August, 2010
Guest post: El-Erian on why the payrolls report matters
Today’s employment report was disappointing, writes Mohamed El-Erian. Nonfarm payroll employment declined by 131,000 in July, the rate and duration of unemployment remain stubbornly high, and other structural dimensions of the problem are deteriorating.
QE cliff-hanger for the weekend, sir?
Terrible deflation fears. Terrible yields on Treasuries. And now terrible non-farm payrolls for July — with more terrible yields. The market really expects the Fed to unveil another round of quantitative easing at its Tuesday meeting,
What kinds of jobs would exports create?
Given the week’s bad news on US unemployment, there will be renewed and focused attention on what the government should be doing in response.
One fairy tale wish hope of the Obama administration is that exports,
The Hellenic Patient, revisited
Greece won surprisingly good marks on Thursday for its fiscal reforms under the bailout — at least in the short term.
But what about the medium term? And what about that debt restructuring risk?
Here’s Morgan Stanley’s Daniele Antonucci and Elga Bartsch.
Poland ‘swaps’ out its 2009 budget deficit
Oh dear. It appears some European governments never learn.
News comes to us via Dow Jones on Friday of Poland’s extremely active participation in the interest-rate and FX derivative market as recently as 2009.
Econ bloggers do it better
A hat tip to Growthology for pointing us to Kauffman’s third quarter survey of economic bloggers, who have become increasingly pessimistic about the US economy–a perspective that was reinforced by this morning’s truly awful unemployment numbers. From the survey:
US non-farms — down 131,000
US non-farm payrolls declined sharply by 131,000 in July, far below consensus, the US Bureau of Labor Statistics said on Friday.
Private payrolls rose 71,000 — below the consensus — perhaps providing a better measure of the employment situation given large census lay-offs.
Markets Live transcript 6 Aug 2010
Markets Live chat transcript for the chat ending at 11:29 on 6 Aug 2010. Participants in this chat were: Bryce Elder Izabella Kaminska, FT BEGood morning BEAnd welcome to Markets Live
‘Capital requirements increase systemic risk.’ Discuss.
Is this what went wrong with Basel II?
Is this what will go wrong with Basel III?
A recent working paper from the Dutch central bank starts with the provocative question: “Why the micro-prudential regulation fails?”
Tipsy in the TIPS market
The FT’s James Mackintosh makes an interesting observation about the US Treasury inflation-linked (Tips) bond market in Friday’s short view column:
…something weird happened this week in Treasury inflation-protected securities,
Market wheats itself
Carlsberg don’t do exposure to the wheat crisis, but if they did… oh. They do:
As do Heineken, after Russia moved to ban grain exports on Thursday:
Yes, we know hops are made from barley beers are made from hops and barley,
And the winner so far in the wheat crisis is …
It could have been very bad for the world’s largest commodities trader. But if you thought for a moment that the escalating wheat crisis might hit the middle-men in the hot seats of the global grain trade,
Britain’s bankers are ‘still alive’ – Britain’s tabloids go nuts
Spotted in the Square Mile. Those elusive, sardonic, still-alive bankers.
Spotted elsewhere. The Sun, the Daily Star et al. combusting with rage.
Further reading
Elsewhere on Friday,
- Taibbi rides again: Wall Street’s big win.
- “Giving sophisticated models and fast computers to traders is like giving handguns and tequila to teenage boys…”
- What makes forecasting tough.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Market Insight: Gillian Tett - Trading volumes retreat with investor trust
While the S&P 500, say, rose about 7 per cent last month, the mood is anything but euphoric,
Snap news
Breaking pre-market news on Friday,
- RBS posts pre-tax profit of £1.1bn in first half — statement.
- Old Mutual sells US Life operations for $350m; profit up 43 per cent — statement and statement.
Housing lessons unlearned
The Washington Independent has an excellent story today about an ongoing housing programme in the US that is almost breathtaking in its stupidity.
Known as “Affordable Advantage”, it involves a kind of partnership between Fannie Mae,
The grimness of US unemployment
Sluggish growth — meet sluggish jobs. Initial jobless claims — the number of people who file for unemployment insurance each week – jumped by 19,000 to 479,000, its highest level since April.
Economists polled by Reuters had been expecting a decline to 455,000.
Pfffft to more M&A
Oh look — another investment bank pumping a global M&A recovery.
But we liked this note — from Credit Suisse on Wednesday — because the evidence they laid out for more M&A really suggests something much more interesting:
StanChart: Chinese property correction imminent
Standard Chartered analysts have always proved themselves pretty exhaustive when it comes to assessing the Chinese property market.
So when they say they believe a correction in property prices is imminent,
Government Sachs — it’s still here
Here’s a fun bit of political science to ponder on Thursday — sorting the ideological positions of US corporations according to their board members’ donations.
With some rather interesting results for banks.
Dear Paulson & Co investor…
Totemic hedge fund manager John Paulson may be dialing down his long-US positions, though irritatingly it might just have been the wrong time to do so.
After a brutal May and June for the Paulson funds,
Bank of England holds rates at 0.5 per cent
It is what it is. The Bank of England, as expected, has held rates at 0.5 per cent.
As Marc Ostwald at Monument Securities highlighted ahead of the decision, it was always going to be a non-event:
Markets Live transcript 5 Aug 2010
Markets Live chat transcript for the chat ending at 11:18 on 5 Aug 2010. Participants in this chat were: Bryce Elder Tony Tassell BEGood morning BEAnd welcome, as ever, to Markets Live
Following the great (stock market) leader — China
Forget the US. China is now your stock market leader.
Citi analysts Geoffrey Dennis and Jason Press have just declared it so:
China is the biggest emerging market in the world, currently accounting for 18.6% of the MSCI GEMs index.
The Hellenic Patient
Congratulations, Greece — you’re getting the second loan of your bailout.
That is, after the EU, IMF and ECB announced on Thursday that Greece’s experiment in austerity is going, OK so far. Staff teams from the ‘Troika’ of Greece-watchers visited the country during July 26 and August 5,
JGBs, US debt and ‘lively debates’
Rarely has so much financial information and analysis diverged so widely across a vast spectrum.
This fact was highlighted this week by Mohamed El-Erian, chief executive of mega bond fund Pimco (and occasional FT Alphaville contributor) and Richard Clarida,
Geriatric asset prices
BIS analyst Előd Takáts is worried about ageing. And not in a personal way, either.
In a caveat-heavy but very interesting Bank for International Settlements working paper, the economist seeks to investigate how ageing populations will impact asset prices — specifically,
So, what was that Lloyds profit again?
Was it £1.6bn, £1.3bn, or £280m?
You can literally take your pick of Lloyds’ pre-tax interim profits.
The Banking Group reported its 2010 interim earnings on Wednesday. And in grand Lloyds’ tradition ever since its 2009 acquisition of HBOS,