June, 2010
Stimulus — nein!
One of the world’s great import-surplus economies reined back on recent moves to stimulate domestic demand on Tuesday, bidding to resist international pressure at upcoming G20 talks — as well as denying US criticism of its policy.
No need to worry about Belarus gas
Russia and gas disputes go hand-in-hand.
And the latest dispute of this nature is focused on Belarus.
Russia’s Gazprom claims the country owes it $192m in unpaid gas payments. On Monday, therefore,
Death by (collateralised) BP association
For BP, the structured finance fallout has just sprung.
On Monday, Moody’s published a note on the 117 Collateralised Synthetic Obligations (CSOs) which reference CDS on BP. In other words, synthetic CDOs with exposure to the British oil giant.
Those Triaxx CDOs…
Collateral managers beware! The SEC is coming for you.
The SEC on Monday filed a suit against ICP Asset Management — the boutique investment bank once indirectly described by AIG execs as one of the,
Further reading
Elsewhere on Tuesday,
- A decade of US bank failures.
- The Stimulants vs the Austerians.
- What’s the point of macro?
- *** PLEASE DO NOT FORWARD THIS EMAIL ***
- Jabulani financial regulation.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Europe is having a midlife crisis
For the past few months, the words “Europe” and “crisis” have been inseparable companions,
Snap news
Breaking pre-market news on Tuesday,
- British Airways agrees deal with pension trustees – statement.
- Whitbread Q1 comparable sales rise 7.6 per cent – statement.
- Corporate: Mitchells &
Renminbi reverberations
No doubt about the winner on the London stock market from China’s decision to let the renminbi to appreciate ever so modestly – miners, miners, miners and for good measure miners.
At pixel time the FTSE 100 leaderboard was dominated by resources stocks:
Renminbi variations
So China moves to flexibility in the renminbi, presenting a token diplomatic gesture before G20 talks, but ultimately not changing very much economically. Right?
Well, sort of. The situation is more complex than that.
When is a caja not a caja?
Moody’s Capital Markets Research group, a separate unit from the more well-known ratings division, published a note on Friday about the skepticism of credit market investors’ toward Spain’s savings banks.
Freight fright *alert*
Many analysts view the Baltic Dry Index, a measure of shipping costs for dry commodities, as a forward macro-economic indicator.
So should we be worried by the fact that the index last week experienced its biggest weekly decline since 2008?
As Bloomberg observed on Friday:
Is this the way the ECB’s bond-buying ends?
How’s this for a neat conclusion to the European Central Bank’s recent run of buying bonds from the eurozone’s troubled sovereigns?
Sell ‘em on to other governments via the eurozone SPV.
Compared to the €60bn Covered Bond Purchase Programme — due to finish at the end of this month — the ECB has never exactly said how its big sister,
Markets Live transcript 21 Jun 2010
Markets Live chat transcript for the chat ending at 11:21 on 21 Jun 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHgood morning NHand welcome to Markets Live
An €11bn stress test scenario for Santander, BBVA
Execution Noble has updated its original stress test scenario note for Spain’s Santander and BBVA banks, this time assuming a 10 per cent haircut scenario on Spanish sovereign bonds.
While their initial “adverse scenario”
BP and Anadarko turn on each other
There’s nothing like a credit downgrade to focus the mind.
After Moody’s cut Anadarko’s rating to junk late on Friday, the US oil company (and 25 per cent non-operating investor in the Macondo well) broke its eight-week silence with this broadside from CEO Jim Hackett.
Some stresstestimates
We’re on European bank stress test methodology watch.
And according to Nomura’s European bank team, the key question is how much time banks will be granted to deal with or absorb projected losses. In other words,
A (timely) bank crisis management critique
‘Authorities moved too quickly to solve the 2008 financial crisis.’
That’s a statement you don’t hear very often, but it’s an idea that comes courtesy of an innocuous-enough sounding BIS working paper* by Claudio Borio,
HSBC’s capital innovation
Bank regulators may have moved to crack down on hybrid capital, but the banks themselves seem to have other ideas.
Witness HSBC’s $3.4bn sale of perpetual bonds last week.
As Bloomberg reported:
Further reading
Elsewhere on Monday,
- ETFs gone wild.
- The advantages of being an individual (investor).
- Are foreclosures racist?
- Howard Davies and a naked ECB.
- It’s different this time for US housing.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Wolfgang Münchau: We need the figures on Europe’s toxic banks
Governments are still fighting the wrong crisis, writes the FT columnist. Global investors have recognised a fundamental truth,
Snap news
Breaking pre-market news on Monday,
- BP says disagrees strongly with Anadarko allegations – statement.
- Rio Tinto and BHP Billiton reach agreement to amend royalties and state agreements – statement.
Renminbi reservations
The knee-jerk reaction in currency markets after China’s big renminbi announcement:
But if most of the media agrees that China’s decision to enhance the yuan’s flexibility was a step in the right direction,
Renminbi ruminations
Some critics are doubtful about the significance of Beijing’s moves but the volumes devoted to China’s weekend statement on currency flexibility on Monday morning would suggest otherwise.
As the FT reports,
FTfm on AV
Some highlights from Monday’s FTfm.
BP spill will be a watershed
The Gulf of Mexico oil spill will prove as big a watershed for the energy industry as the collapse of Lehman Brothers was for the banking sector,
May’s market mayhem in FX settlements
June’s ECB Monthly Bulletin, released on Thursday, is turning out to be a treasure trove of enlightenment when it comes to what transpired inside the financial system in May.
We’ve already noted the critical dysfunctions the Bank observed in the money markets — which it said were comparable to the stresses experienced over the course of the Lehman collapse.
Sovereigns not included? More on Europe’s stress tests
Slowly, we’re finding out a bit more about the methodology behind the stress tests that are due to be published for the top 25 EU banks, plus Spain’s banking system.
Morgan Stanley’s Huw van Steenis and team,
Some consequences of May’s money-market mayhem
On Thursday, the Italian Treasury made a relatively interesting, if low-profile, announcement.
From now on, it said, it would begin issuing a new type of floating rate bond called a CCTs-eu. This was to replace conventional CCTs (Certificati di Credito del Tesoro) which were until now linked to the weighted average rate for six-month Italian BOT bonds.
[GAIM conference 2010] The mirror crack’d
One of the more interesting things to watch at the GAIM hedge fund conference in Monaco this year – more for light, than heat, truth be told – was Mike Novogratz, one of the founders of the giant Fortress Group,
[South Africa 2010] The World Cup effect
Courtesy of Standard Chartered:
Asset markets have gradually drifted higher over the last fortnight, as mixed signals on both the fundamental and technical fronts kept market participants looking for clues to future market direction.
Europe’s north-south divide could last years
Citigroup’s equity strategy team has offered a little insight into the recent thoughts of Willem Buiter, the bank’s chief economist, in their latest note.
As can be expected from Buiter, it’s not cheery stuff when it comes to the matter of the European peripheral countries — but mainly for Spain and Greece.