September, 2010
FTfm on AV
Protection of money market investors at risk
Investors in loss-making money market funds are less likely to be bailed out by fund sponsors in the future, increasing the risks of a run on the $5,000bn sector,
Illusions, opportunity costs, and uneconomists
Time for a bit of Friday fun before you depart for the long (US) weekend.
Have a crack at this word problem (answer further down the post* — no peeking):
You won a free ticket to see an Eric Clapton concert (which has no resale value).
Another prop desk folds, this time at Goldman
Bloomberg is reporting that Goldman Sachs is disbanding its Principal Strategies prop trading unit:
*GOLDMAN SACHS SAID TO BE DISBANDING PRINCIPAL STRATEGIES UNIT
*GOLDMAN PRINCIPAL STRATEGIES HEAD
What are stock index future curves telling us?
Has anyone else noticed that stock index futures fell into backwardation just after the Lehman crisis?
Well, we for one couldn’t find any commentary on it.
Accordingly we present the time-spreads for the FTSE,
Final thoughts on the payroll numbers
As usual AV readers did a good job of teasing out some of the nuances in Friday’s payroll report, and for more analytical heavy lifting we are outsourcing to Calculated Risk:
The underlying details of the employment report were mixed.
A Vix curve ball
Things, it seems, are still looking a bit funny in the world of VIX futures.
Pragmatic Capitalism, for example, wondered on Thursday why it was that volatility futures were refusing to revert to the mean.
Beware the Greeks, though not just yet
Here’s an interesting chart ripped from the CFR Geo-Graphics blog:
Notice anything strange?
The European Stabilization Mechanism was announced on May 11, the date represented by the blue bar in the middle of each time-to-maturity listed.
US non-farm payrolls – down 54,000
US non-farm payrolls fell by 54,000 jobs in August while the unemployment rate remained constant at 9.6 per cent, according to The Bureau of Labor Statistics.
The decline was much less than expected by the market.
The politics of (yen) intervention
With the S&P 500 up nearly 4 per cent in two days, commodities prices firming, better-than-expected economic data, and core bond prices under pressure, some analysts are (already) seeing a rebound in risk appetite.
Markets Live transcript 3 Sep 2010
Markets Live chat transcript for the chat ending at 11:18 on 3 Sep 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHHola NHGoodmorning NHTFIF
Sovereign default – Unnecessary, Undesirable, and Unlikely
The IMF recently published the final part of its sovereign risk trilogy.
Parts 1 and 2 were dark and quite frightening for investors, but Part 3 “Default in Today’s Advanced Economies: Unnecessary, Undesirable,
An impatient market is not a happy market
Andrew Haldane, the Bank of England’s executive director of financial stability, has penned a hugely thoughtful piece about the implications of growing cultural impatience and short-termism on financial markets — and society at large.
Those /important/crucial/vital US jobs figures
Yep it’s another freaking economic indicator. But an important one – US non-farm payrolls.
And with markets seemingly on hold ahead of the _____ report (please insert your favoured adjective) there’s
Further reading
Elsewhere on Friday,
- Ben Bernanke’s Labor Day reading list.
- Roubini’s new odds on a double-dip recession.
- When bankers are more dangerous than warlords…
- The wrath of Vikram Pandit.
Pink picks
Comment, analysis and other offerings from Friday’s FT:
Gillian Tett: Cautionary tale about exit strategies from 1930s Japan
Who would want to be in the shoes of Fed chairman Ben Bernanke, or for that matter,
Snap news
Breaking pre-market news on Friday:
- Roche launches group-wide business review to “adapt cost structures and accelerate productivity improvements” – statement.
- BP says Gulf of Mexico spill costs have reached $8bn – statement.
The housing bubble reconsidered
Maybe it was Jackson Hole or the August slowdown, but academics are in a reflective mood these days.
And some of them are especially interested in answering one specific question that continues to linger — just what caused the damn housing bubble? A description of three attempts from the past week follows.
To: HSH Nordbank employees, Re: Spying, porn
And you thought German landesbanks were boring.
Last week, HSH Nordbank reportedly sent a memo to its employees preparing them for an upcoming Spiegel report. At the centre of the story were supposedly allegations that the bank’s former head of the New York branch,
A brief look back at a weird August
We think a few points are worth highlighting from the M&A and capital markets snapshots just released by Thomson Reuters.
First, after an extraordinary first half of the month, the year’s junk bond rally (which we’ve been monitoring) completely fizzled in the second half:
A history lesson from the FCIC
In addition to grilling Dick Fuld on Wednesday, the FCIC has also quietly released a preliminary staff report documenting the history of ‘Too Big To Fail’ bailouts in the US and their relevance to the latest crisis.
A 99% depreciation in the worth of Blankfeins
The Goldman Sachs CEO was right at the top of Vanity Fair’s 2009 list of the 100 most influential people:
But this year … there’s been a wee bit of slippage:
Ouch. (H/T DealBreaker)
Related links:
Ireland’s exteeeeended banking issues
So much, perhaps, for that scary September of bank refinancing.
Reuters reports that Ireland “signalled” on Wednesday, that it’s seeking to extend its guarantee of Irish bank liabilities, started in response to the late 2008 crisis.
Markets Live transcript 2 Sep 2010
Markets Live chat transcript for the chat ending at 11:17 on 2 Sep 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHMorning all NHon time today NH11.03am sharp
More intrigue in the wonderful world of potash
An even bigger week than usual for potash-related deals and developments with Russia — undoubtedly spurred to new competitive heights by BHP’s hostile $38.6bn bid for Canada’s PotashCorp — signalling its support for the planned merger between potash producers Uralkali and Silvinit.
The Cult of Equity is dead. Long live bonds
Well, if Citigroup’s global equity strategist was at all still prevaricating on which side to take in the bond-stock decoupling conundrum, he’s firmly made up his mind now.
On Thursday Robert Buckland writes that the 40-year cult of equity is — quite simply — dead:
A gazillion more CDS trades
All hail the Depository Trust and Clearing Corporation
The DTCC has provided an updated and more in depth version of its market “snapshot” of CDS trade — six-month data for the top 1,000 CDS single-named reference entities.
CSAs the Spanish way [updated]
Hot on the heels of Portugal’s two-way CSA, comes a partial step from Spain.
From the excellent Chris Whitall, over at Risk Magazine:
The Spanish debt office is in negotiations to amend collateral agreements on its derivatives trades to ease the funding burden for its bank counterparties.
Further reading
Elsewhere on Thursday,
- The Chinese-hedging-gone-awry theory of Treasuries.
- Hard days ahead for hedge funds.
- The economic narrative.
- Why America isn’t working.
- The odd couple.
- “We didn’t understand the recession”.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Hedge funds should cool it on tax
Try to extract money from a hedge fund manager or the founder of a private equity fund and he loses all sense of proportion,