December, 2010
Christmas shopping in Frankfurt
The ECB bought €603m of government bonds last week, versus €2.7bn previously. Volumes in the market are pretty thin at the moment, thus the bank can probably get more for its buck. Clever.
On the other hand — the lack of liquidity has also frozen high yields in place all over the eurozone periphery,
BRIC bats
So what was the best index play on the commodities bull market in 2010?
– The Australian stock market perhaps?
– Brazil?
– The MSCI emerging markets index?
The answer is none of the above.
Dear Santa… This is Ben
Found by the creative writers at JPMorgan Asset Management — a letter to Santa, from a boy (one ‘Ben’) who lives in the Washington DC area of the United States:
“Dear Santa,
It’s that time of year once again and I would like to ask you for some very special presents for Christmas this year.
Why commodities may not be a good bet
According to SocGen’s Dylan Grice, seeking a decent long-term return on commodities is akin to selling coal to Newcastle: rather foolhardy.
For those in need of a history lesson, he has outlined the case of why in his opinion commodities aren’t really so swell.
Eight bond markets a-sellin’
Did you know? The recent bond market sell-off has seen a 100 basis point rise in 10-year US Treasury yields in just five weeks. And there’ve been only seven previous sell-offs of similar speed and magnitude,
An Irish bank collateral conundrum, ECB edition
Now, FT Alphaville reads a lot of central bank legal opinions. But the one released by the ECB at the weekend — regarding the Irish government’s draft emergency bank restructuring law, the Credit Institutions Bill — is causing us to scratch our heads a bit.
Saxo’s outrageous predictions for 2011
It’s that time of year again.
Saxo Bank — inspired by the black swans of Nassim Taleb — have drawn up their 10 ‘outrageous predictions’ of the year. The idea is that these are unpredictable (eh?) events with potentially massive impact.
Markets Live transcript 20 Dec 2010
Markets Live chat transcript for the chat ending at 12:14 on 20 Dec 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola markets fans NHwelcome to Markets Live
Defence of the realm – Chip & Pin edition
First yoghurts and now seemingly chip and pin machines are vital to France’s national interest, according to reports out of Paris on Monday morning.
Les Echos claims the French government is opposed to the sale of Ingenico,
BAA’s Whitemare before Christmas
Some Monday morning hubris, courtesy of London Heathrow-operator BAA.
Heathrow’s army of snow ploughs stretch their wings as snow bites
29 November 2010
The cold snap may have only just bitten but Heathrow’s snow team has been working for months to ensure the UK’s hub airport will once again be prepared for the onset of winter.
An audience with Lloyd Blankfein
Nomura’s banking analyst Glenn Schorr recently caught up with the Goldman boss (plus chief financial officer David Viniar).
And Schorr was able to quiz him on some of the pressing issues of the moment:
Basel-ed again
Believe us, it’s taken all our willpower to not headline this post as Basel Faulty.
The London Banker has returned to blogging after a two-year hiatus. And boy, that 24-month break has done nothing to quell this former central banker’s ire.
Those crazy, crazy CACs
Or, all CAC-ed up?
In addition to creating a two-tiered sovereign bond market in Europe, those Collective Action Clauses (CACs) beloved by ze Germans — and meant to force debt restructuring losses on private investors — could well end up increasing a country’s chance of defaulting.
Further reading
Elsewhere on Monday,
- Cinema takes a trip to Wall Street – again.
- Foreclosure’s whistleblower emerges.
- Japan’s employed underclass.
- That enforcement mechanism for the Volcker Rule in full.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Wolfgang Münchau: Berlin’s goal is limited liability
I have been observing the European Union for a while, but I have rarely seen a political victory as total and far-reaching as that of Angela Merkel,
Snap news
Breaking pre-market news on Monday,
- Ingenico says potential buyer not in position to submit acceptable offer — statement.
- KKR fails in A$1.75bn bid to buy Perpetual — FT.
- 888 Holdings confirms in early discussions over possible transaction with Ladbrokes — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Emerging markets’ valuations raise anxiety
The tidal wave of cash flooding into emerging markets has pushed valuations sharply higher and is in danger of creating a bubble,
Further further reading
FT Alphaville in New York is shutting down early today for administrative reasons, and by “administrative reasons” we really mean “boozy Christmas lunch”.
- Signs that the Build America Bond program will be ‘reincarnated’ in January.
Card tricks
Credit might not be where credit’s due.
Visa and Mastercard unsurprisingly took a chunky whack on Thursday following the Fed’s card interchange rate proposals. Both, however, were moving sideways on Friday:
Ireland’s threat to the IMF
EUR/USD had one of its occasional ‘it’s gonna blow’ days on Friday:
Here’s what could have spooked the market.
We don’t know what it is about IMF staff reports on the viability of country programmes when loans are negotiated — but they always read like thrillers.
Irish sea, UK banks puddle
As Lloyds Bank shareholders found out on Friday, when the Old Lady finally warns you about eurozone peripheral exposure — you listen.
So feast your eyes on these Bank of England data on changes in the foreign claims of UK-owned banks during Q3 2010,
The BoE’s sterling liquidity support to Ireland
Here’s an intriguing arrangement from the European Central Bank and Bank of England on Friday.
As Bloomberg reports, the two central banks have agreed a temporary foreign exchange swap-line to ease liquidity constraints stemming from the Irish crisis (our emphasis):
A digitised history of contango, backwardation
The Google Books Ngram Viewer continues to amuse us at FT Alphaville.
Here, for example, is a particularly interesting ngram brought to our attention by reader Bagehot by-the-Bay.
After all, you wouldn’t necessarily expect this very cyclical pattern to appear when you chart the terms ‘contango’ and ‘backwardation’ through Google’s store of digitised literature:
European fiscal forecast fail
Surprise! EU members aren’t that good at economic forecasting.
And they’ve only gotten worse in the recent debt crisis.
That’s the take from Fitch Ratings who reckon that between 2000 and 2010 European governments have on average underestimated their three-year fiscal deficits and their public debt by 1.8 per cent and 3.4 per cent of GDP,
A customizable client compliance programme
Watch out — here comes a late entrant for euphemism of the year.
The FBI arrested four people on Thursday in connection with alleged insider trading, following a further arrest last month. Two of those arrested were employees of Primary Global Research,
The luck of Lloyds
Not good news for Lloyds Banking Group on Friday.
A regulatory filing from the bank reveals that its particularly nasty case of ‘Irish exposure’ syndrome could be worsening.
From the RNS:
Since the release of its Interim Management Statement on 2 November 2010,
The rise in Fed funds futures rates
The latest chart porn out of the Atlanta Fed:
What you see here is a steady decline, from August through November, in the expectation that the Fed will begin tightening monetary policy before 2012.
Mystery, chicken, and the ECB’s capital increase
The European Central Bank made headlines on Thursday, with its request for a €5bn capital increase. The stated reason was all about covering volatility in fx, interest rates and gold prices “as well as credit risk”
Markets Live transcript 17 Dec 2010
Markets Live chat transcript for the chat ending at 12:26 on 17 Dec 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHhola Rabble NHand welcome to markets live
Shadow banks and stock bubbles, Ngram edition
Have you been using the Google Books Ngram Viewer? It lets you search for any phrase across vast corpuses of digitised literature throughout the decades.
It’s quite addictive.
FT Alphaville fed in a few of our favourite phrases de nos jours to start off.