May, 2010
That receding, deflationary, resurfacing … M3 money supply
When the Federal Reserve decided to get rid of its M3 measure of monetary supply in 2006, it sparked a wave of ‘what are they trying to hide?’ conspiracy theories — most of those centred around inflation.
Further reading
Elsewhere on Monday,
- Was AIG chronically under-reserved in its P&C lines?
- It’s the general equilibrium, stupid!
- Thoughts on the Shorebank rescue.
- The road to economic serfdom.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: America’s monumental job losses
Unemployment in the US is high not just by its own past standards but by international standards,
Snap news
Breaking pre-market news on Monday,
-BP reiterates transparency pledge to Janet Napolitano, Secretary of Homeland Security – statement.
- Invensys annual operating profits rise 2 per cent to £248m;
The shorts are innocent and bonds are not safe havens
Len Welter, Chief Technology Officer, at Data Explorers — which monitors short positions — is not convinced short positions had anything to do with driving the current equity sell-off.
According to him,
CDS liquidity update: Focus on European sovereigns
Markit’s Gavan Nolan wrote this piece
Liquidity has been one of the most important but least understood topics during the turbulence of the last three years. From the genesis of the credit crunch in the summer of 2007,
Dear BoE, where does money come from?
Currently doing the rounds on the interweb is the Bank of England’s answer to a curious freedom of information request from one Mr. T. Cuff.
Mr. Cuff, who submitted his request via email on April 15,
So far, it’s a bad start to America’s trading day
A grim open for US markets on Friday, after earlier European gloom. Flashes, via Reuters:
RTRS-S&P 500 DOWN 10.77 POINTS, OR 1.01 PERCENT, AT 1,060.82 AFTER MARKET OPEN
RTRS-NASDAQ DOWN 30.39 POINTS,
A collateralised eurozone debt obligation?
Here’s a different way to look at the European sovereign crisis.
According to the credit team at Credit Suisse, the entire eurozone may actually be a gigantic collateralised debt obligation (CDO).
Or as they put it:
Oh, the humanity! (updated)
Britain’s FTSE 100 very briefly fell below the, er, ‘psychologically important’ 5,000 barrier on Friday, for the first time since November 2009:
…before veering back to 5012 by pixel time. Oh well.
Swiss franc intervention cost a billion a day in April
The Swiss Central Bank has just released its monthly statistics — things which are likely to attract plenty of interest, given recent rumours of central bank currency intervention.
The raw data is available here.
On the edge of a deflationary precipice…
The world should be discussing deflation, not inflation. The world should be dicussing buying 30-yr govts, not continually wondering like a stuck record where the first rate hike will appear.
Albert Edwards agrees with the depressionistas at RBS.
Markets Live transcript 21 May 2010
Markets Live chat transcript for the chat ending at 11:24 on 21 May 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHhola NHit’s 11.03am NHand time
Short China now!
“Conventional minds are a disaster at profound turning points in economic history”: as Hugh Hendry, the uber-bearish – and highly successful – founder of London-based hedge fund Eclectica Asset Management once observed.
Bank Grεεkery, the preview
Mark your calendars.
A slew of Greek banks will be reporting first-quarter earnings next week.
The schedule looks like this according to Credit Swiss (all times are UK time) :
Bank of Cyprus will report on May 26 before the market open.
German EuroTarp vote, a primer (updated)
A large H/T to Marc Ostwald of Monument Securities for this:
a) The Bundestag (lower house) vote is expected at 10 GMT (11 AM London, 12 PM Berlin), the Bundesrat (upper house) follows and should be completed latest by 12 GMT.
The invisible (BaFin) ban
While it has helped to trash stock markets and launch screaming terror over further political risk in the past couple of days, just how, exactly, is the German ban on naked CDS coming along?
Err…
Barclays Capital’s European Credit Alpha note on Friday provided more evidence that the ban has made an impact everywhere but on naked positions in sovereign CDS.
Let’s all go on a euro booze cruise
Wikipedia notes that a booze cruise is:
. . . a British colloquial term for a brief trip from Britain to France or Belgium with the intent of taking advantage of lower prices.
But Calais in France may have found a rival in the euro itself,
Friday rumourtrage
Some pre-weekend RAW for your delectation. (The usual caveats and wealth warnings apply).
There are rumours of a bid approach for IT services group Logica following on from Friday’s story in the Daily Mail.
Forget the shorts, issuance is slaughtered
Another side-effect of recent market volatility: the death of corporate credit issuance.
Related links:
‘Gun shy markets’… – FT Alphaville
Risky like it’s 2007 – FT Alphaville
Protective headgear not required
At least for the moment.
In spite of Wall Street’s late sell-off, the FTSE 100 is only indicated 30 points lower at the open on Friday:
Market sources tell us that this is because of an impressive pull back in the FX majors,
A quick guide to ECB intervention
With all the wild swings in the euro, speculation that the European Central Bank could intervene in one way or another, is running rife.
There are two ways that could be done.
The first is by making verbal statements such as ‘A too weak euro is extremely bad for the eurozone,
Vix-ated
On Thursday the Vix shot up above 45.
So what?, you might say. The Vix was over 80 just a year-and-a-half ago, after the Lehman Brothers collapse.
That’s true, but as Vix and More pointed out in a Thursday post,
Further reading
Elsewhere on Friday,
- Ride, watch, pop: What to do with bubbles.
- Negative. The indicators are negative.
- Vince Cable as chair of all banks. Dear God.
- ‘The fall in the euro is not completely accidental.’ It’s German.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Romano Prodi: A big step toward fiscal federalism in Europe
When the euro was born everyone knew that sooner or later a crisis would occur, writes Prodi,
Snap news
Breaking pre-market news on Friday,
- British Airways reports annual loss before tax of £531m; targeting revenue growth of 6 per cent and break-even at pre-tax profit level in current financial year – statement.
The rush from risk
Quick Yahoo snaphot at the end of a bloody day on Wall St:
‘Gun shy markets’, or 6 reasons why the EUR carry trade has blown up
Arresting stuff from Alan Ruskin of RBS, who has just pinged out an “Alpha Alert”:
Pure panic. It is rare to see a day where the news flow fits so poorly with the decimation in the risk trade, from currencies to high yield to the once sweet and innocent money market.
FDIC, problem banks and FAS 166/167
The FDIC released its quarterly banking profile for the first quarter of 2010 on Thursday, and we’ve read the report so you don’t necessarily have to*.
Here are some stats that stood out in the report and the accompanying press release (headers and any emphasis FT Alphavillle’s):