October, 2010
Further reading
Elsewhere on Thursday,
- Like the show Biggest Loser, but with fat bankers.
- Currency war is hell.
- Merrill Lynch and the blundering herd.
- Trades gone rogue – a greatest hits album.
- Gold and the punchbowl.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Alan Greenspan: Fear undermines America’s recovery
Although rising moderately this year, US fixed capital investment has fallen far short of the level that history suggests should have occurred given the recent dramatic surge in corporate profitability,
Snap news
Breaking pre-market news on Thursday;
Betfair sets indicative price range for IPO of £1.16bn to £1.48bn — statement.
- Marks and Spencer warns operating costs will be at the top end of the previously guided range — statement.
Deflationary periods in US history
A chart from the St Louis Fed:
And what it shows:
The vertical lines on the chart mark the approximate dates of the 1890, 1893, 1907, and early-1930s financial crises. These crises led to bank failures and a reduced money supply as depositors withdrew money,
What’s really going on in Japan?
Perhaps it was the heady rush that comes with taking long-promised action — that nearly-forgotten thrill for Japan’s oft-derided central bank and finance ministry officials that comes with boldly intervening to curb the currency.
Another EM rising story, M&A edition
We suppose you could file this under the West is wilting meme, though it’s really more a situation of East catching up again.
Either way, we’ve been picking through parts of the Reuters Q3 M&A overview,
Corn report shenanigans
We’re a little bit late to this, but it’s interesting nonetheless for those who might not be all that glued to goings-on in the corn market.
Turns out that after a mega run-up in the price of corn, supposedly due to supply constraints,
Gilt tooth fairies
The UK’s prime minister David Cameron has — unfathomably — told his party’s conference the story of little Niamh (aged 6) who sent his coalition government £1 in tooth-fairy money to help fight the UK’s raging deficit.
How not to camouflage a profit warning
Autonomy is a company that specialises in ‘meaning-based computing’ alongside other enterprise software offerings.
It’s not really a specialism they extend to their regulatory statements:
Autonomy Corporation plc (LSE:
Guest post: what colour is your credit event?
Markit credit analyst Lisa Pollack explores the intricacies of CDS credit events
Before the “Big Bang” in the credit default swap (CDS) market in the spring of 2009, if you thought a credit event had occurred,
Trading the correlation bubble
Could there be a bubble in correlation?
And by that rationale could it be time to position against a bursting of that bubble?
Those, at least, are the thoughts of JP Morgan’s global equity derivatives and delta one strategy team,
The inflationista returns
Is someone turning queasy on QE2?
Here’s a Bloomberg chart showing the (sizeable) spread between the five-year forward US break-even inflation rate and five-year Tips yields:
As we said, sizeable — and as we’ve noted before,
Bank of Japan-baiting
The dollar just went for a trip under Y83 on Wednesday — taking it below September 15′s level when the Bank of Japan intervened, but not for long:
And no sign of the BoJ veering back into the market.
Fitch cuts Ireland to A+ — while banks suffer
Fallout from the Irish government’s kitchen-sink bailout of Irish banks, with Fitch.
The rating agency cut Ireland’s credit rating to A+ from AA- on Wednesday, outlook negative. Here’s the statement:
Japan piles into resources, but is it an inflation hedge?
More details of Japan’s most recent stimulus measures have come out in the last 24 hours, and one of them in particular has got goldbugs and inflationistas’ tongues a wagging.
And that would be the move to create a sovereign wealth fund more focused on resource-related investments than previously imagined.
Dear Paulson & Co investor… happy September
Those Paulson & Co September performance numbers in full:
Advantage Plus: +12.41%
Credit Opportunities: +3.94%
Recovery: +8.47%
Gold: +5.67
Related links:
Paulson and the bulls bounce back – WSJ
Paulson &
QE and exploding pensions, again
Citi is back with another take on low bond yields and pension accounting.
And before you fall asleep (wake up!) this is an update of Citi’s March 2009 note on quantitative easing and exploding pensions.
Markets Live transcript 6 Oct 2010
Markets Live chat transcript for the chat ending at 11:19 on 6 Oct 2010. Participants in this chat were: Neil Hume, FT Tony Tassell NHHola markets fans NHit’s 11.03am
Betfair goes west
We have asked the question before and we will ask it again; what price Betfair, when it lists on the London stock exchange later this month?
Well, if these slides from Numis Securities’ pre-float marketing presentation is anything to go by £1.5bn looks to be the ball park figure.
Peta, 23, from Essex ♥ gold futures
Censored here for impressionable FT Alphaville readers — a contrarian indicator in gold, if ever there was one. From Page Three of Wednesday’s Sun:
Low for longer in the USA?
The Federal Reserve’s war against falling inflation continues.
The latest from the Wall Street Journal’s Fed-watcher Jon Hilsenrath:
Charles Evans, president of the Federal Reserve Bank of Chicago,
The euro desert
The euro has risen to an eight-month high against the dollar (chart via Reuters):
And the unease over what it means for Europe’s weak sovereigns and economies is rising too.
Exhibit A on Wednesday — this Credit Suisse chart:
Further reading
Elsewhere on Wednesday,
- Tarp at two years.
- Ken Rogoff on gold at $10,000.
- RIP, Sidney Weinberg.
- Presenting, ‘De aanval op Europa.’
- Meet the enemy of the MBA.
- Larry Summers is everywhere,
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: How to fight currency wars with China
Has the time for a currency war with China arrived?, asks the FT’s Wolf. The answer looks increasingly to be yes.
Snap news
Breaking pre-market news on Wednesday,
- Liverpool FC board agrees sale to Boston Red Sox owners — statement.
- GE says Wellstream rejected 750p per share offer — statement.
- DNO International may face $45m-$65m loss from Iraq arbitration award – statement.
A ticking, aging time-bomb in JGBs
Somehow, this is a point that’s rarely made.
And yet, it is pretty important.
Last time Japan went scouting for JGB investors, it had a plentiful resource in its own population base — all of whom were aging but were also looking for a risk-less investment until retirement day.
SocGen, La Banque Clown
Dominique Pauthe, who led the three-judge panel in Paris deciding on the guilt of Jérôme Kerviel, has made his court a laughing stock by meeting prosecution demands that this country boy from Brittany “repay”
Handy IMF sovereign hexagon of doom
A picture tells a thousand words…
…and that’s one from the IMF’s latest global financial stability report, summing up its worrying conclusion that macroeconomic (sovereign financing especially) risk has edged forward,
The unequalizers
We spell ‘unequalizer’ with a ‘z’ in the title as an homage to Edward Woodward, (naturally).
Although, in this case, we’re actually referring to the new breed of internalising institutions on Wall Street and in Europe,