February, 2011
Goldman kind of disagrees with the Fed on commodities inflation
Well, this is something of a surprise.
Just after Federal Reserve chairman Ben Bernanke told reporters on Thursday that US QE (I and II) does not cause higher food prices in places such as Egypt, Goldman Sachs’ Michael Vaknin publishes a note suggesting something rather different.
Payrolls snowed under, but unemployment rate drops again
We’ll keep updating this post with analysis as we make our way through it, but for now here’s the link and an excerpt from the report itself is below.
Updates:
1) The headline number is way below the consensus expectation of +145k and even further below the giddy market whispers before release time.
Quants vs decimals
In early 2009, customers of AXA Rosenberg began complaining of ‘industry overexposure’ in their portfolios, according to an SEC order published on Thursday.
Fast forward two years and AXA — which was one of the pioneers of quant models for portfolio investments — has now been fined $242m by the US securities watchdog,
Gaelic TALF, and other bizarre Irish bank fixes
Amazing stuff on Friday from Fine Gael, the party that’s likely to take power in Ireland’s elections later this month, on their policies for fixing Ireland’s bailed-out banks.
Previously, Fine Gael have blown hot and cold on whether to burn Irish banks’ senior bondholders (the subordinated debt is already toast).
Markets Live transcript 4 Feb 2011
Markets Live chat transcript for the chat ending at 12:28 on 4 Feb 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHGood morning markets rabble NHnormal service this morning
Europe’s shocking short-termism
Here’s a chart to ponder as talk of rate rises — in both Europe and the US — returns:
It’s short-term debt issuance as a proportion of total debt issuance for a few eurozone countries. It’s also taken from a December working paper by De Nederlandsche Bank on the interaction between public debt managers’ behaviour and monetary policy.
Synthetic bid activity and rebel shareholders [updated]
There’s shareholder activism…
City institutions have catapulted a rebel investor into the chairmanship of one of the UK’s largest asset managers in a bold act of shareholder activism. Investors in F&C Asset Management,
Fix the EFSF – lower the interest rate?
Even if the interest rates charged by Europe’s Financial Stability Facility (EFSF) are lower than we thought they would be, they’re still counterproductively high.
Here’s why, from CreditSights (our highlights):
Further reading
Elsewhere on Friday,
- Happy anniversary, Mr Keynes.
- How Michael Lewis was duped by Wall Street.
- The ruinous fiscal impact of the big banks.
- Is gold money?
- Private equity’s back-pat fest.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Samuel Brittan: Economists fighting for dead men’s shoes
“One of the great growth industries of the English-speaking world is the exegesis of the writings of John Maynard Keynes.
Snap news
Breaking pre-market news on Friday,
- LVMH reports 13 per cent rise in fourth quarter sales; hikes dividend by 27 per cent — statement.
- SuperGroup buys Benelux and France franchise and distribution partner — statement.
Further further reading
For the commute home, or for kicking off the year of the rabbit
- The UK and US fear different black swans
- The real Yuan
- Egypt’s economic apartheid
- Michael Lewis was moneyballed
SEC brings further charges against expert network employees
Expert networks are being made to look increasingly amateurish.
The SEC on Thursday charged six expert network consultants and employees from Primary Global Research with insider trading and illegal tipping of hedge funds and other clients.
Bernanke to journalists: you’re awesome, now here’s an update
He began his speech to the National Press Club by buttering up the journalists in the crowd — “Your job is not easy, but it is essential” (thanks) — before moving on to more substantive matters.
First an update on the employment situation ahead of Friday’s big nonfarm payrolls report:
S&P: yeah, housing is still terrible
S&P has updated its pessimistic outlook for the housing market this year to reflect the recent, expectations-beating data on new and pending home sales — and remains unimpressed.
From the report:
Legerdemath, or, derivatives dubiousness
Currently doing the rounds — an alleged instance of derivatives fraud, or at least, mispractice. With individual names (Omer Rosen) and banks (Citigroup) attached.
It’s written for the Boston Review,
Greece as a CDO
One way to think about EFSF-financed Greek bond buybacks is as an informal exercise in a collateralisation and tranching of sovereign debt.
An exercise, in short, in converting a country into a collateralised debt obligation.
The Angelo Mozilo foreclosure fund
Pop this in the bittersweet irony chapter of the foreclosure book (from the LA Times Money & Company blog):
California has reached a $6.5-million settlement with two former Countrywide Financial Corp.
No magic words at the ECB
Accordingly, the Governing Council will continue to monitor all developments over the period ahead very closely
– ECB President Jean-Claude Trichet, at Thursday’s press conference.
Code for: don’t wait up for an ECB rate hike in the near future,
EU debt-drenched vs EM erratics
Bob McKee — he of Belgian-short fame — is back.
And the Independent Strategy economist reckons we’re in for quite a reversal — in emerging market risk. His argument, in a nutshell, is that risk appetite for all-things-EM has spun out of control recently.
Markets Live transcript 3 Feb 2011
Markets Live chat transcript for the chat ending at 12:32 on 3 Feb 2011. Participants in this chat were: Neil Hume, FT bryce.elder Jean-Marc Huet NHGood morning NHand welcome to a special edition of Markets Live
Silent capital, backdoor Basel
Two months after Basel III formally landed and the lobbying has intensified.
According to Euro Intelligence — citing an FT Deutschland story — it’s not the banks pushing for some tweaks, but the sovereigns guaranteeing them.
Unilever results – The Verdict
Here’s what the City thinks of the fourth quarter/full year results.
At pixel time, shares in Unilever were 8p higher at £18.66.
* Remember to tune in at 11.00am for Markets Live featuring Unilever’s chief financial officer Jean-Marc Huet.
Gulf Keystone Productions
Surely there are better things for an oil explorer to spend money on?
That said, it’s very nicely shot.
The ECB’s code words
“Strong vigilance”.
“Heightened alertness”.
If you hear either of these phrases at Thursday’s ECB press conference (which starts at 1.30pm London time) then brace yourself for an early interest rate rise.
Further reading
Elsewhere on Thursday,
- Gross tells it like it is: This is not God’s work.
- Why are we irrational? From neoclassical to behavioral economics.
- Gym memberships and the economics of guilt.
- Naive science and the nature of financial markets.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Gillian Tett: Geopolitics is final piece in risk jigsaw
During the past four years, global investors have undergone a brutal refresher course on the different types of risk the 21st century financial world used to ignore,
Markets Live – CFO special [updated]
Update: Thursday 07.56am (GMT).
The results are out and they look pretty good. And for those of you interesting in mugging up before Jean-Marc’s appearance on Markets Live, here are the conference call details.