January, 2011
The latest ‘New Normal’ backlash(es)
The New New Normal apparently means to bash the old New Normal.
They say that three makes a trend in journalism. Never mind that we don’t know who “they” are, or that it’s quite a silly notion. We’ve got four examples of something interesting,
Chancing on the (debt) ceiling
When it comes to the debt ceiling, perhaps we should adopt that wise and time-honored maxim: don’t hate the player, hate the game.
With a hat tip to Self-Evident, David Greenlaw & Ted Wieseman from Morgan Stanley on Tuesday released a handy timeline detailing what to expect during the coming showdown.
EFSF 2.0
From Wednesday’s FT:
In parallel, we must ensure that the financial support mechanisms put in place last May are fit for purpose. The effective lending capacity of the current European financial stability facility should be reinforced and the scope of its activity widened.
A Fed on hold
Back in November, we previewed the new voting membership of the FOMC and speculated on its possible consequences for monetary policy in 2011:
We bring it to your attention because of the changes that will take place in the composition of the FOMC’s voting membership next year.
David Rosenberg’s cartoon-ish 2011
David Rosenberg’s gone all cartoony.
The Gluskin Sheff analyst seems to have given up on on words and is instead using charts — and Loony Tunes — to illustrate his (very salient) points.
The introductory text:
A gasoline snow print
Everyone loves a snow day.
And recent snowfalls across North America, it seems, have provided many with an excuse to take one. (That is, to stay at home for the day rather than to go to work or school.)
The stay-at-home trend has been so significant,
On the implications of a widening WTI-Brent spread
The spread between the two main global oil benchmarks, West Texas Intermediate and Brent, is blowing out (again). And it’s been doing so for most of the month.
We’ve known for a long time, of course,
NYSE invokes Rule 48 for Wednesday’s open
Fresh from the New York Stock Exchange on a snowy Wednesday morning:
A background-er on Rule 48 (or as we like to call it, the ‘Tin Hat rule’) available here.
Let there be light … pools
You’ve heard of dark pools, right?
Well meet their opposite. On Tuesday, Credit Suisse announced it was launching a ‘light pool’ aimed at institutional investors wary of the shadowy, murky dark.
Or,
Save Europe, tax the banks?
Or, let them send bailout funds.
Instead of the thorough banking sector rescue which some commenters have been advocating — it looks like the European Commission could be considering the exact opposite.
Happy Portugal – market takes down €1.25bn of debt
The much-anticipated results of Portugal’s Wednesday bond auction are in.
Via Reuters:
10:52 12Jan11 RTRS-PORTUGAL SELLS 650 MLN EUROS OF OCT 2014 BONDS IN AUCTION
10:52 12Jan11 RTRS-PORTUGAL SELLS
Markets Live transcript 12 Jan 2011
Markets Live chat transcript for the chat ending at 12:26 on 12 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHthat’s better NHwe are up and running
When PBoC officials disagree
We’re used to seeing both dovish and hawkish displays at any one time from monetary policy committee members in the west.
But it’s always been much rarer to see conflicting views from high-ranking members of the People’s Bank of China.
Oil gusher!
Brent has surged to a 27-month high:
It’s now close to one of those psychologically-important levels:
On the other side of the pond, WTI is moving more slowly:
Belgian banks exposed to Belgium
Belgian bonds are blowing out.
Which means pain for any (unhedged) entity holding the stuff — for instance, Belgian banks. Citigroup attempts to quantify Belgian financials’ exposure to their host country in a Wednesday research piece — though it’s worth noting that they do reckon Belgium “is in a far stronger position than the [European] peripheral countries”
Guest post: Quanto-fied, a sovereign CDS tale
Markit credit analyst Lisa Pollack discusses the evolution of the sovereign CDS market, and the growing importance of the ‘Quanto spread’ in eurozone CDS.
Are these the same credits I used to know?
Sovereign CDS have had a long history in the credit derivatives markets.
Bail out Portuguese and Spanish banks together?
Portugal’s bailout is pretty much priced-in, right?
Well — it might be time to consider an intriguing, and plausible, game-changer.
According to Marco Valli, chief eurozone economist at Unicredit,
Further reading
Elsewhere on Wednesday,
- The European death spiral and contagion.
- And 10 reasons to stop the European bailouts.
- “Some hedge funds are losing their sex appeal.”
- A US federal debt ceiling timeline.
Pink picks
Comment, analysis and offerings from Wednesday’s FT,
Martin Wolf: East and west converge on a problem
How is the “great convergence” – the topic of last week’s column – going to shape the world in the 21st century?,
Snap news
Breaking pre-market news on Wednesday,
- Gartmore recommends £335m (92.1p a share) offer from Henderson — statement.
- Sainsbury reports like-for-like sales growth of 3.6 per cent over Christmas — statement.
Indonesian equities warning du jour
One of these is not like the others — chart from Nomura fixed income analyst Owen Job, who’s making a point about Asian inflation risk:
Here’s what Job says (link and emphasis ours):
Recent market moves in Indonesia highlight the risks that inflationary pressures and attempted management of the impossible Trinity can have on asset prices.
Truthiness hurts, so go short
Pssst — want to know a juicy stock market rumour?
Are you sure?
Well, in that case you should think twice about buying, according to a Bloomberg article published on Tuesday:
Electronic news services,
Further further reading
For the commute home,
- The Stock Rabbi is back, and he’s not feeling Chinese reverse mergers.
- Mike Konczal debunks the strategic default trend.
- Behind the scenes with the NY Fed’s QE2 traders.
Roubini vs Issing on next steps for Germany
Oscar Wilde — ironically, an Irishman faced with a history of difficult bail-outs — famously said that a true friend stabs you in the front.
Angela Merkel, then, may be a little wounded on Tuesday by Nouriel Roubini’s interview in Der Spiegel.
Economic forecasting delusions
The Boston Globe has a smart piece that draws on the latest research about one of our favourite topics — the perils of economic forecasting.
Having singled out everyone’s favourite Doomster, Nouriel Roubini,
FT Tilt, in colour….
…at the (alleged) crossroads of the world.
Not sure what the tourists thought of it. Or the naked cowboy.
In any case, go and get yourself a free trial here — tilt.ft.com
The end of the taxpayer put
Even more on the corporate vs sovereign credit theme, this time from a banking perspective.
RBS has been looking at Commerzbank and its CDS since the EU bail-in proposals were unveiled last week.
We noted before that the price has blown out,
Californian cuts, bonds and votes
California is biding its time in the 2011 municipal bond market.
The LA Times’ Money & Company blog on Monday reported that the state is postponing general obligation bond sales due in the spring until fall 2011: