June, 2010
Danger! Knife still falling
Wednesday’s early price action in BP:
Aside from Obama’s kick ass comment, weighing on the share price this morning is news that 42 members of Congress have sent a letter to BP CEO Tony Hayward demanding the dividend be suspended until the spill in the Gulf of Mexico is cleaned up.
More heat at the Pru
As the pressure mounts on Prudential CEO Tidjane Thiam, rivals and interested parties are piling in with their tuppence worth.
As Sky News commentator (and FT columnist-to-be) Mark Kleinman, wrote on his blog on Tuesday,
[South Africa 2010] Take on the World Cup quants
Data prediction site, Kaggle, has, er, borrowed FT Alphaville’s prize collection of World Cup notes.
But, being the light-hearted new media types that we are, we won’t hold that against them.
No,
Kroeber to Faber: China is very big, Marc…
One of the most hotly debated topics among emerging markets watchers is China’s economic direction – both in the long and short-term.
Indeed, says Hong Kong-based research house Gavekal in a Wednesday note,
Swiss intervention in context
How big was the Swiss National Bank’s forex intervention in May?
This big. (Click to enlarge and get the full Hildebrand experience):
That’s from Sean Corrigan at Diapason Commodities, who notes that according to provisional data released by the Federal Statistics Office on Tuesday,
The end of Japan’s balance-sheet recession
Strong praise for the new Japan prime minister, Naoto Kan, from one Richard Koo.
In his latest note, Nomura’s chief economist thinks the former finance minister literally “saved” the Japanese economy in 1998,
Further reading
Elsewhere on Wednesday,
- The BP oil spill, re-enacted by cats.
- But who will defend BP felines execs?
- Fetch me a martini. The nightclub effect in venture financing.
- The comic strip indicator?
- Bond maths:
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Fear must not blind us to deflation’s dangers
A consensus is forming that policymakers should tighten fiscal policy, sharply,
Snap news
Breaking pre-market news on Wednesday,
- Misys to sell majority of its controlling interest in Allscripts; to return proceeds of £800m to shareholders – statement.
- Satander to take control of Mexican subsidiary Grupo Financiero Santander through $2.5bn deal with Bank of America – statement.
CDS splash damage, with Fitch
CDS markets are looking up lately — well, if you’re an emerging sovereign:
The chart above is from Fitch’s latest CDS liquidity report, covering the market up to June 4 2010. Fitch has a funny way of measuring this liquidity — remember that scores go up as liquidity goes down — which indicates credit default risk is rising.
Chart du jour – EUR/CHF
SWISS NATL BANK DECLINES COMMENT ON INTERVENTION VS EURO REPORT
Ahem.
Earlier in the session, the EURCHF cross hit a record low on continued concern about the situation in the European periphery.
CDS report: The Achilles heel
The credit markets appear to be in the midst of a correction, with the major indices all testing recent wide levels. The Markit iTraxx Europe index widened 6.5bp to 142bp today, and has widened about 23bp since last Thursday.
Risk off on Threadneedle Street
The last time FT Alphaville looked at the Bank of England’s Asset Purchase (APF) facility was in the last week of May, and we remarked on the fact that the Old Lady had bought £88m (cash) of corporate paper.
Wake up and smell the BTPs
Here’s una piccola variazione all’italiana on why troubled eurozone sovereigns rely on domestic banks to buy up their debt (which FT Alphaville has noted may pose a few grande problems further ahead).
According to Lombard Street Research’s Stefano Di Domizio,
Danger! Falling knife
Related link:
CONFIRMED: Aerial Video Shows Second Leaking Rig Near The Deepwater Horizon – Business Insider
ECRI watching with Edwards
A second helping of bearishness on Tuesday, courtesy of Albert Edwards.
The Soc Gen strategist is worried about the recent slump in the US Economic Council Research Institute (ECRI) leading indicator.
Prepare for flash crash II and $10 trillion of QE
Plenty of gems in the latest missive from Bob Janjuah.
Aside from the above, the RBS strategist believes the market is starting to realise just how daft the consensus views for global growth and corporate earnings are:
US homeownership minus negative equity = 61.6%
Knock 5.6 percentage points off the American dream: US home ownership.
Doing that will effectively strip out those homeowners currently in negative equity, according to a Federal Reserve paper by Andrew Haughwout,
Markets Live transcript 8 Jun 2010
Markets Live chat transcript for the chat ending at 11:29 on 8 Jun 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHHello there NHand welcome to markets live
Who’s exposed to Hungary (II)
Hungary, look what you’ve kicked off.
JP Morgan published its analysis of which major European banks are exposed to the eastern European nation earlier this Tuesday. And BNP Paribas’ Ivan Zubo and Olivia Frieser have just followed suit with a rundown of country-by-country exposure to Hungary.
The price (and cost) of bank funding in Europe
More on the topic du jour for the banking sector — funding.
Citigroup says the issue isn’t so much the availability of capital — The Fed has after all, reopened its dollar swap lines and the European Central Bank seems likely to replace its expiring 12-month repo facility with more short-term liquidity — but cost.
The dollar shortage in one easy graph
BIS academic Stephen Cecchetti has been much exercised by the currency costs of international financial integration lately — quantifying the yen carry trade.
And now he’s taken another look at dollar shortages.
Like-for-like at Tesco
The end of an era at Britain’s largest retailer.
From the RNS:
Sir Terry Leahy has decided, after an outstanding career at Tesco, to retire in March 2011 at the age of 55 after 14 years as CEO. The Tesco Board has moved to implement its long-term succession plan,
Who’s exposed to Hungary
Hungary may be frantically trying to backpedal its way out of the eyebrow-raising, and market-moving, comments made by some of its politicians and spokespeople last week.
But that hasn’t stopped JP Morgan from publishing a table of which European banks are most exposed to the country.
Yes-we-Kan effect disappears in JGBs
Here’s something rather out of character for the Japanese government bond market — a swift reversal.
Yields on the five-year JGB reached a seven-year low on Friday, on a wave of optimism inspired by news that former finance minister,
Another CDS curve inverts — Spain
Ay ay ay. Spain’s five-year sovereign CDS curve has inverted:
Put simply, that means the CDS market now believes there’s a higher probability of a Spanish default in the short-term than in the longer term.
SPVery complicated in Europe
Behold the eurozone’s very own top-rated special purpose vehicle.
On Monday, after much speculation, eurozone finance ministers reached agreement on the European Stabilisation Mechanism, including its centrepiece SPV.