December, 2010
The omnipresent – not omniscient – Ben Bernanke
The Ben Bernanke show hit prime time Sunday night.
The Federal Reserve chairman played warm-up act to Facebook’s chief executive Mark Zuckerberg on CBS’ 60 minutes, continuing his recent profile-raising efforts and his polite offensive against QE2 critics.
Something else made in China – Chinese GDP
Uh oh.
Wikileaks, fresh from angering US authorities, might be about to incur the wrath of China’s economic establishment. The controversial site has published a US embassy cable containing comments made in 2007 by Li Keqiang — then head of the Communist Party in Liaoning and now the man some tip to become the PRC’s next head of government.
Eurobonds are among us, again
But don’t you see, Jean-Claude Juncker?
We already have eurobonds, of a kind.
FT Alphaville has argued before that Europe’s future mechanism for handling sovereign debt stress may ‘mutate’ bonds issued by national governments after 2013 into what would effectively be eurobonds,
Going for broke with bank guarantees
Quelle surprise. Or should we say, was fur eine Überraschung?
A new working paper from the European Central Bank describes the augmenting effect of government guarantees on bank risk-taking. In a nutshell:
Markets Live transcript 6 Dec 2010
Markets Live chat transcript for the chat ending at 12:20 on 6 Dec 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHhola Rabble NHwelcome to Markets Live
Duster!
Desire Petroleum finds water not oil at the Rachel North well offshore Falkland.
Drilling rig now moves to the Dawn/Jacinta prospect.
Confessions of a banknote printer [updated]
When does the market need to be informed of a takeover approach for a listed company?
An interesting question and one that traders will be asking themselves on Monday, after troubled banknote printer De La Rue finally confessed to a bid approach.
The combative Herr Schäuble
It is just as well that the formidable Wolfgang Schäuble is Germany’s finance minister rather than its foreign minister — a role that might need a little more delicacy than the inciendary approach he clearly feels is required in a finance minister’s verbal arsenal.
That tricky ESM seniority
Here’s something to keep in mind while eurozone ministers try to nail down the specifics of giving the European Stability Mechanism seniority over other creditors.
From the 2003 Isda credit definitions document — which sets out what exactly can be deemed a ‘restructuring event,’ which would trigger payouts on CDS:
Further reading
Elsewhere on Monday,
- 60 minutes with Ben Bernanke.
- What Jamie Dimon isn’t telling you.
- What did you do in the ETF war … erm … daddy?
- “A client is not a counterparty.”
- The problem with men,
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Wolfgang Münchau: A hopeless Europe
It’s a good idea to stay clear of connotation-rich German words that have no real equivalent in other languages,
Snap news
Breaking pre-market news on Monday,
- Rio Tinto in talks over A$3.5bn offer for Riversdale Mining — statement.
- De La Rue confirms takeover approach — statement.
- Candover to sell its private equity business to Arle Capital Partners;
FTfm on AV
Some highlights from Monday’s FTfm.
UK governance reporting remains poor
In a review of corporate governance of FTSE 350 companies by Grant Thornton, only 16 per cent of companies provided enough disclosure to comply with UK code requirements
Allsop tries again with Insparo Africa fund
Jamie Allsop,
Further further reading
For the commute home,
- The euro zone: a determined country could split.
- Kevin O’Rourke’s devastating letter from Dublin.
- Managing risk for JP Morgan, and blindness.
- Bond supply is nearing new highs as the Build America Deadline approaches.
The expected rise of CMBS issuance
Tucked inside the latest S&P report on the state of the CMBS market:
– According to the Mortgage Bankers Association, third-quarter commercial mortgage loan originations were 32% higher than during the same period last year and 15% higher than in the second quarter of 2010.
Taxes in wonderland
It takes all the arguing you can do to keep in the same place.
Apologies to Lewis Carroll (who knew a thing or two about bizarre worlds) but after nearly a decade of wrangling, Washington looks like it may decide to retain all of the Bush tax cuts.
Sovereign liquidity, what lies beneath
Here’s a perfect end to a week in which the ECB has apparently bashed peripheral bond markets into submission. Apparently.
Watch those bid-offer spreads.
We couldn’t quite believe this chart of the bid-offer spread on ten-year Spanish government bonds,
Eurobonds are among us
Even as the ECB heads back into the market to punish the peripheral bond shorts, there’s still much talk on longer-term ways to fix what’s really the problem in markets for this kind of debt.
To recap — mass illiquidity,
Timeline shadow bailout
The Wall Street Journal has a great, interactive, illustration of the Federal Reserve’s Primary Dealer Credit Facility — based on Wednesday’s central bank data dump.
It rather perfectly demonstrates how the facility,
Calling all readers…
We’re looking to up our game, and need FT Alphaville readers for focus groups and testing next Thursday. You’ll get tea and biscuits, plus a little monetary incentive, at the FT offices in London. We’ll get to see what you — the readers — really want.
Payrolls breakdown … blech
By now you’ve heard that it was a big disappointment, but let’s dig in a little deeper:
1. The headline number, obviously, is atrocious, coming in at just +39,000. Expectations from economists and analysts were for much higher,
Euribor, or not putting the ‘E’ in Europe’s non-QE
That’s three-month Euribor — the Euro Interbank Offered Rate and an an interest rate for term loans between banks. It rose to 1.027 on Thursday, ahead of that European Central Bank meeting, and has stuck at the same level on Friday.
One country, two systems, three currencies (and four curves)
Where’s that?
China, of course.
With news out on Friday that Chinese monetary authorities are preparing the ground for a significant shift towards ‘prudent’ rather than loose monetary policy — all eyes are again on the renminbi market.
Peripheral spreads tightening, or not?
Phew. What a relief.
Thanks to Jean-Claude Trichet’s recent sleight of hand bond-purchase maneuver, peripheral debt spreads were finally beginning to tighten on Friday.
Via Reuters:
RTRS – SPANISH?GERMAN 10_YEAR GOVERNMENT BOND YIELD SPREAD TIGHTENS FURTHER TO 215 BPS,
Spanish banking negativity
A reduction in Spanish borrowing from the ECB can only be a good thing.
Right?
Riiiiiiiiight.
UBS banking analysts Alastair Ryan and John-Paul Crutchley are back to tear apart what improvement there has been in the Spanish banking system.
Markets Live transcript 3 Dec 2010
Markets Live chat transcript for the chat ending at 12:15 on 3 Dec 2010. Participants in this chat were: bryce.elder Miles Johnson, FT BEGood morning BEAnd welcome to Markets Live
Junk bonds ride again
If it’s good enough for the Fed, then it’s good enough for legions of investors…
That would seem to be the message, at least, from one of the many interesting aspects of this week’s Federal Reserve data bonanza.
Balance sheet optimisation BOOM
All hail Standard Chartered’s new synthetic Collateralised Loan Obligation:
2 December 2010, Singapore – Standard Chartered Bank has completed its sixth Collateralised Loan Obligation (CLO), START VI CLO,
Madoff is “too good to be true” – JP Morgan, October 2008
Bernie Madoff. Colombian Interests. Threats to lives. Oh my.
This time two years ago the world’s largest ponzi scheme had just come to light. Some 24 months on and the legal-wrangling between Madoff’s investors and related parties continues.
Euro-correlation max
Correlation, as we are now well learning, is a phenomenon which increases when market tensions rise.
That is because when investors flock to the exits, they tend to move more uniformly than usual.
So here’s the interesting thing.