November, 2010
Another squall in the periphery
Breaking:
ATHENS (Dow Jones)–Greece’s 2010 budget gap is expected to reach 9.3 per cent of gross domestic product, well above the country’s target, forcing the government to implement further spending cuts to bring its fiscal reforms back on track,
Give us your money
Charity worker and businessman Frank Timis needs some cash. $800m to be precise to help fund his development work in west African country Sierra Leone.
A press release from Timis’ African Minerals:
African Minerals Limited,
A Kospi conundrum
All the way from Seoul Korea, we bring you yet another example of efficient markets in action.
On Thursday, the benchmark Kospi index fell 2.7 per cent at the close of trade on what we understand was a single large computer-driven sell programme originating from a European bank:
MSCI reshuffle time
Weir Group, the Scottish pumps and values manufacturer, and Essar Energy, the London-listed Indian oil and power group, are worth following over the next couple of weeks:
Late on Wednesday night,
The morning after…
Irish government bonds are holding steadyish on Thursday:
The view in the market place is that Wednesday’s sell-off was as much technical as anything else.
Much of the selling can all be traced back to the decision by LCH.Clearnet to demand that banks or institutions wanting to use Irish bonds as collateral in the repo market find some cash to pay an extra margin of 15 per cent.
Ready for some buybacks?
And so it begins. Here’s what the NY Fed will be buying and when under the $600bn QE2 programme.
Further reading
Elsewhere on Thursday,
- We’re all ‘risk management experts’ now.
- US-China currency wars: the rap battle
- A natural ETF experiment.
- For someone who has everything: Bernie Madoff’s monogrammed velveteen slippers.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Analysis: Beijing’s elevated aspirations
If Bismarck were in Beijing today, he would say this was our nightmare,” says Shi Yinhong, an international relations scholar at Renmin University in Beijing,
Snap news
Breaking pre-market news on Thursday,
- BT says Q2 EPS rose 16 per cent to 5.1p on cashflow improvement – statement.
- Anglogold Q3 profit doubles to $303m on production, record gold prices and elimination of hedgebook – statement.
Further further reading
For the commute home,
- Mapping America’s well-being.
- QE and the dangers of moral hazard.
- World debt as a per cent of GDP: Great Recession vs Great Depression
- The “tea party” Republicans are bad for globalisation.
The lonely long bond gets lonelier
This is the market’s view of the 30-year Treasury at the moment.
With the exception of David Rosenberg at Gluskin Sheff (who sees potential “buying opportunity”) — no one wants to befriend the outcast so-called long bond right now.
Mortgage scandal du jour – forced-place insurance
Jeff Horowitz at American Banker has a cool story to add to the mortgage servicer conflict-of-interest meme. It’s all about — wait for it — forced-place insurance.
This is the stuff that banks foist onto mortgage borrowers (to protect mortgage investors) if the borrowers don’t take it out and pay for it themselves.
Anatomy of a QE2 ‘consensus’
It’s fair to say that forecasts for last week’s anticipated QE2 announcement were far more wide-ranging than usual, at least when compared with more conventional central bank or economic data announcements.
Macro Live transcript 10 Nov 2010
Markets Live chat transcript for the chat ending at 16:43 on 10 Nov 2010. Participants in this chat were: Neil Hume, FT Stacy-Marie Ishmael, FT Cardiff Garcia Izabella Kaminska Tracy Alloway
NHHello again
Top of the bond yield to you
Yup. It seems there’s nothing stopping Irish bond yields racing higher on Wednesday.
Last check at about 2:42pm London time showed yields approaching a whopping 8.5 per cent. Meanwhile one of the Irish two-years was trading around 6.14 per cent.
Table du jour, EM GDP edition
Courtesy of Ashmore, it’s long not wide:
These are at market exchange rates. At purchasing power parity, the emerging market share of global GDP rises to 53 per cent.
The list is top-heavy, with the top five accounting for about half of emerging market GDP,
The least ‘advanced’ mortgage servicers
The mortgage servicing biz is not coming out of the foreclosure scandal unscathed.
What was once a fairly steady industry — based on narrow margins but lots of volume — is suddenly having to rethink its business model.
Goldman Sachs junk CDO trouble – again
Goldman Sachs must be getting tired of this.
The bank duly revealed it’s the subject of a(nother) class action lawsuit involving one of its Collateralised Debt Obligations (CDOs) in the 10-Q it filed on Tuesday — only to set-off another wave of reports — even though the court filing is old.
BoE: we don’t really know about inflation
All men are created equal.
And so too, it seems, are the chances of UK inflation in two years’ time.
From the Bank of England’s inflation report on Wednesday:
Under the assumptions that Bank Rate moves in line with market rates and the stock of purchased assets financed by the issuance of central bank reserves remains at £200 billion,
Markets Live transcript 10 Nov 2010
Markets Live chat transcript for the chat ending at 12:21 on 10 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHbear with me a moment
Blowout
Via Reuters, the yield on the Irish 10-year government bond.
Related link:
Revised risk parameters for Irish govies – FT Alphaville
UK inflation taster
Some comment ahead of the Bank of England’s Inflation Report later on Wednesday.:
From BarCap, on how the market might react:
All told, we expect little difference from the August Inflation Report.
Revised risk parameters for Irish government bonds
Wednesday’s theme du jour — margin hikes.
LCH.Clearnet, one of Europe’s biggest clearing houses, is asking members to stump up more cash to trade in Irish bonds.
Here’s the memo LCH’s director of risk management Christopher Jones has sent to clients on Wednesday morning:
Escalator up, lift down
Time now to look at another precious metal — silver.
It has soared in the wake of the Fed’s QE2 announcement, surpassing $29 an ounce – the highest since 1980 when the Hunt brothers cornered the market and sent prices to $50.
Further reading
Elsewhere on Wednesday,
- Without great men, Wall Street is nothing.
- 10 market bubbles that could soon burst.
- The clash of the interdealer brokers.
- What’s silver telling us?
- The case for pricing gold in gold.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: The Fed is right to turn on the tap
The sky is falling, scream the hysterics, the FT’s Wolf notes: the Federal Reserve is pouring forth dollars in such quantities that they will soon be worthless.
Snap news
Breaking pre-market news on Wednesday,
- ING to spin off its two insurance businesses; announces Q3 results — statement.
- Q3 results from Unicredit fall short of expectations — statement.
- J Sainsbury says H1 pretax profits rose 8 per cent to £332m — statement.
Guest post: Seoul Summit — what could the G20 do?
FT Alphaville presents a guest post by Ousmène Mandeng, head of public sector investment advisory at Ashmore Investment Management Limited. The views expressed are strictly his own.
The G20
Further further reading
For the commute home,
- Sarah Palin vs Real Time Economics. (We’re calling it for RTE.)
- The inevitable return of capital controls.
- Gold is not at a record high.
- Common sense misinformation matters more than “crazy person”