg
We’ve seen a variation of the below chart, which we’ve dubbed Germany’s Bank-Asset-Berg, before:
The above version, however, comes from the IMF’s latest report on Europe’s biggest economy.
It’s pretty self-explanatory;
[Ireland's Bad Bank] “Most of the damage in this crisis has been done by just one institution”
The FT’s opinion pages on Thursday disclose a cutting series of comments from Patrick Honohan, governor of the Central Bank of Ireland, regarding the role of one entity in Ireland’s financial crisis.
For as the governor wrote in the newspaper:
Coincidental headline du jour, topical finance edition
There’s a joke in here somewhere. We’ll let you find it.
Greece‘s Maiden Lane reconstruction meeting was held on Wednesday, the same day the Fed released details of its Maiden Lane portfolios.
Maiden Lane goes public
Here’s something to keep you busy over Easter break — 161-pages of CUSIPS and principal balances for the securities held by the Federal Reserve’s three Maiden Lane special purpose vehicles.
As a reminder,
Further reading
Elsewhere on Thursday,
- Don’t MBS with Texas.
- The ol’ CDO collateral switch.
- Words of caution on emerging market risk.
- How to game CDS non-regulations.
- Will natural gas stay oil’s poor cousin? For and against.