May, 2010
Bring out yer dead scary charts!
Here’s the May edition of the GMI global macro investor newsletter. It’s full of scary charts and words like “Elliott Wave” – a mention of which would usually be followed here by a trip to the desktop recycle bin.
‘Germany’s restrictive measures are liable to hinder European growth’
EDHEC-Risk, a unit of the France-based business school, on Thursday released a withering criticism of Germany’s unilateral ban on naked short selling of eurozone debt.
We quote:
DHEC-Risk Institute considers that the unilateral measures taken by Chancellor Merkel on the sovereign debt markets,
CDS report: In retreat
European credit markets in retreat after solid opening
Positive sentiment from EUR750 billion bailout a distant memory
Sovereigns under pressure – Greece 700bp (+23), Portugal 335bp (+57), Spain 205bp (+22),
The FTSE 100′s close shave
The UK’s FTSE 100 barely avoided falling below 5,000 during a sudden plunge on Thursday afternoon, one hour before closing down 1.65 per cent at 5073.13:
While this chart shows the FTSE 100′s part in a general Eurocrash:
European volatility — a history lesson
Well, here’s a contrarian long-term perspective on Thursday, notwithstanding the collapse on European bourses, and the NYSE’s invocation of Rule 48 amid the signs of contagion.
Volatility in European equities has indeed just passed a historic marker,
The Great Depression II
Warning: the following note from the normally mild-mannered European Rates Strategy team at RBS is seriously bearish.
They think the yield on 10-year US Treasuries can trade at 2.0-2.5 per cent.
Eat your heart out, Bob Janjuah.
Eurocrash
Late-afternoon chaos for bourses across Europe on Thursday. See charts:
Ouch.
Funny how contagion works, II
That’s the Dow. Will it hold above 10k?
We won’t continue wasting too many red pixels here. You should have the picture by now. Losses on the S&P 500 actually stretched to 3.3% mid-morning in New York.
Funny how contagion works
That’s the Nasdaq on Thursday, responding to the eurozone implosion. Plus chart:
Tin hats at the ready
The NYSE has invoked Rule 48 – for the first time since the €750bn eurozone bail out was announced on May 10.
An overview of the Tin Hat Rule:
Rule 48 provides the Exchange with the ability to
The fall of the Mighty Drachmark, again
Curious. Another sudden hammering for the euro on Thursday, as the chart shows:
No obvious news trigger, but does there need to be nowadays? Some context:
Oh no, now it’s mining tax contagion…
The list of dead and dying deals and loudly protesting companies in Australia’s resources sector is beginning to look very long, as FT Alphaville noted last week.
The companies, both foreign and domestic,
Aussie loses to fresh yen for safe havens
Amid fresh bouts of currency volatility and speculation about Swiss intervention in the euro on Thursday, the “safe haven” aura seems to be shifting back towards the yen.
The euro slid against the dollar and yen on Thursday morning in Europe,
UK fiscal cuts, a work in progress
Britain’s fresh new ruling coalition published its full list of policies on Thursday. Only we still can’t quite tell what it’s actually going to do on reforming the City, or reducing the country’s fiscal headache.
Towards a new UK inflation target
The UK’s ruling Lib-Con party published its final coalition agreement on Thursday morning, and a couple of things stand out.
Perhaps the most important concerns the Consumer Price Index, which is, of course,
Markets Live transcript 20 May 2010
Markets Live chat transcript for the chat ending at 11:38 on 20 May 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHGood morning NHHola NHBonjour
The next 48 hours are crucial for the Euro
So reckons CNBC’s Jim Cramer who attempted to calm the frayed nerves of investors in Wednesday’s edition of Mad Money.
Put simply, if we don’t a total capitulation in Europe over the next two days (and
The ECB’s QE doesn’t inhale
According to Morgan Stanley, the ECB’s recent foray into government bond purchases means the US Federal Reserve is now closer to an exit from quantitative easing (QE) than the European bank.
Which leaves the MOST analysts with a number of questions regarding its current actions.
‘We are done with financials’
As the war on speculators, banks (indeed entire financial system) rages on, one big US hedge fund has had enough.
Writing to investors, the fund says it’s now too risky to invest in large financial institutions for anything other than the short-term.
Thursday’s (Spanish) risk factor [Updated]
Up today: The auction of €4bn worth of 10-year Spanish government bonds.
A(nother) Spanish bond auction litmus test.
But Thursday’s auction could well be different. Markets are ticked-off at regulators like BaFin,
What Deutsche Bank did yesterday
So how restrictive is that German ban on naked short-selling of eurozone CDS?
Would it say, apply to Deutsche Bank, who do most of their CDS trading from outside Germany?
The answer, apparently, is no.
‘Greece simply doesn’t register,’ or, the world according to Goldman
It’s better than you think, says Goldman Sachs chief economist Jim O’Neill.
The bank held a webcast last Friday, entitled “Why the world is better than you think,” and late on Wednesday published an accompanying note.
Take HDAT, Greek politicians
From the Trojan Speculators File comes this FT report:
A Greek former European Commissioner has accused the country’s central bank of encouraging naked short-selling of Greek bonds by altering the regulations on its electronic bond trading platform last year.
Further reading
Elsewhere on Thursday,
- In defense of Europe’s grand bargain.
- A portfolio that never needs changing.
- “As a German citizen I wish to apologise…”
- Flash crash means dash for cash.
- Build a fortune with Gordon Gekko stocks.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: A perverse European fund strategy
A few financiers in London’s Mayfair must be considering life on a smaller island or by a Swiss lake,
Snap news
Breaking pre-market news on Thursday,
- National Grid to raise £3.3bn via 2-5 rights issue at 335p a share; announces final results – statement and statement.
- SABMiller reports 17 per cent rise in annual earnings,
Dubai World and creditors agree on debt
Fresh off the wires – some (rare) good news.
Dubai World has agreed — “in principle” — a deal with its creditors to restructure $24bn of debt.
Full statement below:
Dubai World Agrees Headline Economic Terms in Principle with Coordinating Committee
Dubai,
The dangers of politicising regulation [UPDATED]
Former Treasury secretary Hank Paulson, on more than one occasion, deplored what he called the stigmatisation of the Tarp.
As the FT reported in May, Paulson told a hearing held by the Financial Crisis Inquiry Commission that the Tarp should have helped some 2,000-3,000 banks:
CDS report: German shorting ban triggers volatility
Extreme volatility throughout the day – risk aversion on the rise
Markit iTraxx Europe index 9.5bp wider at 120bp, Markit iTraxx Crossover 44bp wider at 572bp
Rollercoaster day for sovereigns – now trading wider
Greece 680bp (+50),