January, 2011
Uncertainty and capital controls
Worries about capital flows and the potential side effects of poorly designed capital controls (trade wars, market inefficiencies and distortions) are all the rage these days.
But some economists are sceptical (here’s one) as to whether capital controls even work,
Macabre Mark Twain mathematics
“The Rumors of my Death Have Been Greatly Exaggerated.”
– Mark Twain
The Wall Street Journal has a further news on Thursday from the grisly world of life settlements. These are transactions where a life insurance policy owner sells their policy,
Diamonds are forever
That’s the performance of Petra Diamonds over the past year.
The Aim-listed company, which has operations in South African and Tanzania, is now valued at almost $1bn and is looking to take advantage of its strong run by issuing at least $300m of new shares.
Outlook negativity, charted
From Fitch Ratings’ just-published Global Credit Outlook:
The agency says the decline in negative outlooks is due to “both improved creditworthiness and downgrade action, with subsequent rating stabilisation.”
In pursuit of 475,500 stolen European Union Allowances
If you thought illiquid European sovereign markets weren’t enough of a problem — time now to familiarise yourselves with the latest trading quagmire to hit Europe.
On Wednesday, the European Union was forced to suspend transfers of its carbon units,
When Spanish bank property losses go Irish
At what point does Spain’s banking crisis look as bad as Ireland’s?
At what point do solutions to that crisis look as bad as Ireland’s?
Around about now:
Out of €439bn of total exposure to property,
From the desk of Jean-Claude Trichet…
… to the desk of BNP chairman and European Parliament member, Nick Griffin:
Related link:
The mechanics of Irish euro-printing – FT Alphaville
The FTSE 100 global growth index
Thursday’s price action in London:
Confirmation (if any were needed) that the FTSE 100, with its very heavy weighting of resources stocks, is now just an option on global growth.
So if investors
Markets Live transcript 20 Jan 2011
Markets Live chat transcript for the chat ending at 12:31 on 20 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHWelcome to Markets Live NHFT Alpha’s daily markets wrap
Fasten your seatbelt
EasyJet shares hit some turbulence on Thursday morning:
Now that sudden loss of altitude isn’t just down to the impact of rising fuel costs — although that’s going to bite (even though the budget airline claims to be 70 per cent hedged at $775 a tonne).
Fear and apprehension: Rudolf Elmer edition
No, WikiLeaks is not going to go away.
The saga over leaked documents on the whistleblowing website has heated up as bets are now being taken on which celebrities, business executives and prominent politicians will be revealed as tax evaders in the promised WikiLeaks data dump of more than 2,000 names from the files of Swiss private banker-turned whistleblower Rudolf Elmer.
Further reading
Elsewhere on Thursday,
- Morgan Stanley’s earnings: 4 themes to watch on Thursday.
- Citi’s lost weekend, what really happened.
- Reading the bond market tea leaves.
- Goldman’s short-sighted navel-gazing.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Anat Admati: Dividends can wait until banks are stronger
American banks, encouraged by good earnings, are itching to “return capital” to shareholders.
Snap news
Breaking pre-market news on Thursday,
- Man Group suffers single redemption of over $1bn — statement.
- Aviva plans to cut hybrid debt by at least £700m over next three years — statement.
- RSA warns of £255m of weather related losses — statement.
Too big to fail, fail?
Those worried that Dodd-Frank was overly-cautious in tackling ‘Too Big To Fail’ issues are unlikely to be comforted by the concentration limits study released on Tuesday by the Financial Stability Oversight Council (FSOC).
Further further reading
For the commute home, or your flight to Beijing,
- The case for businesses to demand the government discount for IPOs.
- “The Chinese policy of buying dollars can be best understood as an indirect purchase of U.S.
2011 is the year of accounting ‘condorsement,’ Fitch says
This is meant to be the year of accounting convergence.
You’re probably already yawning by now — but wait! This is important.
Countries including Canada, Korea and India are expected to implement International Financial Reporting Standards (IFRS) in 2011 — but the accounting world’s attention will really be focused on what the United States decides to.
Oil shock 2.0, or, the benchmark wars
Concerns are mounting that $100 oil prices, if hit, could be enough to dislodge the precarious global recovery — thrusting the world economy back into recession, or even worse, into another global financial crisis.
Reflections on the weirdo Greek debt plan
So would the weirdo Greek restructuring plan being previewed in German paper Die Zeit work?
Harvinder Sian, RBS’s rates strategist, reckons it might help, but utlimately something more radical would be needed.
The Pomo flip
The Federal Reserve bought $7.72bn worth of US Treasuries on Wednesday, and specifically $675m of Cusip No. 912828PL8 and some $7bn of Cusip No. 912828PQ7.
Why do we bring it up?
Because the US Treasury only just auctioned off that second Cusip:
Weirdo Greek debt restructuring
To see one story on Wednesday about an imminent restructuring of Greek debt may be regarded a misfortune. To see two…
Via Reuters:
Officials in Germany’s finance ministry are preparing an emergency plan to handle the fallout if Greece defaults or needs to restructure its debt,
Vallejo’s exit plan: cuts, more cuts and haircuts
Those who believe municipal or state bankruptcy is a clean and simple option may want to take a peek at the city of Vallejo’s proposal to exit court control of its finances. Details from Bloomberg on Wednesday:
Please give generously…
… just £5 a day keeps an FT Alphaviller in coffee and sandwiches at Pret a Manger:
Mr Hu’s trip to Washington
Some thoughts from emerging market specialist, Ashmore…
… On Chinese president Hu Jintao’s visit to America:
The most important and most tangible aspect of president Hu’s visit to Washington may well be what China thinks the role of the dollar should be going forward.
Old Lady conspiracy theories
It’s sometimes said that conspiracy theories are really a back-handed compliment to belief in the power of government. Because they can’t possibly be that incompetent, can they?
And so we turn to the Bank of England’s 2 per cent inflation target.
Even more Spanish banking negativity
Lucky Spain.
Spanish banks’ funding via European Central Bank repo facilities dwindled late last year as the financials made use of a new (repo) agreement with LCH.Clearnet.
From Morgan Stanley:
Unlucky Spain.
More on the widening WTI-Brent spread
Reuters is running an interesting story on Thursday that throws further light on the widening WTI-Brent spread, which when we last looked was at $6.42 a barrel.
The newswire claims oil trader Hetco has taken control of the first eight North Sea Forties crude oil cargoes loading in February and two Brent cargoes.