August, 2010
Further reading
Elsewhere on Thursday,
- Kenneth Starr had all the best victims.
- “Are stocks too cheap or are bonds too expensive?”
- Welcome to the age of diminished expectations.
- Everyone’s starving for yield.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Market Insight: Peter Tasker – Yen has edge over gold in battle for supremacy
There are not many financial assets that are priced higher today than before the Lehman shock in September 2008.
About that Lehman call…
It’s no secret that equity analysts tend to be an optimistic bunch, and that they didn’t exactly cover themselves in glory with their forecasts leading into the financial crisis.
Some decidedly egregious examples have now been posted by Economics of Contempt,
Can we predict a financial crisis? Does it matter?
A couple of new research papers have a go at the question of whether we can predict a financial crisis, and they arrive at different conclusions.
With a hat tip to Free Exchange, first up is an NBER submission co-authored by four economists.
SEC charges 35-year Deloitte veteran with insider trading
This is increasingly looking like the worst of times for professional services firms.
Management consultants were more than a little shaken when the investigation into alleged insider trading at Galleon ensnared a former McKinsey director.
Cracks in the Chinese bubble?
We’ve written a fair amount about the Chinese property market on FT Alphaville. We’ve noted some stinky securitisation practices and highlighted some ghost-towns. Then we found some over-bidding on prices. The next thing to rock the Chinese property market – stress-tests,
Motivational indexing
The Wall Street Journal reported on Wednesday how — shock, horror — Wall Street banks may have actively created and pushed securitised products to some clients which they simultaneously advised other clients to bet against.
‘A lively debate followed,’ or, fun with Treasuries
Tip of the hat to Alea for this — an unusually interesting record of minutes for the latest meeting of the Treasury Borrowing Advisory Committee, released in tandem with the Quarterly Refunding Statement.
Choc ICE
We couldn’t possibly let this go past our Reuters screen without a pun headline:
Related link:
Hotel(ling) Chocolat – FT Alphaville
IMF blueprint for a global currency – yes really
FT Alphaville missed this IMF paper when it first came out in April, 2010.
Authored by Reza Moghadam, director of the IMF’s strategy, policy and review department, it discusses how the IMF sees the International Monetary System evolving after the financial crisis.
The sovereign-bank singularity is (still) here
Remember Europe’s grim sovereign-bank loop?
Fitch does — in a bank ratings overview on Wednesday (emphasis ours):
Rating activity fell significantly, to 83 rating actions in Q210 from 119 in Q110.
Goldman’s CMBS switch
Goldman Sachs — pioneers in whacky securitisation structures — have a new one:
Aug. 3 (Bloomberg) — Goldman Sachs Group Inc. is offering to give investors in the highest-rated portions of a bond sale backed by commercial mortgages control in the event the loans go bad as bankers attempt to revive the market.
The perils of releasing the repo rate
FT Alphaville speculated this week about the degree to which collateralised gold loan rates are more indicative of real repo rates - and of collateralised borrowing costs overall – than general collateral repo rates.
A yen for bonds in ‘upside down’ financial world
The financial world “seems upside down”, writes Michael Heise, chief economist at Allianz, in Wednesday’s FT, noting that the spectre of inflation haunts countless TV and radio debates while gold and other precious metals are the flavour of the moment – and yet,
Markets Live transcript 4 Aug 2010
Markets Live chat transcript for the chat ending at 11:18 on 4 Aug 2010. Participants in this chat were: Bryce Elder Tony Tassell BEGood morning BEAnd welcome to another Markets Live
Something ‘otherworldly’ in the market
Nicholas Colas, chief market strategist at BNY ConvergEx, did an experiment this week.
He ran one of his daily analytical musings through the www.iwl.me website, to see what famous author his writing style most closely resembles.
RBS says stress tests were a success – in the first week
Did stress-testing the sovereign exposures of European banks help soothe the market?
On Monday July 26, shortly after results of the tests were published, the analysts at RBS came up with seven indicators that might suggest whether the exercise had ‘succeeded’ in terms of sentiment.
Market screams deflation as JGB yields drop
The yield on the 10-year Japanese government bond reached 0.995 per cent on Wednesday — its lowest in seven years. And that’s after the two-year US Treasury reached a record low on Tuesday.
Further reading
Elsewhere on Wednesday,
- The Lehman Hall of Shame.
- Greenspan fatigue: If you can’t forecast well, forecast often.
- Emerging markets shine again?
- Around the world in real estate trends.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Tim Harford: Confessions of an armchair economist
Anniversaries are a time for reflection and, as the third anniversary of the credit crunch approaches,
Snap news
Breaking pre-market news on Wednesday,
- Lloyds posts £1.6bn profit in first half, impairments at £6.55bn – statement.
- RBS sells UK branches to Santander for £1.65bn — statement and statement.
In the long run we’re all…just fine (maybe)
We’re not known for our sunny disposition here at FT Alphaville, but it would be rude not to point out an uplifting message when one catches our eye. So, over to the Aid Watch blog (of all places)…
Drawing upon the lessons of This Time is Different,
[MoneyTech] Information asymmetry, PR wire releases edition
FT Alphaville has noted before that when it comes to financial markets, and especially in the battle between institutional investors and the day trader, someone will always have the data first.
The Chicago PMI report is made available to subscribers before it hits the general investing public,
Stock up on bread now— at least until it rains again
The most well-known wheat crisis to date is the 1972 “Great Grain Robbery,” in which the Soviet Union combated a catastrophic drought that depleted their wheat supply by buying all the available surplus of wheat in the United States. This Soviet spending spree triggered food price hikes worldwide.
More on overcoming the Volcker Rule
On Monday night came the news, via CNBC, that Morgan Stanley plans to spin off hedge fund unit FrontPoint Partners. From the report by John Carney:
Morgan Stanley has been weighing the future of its stakes in several hedge funds following the passage of the financial reform bill restricting bank ownership of such funds.
The fight over interest on reserves
Is the policy of continuing to pay interest on the bank reserves held at the Federal Reserve a good idea, a bad idea, or completely irrelevant?
This question has been the source of ongoing debate among economists.
Back to the future, with US covered bonds
You’d think America was welcoming a new European immigrant to its debt markets from the way the House passed the United States Covered Bonds Act 2010 last week.
Here’s the abstract of a timely new NBER paper from University of North Carolina economic history professor Kenneth Snowden (emphasis ours):
The secured lending boom (through gold-tinted glasses)
There have been some intriguing developments in the precious metal markets since August 2007, not least:
346 tonnes of BIS gold swaps.
The fact that rather than traditional swaps, these BIS deals were actually collateralised repo loans,