August, 2010
Hitting the reset button on US mortgages…
Have you heard the Great Mortgage ReFi Rumour of August 2010?
Now that the US Treasury’s Hamp programme is widely recognised as a failure, attention is turning to new efforts to reinvigorate the lagging American housing market.
An Atkins diet for the world
One man’s famine is another man’s feast — though in this case, it looks like many of us will have to take another look at the Atkins diet.
With soaring demand from key regions of the world and supply problems such as Russia’s drought and India’s grain storage crisis,
Markets Live transcript 3 Aug 2010
Markets Live chat transcript for the chat ending at 11:05 on 3 Aug 2010. Participants in this chat were: Bryce Elder Tony Tassell BEGood morning BEAnd welcome TTgood morning folks
Tokyo FX traders keep calm and carry on
Japanese regulators are nannying their charges again. In this case it’s the thriving community of foreign exchange day traders, often dubbed the “Mrs Watanabes” of the country, who account for as much as 20-30 per cent of the volume of Tokyo’s entire spot currency market.
FSA fines RBS £5.6m for sanctions rules breaches
Or for ‘risking’ the integrity of UK financial services. (Really).
There’s some international criminal intrigue on Tuesday — the FSA has fined RBS for failing to prevent payments going to and from persons sanctioned by the UK government.
A deflation refresher
It’s a deflation déjà vu. The looming Lost Decade. The exfiltration of inflation.
The summer of 2009 was characterised by one almighty debate between those expecting Japan-style deflation, those who forecast inflation — and those who thought monetary conditions would be ‘just right.’
(Where,
Das Stressometer
CreditSights has created a sort of EU bank stressometer.
In their words, it seeks to “exploit” the additional disclosure on sovereign risk published in the CEBS-administered European bank stress tests.
Further reading
Elsewhere on Tuesday,
- In search of the US consumer – via short interest.
- Warren Buffet’s Mr Fix-it.
- Notes from the Lehman examiner’s report.
- “The beauty premium is not much greater in prostitution than it is in the economy generally.”
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
John Paul Rathbone: Venezuela cannot run on rhetoric
Parrots screeched in the trees, ripening mangoes hung from the branches, and the South American diplomat was creased up in a wicker chair in his garden,
Snap news
Breaking pre-market news on Tuesday,
- ITV confirms move into pay-TV with Sky agreement — statement and statement.
- Xstrata operating Ebitda up 67 per cent to $4.494bn in first half — statement.
IPO auctions: still a bad idea
Can you remember the last time an issuing company not named “Google” tried an IPO auction? Neither can we.
As IPOs continue to rebound this year, largely driven by activity in Asia, a new paper explains why companies don’t try auctions more often despite the imperfections of the book-building approach.
Overcoming the Volcker rule, with ETFs
We heard last week how Goldman Sachs was taking its prop trading over to the asset management side of its business, in a bid to outmanoeuvre US financial reform’s use of the Volcker rule to clamp down on in-house risk-taking.
Euro-mysticism
Fibonacci analysis alert — the euro punched through $1.3125 on Monday:
The faithful have apparently been waiting for this level to be reached, according to Bloomberg BusinessWeek. It’s, err,
Moody’s: Don’t Gamble on Gambling
Fresh out of the investment research side of Moody’s – a report on the future of gambling in the US. When the title reads “Proceed With Caution,” you can guess that the prognosis is not good…
From early 2008 until recently,
The sound of one central bank clapping
Compare and contrast, central banking psychology edition.
Here’s a Bank of England angle on the Fed’s got a stimulus problem this summer — in which there’s mixed but growing evidence for a downturn – deflation,
The Congressional Budget Office does a US fiscal crisis
If you thought the Bank of England’s fan charts were bad in terms of err, fanning uncertainty, take a look at the below from the US Congressional Budget Office’s economic and budget issues brief:
According to the CBO’s forecast,
Correlation fatigue, emerging market edition
Following up FT Alphaville’s recent focus on market correlations, here’s an interesting piece from Reuters quoting Bank of America Merrill Lynch’s Daniel Tenengauzer.
It seems that whilst investors could previously depend on emerging markets for portfolio diversification — in the last three months there’s been a very meaningful breakdown of the old relationship.
Looking at the silver bid-ask spread
While all eyes have been focused on gold perhaps the market has overlooked some strange goings-on in the silver market.
We noted on Friday, for example, how the forward curve in gold flipped into backwardation at the same time as silver went into a steep contango.
Markets Live transcript 2 Aug 2010
Markets Live chat transcript for the chat ending at 11:20 on 2 Aug 2010. Participants in this chat were: Bryce Elder Tony Tassell BEGood morning BEAnd welcome one and all
Zimbabwe: Does Woodford know something we don’t?
Is there something afoot in Zimbabwe? As The Times (via The Australian) reported on Monday, influential UK-based fund manager Neil Woodford, who manages about ₤15bn for Invesco Perpetual, has committed $25m of clients’ money to investment in Zimbabwe.
Buiter, gangsters and euros – oh my
It’s no secret that we on FT Alphaville ♥ Willem Buiter.
But we really really ♥ the Citi economist and former FT blogger’s most recent European missive — from the Wall Street Journal’s eye-catchingly titled “How gangsters are saving the eurozone”:
Smug bank is back
Well, here’s something to kick off a week of UK bank earnings — some nice forecast-beating numbers from HSBC.
The bank posted pre-tax profit of $11.1bn in the first half on Monday. That’s compared to analyst predictions of $9.1bn.
Paint by algos
Zero Hedge draws attention to a remarkable little study by a group called Nanex.
The datafeed company’s research shows that high frequency players approach trading in an almost ‘paint by numbers’ way.
Cliff-diving in European interbank rates
Ker-splash.
Those are some short-term liquidity rates — like European top-tier commercial paper — quite literally jumping off a stress-test cliff last week. Which is rather a step-change given that for the first few days after test results were announced some European interbank strains looked to have persisted.
Further reading
Elsewhere on Monday,
- There’s a derivative in your cereal.
- Seven lessons to learn from a trading loss.
- How dare you second-guess the gold bugs.
- Correlation – and beating that herd on the Street.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: Obama must break his tax promise
Between now and the November elections, the biggest political fight in the US is likely to be about taxes,
Snap news
Breaking pre-market news on Monday,
- Tullett Prebon operating profit falls from £100.6m to £84.7m — statement.
- BNP Paribas net profit up 31 per cent to €2.1bn in second quarter – statement.
FTfm on AV
Highlights from Monday’s FTfm.
Securitising life policies has real dangers
Investors buying bonds based on traded life policies could expose themselves to unknown risks, warns a report on the asset class.