May, 2010
Nasdaq, NYSE testimony on the flash crash
Talk about insta-outrage: less than one week after last Thursday’s ‘flash crash’, US lawmakers have organised a hearing on the roots of that sudden, short-lived stock market plunge.
The House Financial Committee on Financial Services,
Oh, those evil, speculative… European officials
FT Alphaville continues to be amazed at the hypocrisy of politicians and officials around the world, particularly as regards their attacks on so-called “wolfpacks” of speculators.
The most recent and
Welcome to the OECD debt trap
George Magnus’ most recent report on the upcoming global structural crisis to come is so good, we thought it was worth highlighting some additional extracts.
Consider, for instance, the charts below.
Dead Brown bounce
The UK won’t be getting a left-wing grand coalition after all, after five days of party negotiations in the wake of inconclusive elections and a mounting fiscal challenge.
UK gilts and sterling promptly rallied on Tuesday.
Magnus: ‘An existential crisis for the euro-system’
UBS senior economic adviser George Magnus has laid his cards on the sovereign crisis table.
He, for one, does not think the European Union’s weekend rescue will be enough to resolve the situation or stop it from spiralling into a structural crisis for all large debtor nations in the industrialised world.
Forget ‘bonus rage’, go to (a British) court
While US investment bankers face congressional grillings and “bonus rage”, Britain – somewhat ironically – is looming as a shining centre of bonus redemption for litigious bankers.
Even as the UK attempts to halt a bonus culture that politicians blame for helping to create the credit crisis, imposing a 50 per cent “super tax” on bank bonuses over £25,000,
Eurozone banks sip at ECB’s dollar swap facility
Rumours of an interbank funding squeeze swirled through the market last week.
Barclays Capital analysts for example noted that demand for USD funding in Europe had spiked in recent days:
The activation of fresh ECB,
Markets Live transcript 11 May 2010
Markets Live chat transcript for the chat ending at 11:27 on 11 May 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHGood morning NHand welcome to Markets Live
UK gilt auction – ‘pass’
The Debt Management Office has just released the results of the first post election gilt auction.
And…
… the bid to cover ratio was good although the average yield ticked up a bit to 4.472 per cent.
Dude, where’s my web of debt?
Ah, the power of infographics. You might have seen this nifty little NYT diagram of the links between Europe’s, err, porcinely acronymous debt-laden sovereigns:
Aaah! Big! Debt! Terror! Except the picture may not be so informative as it is striking,
Somewhere, over the rainbow… a UK downgrade
In the wake of Friday’s non-result in the UK’s general election, BNP Paribas said the British people had voted for a downgrade.
The bank reiterated that view on Tuesday morning, as the Liberal Democrats and the ruling Labour Party continued discussions about the creation of a rainbow coalition,
Won’t somebody please think of the weddings?
The cake has been bought.
The dress has been fitted.
The menu has been chosen.
The venue, food and alcohol have been paid for.
The Catholic preparation classes have been attended.
The bridesmaids are ready.
Five things RBS doesn’t like about the Drachmark
As the Drachmark relief rally runs out of steam — at pixel time it’s trading at $1.27 — RBS’s Alan Ruskin says there are five reasons why the euro will remain depressed. And here they are:
1. A Greek restructuring is almost certainly delayed relative to market thinking before the weekend,
Asia takes a hard look at Europe
The downturn in Asian markets on Tuesday was an eloquent signal that cold, hard reality is setting in after an initial wave of relief over the EU and IMF’s mega-bailout plan drove Monday’s rally in regional stock markets.
Well that was fast…
Related link:
The smell of burnt fingers wafts across Europe… – FT Alphaville
The euro premium episode – FT Alphaville
Thursday’s crash might really have been a Black Swan event
Was the world’s most pompous finance commentator and ornithology enthusiast in someway behind the flash crash?
There have been rumours that the order which set of Thursday’s cascade of high-frequency fueled-selling had originated somewhere in Chicago.
Saving our bacon
Courtesy of Danske Bank, Monday’s action in porcine bond yields:
The analysts say that — contrary to some early confusion — Europe’s central banks did indeed start buying Greek, Portuguese and Spanish sovereign debt in secondary markets on Monday morning,
The euro premium episode
Despite flooding the system with euro and dollar liquidity on Monday, there’s one money market measure that remains stubbornly negative: the five-year euro-dollar basis swap.
The euro-dollar basis swap is basically an exchange of two floating rates in the two currencies.
Further reading
Elsewhere on Tuesday,
- ‘Be the Hyena. Attack that wildebeest’.
- Greece won’t default just yet.
- Reflecting on the euro bazooka.
- Thermonuclear warfare has its limits for the ECB.
- A Fed swap line primer.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Europe is unprepared for austerity
Europe has bought itself time with its €750bn bail-out for the euro. But the long-term problem remains.
Snap news
Breaking pre-market news on Tuesday,
- Aviva Q1 life and pensions sales up 15 per cent – statement.
- Diageo’s Nick Rose to stand down as CFO – statement.
- Serco says H1 performance strong, FY on track – statement.
BarCap on that flash crash: ‘a perfect storm’
Regulators, politicians, media types, investors and exchanges are still trying to figure out just what happened to cause that sharp, sudden and scary plunge on Wall Street last Thursday.
Now analysts at Barclays Capital have weighed in:
CDS report: Credit rally, protection buying in sovereigns
Markets again led by sovereigns but significantly tighter due to announcement over the weekend
Protection buying in sovereigns pushed levels wider though from the open; Greece CDS was as tight as 480 bps to start
Moody’s announced guidance on its review of Greece’s A3 rating
Corporates and equities rally
Bank CDS,
GBK watch – Lib/Lab edition
Flashes, via Reuters:
10May10 RTRS-UK’S PM BROWN SAYS LIB DEMS WANT TO HOLD FORMAL GOVT DISCUSSIONS WITH LABOUR PARTY
10May10 RTRS-UK’S PM BROWN SAYS PRIORITY FOR TALKS SHOULD BE AGREED DEFICIT REDUCTION PLAN
And that was good enough to do this:
Cushing is full and time-spreads are collapsing
Commodities guru John Kemp at Reuters has again been focusing on full stocks at Cushing Oklahoma and the continuing widening contango, in his latest market commentary.
A bit of background: Cushing is the main physical delivery point in the US for Nymex WTI crude.
Trichet on the ECB’s government bonds about-face
Spare a thought for Jean-Claude Trichet, president of the European Central Bank.
The man has had a rough couple of days. Just last Thursday, he was being roundly abused for declining to even consider the prospect of intervention in the secondary market for government bonds,
Please sirs, Fannie Mae wants some more
Fresh off Freddie Mac asking the US Treasury for $10.6bn to offset losses on bad loans, Fannie Mae entered its own plea for a $8.4bn helping of financial aid.
Moreover, the home-loan company — which on Monday reported a net loss of $13.1bn for the first quarter of 2010 — warned in its 10-Q filing with the SEC that there is “significant uncertainty as to our long-term financial sustainability”:
Smoking the shorts, euro sovereign edition
Monday’s sovereign CDS action, in a Markit chart…
Related links:
Eurozone bank CDS goes squeaky-pop – FT Alphaville
The smell of burnt fingers wafts across Europe… – FT Alphaville