November, 2010
Another Shanghai surprise
The Shanghai Composite, down another 4 per cent on Tuesday…
… extending losses over the past three sessions to 8 per cent.
Further reading
Elsewhere on Tuesday,
- An alleged Irish deposit flight.
- “Gentlemen we have a liquidity problem.”
- Sarah Palin, hyperinflationist.
- The politics of easy monetary policy – a reminder.
- QE2 is working goshdarnit!
- But did it start working before it began?
- Seniority destruction and the capital structure.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Nouriel Roubini: Irish woes should speed Europe’s default plan
As the EU attempts to force Ireland to accept an aid package, Dublin is close to being unable to sell its debt on the open market,
Snap news
Breaking pre-market news on Tuesday,
- Vedanta to list Zambian division, Konkola Resources, on the London stock exchange — statement and statement.
- Nat Rothschild’s Vallar pays $3bn for stakes in two Indonesia coal businesses;
Further further reading
For the commute home,
- Greg Ip dispenses with five myths about the Fed.
- No, lenders weren’t more likely to reduce the principal on a mortgage in the Depression than now.
- American voters don’t care (as much) about the deficit.
Inside an FX IPO
FXCM, the US-based FX and securities broker, filed a prospectus to the Securities and Exchange Commission on Monday for an intended initial public offering later this month.
The terms show the company hoping to raise $211m by offering 15.1m Class A shares at a price range of $13-$15 — a mid-point of which would give the company a market value of $1.1 bn.
Some possibly worthless forecasts
You know how we feel about forecasting around here, so please don’t believe anything you’re about to see take the findings of this chart with a rather large grain of salt:
These are the projections from a survey of 43 private sector and academic macro forecasters conducted by the Philly Fed.
FOMC, minutes and minutiae
Mark November 23 in your calendars — it’s the day the FOMC will be releasing the minutes of the latest meeting in which the committee approved QE2.
In a speech Sunday night, cautioning against using monetary policy over-aggressively to pursue a specific unemployment target,
Behold the new economic super-cycle
Remember the economic super-cycle?
Well, it never really went away. At least not according to Standard Chartered, which has just published a huge report on the world economy and the decades of strong growth that lie ahead.
Don’t be evil, or too reliant on Ireland’s tax regime
Presenting a possible, and overlooked, ripple from the Irish bailout (which was looking ever more likely, bar the shouting, at pixel time).
Basically, sovereign bailouts involve a certain quid pro quo.
Stop stealing our yield!
We mentioned last week how HSBC’s analysts were beginning to worry more about quantitative tightening (QT) moves in emerging markets than further rounds of quantitative easing (QE) in the US and Britain.
Bleak house (prices)
Whatever sellers wish to believe about the value of their property, here’s a reality shot ahead of a bleak housing midwinter courtesy of Rightmove’s latest house price index (click to enlarge):
Winding down at the BoE
What’s this? Some good news from the Bank of England?
Out this Monday — a slew of announcements related to the Old Lady’s support programmes for British credit. They include (drumroll please) the following:
The mother-of-all MERS fixes
Here’s an, erm, efficient way to solve problems around MERS — the Mortgage Electronic Registration Systems Inc. that’s been making headlines in recent months.
From an unconfirmed report by consumer-advocate Neil Garfield:
Bailing out Ireland, bailing out banks
Here’s one Irish-bailout-in-the-works story you absolutely should be reading on Monday, courtesy of the Irish Independent:
Finance Minister Brian Lenihan is considering asking for money for Irish banks from the EU emergency fund in a bid to fend off a threatened bailout for the State…
Markets Live transcript 15 Nov 2010
Markets Live chat transcript for the chat ending at 12:29 on 15 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHhola NHand welcome to Shambles Live
The distorted European bailout
Some weird goings-on in the Irish yield curve.
(Nicked from Frankfurter Allgemeine — the Ireland curve is the brown-ish one)
Last week a jump in Irish two-year bond yields turned the whole thing rather hump-shaped.
€1,650bn of pain for Europe’s peripherals, Credit Suisse says
Want an interesting estimate for the cost of fixing peripheral Europe?
Credit Suisse’s Andrew Garthwaite & Co. are here to serve.
They reckon that total bank losses in Spain, Greece, Ireland and Portugal have so far been about €140bn — or 8 per cent of GDP.
NAB gets Axa-ed, and AMP-ed, Down Under
At long last. The interminable — and fiendishly complicated — saga of the battle for Axa Asia Pacific Holdings (Axa APH) is approaching a finale. Or so it seems.
As Reuters reports on Monday:
Australian wealth manager AMP and French insurer AXA SA launched a new $13.1bn-plus bid for AXA Asia Pacific,
Economists against Fed
More QE2 dissent — this time from the back of the classroom.
An open letter to Ben Bernanke via the Wall Street Journal:
We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued.
The illustrated burdensharing for (Irish Bank) bondholders
Last week’s unlikely equities outperformer? One Allied Irish Banks.
Allied managed a more than 40 per cent rise last week (albeit from low levels) which you can see in the below chart. The story in credit,
Further reading
Elsewhere on Monday,
- Gold, growing on trees! Kinda.
- The Credit Anstalt analogy game.
- Europe, default and a cordon sanitaire.
- Taiwan, FX intervenor du jour.
- A Kilkenomics round-up.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Clive Crook: How Obama should curb the deficit
This year Barack Obama appointed a bipartisan commission to look at how to curb public borrowing.
Snap news
Breaking pre-market news on Monday,
- AXA and AMP join forces to make $13.1bn offer for AXA Asia Pacific Holdings — statement.
- BHP Billiton to complete $13bn buyback programme — statement.
- Persimmon says did not experience normal autumn increase in visitor levels — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
EM asset flows could close doors
Western investors are on a collision course with emerging market policymakers that will exacerbate trade tensions and result in a wave of capital controls and other barriers being erected,
Further further reading
For the commute home,
- The five macroeconomic theories that survived the crisis.
- Loopholes in the Volcker Rule and Merkley-Levin.
- Private banks keep hiring as rich get richer.
- Structural immobility in the US labour market.
Hedge funds, Singapore and why Tokyo is hollowing out (again) [corrected]
Update: Goldman called us on Tuesday to correct a few key facts about its annual Tokyo gabfest, held last week. Our report below was based on attendance at some speaker sessions and a social gathering.
A G20 “victory”
We expected little progress to be made at the G20 summit, and little is what we got. We also happen to agree with this NYT article that given the remarkable period of contentiousness just before the summit,
The Fed’s plan for bank dividends
The XLF’s performance in the past month:
That jump on November 4 coincided with the story that the Fed was set to allow well-capitalised banks to start increasing their dividend payments again. Only a few banks were expected to qualify at first,