January, 2011
Go north, jaded government bond investor?
No, not north to German bunds. Further north.
Pär Magnusson and Filip Andersson — Scandinavian macro and fixed income analysts at RBS — have a few things they want to get off their chest at the moment,
The new look, client-facing, Goldman Sachs
The eagerly awaited Goldman Sachs internal review is out.
As the Wall Street Journal reported, the document was commissioned last year after the bank got into hot water, in the wake of the Fabulous Fab affair,
Mixed signals from US small businesses
So many other US economic indicators have improved in recent months that we’d be remiss not to report one that worsened.
Small business sentiment is famously stubborn, but even so, the numbers from the latest NFIB survey were disappointing given the positive momentum at the end of last year:
Solving the second-lien sticking point
Remember this chart? It’s old, but still relevant.
Those are second-lien (or just plain second) mortgages held by US banks — also known as remortgages or home-equity withdrawals in the UK. The top four,
UK mortgages, and the bank lending blame game
Is Bob Diamond — currently under the kosh at the UK Treasury Select Committee at pixel time — getting the wrong end of the stick? At least in terms of Barclays’ lending habits?
Or, more importantly,
P-p-p-ick up a Portuguese private placement
Spot the odd one out, Portuguese government medium-term note sales edition — click chart to enlarge:
We’ll get to the answer in a bit, but first — a trip to the sovereign debt funding twilight zone.
Markets Live transcript 11 Jan 2011
Markets Live chat transcript for the chat ending at 12:31 on 11 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHwelcome to another ML
Arm and Mad Money [updated]
Arm Holdings is in the charge again on Tuesday morning:
And the reason for this move? Traders reckon it could be the following…
Overnight CNBC’s Jim ‘Mad Money’ Cramer told viewers of his show that the Cambridge-based chip designer,
Eurozone interest-rate hindsight
It’s often said that one of the factors responsible for brewing the current eurozone crisis was the monetary union’s insistence on a converged interest-rate policy.
That is to say, one interest rate for all members — irrespective of whether the rate was more suitable for Germany than say Spain or Ireland.
China and Japan to the rescue, but with saviours like these…
It’s one of those days to marvel yet again at how quickly times can change.
Just a few highlights from the now-daily diet of China-related developments includes the fact that China has overtaken the UK to become the world’s second-largest market for Rolls Royce limos (behind the US),
Europe’s corroding core, a credit story
Here’s one for the corporate vs sovereign credit theme.
Barclays Capital points out on Tuesday that CDS on a number of European corporate names is now trading close to — or even better than — their domiciled countries.
UK fuel poverty and the security of supply
Here’s one for the tabloids to get stuck into – UK household utility bills could double every five years until 2020.
That’s the view of Unicredit which has been looking into affordability in a review of the utility sector.
The illustrated, erstwhile, safety of senior bank debt
Via Old Mutual Dynamic Bond Fund — a glance at how much the world of bank debt has really changed after moves towards burden-sharing for senior debt investors.
The subtitle, incidentally, is: “It’s gone and it’s not coming back.”
Further reading
Elsewhere on Tuesday,
- A modern ghost town in China.
- “Only economic mismanagement would unseat the dollar from its dominant position.”
- Fiscal handcuffs and shocked currency unions.
- The Long Slump and the history of economic thought.
Pink picks
Comment, news and other offerings from Tuesday’s FT,
Gideon Rachman: Paranoia disfigures the Tea Party
It is unwise and unfair to blame the act of a violent lunatic on an entire political movement,
Snap news
Breaking pre-market news on Tuesday,
- Simon Property Group not to make offer for Capital Shopping Centres — statement.
- Marks & Spencer trades well through Christmas period; UK like-for-likes sales up 2.8 per cent — statement.
Further further reading
For the commute home,
- What a TRILLION dollars looks like.
- Dan Drezner hands out awards for the best writing on global political economy in 2010.
- American jobs gained and lost over the past decade.
Defence stocks on the defensive against budget cuts
While Washington debates the why, where, what and (against) whom of defence spending, Wall Street has ordered a partial retreat.
From Goldman Sachs analysts on Monday:
Our view remains that Defense fundamentals have peaked and may deteriorate for an extended period of time.
Shiny junk resists a funk
Moody’s has released its full-year 2010 default rates for high yield bonds and loans, and unsurprisingly the improvement over 2009 was impressive:
The global speculative-grade default rate finished 2010 at 3.1%,
Not just printing money — making it, too
That’s just showing off.
The Fed released its preliminary 2010 results on Monday and they show a hum-dinging whopper of a “profit”. From the release:
The Federal Reserve Board on Monday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $78.4 billion of their estimated 2010 net income of $80.9 billion to the U.S.
Commerzbank fact du jour
On a day when the Markit iTraxx Senior Financials CDS index traded at a wide not seen since March 2009…
Commerzbank CDS spreads traded at their widest since 2002 on Monday, according to Markit (click chart to enlarge):
The economic impact of the foreclosure slowdown
Lord, give us a housing market in which foreclosures are initiated and processed quickly and where prices reflect market fundamentals … but not yet. Or anytime soon, really.
With apologies to Saint Augustine,
QE counter-factuals and counter-arguments
Here’s a pop quiz for macro fans: Federal Reserve asset purchases were equivalent to an X hundred basis point reduction in the federal funds rate and contributed Y million jobs. What are X and Y?
In a recent paper on zero lower bound events and the impact of quantitative easing,
Petrochina and Ineos partner up in new JV
The long-rumoured partnering up of privately-owned refiner Ineos and Petrochina — China’s largest listed oil firm by capacity– is finally out of the bag.
On Monday, Ineos publicly announced that it would be entering a formal trading venture with the Chinese company,
Smouldering in Belgium
Portugal is loudly occupying bond markets as they look for the next bailout candidate. But its always the quiet ones you should watch out for.
So we’d suggest looking closer at how markets have repriced Belgian risk lately.
‘Focus on the positives’ of the Ibanez case, Amherst says
Should banks be trembling in their boots after Friday’s “Ibanez case” ruling from a Massachusetts High Court — you know, the one that said Wells Fargo and US Bancorp couldn’t foreclose on two properties in the eastern seaboard state.
China’s crouching commercial paper, hidden loan targets
As western commercial paper continues to wither, the eastern stuff is on the up.
Bloomberg wrote on Friday about surging commercial paper sales in China — as companies tap the short-term paper instead of getting loans from banks:
A slow, speedy death for BofA’s conduits
Bye, bye Bank of America commercial paper conduits. We knew you well.
From Asset-Backed Alert:
Bank of America is officially out of the business of running commercial-paper conduits.
The Charlotte bank paid off all of its outstanding conduit paper within the last week or two,
There will be no UK house price fall in 2011
LONDON, Jan 10 (Reuters) – British house prices fell at their fastest annual rate in more than a year in December, mortgage lender Halifax said on Monday, but it reckons there will be little movement in house prices in the coming year.