February, 2011
Miserable like it’s 1994, in Britain
It’s Friday, so we shouldn’t be doing this but … it’s misery (index) time!
Société Générale has an update of the infamous index, which was first developed in the 1970s by American economist Arthur Okun.
The hidden message in Asia’s FDI flows
Figures this week showed surging foreign direct investment in China — up 23.4 per cent to $10bn in January from a year earlier. But they hide a number of key trends — including a steady shift in the direction of Japanese and Korean FDI,
‘BoE rolls hand-grenade under ONS inflation,’ JPM says
Buried a bit deep in Wednesday’s inflation report from the Bank of England — a little from BoE governor Mervyn King to the UK’s Office for National Statistics (ONS).
The central bank is now claiming that CPI inflation may have been “biased down”
Sigma-tic cotton prices
A nearly 10-sigma move in cotton futures since last July — or something which should happen once every 1 x 10^22 trading sessions, according to Sean Corrigan:
The EM retreat continues
And so… the rotation out of EM equities into DM equities goes on.
Data from Citigroup:
So, in the week to February 16 outflows from emerging market funds totaled $5.45bn, up from $3bn just the week before.
Clues to the eurozone’s €15.8bn fat finger
Fresh from the European Central Bank on Friday morning, some clues to the mystery of Thursday’s €15.8bn ‘fat finger’ tapping of eurozone liquidity.
Headlines off of Bloomberg:
*ECB SAYS BANKS BORROWED
Japanese mortgages: rarer and riskier
By now you’ve perhaps heard about the ticking, aging timebomb underneath Japanese government bonds. Or predictions of a negative savings rate. Or sovereign downgrades.
But what of the super safe Japanese mortgage market?
In a note out on Wednesday,
Further reading
Elsewhere on Friday,
- Desperately seeking search.
- The number one rule of market punditry.
- Forecasting is for the birds (and rats).
- Secrets of a top-performing hedge fund manager.
- Talking of insider trading – more than you ever wanted to know.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Jeffrey Sachs: To end the food crisis, the G20 must keep a promise
Soaring commodities prices once again haunt the world economy, director of the Earth Institute at Columbia University.
Snap news
Breaking pre-market news on Friday,
- Anglo American says Tarmac to merge with Lafarge’s UK business; announces results — statement and statement.
- Retonkil Initial says resumption of dividend remains under review pending recovery at City Link and Textiles divisions — statement.
Further further reading
For the commute home or while stockpiling garments,
- Retrieving Madoff’s funds is set to cost $1.3bn.
- An economic growth agenda for Egypt.
- Who needs 100-years when we could have GDP-linked bonds?
- “Government of the rich,
Chart du jour, cross-border M&A edition
2011 has seen the biggest start for global M&A in a decade.
And this chart from Credit Suisse on Thursday neatly captures the story so far:
Rich world, bring us your minerals…
Related links:
Offshore adventures in Chinese property
With bank credit being tightened across the country it seems clear that China’s property developers increasingly desire to fund via the bond markets.
Some, though, have been increasing bond sales more than others.
The LSE’s millennium bug
The London Stock Exchange has (finally) broken its silence on those migration issues. And surprise, surprise they are not to blame.
The London Stock Exchange’s UK cash markets successfully migrated to the Group’s new ultra-low latency trading platform,
US banking stress tests 2.0 – an update
Aka — could your desire to release dividends survive a double-dip?
FT Alphaville reported back in November that the US Federal Reserve was looking at whether bank holding companies could distribute capital again without putting themselves — and everyone else — in danger.
The eurozone’s €15.8bn fat finger?
Marginal Lending from the European Central Bank … to the moon!
(And a big H/T to Lorcan Roche-Kelly at Corner Turned for the above chart)
Use of the ECB’s emergency overnight lending facility jumped to €15.8bn on Wednesday — the highest figure since June 2009 — when the thing was first started.
CPI climbs just a bit more
The US Consumer Price Index climbed 0.4 per cent in January, and the core number was up 0.2 per cent. Each was slightly above consensus, with two thirds of the increase in the headline number driven by food and energy prices.
Intra-European imbalances
From BNP Paribas’ FX team on Thursday — an update on Europe’s current account:
Related link:
From a three-speed Europe to a structurally-cracked eurozone - FT Alphaville
MERS tells members not to foreclose in its name
Fresh from Mortgage Electronic Registration Systems (MERS) on Wednesday — what looks like some (they say temporary) capitulation in the face of legal setbacks.
MERSCORP — which acts as a centralised and electronic registry for about half of the mortgages in the States — issued the below mid-week statement to its members:
Another bank non-call, an entirely new reaction
Cast your minds back to the (heady) final days of 2008 — when Deutsche Bank rattled the bond market by opting not to call one of its Tier 1 subordinated bonds.
The decision spooked bank debt investors.
Econ bloggers still cool (on the economy)
The latest Kauffman Foundation survey of economics bloggers lacks the wisdom and perspicacity of FT Alphaville has just been released.
Like the Fed, our compadres throughout the interwebs have become increasingly optimistic about the US economy since the last survey,
Markets Live transcript 17 Feb 2011
Markets Live chat transcript for the chat ending at 12:24 on 17 Feb 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola markets rabble NHand welcome to Markets Live
Selling England by the pound…
… is the title of the 1973 album from ‘prog rockers’ Genesis, and it also sums up the UK’s inflation problem, according to Bank of England hawk, Andrew Sentance.
In a speech at the Institute of Economic Affairs ‘State of the Economy’ conference on Thursday,
Time to go bargain-hunting in the retail sector?
Probably not with cotton futures now through $2/lb.
Richard Koo goes unconventional on China
Nomura’s Richard Koo — he of ‘balance sheet recession’ fame — has been inspired.
He’s spent a week with Chi Hung Kwan, of the Nomura Institute of Capital Markets Research and an all-around China expert,
Long-term fiscal relief for Mervyn
UK inflation and growth are massively uncertain.
They’re massively uncertain in part because UK fiscal austerity is massively front-loaded, and likely to be rather painful. Sharp rate increases would then be tricky for home-owners who’d already be squeezed,
Armageddon Bank
Amagerbanken is a small bank in Denmark — but its failure could end up having big consequences for investors in bank debt. It might end up being a relatively rare instance of a bank’s senior unsecured investors (and depositors) taking a hit.
Further reading
Elsewhere on Thursday,
- How Goldman killed AIG.
- Why isn’t Wall Street in jail?
- The cocktail party market indicator.
- Exchange politics, the Germans are worried.
- Rationality breaks out in the hedge fund world.