August, 2010
Executive comp rules still unclear
The Washington Post picks up on the idea, thus far mostly pushed by academics, that executive compensation should reflect accountability not just to shareholders of financial institutions but to other stakeholders as well.
The Big Pfffft and the Euro-peripherals
There’s a bluntness about this one that we kind of like.
Barclays Capital’s AAA Investor note looks at the problems posed by the rally in long-term bonds (sub specie deflationitatis) on Thursday:
These developments pose a problem to most yield-driven real money investors,
Survivor’s gilt
Following the Philly Fed fail – the yield on ten-year UK gilts punched under 3 per cent on Thursday. First time since the panic days of March 2009:
Philly Fed double-dip disappoints
The Federal Reserve Bank of Philadelphia’s index of business conditions registered a big unexpected fall into negative territory, on Thursday.
Here’s the breakdown of the survey results via Bloomberg:
Banks’ buyback pain to be $17bn – $42bn, Fitch estimates
While the Firm uses the best information available to it in estimating its repurchase liability, the estimation process is inherently uncertain and requires the application of judgment.
- JP Morgan’s Q2 10-Q filing.
UK banks, sucking on the blood of depositors
Here’s a brilliant report from Bruce Packard at Seymour Pierce on Thursday, which expands in great detail on the rather hypocritical trend of banks scorning unsecured lending while simultaneously fighting over customer deposits — the cheapest form of unsecured borrowing for them.
Flattening yield curve, flat-lining banks
In pic-form — one drag on US bank earnings:
It’s the flattening US yield curve. And its antithesis — a steepening curve — is one of the things that helped recapitalise and propel the banks to super-profits last year;
BHP’s Potash war gets personal
So the gloves are off in the fertiliser battle and everyone has an opinion on the year’s biggest takeover bid, after BHP Billiton on Wednesday went hostile on its $39bn bid for PotashCorp.
One thing is for sure.
No, sir, no bubble here…
From a recent trip to China. Caption competition, anyone?
(Photo courtesy of Adam Zaremba of Superfund TFI, H/T to Blazej Karwowski at TVN CNBC Biznes.)
The bond-stock decoupling is quite the Conundrum, Citi says
Bond yields are falling, falling, falling . . . but global equity markets simply don’t seem to care:
Global stock prices have rallied 6 per cent over the past six weeks, while global bond yields have fallen a collective 25 basis points,
The loneliness of the long-distance inflationista
Joachim Fels just isn’t giving in, part four.
Despite mounting signs of global deflation fear — as yields on ultra-long bonds fall — Morgan Stanley’s central-bank watcher and his colleague Arnaud Marès are still on inflation watch.
Germany’s defaulted gold bearer bond
Err, shouldn’t the fact that Germany is potentially facing a multi-billion dollar lawsuit for defaulted hyperinflation-era gold bearer bonds be triggering more news flow than just this Bloomberg story?
Germany must face a lawsuit over bonds that defaulted under Adolf Hitler in the 1930s,
Further reading
Elsewhere on Thursday,
- Those Druckenmiller years.
- Six questions for China.
- Brad DeLong does the Treasury bubble.
- Should minors have bank accounts?
- A contrarian take on gold.
- It’s ‘Atlas Shrugged’,
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Analysis: Banking reform – suspense over
The new Basel rules are softer than the industry feared as economic wobbles hindered regulators’ ability to fortify the financial system any more fully.
Snap news
Breaking pre-market news on Thursday,
- Essar Energy profits fall 28 per cent, warns on Indian inflation — statement.
- Mastercard strikes 360p per share deal to buy DataCash — statement.
- Gulfsands Petroleum says Lambouka well is water-bearing — statement.
Congratulations, New Jersey
The state of New Jersey appears to have blazed a new trail, but hopefully it’s one that other states won’t follow:
New Jersey is the first state ever charged by the SEC for violations of the federal securities laws.
Steampunk chartism
Hindenburg Omens are for kids. Here’s a tip of the top hat to Barry Ritholtz for unearthing this nineteenth-century great-grand-daddy among technical cycles:
(Click to enlarge)
That’s by one George Tritch.
Corporate cash piles & bond yields
Here’s an interesting snippet from CFO magazine, which may — or may not — explain the recent plunge in top-quality bond yields:
Over the past year, treasurers and CFOs have increasingly pursued the corporate equivalent of putting their money under the mattress:
A legacy of potash
The ag bull strategy has been fertilised, the M&A is pumped up on nitrogen, the grand game of playing emerging-world food demand is back on.
Watch out for the whiffs of ammonia around the balance sheets though.
Stop the market – the Fed wants to get off
Oops.
The Federal Reserve didn’t mean for its recent QEII announcement — that it would be reinvesting proceeds from its maturing securities portfolio — to so greatly affect investors.
So said Minnaepolis Fed president Narayana Kocherlakota in a (telling) Tuesday speech:
Legal & General gets the bid speculation treatment
Aviva and RSA have set tongues wagging, obviously. Legal & General had pushed up just under 3 per cent in London at pixel time, on trader talk of interest from Zurich:
Legal & General has said to Reuters it won’t comment on speculation…
That cornered – failing – MBS market
Fails to deliver — to the moon!
That’s trade settlement failures in mortgage-backed securities (MBS) — the most liquid US bond market after US Treasuries — and they’ve spiked this summer. The fails occur when the MBS seller fails to deliver on an agreed upon settlement date.
For China, it’s diversify, diversify, diversify
First, it was a swoop on Japanese government bonds in May. Then a modest but intriguing spree in the Spanish sovereign bond market in July – all amid a steady sell-off of US Treasuries.
As the latest US TIC data indicated this week,
Every 1% increase in bank capital = 0.19% lost in GDP, BIS says
The long-awaited interim reports of BIS’s macro-economic impact study are out.
They’re part of the Bank for International Settlements efforts to assess potential changes to financial regulation. Specifically,
Caught between Scylla and Sentance
The song remains the same, as Led Zeppelin and Andrew Sentance would say.
The August Bank of England MPC minutes are out, and they once again offer what’s by now become the Bank’s trademark (and excruciating) mix of uncertainty on rates.
[South Africa 2010] Higher GDP makes footballers more attractive
Some August fun below.
A new paper from the University of Toronto’s Feng Chi and Nathan Yang seeks to determine whether there’s a link between social status and wealth. In particular, it tries to examine a possible connection via the perceived social status of 2010 World Cup football players and their country’s GDP per capita.
Further reading
Elsewhere on Wednesday,
- A blogger’s afternoon with the US Treasury.
- Spain’s national addiction to the use of ‘Dinero B.’
- A short history of world GDP.
- The cult of equity — dying hard,
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
John Kay: Robber barons of the Rhine
The phrase “robber baron” is popularly used to describe the titans of late 19th-century US business – men such as John D.
Snap news
Breaking pre-market news on Wednesday,
- BHP Billiton sets aside $43bn to go hostile on PotashCorp offer — statement.
- Eurasian Natural Resources posts $1.435bn underlying EBITDA — statement.
- Rockhopper has $119.7m for exploration;