June, 2010
Est-ce la contagion?
Spot the odd sovereign out in these eurozone bond yield spread data on Friday.
Flashes (or should that be éclats?) via Reuters:
RTRS-SPANISH/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD AT EURO LIFETIME HIGH OF 192 BPS
RTRS-ITALIAN/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD AT 168 BPS,
Time for the ‘Spanish flu trade’?
Spanish banks rapidly seem to be becoming the ‘new Greece’, or rather, a key focus of eurozone concern, as their shares slide and credit default swaps (CDS) rise amid growing funding fears.
As FT Alphaville noted earlier on Friday,
The new double-life of Mr Roach
Stephen Roach, the “Mr Asia” of investment banking commentators, is stepping down as Morgan Stanley’s Asia chairman and moving back from Hong Kong to New York to take up a teaching post at Yale University.
The awards curse strikes at JP Morgan…
Last Friday:
[The Banker Innovation in Banking Technology Awards 2010]
Chair’s Choice and Innovation in Custody and Securities Services
Winner: JPMorgan (Worldwide Securities Services)
Project:
Willkommen im Hotel Kalifornia
Here’s an interesting coda, and/or reality check, to recent attempts at predicting the ultimate fate of the eurozone amid Europe’s sovereign debt crisis.
Germany really can’t leave the single currency even if it wanted to — and hasn’t been able to for a while,
How the ECB sees inflation — as a big purple monster
Taking a line from the Fed’s tutorial notebook — the European Central Bank has made an educational video aimed at explaining the concept of price stability to “young teenagers.”
It weirdly combines cartoons suitable for six year-olds with dialogue like:
BNP Paribas: ‘Avoid Spanish banks for now’
Add the credit analysts at BNP Paribas to the growing list of those concerned about the robustness of the Spanish banks.
In a note published on Wednesday, analyst Olivia Frieser observed, in a comment on the findings of the June 2010 edition of the ECB’s Financial Stability Review,
Further reading
Elsewhere on Friday,
- The BP logo redesign contest.
- Maginot Lines and illusions
- Should investors boycott the stock market?
- Rashomon in the OECD.
- The continuing mystery of the Lehman blackhole.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Analysis: European banks – leaning lenders
There are good reasons why the failure of CajaSur not only added another ruined temple to the age-old city’s Roman remains but also sent tremors round the world,
Snap news
Breaking pre-market news on Friday,
- Rockhopper confirms medium gravity crude find at Sea Lion well – statement.
- EasyJet says rolling 12-month passenger numbers up 6.2 per cent – statement.
- Scottish &
Unusual economic indicators, Brazilian plastic surgery edition
Hollywood cheered when the Obama administration’s proposed ‘botox tax’ didn’t make it into the final version of the mammoth health care reform bill. On the other hand, those seeking a year-round golden glow may have been irked that a 10 per cent tax on tans delivered via tanning bed comes into force on July 1.
CDS report: It’s the economy, stupid
Risk aversion receded today as European credit continued to take its cues from US stock markets. A strong finish to the session yesterday had the predictable effect of compressing European credit spreads at the open.
Dubai: It’s a ‘frontier market’ for a reason
Kudos to Zawya Dow Jones for keeping an eye on an evolving legal dispute between Dubai Islamic Bank (DIB) and four businessmen.
Proponents and practitioners of Sharia-compliant finance are fond of trumpeting the safety,
The fate of the euro is in your hands
Want to forecast the future of the eurozone? There’s an App for that.
(Not really — but close.)
Independent Strategy (who, incidentally, have it in for Belgium, but are pretty knowledgeable on sovereign crises) have built a spidergram of events and probabilities that could lead to the euro’s demise.
Mining super-tax rage (Part II): The dark and the light side
Continued from Part I: Xstrata on warpath.
Amid the howls of pain from miners over Australia’s proposed 40 per cent resources ‘super profits’ tax — the latest manifestation being Thursday’s outburst from Xstrata’s combative CEO Mick Davis — come some more sobering figures.
FSA fines JP Morgan record £33.2m
On Thursday, Britain’s Financial Services Authority whacked JP Morgan for failing to segregate client money during the merger with Chase — resulting in what regulators trumpeted as the FSA’s ‘largest ever’ fine at £33.32m.
Markets Live transcript 3 Jun 2010
Markets Live chat transcript for the chat ending at 11:12 on 3 Jun 2010. Participants in this chat were: Bryce Elder Miles Johnson, FT
BEGood morning.
BEAnd welcome to Markets Live.
Thursday payrolla
What’s this?
A sudden rash of market optimism?
US markets moved sharply higher on Wednesday, and Europe is following their lead on Thursday. Since all eyes are firmly set on Thursday’s US ADP employment report — and Friday’s non-farm payrolls — this can only mean one thing:
Tearing flesh off the FSA’s bones
Typical. You launch a regulatory reign of terror so wide-ranging, so baldly inquisitorial, that it would make Robespierre himself blush, and what do you get?
Oblivion.
As the Guardian reports, Britain’s new chancellor George Osborne will probably abolish the FSA after all. Starting with his Mansion House address on 16 June:
Mining super-tax rage (Part I): Xstrata on warpath
Xstrata’s chief executive Mick Davis is on the warpath.
On Thursday he captured headlines with his threat to scrap $5.4bn in coal and copper projects in Australia, blaming Canberra’s plan to slap a 40 per cent “super profits tax” on mining companies.
More on those USD swap lines…
Here’s a timely working paper from the BIS.
It’s a 91-page review of liquidity provisions during the financial crisis, including the multitude of currency swap lines initiated by the globe’s central banks.
The loss of central bank credibility, the coming inflation – by MOST
Here’s a big two-finger salute to central bankers, courtesy of Morgan Stanley.
In the latest issue of the bank’s Global Monetary Analyst, entitled “Paradise Lost,” MS economist Joachim Fels tells the following tale:
Further reading
Elsewhere on Thursday,
- Knightian uncertainty, explained.
- Vladimir Putin, transaction cost economist.
- Harry Markopolos weighs in on the “new’ SEC.
- Data mining, 10TB of patents edition.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Chris Patten: Europe must focus on what works
Start from the top. Over the past half century, the European Union, the world’s largest economy,
Snap news
Breaking pre-market news on Thursday,
- $360m costs for BP to fund Louisiana barrier islands amid oil spill – statement.
- Johnson Matthey sales flat at £7.8bn- statement.
- Quintain Estates cuts pre-tax losses to £10.1m from £129.1m – statement.
800,000 CDS trades
The DTCC has published what it calls a “snapshot” of the CDS market, but it’s actually more like a “time-lapse movie” in that we now have nine months of data covering just about every single-entity CDS traded since June last year – sovereigns as well as corporate.
The commercial real estate-failed bank nexus
The warnings have become the reality. Back in October 2009, the NY Times cited an estimate by research firm Foresight Analytics that as many as 581 small banks were at risk of collapse by 2011, due in large part to their exposure to commercial real estate.
Vanity Capital L.P
We watched the video, so you don’t have to…
Vanity Fair promo:
In the July issue of Vanity Fair, legendary hedge-fund billionaire Steve Cohen tells special correspondent Bryan Burrough that he might be ready to walk away from active trading.
The exposed case of “Client A”
Consider the following extract from a “final notice”, issued by the FSA on Wednesday as the UK regulator slapped a lifetime ban and a £100,000 fine on one Andrew Kerr, a commodity broker at Sucden Financial: