December, 2010
Merry Christmas from FT Alphaville
FT Alphaville is off on holiday. But before we go we wanted to say…
And don’t worry, we’ll be back with our usual service of daily market insight and commentary as of January 4 — bar the implosion of the eurozone (or something like that).
Guest post: Why part of the CDS market is stuck in time
Markit credit analyst Lisa Pollack investigates why 2007 is still haunting a number of CDS index products when it comes to off-the-run volumes.
According to ISDA, there were $62,000bn of credit default swaps (CDS) at the end of 2007. What exactly is this number though? First,
The fabulous Footsie
RTRS-BRITAIN’S FTSE 100 <.FTSE> INDEX HITS 6,000-MARK FOR FIRST TIME SINCE JUNE 2008
Sadly it didn’t manage to close there.
Still, there’s always tomorrow.
Echoes of a ‘Notgeld’ Germany
On Thursday, Germany’s Sueddeutsche Zeitung carried a story suggesting Germany was working on the creation of a European Stability and Growth Investment Fund, which according to Reuters would run as a largely independent institution next to the European Central Bank.
“Austerity” win
With a hat tip to Annie Lowrey of Slate, check out the winner of Merriam-Webster’s word of the year for 2010:
Topping the list is austerity, defined as “enforced or extreme economy.” Lookups for austerity peaked dramatically several times throughout the year,
‘Tis the season to watch for carry trading
Here’s something to add to those lists of 2011 investment themes doing the rounds: whether we’ll get a full-blown comeback of the dollar carry trade in the new year.
Controversial, we know.
But here’s how BNY Mellon’s Michael Woolfolk set the scene on Wednesday,
US morning econo-roundup
Not that we think any of these indicators will have much of an impact on the last trading day before Christmas — but here’s a roundup of activity on Thursday morning:
Initial weekly unemployment claims:
Epitaph for Allied Irish Banks — the statement
Direction Order
Under the agreement AIB is to issue to the NPRFC:
675,107,845 Ordinary Shares of €0.32 each
10,489,899,564 convertible non-voting shares of €0.32 (the “CNV Shares”)
€52.5 million for the cancellation of warrants which related to the 2009 recapitalisation
There will be a net payment of approximately €3.7 billion in cash from the NPRFC.
Fact du jour, Deutsche Mark circulation edition
For those still worried about a potential eurozone break-up, here’s an interesting factoid courtesy of Barclays Capital’s Thorsten Polleit on Thursday.
According to the economist, there are still €13.45bn worth of Deutsche Marks in circulation in the eurosystem.
Markets Live transcript 23 Dec 2010
Markets Live chat transcript for the chat ending at 12:15 on 23 Dec 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHand welcome to the last Markets Live of 2010
Normalisation of 5% at the BoE
We all know the Bank of England has an inflation problem.
As revealed in Wednesday’s MPC minutes, BoE governor Mervyn King and crew are more worried about inflation than they have ever been in the post Lehman crisis environment.
SuperDroop
The sell-off in the trendy clothing retailer shows no signs of abating.
But Nick Bubb of Arden Partners isn’t worried:
The wags have renamed it “SuperDroop” as the company has suffered from a massive overreaction to some innocuous comments about the gross margin outlook with its recent interims,
The diluted Allied Irish Banks
The price action in Allied Irish Banks on Thursday morning:
The falls follows a report in the Irish Times that Brian Lenihan, Minister for Finance, was taking steps to effectively nationalise Allied Irish Banks.
Further reading
Elsewhere on Thursday,
- Default and bankruptcy in the municipal bond market (part two).
- You’re fired! (again, for fraud).
- The self-destructing Merrill Lynch subsidy.
- VIX and the week before Christmas.
Pink picks
News, comment and other offerings from Thursday’s FT,
FT Person of the Year: Steve Jobs
When Steve Jobs walked on to the stage at San Francisco’s Yerba Buena Center in January, it capped the most remarkable comeback in modern business history,
Snap news
Breaking pre-market news on Thursday,
- Rio Tinto recommends A$16 per share cash offer for Riversdale – statement.
- Paddy Power to acquire outstanding minority shareholdings in Sportsbet for A$132.6m – statement.
Further further reading
For the commute home,
- Between clever and stupid bank regulation, choose both.
- An inflation (or lack thereof) chart show.
- An excellent overview by Felix Salmon of the chances of muni defaults next year.
EM private equity: other things to worry about
Stephen Davidoff has an excellent overview in DealBook of the potential obstacles that US private equity firms should worry about as they increasingly look abroad.
They are:
– Carried interest taxes are higher,
Behavioural economics: same as the other kinds?
A hat tip to Modeled Behavior for pointing us to this new paper with the intriguing title of “As-if behavioral economics: Neoclassical economics in disguise?”
From the abstract (emphasis ours):
Behavioral
Something familiar about this IPO preview
Care for another parallel between the current year-end optimism and last year’s?
At this time in 2009, analysts were waxing optimistic that internet IPOs would boom this year, and a lot of the big names were thrown around as potential listings — Facebook,
Sucden Financial turns its attention to Delta One
An interesting press release via Mondo Visione on Wednesday (our emphasis):
Sucden Financial has announced that it will be launching a new service geared towards institutions to capture brokerage opportunities in the Delta One and Equity derivatives and finance arena with effect from January 2011.
The mortgage finance squeeze
Our national pastime of guessing house prices pauses for no cold breath in the run-up to Christmas. The RICS 2011 Housing Forecast released today brings the estimate that house prices will be 2 per cent lower than present levels at the end of 2011.
Clutching at the Chinese, Portugal edition [updated]
OK, this is weird.
RTRS-CHINA C.BANK SAYS NO COMMENT ON REPORTS THAT IT’S READY TO BUY PORTUGAL DEBT
And that little piece of strategic ambiguity follows a Portuguese business paper’s reporting that the Chinese will buy €4-5bn of government bonds,
Markets Live transcript 22 Dec 2010
Markets Live chat transcript for the chat ending at 12:26 on 22 Dec 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHand welcome to the penultimate ML of 2010
ECB rollover day [updated with result]
Wednesday is 3-month LTRO day.
This, of course, is otherwise known as the ECB’s Long-Term Refinancing Operation, in which banks get to bid for an unlimited funds for a three-month duration.
According to Gary Jenkins at Evolution Securities,
Cable guy unplugged
The market has delievered its verdict on Cablegate (Vincegate?) by marking shares in BSkyB higher on Wednesday morning:
That move reflects the fact that Jeremy Hunt, Secretary of State for Culture,
Guest post: Speaking volumes with credit indices
Markit credit analyst Lisa Pollack explores what trade volumes might tell us about credit spreads.
Weekly bond purchases by the ECB under the Securities Markets Programme (SMP) have seen a revival of late. Remember this from the December 2 press conference?
“Question:
Further reading
Elsewhere on Wednesday,
- Monetary base growth ≠ inflation, for the nth time.
- Investing on the ‘low side of bullishness’.
- Are banks going short volatility the problem?
- What if South Korea fired back?
- Hedgie risk management:
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: The eurozone needs more than discipline from Germany
Germany rules, the FT columnist writes. It will determine how well the eurozone prospers,