July, 2010
CDS markets are overreacting, BNP Paribas says
We’ve seen CDS curves in Greece, Spain, Portugal — and BP — invert this year.
But before Lehman Brothers collapsed, those kind of CDS curve flattening and inversions (which suggests CDS investors are pricing in a higher chance of default in the short-term) were relatively rare.
Place yer spread bets
Based on Thursday’s closing prices IG, a spread betting group, is now bigger than the venerable London Stock Exchange — £1.52bn market cap versus £1.475bn.
Dear readers, you can decide what that means.
Introducing Polyus Gold…
. . . the latest overseas mining company to seek a home on the London stock market.
This week Russia’s largest gold producer announced a $9bn deal to reverse into its 50.1 per cent-owned subsidiary KazakhGold and create a company big enough to qualify for inclusion in the FTSE 100.
‘If only European credit investors had their own prescient cephalopod’
Congratulations, markets: Paul the psychic octopus probably has a better handle on the future right now.
That, at any rate, was the implication of Barclays Capital’s European Credit Alpha note on Friday,
Julia’s big day: Mining tax metamorphosis
How relatively little it takes to please miners these days.
A 30 per cent tax on so-called super profits instead of a 40 per cent rate — when there was no suggestion of any ‘super profits’ tax just six months ago.
The Drachmark rises from the ashes
The biggest surprise of Thursday’s trading session?
The strength of the euro — particularly against the dollar.
And that trend is continuing on Friday morning:
The mainstream media are pinning the rally/dead cat bounce on two factors:
Casing the capital structure, calling a crisis
Could more bank capital cause another bank crisis? So long as it’s (still) the wrong kind?
It’s a point picked up with some aplomb by Paul Marson, of Lombard Odier Private Banking. In fact, Marson reckons regulators’ refusal to distinguish between different types of capital will inevitably lead to another crisis.
Introducing the eurozone’s chief bail-out officer
The Economist totally beat us to coming up with a snappy job title for Klaus Regling, the man who took office on July 1 as the chief executive of the European Financial Stability Facility (EFSF).
(Recall:
Further reading
Elsewhere on Friday,
- Krugman versus austerity: the war goes on.
- ‘Who cares if Big Business likes Obama?’
- A cool drink of liquid alternative beta.
- Beware the Kruger-Dunning effect.
- Goldman’s AIG collateral calls — key to the crisis?
- A US non-farm payrolls preview.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Splintered solidarity
Whatever happened to global governance?, asks the FT’s Stephens. The Group of 20 was supposed to answer
Snap news
Breaking pre-market news on Friday,
- BHP Billiton, Rio Tinto, Xstrata welcome revised Australia resource tax — statement.
- Sanofi-Aventis eyeing US acquisition worth $20bn — report.
- Chloride accepts 375p cash offer from Emerson — statement.
Trends in FHA-insured loan performance still not encouraging
The FHA is a little bit sensitive about any suggestions it might not be A-OK, but the steady trickle of less-than-reassuring news about the federal mortgage insurer difficult to ignore.
Consider the following assertions from the Cleveland Fed,
KNOC explores bid for Dana
By Miles Johnson and Neil Hume
KNOC, South Korea’s national oil company, is exploring a £1.5bn offer for the FTSE 250 oil explorer Dana Petroleum as part of a foreign acquisition spree planned over the next two years.
Every little helps – revisited
There is nothing untoward with our accounting as Citigroup’s report acknowledges. We report in line with statutory guidelines and the accounts are externally audited. The issues discussed in the report have been gone over many times before and do not detract from our strong performance over the last year.
M-m-m-meltdown
Gloom and doom on Thursday for stock markets after poor US jobs and PMI data:
Cheer up — the double dip might never happen. Well, on second thought…
Will the EU limit hedge fund pay?
According to the BBC, new EU rules to regulate bank bonuses – announced on Thursday - will hit Mayfair hard: the onerous restrictions on pay, says Robert Peston, the BBC’s business editor, will apply to hedge funds too:
Shell’s Vulcan mind meld returns
The share price of Royal Dutch Shell’s suddenly saw a ghost on Thursday afternoon.
Shares were down just under 4 per cent at pixel time.
The talk in the market is that analysts are cutting their Q2 2010 net income forecasts — numbers are flying about of $3.6bn or so,
Whisky Galore
Here’s an interesting way to make a good a pension fund deficit – fill it with 2.5 million barrels of maturing Scotch whisky.
This novel idea has been dreamt up by Diageo and forms a key part of a 10-year funding plan for the drinks group’s UK Pension Scheme (which at the time of the last the triennial actuarial had a deficit of £862 million).
From junk bonds to junk mortgage bonds
If investors really ♥ junk for most of this year, they really really might ♥ mortgages.
It’s a point you might not have realised just by looking at non-agency residential mortgage-backed securities (RMBS) and high-yield bond indices over the past 13 months or so.
That $19bn bank fee? Focus on what it paid for.
Republicans moaned unconvincingly for months that the financial reform bill perpetuates endless taxpayer bail-outs. It’s supposed to do the exact opposite, of course, giving regulators the power to step into a failing institution like AIG or Lehman,
TanKANnery
Some rare upbeat – if somewhat bemusing – news out of Japan on Thursday that should give the ever-hopeful new government of Naoto Kan a boost ahead of the country’s July 11 upper house election.
Amid continuing signs of economic torpor,
Post-ECB stress test (dis)order
Europe’s banks have (sort of) cleared the hurdle over ECB liquidity. Now can they survive July’s scheduled stress tests?
Perhaps it depends on the R-word.
Morgan Stanley’s chief European economist Elga Bartsch has gone back on the attack over recapitalising banks,
Markets Live transcript 1 Jul 2010
Markets Live chat transcript for the chat ending at 11:20 on 1 Jul 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHIt’s 11.03am NHsorry 11.04am NHand time for Markets Live
Another rollover to worry about?
How worried should we be about the rollover in lead economic indicators?
As Lex noted earlier this week, Economic Cycle Research Institute has scolded pundits, such as SocGen’s Albert Edwards, for misinterpreting its widely followed indices.
Singing’ a liquid tune – banks tap €111.2bn from ECB six-day op
Results of the European Central Bank’s six-day fine-tuning operation are out.
And they are — €111.2bn allocated to 78 banks.
Markets had been looking for something €75bn-125bn at the op,
The bonos are all right, for now
Spain headed to market on Thursday with an auction for five-year bonds. Given the pressure on the country’s public finances — including more credit downgrade fears — this one’s worth a look.
And the results were perhaps not too bad.
More please … the 12-month LTRO roll-over ain’t over yet
Relieved at the results of Wednesday’s three-month LTRO offer? Not so fast.
We’ve noted ad nauseum that lower-than-expected demand for the European Central Bank’s three-month Long-Term Refinancing Operation (LTRO) — on the eve of the expiry of its €442bn 12-month LTRO — could hide discrepancies between eurozone banks.