May, 2010
Ironic fact du jour
William Hill is offering odds of 25-1 on a 0-2 North Korean victory in Tuesday’s World Cup warm up match.
Related links:
S Korea won hit by escalating tension – FT
North korea vs South Korea
Those Libor laments in context
You’re looking at two indicators of interbank funding pressures.
The first is 3-month US dollar Libor. The second is the five-year euro-dollar basis swap, a basic gauge of demand for US dollars,
Flight to safety
RTRS: 10-YEAR GERMAN GOVERNMENT BOND YIELD FALLS TO RECORD LOW AT 2.586 PCT; BUND FUTURE AT RECORD HIGH OF 129.28
Bonfire of the currency correlations
Or, what central bank intervention can do to correlation-based currency models.
Late last week it looked like the Swiss National Bank stepped in to move the Swiss franc lower:
Unsurprisingly some market participants are a touch peeved at this.
$47bn and counting
Canaccord Genuity is providing some interesting commentary on BP and the Gulf of Mexico oil spill. And it goes some way to explaining why the share price of what was the biggest company in the FTSE 100 keeps heading south in spite of numerous “buy”
Collect gold for the love of Greek banks
Germans may have stolen the country’s stockpile back in World War Two, but analysts at JP Morgan are still mentioning the possibility of the Greek population selling their own gold, to avoid a debt restructuring.
Eurocrash, part deux
European markets staggered on their open on Tuesday, following a grim session in Asia.
Flashes via Reuters:
RTRS-SPAIN’S IBEX 35 FALLS 3.6 PCT, PORTUGAL’S PSI 20 DOWN 3.1 PCT AND ITALY’S BENCHMARK DROPS 2.6 PCT
RTRS-EUROPE’S FTSEUROFIRST 300 FALLS 2.3 PCT TO 951.13 POINTS IN EARLY TRADE
RTRS-GERMANY’S DAX DOWN 2.6 PCT
RTRS-STOXX EUROPE 600 BANKS INDEX DOWN 2.9 PCT,
Take cover
A grim start in prospect for the London market on Tuesday, according to the futures market.
QE, the UK, Japan and samurai central banks
Bank of England Monetary Policy Committee member Adam Posen is a Kurosawa-fan.
He is not, however, a fan of likening Britain’s future to the ‘Lost Decade’ experienced by Japan.
In a Monday night lecture,
Dirty derivatives language du jour
From the Dreyfus Balanced Opportunity Fund prospectus — an unfortunate typo:
We think that’s meant to be “shift” though heavens knows why the army of investment and legal professionals that presumably read-through the document missed it.
Level 2 assets are the new Level 3
Or, bye bye FAS 157. Hello Topic 820.
The accounting standard known as FAS 157 gained not-a-small amount of notoriety last year.
In March of 2009, the US Financial Accounting Standards Board (FASB) changed the rule,
Further reading
Elsewhere on Tuesday,
- Dangerous strip(pers).
- Forget the euro, the stock market has a new obsession.
- Gold and crude are very different animals.
- What China’s A-shares are telling us.
- Recovery and the will to believe:
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Martin Wolf’s Exchange: How likely is financial repression?
First comes financial crisis; then comes sovereign debt crisis; then comes financial repression.
Snap news
Breaking pre-market news on Tuesday,
- Marks & Spencer pre-tax profits up 4.6 per cent on year – statement.
- ‘Unprecedented combination of failures’ in Deepwater spill, BP says – statement.
- Gulf Keystone Petroleum raises $165m via an issue of new shares prices at 75p per share;
AIA chief spits dummy over Pru deal
With CEOs like these, Prudential certainly doesn’t need any more critics.
Here, hot off the FT’s presses, or rather, computers, on Wednesday, is news that doesn’t augur well for one of the biggest insurance sector deals this decade:
CDS report: More pain in Spain
It was a quiet start to the week with much of Europe closed for the Whitsun public holiday. The major credit indices were tighter and outperformed lacklustre equity markets. Some of the gains were lost in the afternoon amid low volumes.
Austerity all’Italiana
It’s funny what a whiff of bond market grapeshot can do: more and more European governments seem to be getting religion on fiscal austerity by the day.
A recent convert — Italy, as Reuters reported:
Libor’s slow grind higher
Libor is back.
The FT reported on Monday that we are due a sharp rise in dollar interbank offered rates, on account of renewed credit risk fears around European banks.
Ah, but will it be a spike — or is this the New Normal breaking through?
According to Citigroup’s Neela Gollapudi,
A Japanese casa for Spain
ING’s Simon Goodfellow looks at the Spanish issue this week.
His main question — “What would happen to the banking system in Spain if the Spanish housing crisis turned Japanese?”
While the Japanese scenario is not ING’s central projection,
And the award for most impressive sovereign funding goes to…
EuroWeek just bestowed its 2010 award for most impressive sovereign funding official to this man:
That’s Robert Stheeman of the UK Debt Management Office. And as the Wall Street Journal’s Heard on the Street column notes,
Whither corporate bond issuance?
“Forget the shorts”, as FT Alphaville noted on Friday. Company and financial bond issuance has virtually collapsed in Europe in recent weeks amid fears over the eurozone’s public debt problems and US financial reforms.
Osborne cuts it
Finally, the first indications of the tone of cuts to come in Britain.
While the new UK chancellor will be presenting his freshly put-together budget on Tuesday, on Monday, George Osborne, outlined the cuts that wouldn’t need parliamentary approval:
AN ÜBER BEAR EARLY WARNING ALERT
The use of “Caps Lock” can only mean one thing — Bob ‘the bear’ Janjuah is back.
And his latest missive — the first since the euro meltdown — does not dissapoint.
Dear All
I am deeply troubled by the world and markets.
Markets Live transcript 24 May 2010
Markets Live chat transcript for the chat ending at 11:22 on 24 May 2010. Participants in this chat were: Neil Hume, FT Bryce Elder
NHGood morning
NHand welcome to Markets Live
‘Time to stand up and be counted’
Ian Harwood, strategist at Evolution Securities, is in bullish mood on Monday and he is not the only one…
(Emphasis ours):
As far as being optimistic or pessimistic about the global economy is concerned,
Prepare for 10 years of FX ‘super-volatility,’ says UBS
Were you battered by currency volatility last week?
You’d better get used to it.
UBS currency analyst Mansoor Mohi-uddin is predicting a decade of ‘super volatility’ amongst global currencies, in the Swiss bank’s new FX mega-trends 2010-2020 note.
Austerity and the eurozone economy
For all the talk of deflation and double dip recession, how much damage will fiscal austerity inflict on the European economy?
Not a lot, according to Holger Schmieding, European Economist at BofA Merrill Lynch.
Seized: CajaSur, or, 0.6 per cent of Spanish banking assets
Saturday’s pain in Spain came in the shape of the seizure of CajaSur, one of the country’s troubled savings banks (cajas). The cajas, you might recall, are in the midst of a rather grandioso restructuring.