October, 2010
Re-evolution of the CLO
The market for Collateralised Loan Obligations — those sliced and diced business loans — may have only just reopened, but boy, has it evolved!
News came on Tuesday that JP Morgan is revising the $400m CLO arranged for Apollo Management;
Goldman and those 50-year bonds
In another display of nifty tentacle work, Goldman Sachs on Tuesday sold $1.3bn in 50-year bonds to retail investors — vastly beyond its original plans to sell just $250m worth.
While investors were (quite naturally) drawn to prospects for high,
Markets Live transcript 27 Oct 2010
Markets Live chat transcript for the chat ending at 11:28 on 27 Oct 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHMorning rable NHIt’s 11.03am NHand time for a bit of Markets Live
Gusher!
Has Falklands explorer Desire Petroleum struck oil (or got a bid)?
Someone seems to think so.
Compare and contrast – UBS vs Deutsche Bank edition
The more one looks at Tuesday’s third quarter results from UBS the uglier they seem — and not just because its top bankers want the $1m cap on cash bonuses lifted so they can pay the mortgage and the kids school fees.
The Hobbit Bounce
Kiwi action, after New Zealand reached a deal to keep the filming of ‘The Hobbit’ local:
Related link:
Aussie slumps on soft inflation; kiwi outperforms – International Business Times
Fedwire
You’ve heard of Pestowire and Kleinmanwire.
Well, our US cousins have a similar service. Edited by the Wall Street Journal’s Jon Hilsenrath, it’s called Fedwire and it brings you all the news, views and gossip from the world’s most powerful central bank.
Posen to surplus countries: easy money won’t inflate asset bubbles
Still fresh after his performance as the lone dissenting dove on the UK’s Monetary Policy Committee, Adam Posen has now used the expertise for which he is perhaps best known — Japan’s lost decade(s) — to argue in a speech that easy monetary policy doesn’t lead to asset bubbles.
Further reading
Elsewhere on Wednesday,
- The continuing trials of Wall Street’s women.
- A scholarly view on oil shocks and the zero bound.
- The secret world of Goldman’s trading system.
- How to lose $25bn in a year,
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Simon Schama: Time for the great orator to talk back
History will be kinder to the first two years of Barack Obama’s administration than the electorate next Tuesday,
Snap news
Breaking pre-market news on Wednesday,
- Deutsche Bank says sales and trading activity rebounded in September — statement.
- British Airways launches £350m convertible bond offering — statement.
Further, further reading
For the commute home,
- After the elections, forget about another bailout.
- Where are the biggest imbalances?
- Lloyd Blankfein and the flowering tree.
- Simulating what happens when a (US) state defaults.
We have lift off…
… in UK government bond yields that is.
Via Reuters, the price action in the 10-year gilt following Tuesday’s much stronger than expected Q3 GDP reading:
Bye, bye QE2 premium.
However,
Real appreciation
This sharp bit of analysis by Ed Dolan on renminbi appreciation has been getting passed around the blogosphere lately (our emphasis):
Heated rhetoric aside, the real question is, how successful has the manipulation been in maintaining the competitiveness of Chinese exports?
To answer that question,
Emergification has arrived
Barclays Capital may not be too hot on some emerging-market credits (ahem, Hungary) but they certainly make a stirring case for EM bonds overall.
Or rather, they make a stirring case for the rise of emergification.
Housing index bonanza
Well, this is no fun. Four US housing indices have released updates since Friday, with three of them showing worrying declines in the months they tracked.
The lone dissenting index belongs to the FHFA,
Adventures in de-equitisation
The latest corporation looking to take advantage of the yawning gap between earnings yields and (after tax) debt yields is IBM.
Via Reuters:
IBM SAYS AUTHORIZED $10 BILLION IN ADDITIONAL FUNDS FOR
Hungary: willpower, but no way?
FT Alphaville recently noted the tricky situation Hungary could be getting into vis-à-vis strong demand for emerging market bonds like its own, contrasting with its still-questionable credit fundamentals.
Conquering Anglo Irish CDS
CDS-watchers — mark your calendars.
November 23 is the first possible date that Anglo Irish Bank’s sub-debt exchange could trigger a credit event for CDS written on the bonds. That is, the ‘liability management exercise’ will elicit lump-sum payments for protection buyers.
A rocky road to yield
A data point, in the relentless search for yield.
The bottom tranches of Granite — the mortgage securitisation vehicle of Northern Rock — crossed the 50 price level for the first time last week. This is,
An investment banking horror, from UBS
“Pretty horrific.”
That’s the reaction of one City analyst to Tuesday’s third-quarter results from UBS.
And it’s hard to disagree.
We all know the third quarter has been a tough one for investment banks but this set of figures really does put things in perspective.
Go on, Treasury: buy dollars
What’s the best way for the US to show commitment to avoiding currency belligerence after pledging its faith at the latest G20 summit?
Answer, courtesy of BNY Mellon’s FX strategist Neil Mellor: it should buy dollars — and help weaken the yen.
Markets Live transcript 26 Oct 2010
Markets Live chat transcript for the chat ending at 11:14 on 26 Oct 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHand welcome to another Markets Live
The AIG Wars
Oh dear, it’s the battle of the government agencies. Over AIG.
And specifically, the US Treasury vs SigTarp.
The special inspector general for the US’s Troubled Asset Relief Program has just published its quarterly report to Congress,
Blast off – UK GDP rocket
And it was RBS analysts wot won it.
Economic growth in the third quarter chewed up consensus forecasts and spat them out on Tuesday — recording 0.8 per cent above a predicted 0.4 per cent.
Just ignore all those austerity clouds,
Smithers vs Wolf
A pessimistic Andrew Smithers is even more pessimistic than usual in his latest World Market Update, predicting a coming US asset bubble as a result of the Fed’s current trajectory, towards further quantitative easing.
Econ bloggers: outlook worse, again
Since we’re always curious to know what our blogospheric comrades are thinking, we’re highlighting a few items from the latest Kauffman survey of economic bloggers.
The previous survey, released in August,
Further reading
Elsewhere on Tuesday,
- So what is insider trading?
- 15 inviolable rules for dealing with Wall Street.
- Gladwell on Steve Rattner and the rescue of GM.
- How Canadian is ‘Canadian enough’?
- UK sits pretty as sterling looks shaky.