November, 2010
The ECB exit hurts — hurts like negative €12.6bn
The European Central Bank wants out. That much is clear.
In recent months the ECB has been funding eurozone banks to the tune of squillions, with financials using government bonds, asset-backed securities and the like,
Keep calm and carry on
The Falkland oilers fanclub aren’t giving up even though Desire Petroleum has suffered another setback.
On Tuesday, the company said it had been forced to plug and abandon the sidetrack well at the Rachel prospect because of technical issues.
Further reading
Elsewhere on Tuesday,
- Wall Street and the elections.
- Why HFT traders love the Alpha index.
- The SEC turns to Magnetar and JP Morgan.
- A pan-European bank mutiny day?
- It’s not the economists,
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Martin Wolf’s exchange: Could the world go back to the gold standard?
During any period of monetary disorder — the 1970s, for example, or today — a host of people calls for a return to the gold standard,
Snap news
Breaking pre-market news on Tuesday,
- BP returns to profit; to review dividend policy alongside FY results in early 2011 — statement and results.
- BG announces 2.7bn barrel upgrade for fields in the Santos basin and results — statement and statement.
Further further reading
- A visual history of US government deficits.
- Elections and QE: “It’s not the event itself that moves markets, it’s the departure from expectations.”
- The rot in the economy and political system is still there.
ProPublica: SEC investigating JPM and Magnetar
Just a quick post alerting readers to the latest from ProPublica’s Jesse Eisenger and Jake Bernstein — the gist of which will sound awfully familiar to those who followed the Abacus case:
The Securities and Exchange Commission is investigating whether JPMorgan Chase allowed a hedge fund to improperly select assets for a $1.1 billion deal backed by subprime mortgages,
Icelandic volcano risk, again
As if the threat from radicalised printer ink cartridges wasn’t bad enough.
We wonder if airline investors are watching the following too (via Reuters):
Meltwater [is flooding] from the Grimsvotn glacial lake in Iceland and could signal the volcano underneath is about to erupt,
The neo-medieval trade
Markit pointed out something interesting on Monday: there’s a record spread between their iTraxx Europe and SovX Western Europe CDS indices.
Chart via Bloomberg, click to enlarge:
SovX WE — which is filled with such wholesome sovereign goodness as Portugal and Ireland — has obviously had a few down days recently,
Enel Green Energy – A successful IPO?
What’s your description of a successful IPO?
Is it one where three quarters of the stock ended up in the hands of retail investors at the bottom end of a lowered price range?
Is it one where the heavily indebted issuer was trying to raise at least €3bn but only got €2.6bn?
According to one of the joint bookrunners on the Enel Green Energy IPO it is:
Manufacturing comeback
US markets jumped early this morning before reversing a bit:
As to what might have caused the early spike…
If the September ISM PMI was a correction to August’s surprisingly good readings, the October numbers are a welcome snap-back in the right direction.
Wanting (and waiting) to sell
If you’re trying to sell a house anywhere between Berwick-upon-Tweed and St. Ives, you could be waiting a rather long time.
That’s what Hometrack, which analyses the UK housing market, has concluded from their monthly housing survey.
Wall Street to Fed: Here’s what we’re expecting on Nov 2-3
The big day is almost upon us but what does the market expect from the FOMC meeting?
To try and answer that question Citigroup’s rates team have taken out the clipboards and polled their global client base.
Two years n’ Tibet
Tip of the hat to The Browser for this — a paper on Chinese international trade and internal politics that’s both weird and timely.
Here’s the abstract, penned by two University of Goettingen economists (emphasis ours):
Ambac in critical condition
Ambac to the … umm … Earth’s core:
Shares in the troubled bond insurer dropped 40 per cent on Monday after the firm said it had decided not to make a scheduled interest rate payment due this November 1st.
The unsinkable, unfalsifiable HMS QE2
Did you hear the one about the superliner that squeezed under a Danish bridge with just an inch and half to spare?
It’s getting that way with HMS QE2.
Exhibit A — More decent UK data in the shape of a manufacturing PMI,
CDO lemons, a government fruit bowl
‘Asymmetric information’ in Collateralised Debt Obligations is not a good thing.
That much we know from Goldman Sachs’ Abacus 2007-AC1 CDO and, err, Goldman Sachs’ Abacus 2006-13 and Abacus 2006-17 deals.
Markets Live transcript 1 Nov 2010
Markets Live chat transcript for the chat ending at 12:23 on 1 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHgood morning rable NHand welcome NHto the MEGA WEEK
Ireland’s scary scenario (updated)
Presenting the Irish/German 10-year government bond spread…
… which has widened more than other peripheral spreads this Monday morning.
Traders are pinning the move on comments made by University Colleage Dublin’s influential economist Colm McCarthy over the weekend.
Bias in bonds
Foreign ownership of certain peripheral European government bonds has been dropping like a Blarney stone, in a reversal of a decade-long trend.
You can see the effect in the below chart — from Citigroup’s economics team — and made using the World-Bank Joint External Debt Database:
Serco’s mea culpa
How about this for a screeching U-turn?
It’s a Monday press release from FTSE 100 outsourcing company, Serco:
Serco yesterday reaffirmed to the Cabinet Office that Serco’s most recent offer of savings to the UK Government will not result in any of the Government’s cost saving programme being passed on to our suppliers.
Double agents in asset management
It may not be the workings of an Anna Chapman-style Russian sleeper cell.
But it is a case involving suspected double-agents. In the asset management industry.
As FTfm reports on Monday in their lead article:
Beware a CHIPO bubble….
Another day, another Chinese IPO: but is it all heading for what you could call an ugly, big “Chipo” bubble?, wonder some observers.
As Bloomberg reports on Monday, China Rongsheng Heavy Industries,
An ill wind — blows some good
Surprise, surprise.
Smiths Group, which makes airport screening and detection equipment among other things including chest drainage catheters, is among the biggest FTSE 100 risers on Monday morning:
Structured, structured finance
October may be over, but it will go down in covered bond history (ahem) as the month which saw the debut of not one, but two covered bonds backed by RMBS.
That’s a debt security backed by Residential Mortgage-Backed Securities.
Further reading
Elsewhere on Monday and at the weekend,
- Is financial innovation over?
- Mugged by the moralizers.
- Beware a Chinese IPO bubble.
- US banks and their back-office blues.
- Marc Faber (remember him?) on QE2.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Analysis – Credit markets: Paper weight
Gary Lieb can barely stand it. The broker at Apple Mortgage in Manhattan has never seen such cheap borrowing rates on housing loans.
Snap news
Breaking pre-market news on Monday,
- Desire Petroleum says reports logging Rachel prospect in the Falklands — statement.
- Ryanair increased FY guidance after half year profits rise 17 per cent — statement.