January, 2011
The silver market’s conflicting signals
Talk to the precious metal bugs, and you’ll soon come across the story that there is a growing disconnect between what’s happening in the futures market and the physical market.
This, they say, is particularly the case for silver,
US housing double-dip, continued
The Case-Shiller housing numbers for November are out and — unsurprisingly — they show another steep monthly decline:
Data through November 2010, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices,
Chinese plate-smashing
Another day, another high in Chinese money market rates:
That’ll be FT Alphaville’s favourite Chinese interbank benchmark, the seven-day fixed repo rate, posting a record one-day rise of 242bps on Tuesday.
Goodfella game theory
File this one under “Economics vs Omerta” — or just a bit of Tuesday morning tomfoolery to make the week pass by a little easier.
Via Slate, here’s a trend we were unaware of related to the mob bust in the US last week (emphasis ours):
Revisiting negative equity and labour mobility
Hands up — looks like we’re gonna have to rethink one of our previous previous assumptions.
Sam Schulhofer-Wohl, a researcher at the Minnesota Fed, scutinised a previous study showing that an increase in negative equity (like what we’ve seen since the end of the housing bubble) harms labour mobility and therefore contributes to higher unemployment — and he found its methodology flawed.
Quant crisis, the much more-moderated sequel?
Quant crisis. [kwont] [krisis] Origin: In August 2007 a host of quant-driven hedge funds experienced losses on the back of the subprime crisis and a series of margin calls. This led to a ripple effect causing losses across various quant strategies and would become known as the ‘quant crisis’ or ‘quant scare’ of 2007.
John Paulson’s real 2010 success: Gold
Paulson & Co may well have made more than $1bn from its long position in Citigroup, but the firm’s really big bet — the one that has seen the firm’s assets swell by around $8.4bn over the past 12 months (before,
Markets Live transcript 25 Jan 2011
Markets Live chat transcript for the chat ending at 12:32 on 25 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHand welcome to markets Live
A sudden rise in Britain’s debt-to-GDP figures? Blame the banks
Well, this took a while.
From the Office for National Statistics and with a H/T to Ian Fraser:
The Office for National Statistics and HM Treasury jointly publishes monthly estimates of the Public Sector Finances (PSF).
Come one, come all, to the EFSF bond issue
Here’s a clue to the question; what price Europe, or just the EFSF bond?
Issuer………….EFSF (EFSF – Aaa/AAA/AAA)
Size……………EUR 5bn
Type……………RegS Eurobond, off €27bn Guaranteed DIP
Coupon………….Fixed,
Mr Yosano’s ‘dreadful dream’
Have we been here before?
Not to be outdone by Japan’s (now former) top government spokesman Yoshito Sengoku, who said earlier this month that the country’s finances were about to fall off a cliff, Kaoru Yosano,
Ugly UK GDP figures
Fresh off the wires — a suggestive double-dip GDP figure for the UK:
Blaming the weather. How very British.
Another AIM success story [updated]
Dodgy “rent-a-doctor” company explodes — film at eleven:
HCL announces that the ordinary shares of the Company have been suspended from trading on AIM with immediate effect…
The Board has strong reason to believe that the financial performance of HCL for the year to 31 December 2010 will be materially below market expectations.
All we are saying, is give Murdoch a chance
Amazing.
Jeremy Hunt, the Secretary of State for Culture, Olympics, Media and Sport, has decided to bend over backwards to help News Corporation win control of BSkyB.
Even though the media regulator Ofcom says the £12.2bn buyout should be referred to the Competition Commission for a six month review,
Further reading
Elsewhere on Tuesday,
- Dances with derivatives regulation, part I.
- Those inevitable inflation fears.
- Balance sheet recessions and consumer spending.
- Why do we use debit cards when credit cards make more sense?
- How econometrics inform policy,
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Where have the great thinkers gone?
Once you start listing the world’s greatest thinkers, it is hard to avoid the impression that we are living in a trivial age,
Snap news
Breaking pre-market news on Tuesday,
- UK still intends to refer News Corp/BSkyB merger to Competition Commission, but will consider remedies from parties — statement.
- Misys posts £161m H1 profit;
The second coming of Spanish bank recapitalisation
In case you missed this on Monday afternoon — here’s the FT’s report on Spain’s bank recapitalisation:
Elena Salgado, finance minister, said the additional capital needed by the Spanish banking system would not exceed €20bn ($27bn) – at the lower end of estimates made by analysts and economists – and would ideally come from the private sector rather than the state.
Further further reading
For the commute home, or while you’re recalculating,
- “Spain’s savings banks… have seven months to raise capital through private investors or the state will partially take them over.”
- The Dow is closing in on 12,000.
SWFs, plotted
Courtesy of the Sovereign Wealth Fund Institue:
We’ve got the same question as the Oxford SWF Project: If the funds on the left are low in transparency, how do we know their strategy?
Space, time and public pension black holes
Mad, bad, and dangerous to know — the response from states to the idea of Congress pre-emptively legislating for their bankruptcy.
In Monday’s Wall Street Journal, EJ McMahon of the Manhattan Institute adds to the criticism,
Beware the (Chinese) retail flows
In Shanghai, it seems, the dumb money is very dumb indeed — and there’s a lot of it.
This first bit comes via our Tilted colleague (and the original AV’er) Paul Murphy. In December the CSRC, China’s financial markets regulator,
Quote du jour, carbon market farce edition
Continuing the theme of farcical carbon markets:
Friday saw market uncertainty following the EU’s mistaken release of a press release suggesting that member states had voted in favour of a ban from the 1 st of January despite the vote not having taken place.
Lloyds gets the red pen treatment
First the good news. House broker UBS remains extremely on bullish Lloyds Banking Group.
We remain convinced that the group can, by 2013, deliver a mid- to high-teens RoE on a capital base and net asset value considerably higher than the current level.
The FX market is now through the looking glass
It seems ingrained in the FX market that rate rises are currency positive, but this has not always been the case. In an environment where inflation is problematic the market asks the question – is the central bank ahead or behind the curve?
Those are the opening thoughts of HSBC’s in-house FX guru David Bloom and team on Monday.
Inflated expectations and spare capacity concerns
As Nicolas Sarkozy has noticed, worries about global inflation have picked up in the first weeks of 2011.
And according to two notes out on Monday this is not just down to rising commodity prices; there is also a lack of spare capacity that is being reflected in rising core inflation and increased expectations.
Have the media made the Greek crisis worse? Puh-lease.
Or, how FT Alphaville spent the fall and winter of 2009/2010.
We bring it up because some sociologist-boffin has penned a paper suggesting the media made the Greek crisis worse with their relentless coverage and “sarcastic”
Chinese plate-spinning
And last week’s cash crunch in Chinese interbank markets…
…is still proving difficult to put down.
That’s the seven-day repo rate, off last week’s high following RMB50bn of liquidity added by China’s central bank on Thursday,
CMBScurviness by originator
Iffy commercial loans pre-financial crisis? Blame the conduits.
A new Federal Reserve discussion paper takes a look at 30,000 loans that were eventually turned into Commercial Mortgage-Backed Securities (CMBS) to figure out whether mortgages originated by certain types of lenders were more risky.
Muni mayhem, charted
Recent action in the municipal bond market … from The Bond Buyer:
And some historical context from Deutsche Bank:
Ouch.