April, 2010
From Level I to Level III, the myth of fair value
Fair value –or mark-to-market — accounting is back in the news.
The IASB and FASB, the European and US accounting standards boards, are reportedly grappling over global accounting convergence because of the issue. From the FT:
Chinese consumer credit binge begins
We’ve just seen Chinese GDP rise 11.9 per cent in Q1.
And urban house prices increased 11.7 per cent in March.
And retail sales are up 17 per cent.
So here’s another dramatic Chinese statistic to throw into the mix,
Further reading
Elsewhere on Thursday,
- Housing finance reform: advise Uncle Sam.
- Plus: be your own Greek finance minister.
- The rise of Spain’s economía sumergida.
- For once, it’s not Lehman’s fault.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: A short story of a star hedge fund
Perhaps politicians will shift their attention to another possible subprime culprit, an Illinois-based hedge fund whose founder,
Snap news
Breaking pre-market news on Thursday,
- Dana Petroleum says makes significant gas discovery offshore UK – statement.
- Rio Tinto says most of operations ran at full capacity in Q1- statement.
- Roche Q1 sales beat forecasts,
23,000 words on derivatives reform
Oh goodness, Republican Senator Judd Gregg has his work cut out in mastering the intellectual debate on fixing the derivatives trade.
Here’s a long and detailed paper entitled: The Derivatives Dealers’ Club and Derivatives Markets Reform:
The slow death of the cajas
Ah, cajas de ahorros! The pain (in Spain) never seems to end for the country’s unlisted savings banks.
We’ve already noted how BBVA and Santander have started a race to the bottom in attracting new deposits — a race which the cajas seem set to lose,
Bernanke back on Capitol Hill
Ben’s up before the joint economic committee. Again. Click for the live stream or read his prepared testimony here.
Introducing SocGen’s ‘leak-o-meter’
Counter-intuitive, this one. Click to enlarge.
This is a list of stocks Société Générale thinks you should avoid — because, er, they might get taken over, or go up for some other random reason,
And the US bank earning season begins…
…with a big earnings beat from JP Morgan.
Via Reuters:
- JPMORGAN REPORTS FIRST-QUARTER 2010 NET INCOME OF $3.3BILLION, OR $0.74PER SHARE, ON REVENUE1 OF $28.2BILLION
- JPMORGAN Q1 REVENUE $28.2 BLN
- JPMORGAN SAYS BALANCE SHEET REMAINED VERY STRONG:
How ETFs fueled high frequency trading
FT Alphaville has previously noted the connections between the growth in exchange traded funds (ETFs) and the rise of high frequency trading.
For the first time, though, we see the relationship directly referred to by a company that’s positioned in the very heart of the ETF market-making business,
Greece – ‘It’s not that different’
SocGen’s Dylan Grice is one person not bored with Greece. In fact, he believes it is the beginning of a wave of government funding crises, not the end.
The reason? The colossal amount of government debt that needs to be issued.
Markets Live transcript 14 Apr 2010
Markets Live chat transcript for the chat ending at 11:00 on 14 Apr 2010. Participants in this chat were: Bryce Elder Neil Hume, FT BEWarning BEWho should read this?
All staff.
A different kind of bank repurchase
Call it poetic justice. Or perhaps, credit comeuppance.
The ghosts of sketchy mortgage loans are coming back to haunt the banks that created them — in the form of a wave of mortgage repurchases.
The way repurchases work is this.
Lehman’s alter ego – or was it?
Thank heavens for Lehman’s Repo 105.
Revelations of the repurchase arrangement, which helped the former investment bank hide risk ahead of quarterly reporting season, have initiated a spate of investigative reportage on all matters off-balance sheet.
Bored with Greece? BNP Paribas is too
The game being played out between Greece and the rest of the eurozone has perhaps become a bit tedious by now.
The pattern is pretty well-established. Greek bonds take a dive as investors start worrying –>
Historic moments in Chinese banking
Are you a Chinese politician looking for ideas to pare back your country’s lending boom?
Well, look no further! According to a new NBER paper, your own history — circa the late Qing dynasty — has some excellent policy insights.
Fear me, for I am a liquidity-giving economy
In addition to weighing surcharges for too-big-too-fail banks, the latest edition of the IMF’s Global Financial Stability Report, has an interesting chapter on the 2007-2009 global liquidity expansion.
Musings on mortgage modification-obfuscation
Here’s something to ponder ahead of the US bank earning season.
Mortgage modifications — that is, changes to the terms of home loans — have been running rampant just as banks’ non-performing loans and net-charge-offs appear to be peaking.
Further reading
Elsewhere on Wednesday,
- The case for a Greek strategic default.
- Hypselotimophobes anonymous.
- A ‘domestic IMF’ for troubled US munis.
- US bank reforms: a little more stress (test), please.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: UK economy must perform a rebalancing act
How ill is the UK economy? What are the challenges for economic policy? These questions seem to me to be far more urgent than before any general election since 1979,
Snap news
Breaking pre-market news on Wednesday,
- ASML Q1 bookings beat forecasts, posts profit – statement.
- Fresnillo Q1 silver output up 3 per cent to 9.5m ounces – statement.
- Alisher Usmanov’s Red &
Kill all business journalists
Well, that seems to be the view of Howard Bernstein, executive producer of the most successful documentary in Canadian television history.
From Howard’s Medium Close Up blog:
I have a few proposals of my own to help deal with the business media as it exists today.
A Greek on Greece
Is Jim Chanos going soft?
He’s certainly soft on Papandreou’s plight, trying to sort out the Greek debt crisis, as this interview with Vince Veneziani at Clusterstock reveals…
You know I feel bad for my mother country in that they’re going through a lot of austerity now and I actually think that the Prime Minister and his team are doing the right thing.
The derivatives ding-dong waiting in the Dodd bill
Looks like the flagship of US financial reform won’t have plain sailing after all.
Tuesday brought an odd bit of shadow-boxing over where to park derivatives trading in the post-Lehman age. Something to watch,
Chinese bribery: wake up and smell the moisturiser
Corrupt business practices in China have ensnared many a foreign firm: most famously and recently, Rio Tinto; but also IBM, Hitachi and NCR. And now — the Avon ladies?
As Reuters reports (link ours):
‘I believe in the Goldilocks recovery’
Are fund managers becoming complacent? If the latest BofA Merrill Lynch survey of the profession is anything to go by there is certainly reason to think so.
According to the April report the number of investors taking “above normal risk”
The fight for deposits in Spain
FT Alphaville alerted readers on Tuesday to some of the factors raised in Iceland’s investigative report into the country’s banking collapse.
Appendix 3: Iceland’s failed banks – a post-mortem, by Mark J Flannery of the University of Florida noted the extent to which Icelandic banks had embarked upon measures to raise depositor funds,
Northern Rock, blast from the (misreported) past
A former deputy chief executive of Northern Rock has just been slapped with a £504,000 fine by the FSA.
The reason?
David Baker was aware Northern Rock’s Debt Management Unit was fudging its mortgage arrears figure,