October, 2010
BarCap predicts Europe’s distressed debt destiny
Whither all those rubbish European bank assets?
There are plenty of soured loans lingering in the system, on top of a €500bn-outstanding leveraged loan market still being shaken out.
Barclays Capital believes both these things could be the foundation for new European distressed debt market. And it starts around now.
Hugh Hendry: short China, via Japan
As the FT reported this morning, the voluble and prescient Hugh Hendry is shortly to close a new fund launched only a few months ago designed to profit from a China slowdown.
As has been reported elsewhere previously,
From Robo-Signing to RMBS
Introducing the ‘Robo-Signing’ scandal.
Not to be confused with the flash crash or algorithmic trading, this robotic reproach concerns America’s foreclosure crisis.
It seems some mortgage servicers,
Your golden shoes day
Courtesy of some friendly city brokers, comes the following observation about spot gold price movements on Tuesdays:
We are increasingly interested by the move on Gold every Tuesday. I have grabbed the gold price chart from Bloomberg and the steps up in the price are noticeable.
Markets Live transcript 5 Oct 2010
Markets Live chat transcript for the chat ending at 11:19 on 5 Oct 2010. Participants in this chat were: Tony Tassell Neil Hume, FT TTgood morning…kind off NHSurprise
BoJ says: ‘Bye, bye bank note rule’
Could the market be underestimating the importance of the BoJ’s QE announcement on Tuesday?
Here’s the current reaction to the “giant leap” by the Bank of Japan:
In short, equities are up but there’s been a pretty muted reaction from the yen.
From the FOMC, to markets, with love
Brian P. Sack, head of the open market desk at the New York Fed, had some comforting words on Monday — for those expecting another bout of asset-pumping quantitative easing.
Speaking at the 2010 CFA Institute Fixed Income Management Conference in Newport Beach,
A jumpin’ Jack flash in aluminium
First there was the flash crash.
Then there were mini flash crashes.
Now, welcome to the cross-fire hurricane of cross-asset jumpin’ Jack mini flashes.
The development first raised its ugly head last week,
QE wars, Japan edition
You may have heard that China has launched a new mission to the Moon.
But what no one seems to have told the market — or a Federal Reserve pondering further quantitative easing — is that Japan has quietly staged a landing on Planet Zirp in the meantime.
Directors’ dealings Kazakh style
That’s Vladimir Kim.
He’s the chairman of Kazakhmys, the London-listed Kazakhstani copper producer.
And he’s just sold an enormous chunk of stock.
From the RNS on Tuesday morning:
The non-role of internalisers during the flash crash
Themis Trading’s Sal Arnuk picks up on a really important point from the SEC-CFTC’s joint flash crash report published last Friday.
That being: the clear and demonstrable non-role played by broker-dealer/large market maker internalisation desks on May 6.
Further reading
Elsewhere on Tuesday,
- ‘Real men don’t buy gold’.
- Best not to annoy Mike Mayo.
- Path dependence and the flash crash.
- Japan goes ZIRP…
- …while Ben goes fiscal.
- Krugman prods the Austrians.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
George Soros: America needs stimulus not virtue
The Obama administration’s insistence on fiscal rectitude is dictated not by financial necessity but by political considerations,
Snap news
Breaking pre-market news on Tuesday,
- Moody’s places Ireland’s Aa2 rating on review for possible downgrade – statement.
- Tesco first-half group sales up 8.3% at £32bn – statement.
- Pandora says IPO values it at $5bn – Reuters.
ECB bond-buying does a (probable) Irish jig
Hmm, we just can’t think whose government bonds they might have bought.
The European Central Bank’s bond-buying programme has suddenly lurched back into life, according to a recent release (emphasis ours):
From the annals of brave banking calls
Step forward, Evolution Securities.
Their analysts have reacted to National Bank of Greece’s €2.8bn capital raising — which would come in handy for covering any haircuts on Greek government debt holdings (emphasis ours):
A lost day for Japan’s banks
Spotted over at the Tokyo Stock Exchange on Monday — the Topix Banks Index closing at 110.71 — the lowest level on record:
European bank watch — past, present and future
Hey, institutional investors — those Basel III capital rules really are something for European banks to worry about, aren’t they?
Err…
…investors?
And that somewhat more-than-residual fear of sovereign risk is just one among many interesting results from a conference on European banking recently hosted by Bank of America Merrill Lynch.
Euro liquidity and the implications for cash-collateral
According to Bloomberg data, there’s been an interesting development in the euro swaps curve over the last week.
As can be seen below, the very front end of the curve has inverted ever so slightly:
A persistent inversion of this sort — we are told — usually reflects changing rate expectations,
That’s a big bowl of (Swiss bank) CoCos
Presenting the Credit Suisse cuckoo-for-CoCos roadshow…
[July 22 Q2 2010 earnings call transcript] We are encouraged by what seems to be an increased consensus among policymakers on contingent capital securities,
Markets Live transcript 4 Oct 2010
Markets Live chat transcript for the chat ending at 11:23 on 4 Oct 2010. Participants in this chat were: Neil Hume, FT Tony Tassell NHhola NHgood morning NHit’s 11.03am
Basel takes aim at the negative basis
Basel is busy bolting stable doors.
Indeed, one of the big drivers behind new Basel III counterparty risk capital requirements is the infamous negative basis trade.
UBS banking analysts had a good example of the trade last week:
Let the equity bear market resume
If you are wondering what this was all about…
… don’t worry, Société Générale strategist Albert Edwards has the answer. And it’s really rather simple.
The rally that started in July and continued into September was just “the market working off an extreme oversold position as it carves out a long-term top before entering the third lef of a multi-decade valuation bear market”.
The nicotine factor in Japan’s GDP
Amidst Japan’s news of yen intervention and political turmoil, it is an event that has easily escaped the attention of much of the world.
But a (relatively) huge increase in Japanese cigarette prices last Friday — of nearly 40 per cent per packet,
Euro watching
It’s nothing to panic about yet, but the strength of the euro (or should that be weakness of the US dollar?) is starting to cause a bit of unease:
Erik Neilsen, the chief European economist at Goldman Sachs,
Abramovich vs Ireland
So, from Irish subordinates to Russian billionaires.
Millhouse LLC, Roman Abramovich’s private asset management company, is not happy with the bank bail-out plan released last week by the Irish Finance Ministry.
Further reading
Elsewhere on Monday,
- So was Brian Lenihan heckled or not?
- Steve Jobs agonistes.
- Comparing QE-ffects.
- Booming, bilious reverse convertibles.
- Viva Las Vegas.
- Foreclosure mills of Florida.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: Voters will rebuke Washington itself
Opinion polls continue to say that Democrats will do badly in next month’s midterm elections,
Snap news
Breaking, pre-market news on Monday,
- Sanofi launches $18,5bn Genzyme bid – AP.
- Switzerland says UBS, Credit Suisse Group must hold almost double the capital required under Basel III – Bloomberg.