July, 2010
QE II, or ‘standing up to free markets’
The debate over a second round of US quantitative easing is heating up.
And with it, a rather uncomfortable situation for the Federal Reserve.
Without getting too wonk-ish, the idea is that the Taylor Rule beloved by economists currently suggests the need for a (real) negative funds rate.
Markets Live transcript 20 Jul 2010
Markets Live chat transcript for the chat ending at 11:29 on 20 Jul 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHhola NHits 11.03am NHand time for…
It’s all Greek (banks) to the ECB
Here’s an intriguing tidbit from the Bank of Greece’s monthly financial statement for June, released on Tuesday:
That’s ‘Lending to euro area credit institutions related to monetary policy operations denominated in euro’ – or the size of European Central Bank funding for Greek banks.
UK Plc feels the pain of Osborne’s axe (updated)
George Osborne’s austerity measures are beginning to bite; and UK Plc is feeling the pain.
On Tuesday morning shares in the confusingly named Cable & Wireless Worldwide fell 12p, or 14 per cent,
The BoE’s phantasmic new web idea
Whoops.
This little market notice — from the Bank of England — slipped past us on Monday:
MARKET NOTICE – EXPANDING ELIGIBLE COLLATERAL IN THE DISCOUNT WINDOW FACILITY AND INFORMATION TRANSPARENCY FOR ASSET-BACKED
That’s the long-awaited outcome of the central bank’s consultation into the type of bank collateral it allows banks to use at its discount window facility (DWF).
Shorting (and scheduling) the stress tests
DataExplorers has something useful for European stress test-watchers.
Ahead of the test results, the data specialist is providing a daily update on short interest in European banks. The first report was published on Monday — and it answers a few important questions:
Further reading
Elsewhere on Tuesday,
- The Greek debt song.
- Monetary policy, the Chinese (historical) perspective.
- The men who ended Goldman’s war.
- Should central banks target higher inflation rates?
- One Volcker Rule to err,
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Brad DeLong: It is far too soon to end expansion
Greece, Ireland, Spain, Portugal and Italy need to be austere. But Germany, Britain,
Snap news
Breaking pre-market news on Tuesday,
- Cable & Wireless Worldwide issues profits warning – statement.
- Aquarius Platinum says working with South Africa’s Department of Mines to determine best practices- statement.
Important information about the 6am Cut
Some of you won’t like this. Charging is (partly) upon us.
From Tuesday (July 20) you will have to be a fully-fledged subscriber to FT.com in order to continue receiving the 6am Cut briefing service by email.
The three risks to global growth, from Barclays Wealth
Three regions, three problems.
According to strategists at Barclays Wealth on Monday, the global economy is facing three big risks in three big regions:
The risks are that U.S. consumers do not increasing spending,
Chart du jour, emerging Europe FX loans edition
BNP Paribas analysts Vivek Tawadey and Oleksiy Soroka on Monday commented on the standoff between Hungary and the IMF over the small matter of a controversial bank tax, among other things.
As they put it:
Life on planet ZIRP
The consequences of near zero interest rate policies (ZIRP) are many and varied, as the UK’s retail investors found to their cost on Monday.
National Savings & Investments, the UK government’s savings arm,
Frozen in the Greek repo markets
The European Repo Council put out an interesting paper earlier this month on developments in the repurchase and securities lending markets, post the Lehman and European sovereign crises. It’s available here.
Basel as MMORPG
David at Deus Ex Macchiato has had a pretty capital idea for testing out bank regulation — and a pretty timely one, with Basel reforms in play.
In short, turn it into a game:
There are two classes of players.
International Power and the change of control premium
Talks between International Power and GDF Suez are back on but what shape might a deal take? We know it will be structured as a reverse takeover with GDF transferring some of its non-European assets into the UK company,
Canvassing QE’s contribution
The Bank of England’s £200bn QEasing programme may have ended earlier this year, but one key question remains; how successful was it? And, perhaps more importantly, did investors value it?
This little survey — from Credit Suisse — can help with the latter query:
Markets Live transcript 19 Jul 2010
Markets Live chat transcript for the chat ending at 11:24 on 19 Jul 2010. Participants in this chat were: Neil Hume, FT Bryce Elder Izabella Kaminska, FT
NHGood morning
NHand welcome to Markets Live
Anyone for bonos?
Ever wondered exactly who’s been holding Spanish government debt recently, who’s been cutting down — and who might change their mind in the coming months?
Wonder no further.
Laurent Fransolet of Barclays Capital has looked at the data on foreign and domestic bond holdings compiled by the Spanish Tesoro and the Bank of Spain.
Hotel(ling) Chocolat
As we have explained before, one consequence of low interest rates has been savvy traders’ pursuit for yield via the commodity contango trade — first made famous in the oil floating storage trade.
And it is true to say,
Cash for chocolate
Oompa, Loompa, doom-pa-dee-da
If you’re not greedy, you will go far
You will live in happiness too
Like the Oompa Loompa doom-pa-dee-do.
That, by the way, is FT Alphaville’s ode to Anthony Ward (dubbed “Choc Finger”
A bid and a double-dip warning from Tomkins
Shares in engineering conglomerate Tomkins are moon-bound on Monday morning:
Lift off was triggered by news that the company had opened its books to a Canadian consortium led by Onex Corporation,
Danger! Methane-powered falling knife
BP’s share price in London early on Monday, after official concerns that methane (which would indicate oil) is leaking from the seabed near the Macondo well:
Volatile stuff, methane.
Goldman seeks to avoid SEC fund-amentalism
A tip-off, for any one who thinks Goldman got off lightly in the Abacus affair.
The Securities and Exchange Commission’s undertaking on the Abacus 2007 AC1 CDO ain’t over ’till it’s over — and it looks like that’s not yet.
Further reading
Elsewhere on Monday,
- Explaining deflation. It’s the technology, stupid.
- Think financial reform is finished? Just wait for the ‘corrections’ bill.
- The annotated Jim Cramer.
- Barry fumes again:
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Larry Summers: America’s sensible stance over recovery
Economic commentators are mired in an unhelpful dialectic between “jobs” and “deficits” that,
Snap news
Breaking pre-market news on Monday,
– International Power and GDF Suez Energy International confirm talks on reverse takeover – statement and statements.
– Tomkins receives 325p a share offer from Onex Corporation and Canada Pension Plan Investment Board;
Guest post: Towards a eurozone governance overhaul
Shahin Vallée, economist at BNP Paribas and Jérémie Cohen-Setton, PhD candidate at U.C. Berkeley argue that euro area leaders, although actively engaged in the definition of the EDRM, should refrain from publicly talking about it given the risk of self fulfilling prophecies.