January, 2011
Markets Live transcript 14 Jan 2011
Markets Live chat transcript for the chat ending at 12:14 on 14 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder
NHHola
NHand welcome to Markets Live
NHour daily markets chat
An €80bn mega-inyección for Spanish banks?
Wa-hey. Anyone speak Spanish?
Just as the European Central Bank announced that Spanish bank borrowing resumed its upward trajectory last month (€70bn in December, up from €64.5bn in November) El Confidencial is reporting that Spain is preparing a massive capital injection of between €30 and €80bn to clean up the cajas,
Eurogeld déjà vu
Euro shorts burned on Thursday — still being roasted on Friday:
It’s a European Financial Stability Facility-inspired short-covering/risk rally — Spanish and Italian sovereign bond spreads against Bunds are at their tightest since early December.
One for the M&A watch list [updated with added confusion]
Here we go again…
Friday’s Daily Telegraph:
US orthopaedics giant Biomet is set to begin informal talks with Smith & Nephew (S&N) about a potential £15bn merger….
However, because of the levels of debt attached to Biomet – $5.9bn – a cash acquisition would not be possible,
From bail-ins to flail-in’ CDS markets
Or adventures in unintended consequences, bank burdensharing edition.
Last week’s bail-in proposal for bank debt, from the European Commission, marks a step-change for capital markets — so it’s no wonder there could be plenty of those known unknowns (or even unknown unknowns) to go along with it.
CoCo Killers [updated]
CoCo *pops.* Curtains for CoCos. And so on.
Late on Thursday the Basel Committee released its final (and curt) rules on loss-absorbing bank capital, including the mandate that all Tier 1 and Tier 2 instruments are able either to be written off or converted into equity at the behest of regulators.
Further reading
Elsewhere on Friday,
- Is the Fed so profitable after all?
- China might well be number one already.
- Putting names to (systemically important) faces.
- Bring out yer dead — a Europe contagion map.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: New ways to control hot money bubbles
Is there anything governments can do to clamp down on “hot money” flows?, asks the FT’s Tett.
Snap news
Breaking pre-market news on Friday,
- Biomet and Smith & Nephew set for talks over £15bn merger – report.
- Fresnillo expects silver production to rise 5 per cent in 2011 — statement.
- F&C Asset Management announces cost cutting plan — statement.
Muni-ETFs at the Vanguard
Sign-of-the-times news from the municipal bond world on Thursday (report from Reuters):
Vanguard Group canceled plans to open a line of tax-exempt bond exchange-traded funds as municipal bond prices tumbled and index tracking concerns hit competitors’ ETFs.
Further further reading
For the commute home,
- Merkel and Sarkozy, Europe’s odd couple. See also our caption competition.
- An inflationary environment is good for entrepreneurs.
- Algo trading, market structure, and tail risk.
Caption competition! [we have a winner]
From the New York Times:
Keep it family-friendly, please.
Winner gets a copy of Consumptionomics: Asia’s Role in Reshaping Capitalism and Saving the Planet. Deadline for entries: 10pm London time,
Double or quits? The structural unemployment question
The cyclical vs structural debate raised a lot of heat and not a great deal of light during the summer. But in the last week or so wise minds have returned to the issue.
In a syndicated column, Raghuram Rajan cited research that ostensibly suggested the demise of housing-related jobs represents a structural break in the US labour market:
Vox populi, vox stulti — US-China datapoint
FT Alphaville is not sure which set of Americans to worry about, as per these survey results from the Pew Research Center:
Either the 47 per cent who think China (GDP per capita in PPP terms in 2010:
Cashing out of De La Rue
Interesting developments in the De La Rue takeover saga.
From Thursday’s Daily Telegraph:
France’s Oberthur Technologies has offered a handful of private equity firms a £300m-£400m stake in its planned acquisition of bank note printer De La Rue.
Sweet, squeezed euro nostalgia
RTRS-TRICHET-REMIND YOU IN JULY 2008 WE HIKED RATES
Rates markets to Trichet — ‘OK, we’re reminded’.
Euro shorts to Trichet — ‘AAeeaaurgh it burns, it burns!’
And, of course, FT Alphaville will just note that euro rates hindsight works both ways.
The acrid smell of burnt fingers…
… in the Spanish banking sector:
That’s what a couple of positive bond auctions in the periphery can do.
Loan loss reservations, US bank earnings
Did you think US banks’ 2010 results would actually mean something?
Silly you. Don’t you know their earnings — like those from 2009 — will be skewed by falling loan loss provisions set aside to cover bad debt.
Changing China’s biggest bank account?
To tell the story of China’s biggest bank account it helps, perhaps, to start with a story about certain, smaller, Chinese bank deposits. So. Meet Zhang Meifang.
Ms Zhang is, or rather was, an official at the Jiangsu Province Finance Bureau.
Markets Live transcript 13 Jan 2011
Markets Live chat transcript for the chat ending at 12:39 on 13 Jan 2011. Participants in this chat were: Neil Hume, FT bryce.elder
NHHola
NHand welcome to Markets Live
NHon the day of a 1,000 trading updates
The graphic, gigantic, European bailout fund
An illustration by Citigroup, who reckon Europe’s Financial Stability Facility (EFSF) needs to be increased to at least €1,000bn to cover peripheral funding needs:
On the plus side, Citi also think an increase could be positive for Europe’s banks…
Commerzbank’s complicated capital boost
Commerzbank mystery, solved.
From a Thursday morning statement:
Commerzbank plans measure to optimise its capital structure
Today, as a step in its capital management, Commerzbank AG has provided
Eurozone semantics: yes, no, jein…
For a nation famed for precision and definitive positions, it might be almost reassuring to know that Germany has a word that combines “yes” (ja) and “no”, (nein) to mean, well, “yes-no”: jein.
But sometimes,
Adventures in Portuguese bond shorts
Short-selling specialist DataExplorers has an interesting update on borrowing interest in Portuguese government bonds — which rallied on Wednesday on the back of a closely-watched and relatively successful auction of €1.25bn worth of debt.
Further reading
Elsewhere on Thursday,
- So, are London’s bankers paid too much?
- Chinese ghost towns, the video.
- Humans are hard-wired to inflate.
- And all about Chinese-US inflation.
- “This time may truly be different”
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Mort Zuckerman: Housing weighs down the recovery
Welcome to 2011, which in one respect at least has started well, notes Zuckerman, editor in chief of US News &
Snap news
Breaking pre-market news on Thursday,
- Tesco reports disappointing UK sales over Christmas; blames weather– statement.
- Commerzbank planning 10 per cent equity capital increase — statement.
- Ashtead and TVH join forces to make 115p a share offer for Lavendon Group — statement.
Further further reading
For the commute home,
- An excellent sortable chart of dividend stocks.
- The most amazing press release ever written.
- Illinois passes a tax increase as it tries to avoid defaults.
- Krugman goes long-form on Europe.
Here comes the promised CMBS issuance
Looks like the expected 2011 rise in CMBS issuance remains on schedule, according to the WSJ on Wednesday:
In the next two months alone, an array of firms—some of which are packaging their first loans since 2007—are expecting at least $5 billion in new issues.
Lighter shades of beige
The Fed’s latest batch of crowd-sourced qualified optimism was released on Wednesday.
The December beige book maintained the cautious volte-face amongst contacts Federal Reserve districts from September’s description of “widespread signs of deceleration”.