November, 2010
Capital controls: the low-intensity currency war
The latest moves by South Korea and China — not to mention India, Malaysia, Thailand and a swag of other countries — to impose capital or price controls show that the hype over ‘currency wars’ is mutating into a low-intensity battle being waged by countries through a series of unilateral,
Further reading
Elsewhere on Friday,
- What’s really behind Bernanke’s easing?
- Greg Mankiw: “QE2 is a modestly good idea.”
- Debt and deleveraging — an approach via Fisher, Koo and Minsky.
- Sifting negative sentiment towards Italian and Portugese banks.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: Road map that opens up shadow banking
In a document recently compiled by the New York Federal Reserve called The Shadow Banking System,
Snap news
Breaking pre-market news on Friday,
- Vedanta Resources details $6bn financing arrangement for Cairn India — statement.
- Nestlé announces changes to sales recognition policy — statement.
- BTG to acquire Biocompatibles for £177m,
Further further reading
For the commute home,
- The 16 biggest IPOs of all time.
- A round of interesting Fed speeches today.
- Republican gains in the recent elections have been bad for the muni market.
- Does financial economics bring any benefits?
- The new GM is the same as the old GM,
OECD: ‘It won’t be us leading the global recovery’
A chart from the OECD’s latest economic outlook:
The report calls mostly for conventional measures aimed at reducing global imbalances: medium- and long-term fiscal consolidation in debtor countries,
Steven Rattner sued by New York State, settles with SEC
The New York State Attorney has posted its two lawsuits against former Quadrangle founder and car czar Steven Rattner:
From the statement:
NEW YORK, NY (November 18, 2010) – Attorney General Andrew M.
The rights of man(y) – a basket case
Q: What is 41 years old, worth $300bn and often neglected? A: The bridesmaid of foreign exchange: Special Drawing Rights (SDRs).
SDRs are the IMF’s international reserve assets, which act as potential claims on the freely usable currencies of its members.
The Lehman flip [updated]
So the Lehman Bros estate has managed to clawback $500m worth of deposits from Bank of America — which means its sights are firmly set on its next legal pursuit.
Bloomberg, for instance, is currently running a story about the ‘next target’ of the Lehman estate — JP Morgan and its $8.6bn of collateral,
The price of an Irish promise [updated]
Some fast-moving developments on the Irish bank funding front on Thursday, flashes via Reuters:
RTRS-IRISH FIN MIN SAYS WANTS TO REASSURE ALL DEPOSITERS THAT THEIR DEPOSITS ARE SAFE
RTRS-IRISH FIN
Citi sees no bubbles
At least not yet.
Although perhaps best to look away if you’re loaded up on US junk bonds, or Chilean and Indonesian equities in your portfolio.
Charts via Citigroup’s Global Bubble Tracker, as compiled by Robert Buckland’s equity strategy team (click to enlarge):
Markets Live transcript 18 Nov 2010
Markets Live chat transcript for the chat ending at 12:29 on 18 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHor should I say NHTop of the morning
The mathematics of inventories
While the eurozone plays out its tortuous journey to disintegration, much more concerning developments are occurring. We are convinced that the US economy will slow surprisingly sharply in the months ahead.
Who’s bailing out whom?
Facetious title — but here’s an updated list of bank exposure to eurozone peripherals (in this case Ireland, Portugal and Greece) to ponder, as Ireland nears its bailout:
Source: Morgan Stanley’s Huw van Steenis.
Swelling Spanish bond yields
A data point in the eurozone peripheral contagion story.
Out on Thursday — the results of a Spanish auction of 10- and 30-year bonds in the midst of heightened peripheral tension. The price? A hefty pick-up in yield.
Patrick Honohan is an honest guy
Denial. Anger. Bargaining. Depression. Acceptance:
The intention is and the expectation is, on their [the IMF's] part and personally on my part, that negotiations or discussions will be effective and a loan will be made available and drawn down as necessary…
RBS and Rec 6, a CMBS story
Here’s a CMBS saga, if ever there was one.
If you worked on an asset-backed securities desk or similar, you might have seen some interesting RBS run requests cross your inbox just after November 10.
Stress tests – the sequel
Ireland’s sort-of doing it — and now the US definitely is.
Stress tests v.2.0, that is.
Late on Wednesday, the US Federal Reserve issued its guidelines for financials that want to start paying out dividends again.
Further reading
Elsewhere on Thursday,
- “Being bearish is officially out of style.”
- Securitisation, reverse-engineered.
- Kerviel and “craptastic” Socgen risk management.
- Felix Salmon’s tweets are very precious…
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: From Russia with love and money
Yuri Milner is very popular among leading internet entrepreneurs, notes the FT’s Gapper. Among Silicon Valley’s venture capitalists,
Snap news
Breaking pre-market news on Thursday,
- PartyGaming gets clearing for merger from German Cartel Office – statement.
- National Grid announces pre-tax profit up 45 per cent — statement.
- QinetiQ announces group revenues up 7 per cent — statement.
Further further reading
For the commute home,
- A reading from the book of Eurorevelations.
- (Dis)inflation in the US is tracking 90s Japan.
- Carmen Reinhart’s spreadsheets documenting two centuries of financial crises.
Thanks for what, Warren?
Barry Ritholtz posts the letter that Warren Buffett could have written to the US government, in lieu of today’s wet kiss in the New York Times op-ed page, if he’d chosen to be more transparent and self-critical:
Thou shalt not bluff
As all eyes focus on what should be done about the Irish banking crisis, perhaps it’s time for the European Union, IMF and other related parties to take a closer look at some of the factors that may have exacerbated the problem.
Debauch-e bank
Deutsche Bank. So bound up in casino banking… (via the Economist):
JOSEF ACKERMANN, the head of Deutsche Bank, combines a silky manner with blunt words… when regulators and economists say that big banks should be broken up,
Inflation, as (un)expected
The CPI numbers for October are out from the US Labor Department, with the monthly 0.2 per cent increase a bit lower than the expected 0.3 per cent.
But here’s the chart we usually focus on:
Over the last twelve months,
Ireland’s bifurcating bailout [updated]
Or, bailing out Ireland, bailing out banks — put into practice.
Bifurcation is pretty much how the next chapter in this crisis was looking at pixel time — eurozone aid to Irish banks, rerouted via the Irish sovereign,
Shorting a tarnished fund management group
Hmm.
Have you been wondering why the share price of Gartmore has remained firm in spite of all the recent dismal news?
Stuff like this, for example (from Reuters on Wednesday):
SIGNIFICANT PORTION OF 3.5 BLN STG OF ASSETS MANAGED BY GARTMORE FUND MANAGER ROGER GUY LIKELY TO BE REDEEMED – SENIOR GARTMORE SOURCE
One answer could lie in short covering (chart via Data Explorers):
Votes for notes
Here’s a novel solution to the problem of excessive public debt: democracy.
Presenting the idea of vote-sharing bonds, via Hans Gerbach of the ETH in Zurich.
And here’s how it might work.
A government wants to increase expenditure to fund new measures.
IT’S THE BANKERS WOT DID IT
Spotted in the Irish Daily Star — banker outrage in extremis.
Via LettersofNote, and passed on by Sam Jones.