January, 2011
Remittances to Egypt
Another Tilt of the hat to our blogging brethren for the heads up about a primer on Egypt out Monday from Capital Economics.
We were struck by this chart showing the components of Egypt’s current account (im)balance.
Further further reading
For the commute home, and to help you safely absorb capital inflows,
- More clues that interest rates don’t affect house prices, but might affect homeownership rates.
- A group of economists has published a letter calling for restrictions on capital controls to be removed from trade agreements.
More on the bank business lending recovery
We mentioned last week that bank business lending in the US had finally begun to recover, if weakly, after precipitous double-digit declines during and after the recession.
Today’s release of the Q4 senior loan officer survey from the Fed offers a bit more reason for having confidence that this will continue:
Oil spikes, shocks and stocks
With oil on the rise, what next for equity markets?
That’s the question KBW try to answer in a note out on Monday. The analysts look for correlations over the last 50 years between big (ten and 20 per cent quarter on quarter) WTI rises and changes in the S&P500 and the Keefe Bank Index.
Suez isn’t Brent’s $100 problem
Brent’s finally done it:
(Reuters) Brent crude oil futures surged above $100 a barrel for the first time in 28 months on Monday on concerns that anti-government protests in Egypt could create instability across the Middle East,
‘Banks may be the best holders of mortgage risk,’ says Deutsche
Or, why the private label mortgage securitisation market keeps failing to rise from the dead — especially as the US grapples with Fannie/Freddie reform.
Here’s the thinking, from Deutsche Bank’s Steven Abrahams:
Europe’s FICC woes
The reporting season for Europe’s investment banks starts this week and expectations are not high…
From Monday’s FT:
European investment banks are expected to reveal sliding revenues from one of their core businesses when Deutsche Bank kicks off the earnings season this week,
On not accepting QE3, with Bob the Bear
Remember when Bob the Bear went bullish?
Bob Janjuah and Kevin Gaynor — global macro strategists formerly of RBS, now based at Nomura — said in October that markets were set to turn strongly ‘pro-risk’,
Beware the special US Treasury market
FT Alphaville has been keeping an eye on the composition of the Federal Reserve’s US Treasury purchases for a while.
It’s important to watch because the more the Fed buys of any particular issue, the less of a free float is available for everybody else — a fact which may skew pricing or encourage a security’s so-called ‘specialness’ in the market.
A hunger for change
Add criminally high youth unemployment and stir. Charts via Goldman:
Related link:
Egypt protests liveblog - The Guardian
The 2015 banking crisis begins in commodities
John picked up the phone. It was the bank’s legal counsel, Peter Thompson, calling. He had dramatic news. Garland Brothers, one of the world’s oldest banks, would declare bankruptcy tomorrow. As he lay there in his spacious air-conditioned bedroom,
Markets Live transcript 31 Jan 2011
Markets Live chat transcript for the chat ending at 12:20 on 31 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHGood morning rabble NHFT AV’s daily markets chat
Counting the (UK stock market) cost of the Mubarak uprising
As the situation in Egypt worsens, quoted UK travel operators are coming under selling pressure.
Tui Travel and Thomas Cook are among the biggest fallers on Monday morning as analysts downgrade to reflect the impact of the unrest in Egypt,
Fitch on Spanish mortgage walkaways
Fitch seems angry.
In a Friday statement, the rating agency dealt with a recent ruling by a judge in the Spanish province of Navarra, which said that giving a mortgaged house back to a bank is sufficient to cancel mortgage debt,
The euro is not to be feared
Kathleen Brooks at Gain Capital observes on Monday that the Vix Index — sometimes known as the fear gauge — has pushed above 20 for the first time since early December.
This is understandable given the recent tensions in the Middle East.
The German Trump
For those with a spare two hours on their hands — here’s a 120-minute speech by Professor Markus Kerber, one of the plaintiffs in the Consitutional court case still winding its way through the German legal system.
Further reading, Middle East edition
Some opinion, comment and analysis over the weekend,
- Egypt: A complete guide to the 2011 revolution.
- Forget Egyptian CDS, here come the Saudi contagion vigilantes.
- Oil, CDS and musings from the Armchair General.
Further reading
Elsewhere on Monday,
- Recessions under the gold standard.
- The Great Stagnation – a review.
- On the impossibility of stock forecasting.
- Goldman’s $13.2m man.
- So how big is China’s GDP?
- …
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Wolfgang Münchau: Europe’s inflation target
Should we worry about inflation in Europe? asks the FT’s Münchau. Or rather: should we worry about inflation in the presence of an inflation target of under 2 per cent? The European Central Bank has been warning about the inflationary effects of higher commodity prices.
Snap news
Breaking pre-market news on Monday,
- Ryanair posts third-quarter loss of €10m – statement.
- Lagardere to sell International Magazine unit to Hearst for €651m – statement.
- Gulf Keystone says Kurdistan study backs estimates – statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Insurers gear up for new charges
Solvency II rules could cause a sell-off of equities and corporate debt among European insurers. Instead they might be pushed into more local currency emerging market debt and supposedly risk-free sovereign debt.
US foreign aid to Egypt
This might be of use: a bit of statistical context that suggests just how important Egypt is to US foreign policy.
Since the Israel-Egypt peace accord in 1979, these two countries have been the number one and two recipients of US foreign aid.
Further reading, special Egypt edition
“Despite the Mubarak regime’s efforts to invoke the spectre of the Muslim Brotherhood, Egyptians aren’t demonstrating for an Islamic government any more than the Tunisians were; they’re demonstrating for an honest government – one that will improve education and infrastructure,
The Suez effect on WTI-Brent [updated]
Speculation about the potential closure of the Suez canal is mounting on Friday, probably the reason that WTI prices are heading higher.
Notably, prices of Brent crude (which is not continent-blocked;
An unusual letter from the Fed, an unwinding of hedges
That’s a sudden spike in trade volume right around Tuesday of this week. As a reminder, this index tracks CDS on 125 investment-grade names, including the monoline MBIA.
We bring it up because Creditflux reported earlier this week that MBIA CDS rallied (i.e.
Macro Live transcript 28 Jan 2011
Markets Live chat transcript for the chat ending at 16:03 on 28 Jan 2011. Participants in this chat were: Cardiff Garcia John McDermott Joseph Cotterill Izabella Kaminska
CGGoooood morning Rabble
WTI arbitrage is a PADD II windfall
There’s been some interesting commentary on Friday regarding the ongoing problem of the widening WTI- Brent spread, which struck a record wide in like-for-like basis terms on Thursday.
First this from John Kemp at Reuters,
Meanwhile, in Chinese gyms
With private Chinese media getting more restrained by the day in their financial coverage – it might pay to read between the lines of what state outlets are saying.
To wit, this bit of fluff from China Daily: