October, 2010
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: China can no longer plead poverty
Anybody who talks regularly to Chinese officials will be familiar with the mantra that “China is a developing country”.
Snap news
Breaking pre-market news on Tuesday,
- UBS says investment banking arm recorded a loss of SFr406m in Q3 — statement.
- ArcelorMittal warns of tough Q4 — statement.
- Brit Insurance recommends £10.45 a share cash offer from Apollo Management and CVC Capital Partners — statement.
Still Tipsy, still the best
Tips — still the best, apparently.
As we’ve already discussed in some detail, Tips have been attractive investments in the current environment for several reasons: protection against expected inflation,
Chart of the day, RMB appreciation edition
Via Geo-Graphics:
And CFR’s straightforward interpretation:
As this week’s Geo-Graphic shows, when the renminbi appreciated significantly between 2005 and 2008 Chinese export growth slowed and household spending growth rose.
Volkswagen 2.0
Remember the Volkswagen fruit machine?
Well, the situation developing at Hermes International, following the daring market raid by the Wolf in the cashmere coat, bears something of a resemblance to the short squeeze that developed in the German carmaker two years ago.
Introducing: Further, further reading
We’re introducing a new daily feature — or maybe we should just say that we’re doubling up on a feature that already exists.
Just as each morning we greet you with a ‘Further reading”‘ post, starting tomorrow we’ll be ending the (US trading) day with one as well. Just before Wall Street closes at 4pm in New York,
Repo-airing European banks
What’s Spanish for piggybacking?
We ask, because there’s a rather interesting detail on the reconstruction of Spanish bank funding in JPMorgan’s most recent Flows and Liquidity note:
Peripheral banks in particular have increased their participation in interbank markets markedly since August driven by Spanish banks.
Hungary: muddling through the EM tide
Something to bear in mind for all that money flowing into emerging-market bonds lately – there are still some hefty pockets of EM credit risk out there.
Remember Hungary?
Barclays Capital wants you to.
Why JP Morgan’s new copper ETF may have a scouse exposure
JP Morgan threw its name into the physically backed commodity ETF race on Monday with the filing of a preliminary prospectus for a copper-backed product.
The SEC document, the first from a major new player preparing anticipating an entry into the market,
Market wets itself over UK QE
Here’s one for the ‘weird QE effects on equities’ files. One for those already identifying higher inflation expectations even before QE is announced, too.
Presenting the incredibly inflating share prices of UK water companies, as noted by Evolution Securities on Monday (chart via the FT/Reuters):
China’s little problem with unspent cash
There’s a bit of an interesting situation developing in Chinese public finance.
According to analysts at Standard Chartered, based on current trends, the government’s revenues could fall short of expenditures by only CNY300-500bn,
Markets Live transcript 25 Oct 2010
Markets Live chat transcript for the chat ending at 11:23 on 25 Oct 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHhola NHit’s 11.03am NHand time for another week
The Wolf strikes: but how did he do that?
They don’t call Bernard Arnault the “wolf in the cashmere coat” for nothing.
The latest master-stroke from France’s richest man is the acquisition of 17 per cent stake in Hermes International at a 50 per cent discount to the prevailing market price.
SGX: first Australia, then — the world?
Singapore has taken its ambitious push to become Asia’s investment “gateway” to a whole new level, with a deal by SGX, the main Singapore exchange, to buy Australia’s ASX for A$8.4bn ($8.3bn).
Analysts see the deal as logical and timely,
Flash, a-ha, he’ll strike everyone of (our security markets)
Hat tip to a beady eyed reader for drawing attention to the latest mini flash attack — this time in the front-month Ice Dollar Index future (December expiry) just ahead of the Friday market close:
And here’s the same Bloomberg chart on a longer duration:
Further reading
Elsewhere on Monday,
- What is wrong with the new elite?
- The parallels between food and finance.
- Sony bids ‘sayonara’ to the cassette Walkman (in Japan).
- ‘This is what happens when you need to leap over a chasm’.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: Health reform weighs down Obama
Almost all Democrats and even some Republicans were sure the Patient Protection and Affordable Care Act,
Snap news
Breaking pre-market news on Monday,
- Puma to restate 2009 results after ‘irregularities’ at Greek joint venture partner — statement.
- Pearson expects adjusted EPS 10 per cent ahead of last year;
FTfm on AV
Some highlights from Monday’s FTfm
Asset chiefs fear EU’s activities tax
The asset management industry claims it bears no responsibility for the financial crisis, but it may be on the hook to foot part of the bill as the European Commission has thrown its weight behind a financial activities tax on an EU level.
Further reading, weekend edition
The world’s top central banker – The Jerusalem Post
The legacy of Drexel Burnham Lambert – The Economist
A reading list of the classical economists – Marginal Revolution
More questions about Wells Fargo’s foreclosure practices — ProPublica.
Performing PPIFs
The Public-Private Investment Program, or PPIP — do you remember it?
Appropriately, given its somewhat Dickensian name, it was like the orphaned child of banking stabilisation measures. Associated with a difficult early period of the Tim Geithner reign,
The US Treasury market is not enough
It’s less than two weeks ’till the day markets expect a US QE2 announcement.
And expectations are intensifying ahead of November 3. RBC Capital Markets, for instance, expects the Federal Reserve to purchase about $113bn worth of US Treasuries per month,
Dylan Grice vs Emerging Markets
Société Générale strategist Dylan Grice is back on the Rudolf von Havenstein trail.
Grice first brought up von Havenstein back in March, noting the Prussian central banker’s penchant for monetising Germany’s debt during the First World War — leading to massive bouts of hyperinflation.
The USD covered-bond-apalooza
Earlier this year we wrote about the unexpectedly stringent provisions for covered bonds to be imposed by Basel III, in particular with respect to their treatment in the liquidity coverage ratio and the net stable funding requirement.
Meet the £1bn man
This is Colin Day, the chief financial officer of stock market darling Reckitt Benckiser. And his departure, announced on Friday afternoon, knocked more than a £1bn off the price of the Anglo-Dutch consumer goods company,
Bob the Bear comes out of hibernation
Bob the Bear — aka Bob Janjuah — is back, in an FT Alphaville exclusive.
The lovable perma-bear has, together with sidekick Kevin Gaynor, moved from being RBS’s chief markets strategist to co-head of cross-asset allocation strategy at Nomura.
Freight-ful dollar prospects
Thought a more obscure market like freight might escape the grip of correlations?
Not quite.
ICAP’s latest monthly shipping analytics report notes that the relationship between the dollar and the freight market,