February, 2011
Further further reading
For the commute home,
- Move the people to the growth, not the growth to the people (or, What to do about Michigan?).
- Michael Lewis and Steve Eisman are being sued for the way Lewis portrayed Wing Chau in The Big Short.
Magnus on a chronic under-reporting of private sector surpluses
UBS senior economic adviser George Magnus addresses the issue of Washington’s budgetary crisis on Monday.
As he points out, to some there is a major fiscal imbalance that has to be addressed, but no crisis — while to others the US is bust and nothing short of an immediate downsizing will neutralise a looming austerity crisis.
US deleveraging and consumption, in progress
There was some good news in this morning’s Personal Income and Outlays report for January, though not quite enough to get excited about.
Personal income climbed 1 per cent, well above expectations, and the savings rate increased for the first time since last July,
Underestimate the force of a supply shock, do not
David Bloom’s currency strategy team at HSBC looks at the issue of oil and foreign exchange rates on Monday, arriving at a clear-cut conclusion.
Determining which currency in which to park one’s money when oil prices are on the rise is dependent on one thing and one thing only — whether said price rises are the result of demand forces or of a supply shock.
HSBC’s fat cats
From page 213 of HSBC’s mighty 2010 annual report and accounts.
Related link:
Costs and Basel III undermine HSBC – FT Alphaville
The ‘depreciation doomsday machine’
There are prognostications of doom for the US economy, and there are highly specific prognostications of doom for the US economy.
Here is one, from Charles Dumas of Lombard Street Research:
The potentially
All together now: “The forward curve is not a forecast”
We’ve touched on the issue of the forward curve not being a forecast a few times on FT Alphaville before.
But just in case it still hasn’t hit home — since many are seemingly still confused — here’s a little more from former energy analyst John Kemp,
The FSA is concerned about ETFs
The UK financial regulator the FSA appears (finally) to be on to the complexity issue that has been affecting the ETF industry for a long while now.
From the FSA’s ‘Retail Conduct Risk Outlook 2011″
Elasticity *alert* — or, at what point demand destruction?
Bank of America Merrill Lynch is out with a whopper of an oil note on Monday.
Amongst other things, it makes a number of bold predictions, least of all this:
Libya could well be the 8th largest supply shock since 1950
Which brings the team at BoAML,
Peak Testosterone
An interesting application of political science to the market, from Deutsche Bank analysts:
Youth bulges in emerging markets likely to decline sharply from 2010–2020
Emerging-market youth bulges are projected to decline in the next decade (except in sub-Saharan Africa,
What Libya crude cuts mean for tanker rates
Icap’s shipping analysts have on Monday come up with an interesting hypothetical take on how an extended Libyan crisis might impact the shipping market.
In a nutshell, think more bearish than bullish for shipping rates.
Markets Live transcript 28 Feb 2011
Markets Live chat transcript for the chat ending at 12:36 on 28 Feb 2011. Participants in this chat were: Neil Hume, FT Robin Freestone bryce.elder NHGood morning NHand welcome to a special session of Markets Live
Costs and Basel III undermine HSBC
Thud.
That’s the sound of the HSBC’s annual report and accounts hitting the FT Alphaville desk — all 397 pages of it. (Download at your peril.)
Clearly, we haven’t had time to read all of it, but here are our initial thoughts.
It’s an Irish bank eat Irish bank world
A Monday morning reminder to Ireland’s new government of a not so small banking problem, this.
Overnight borrowings from the ECB jumped (again) on Monday — this time to €17.115bn. And this time, the dynamic in Irish banking that has driven this newest spike is fairly clear,
The Libya effect on crude differentials, charted
We’ve highlighted the Libyan crude substitution problem on FT Alphaville here and here already.
But, as ever, we like charts. And here’s a nice one from JBC Energy reflecting the Libyan substitution effect across the light sweet crude complex as of last week:
LSE under attack
Technologically speaking all is still not well at the London Stock Exchange.
Prices are being disseminated on Monday morning but anyone trying to enter the LSE website via Google gets hit with this message.
The imprecise science of revolting indexes
It’s the perfect season to roll out what TheSource calls a “revolting index”. As the blog’s Alen Mattich remarks, investors — not just autocrats — are also spending “a lot more time these days looking over their shoulders”,
Mirror, mirror on the wall — who’s really the riskiest of them all?
This — in case you were wondering — is a list of what some academics see as today’s most systemically risky financial firms in the US:
The list has been compiled on VoxEu.org by Viral Acharya,
Further reading
Elsewhere on Monday,
- Updates from Libya.
- That investor letter: Quotes and quips from the Sage.
- Daniel Yergin on oil.
- Investing in cyber-warfare.
- The debate that’s muting the Fed’s response.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
David Gardner: Citizens not serfs can save Saudi Arabia
On his return from months of medical treatment in the US and Morocco, King Abdullah of Saudi Arabia was characteristically unstinting in his generosity,
Snap news
Breaking pre-market news on Monday,
- Centamin Egypt says not affected by official ban on gold exports — statement and report.
- Pearson says adjusted operating profit up 15 per cent to £857m — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Complex ETFs find door open in US
Unbelievably, providers of complex ETFs have been able to find a route to market in the US by launching new products under the 1933 Securities Act.
Further further reading
For the commute home,
- Glencore, a profile.
- Economic problems ahead for Egypt.
- Janet Yellen must know that journos can’t resist a hypothetical.
- The Vix calls trade.
- On the contrary,
USA, incorporated and indebted
Congress continues to argue over a continuing resolution to fund non-essential parts of the US federal government past March 4.
As silly season drags on we’re still unsure whether a deal will be struck.
Freezing Gaddafi’s billions
Or, just who is ‘sovereign’ in a sovereign wealth fund, anyway?
Western powers were starting to catch up with the Libyan people in hitting Colonel Gaddafi where it hurts on Friday. In this instance,
Oily shadows of 2008
What do over $100 per barrel oil prices really mean for the global economy?
According to Stephen King, chief economist at HSBC, the situation doesn’t bode well for the recovery at all.
His Friday research piece beings:
The Bank of England’s very own, very secret liquidity
Emergency Liquidity Assistance (ELA) — or short-term liquidity programmes courtesy of national European central banks — has made headlines recently.
Not least because Irish banks are supposedly using over €50bn of the stuff.
James Bullard and QE2 – oil price update
Comments on Thursday’s FT Alphaville post on James Bullard pointed out that while he was happy to show the correlation between QE2, inflation expectations and real interest rates, there was little on what it may have done to oil prices.
Back to the future with CMBS
Blink and you might have missed it — but the market for Commercial Mortgage-Backed Securities (CMBS) reopened about 15 months ago with three transactions.
But the deals, issued in late 2009, were not CMBS as we knew them pre-financial crisis.