February, 2011
GDP growth and equities: a match made in… nowhere?
The Atlantic spots an interesting outlook piece from the Goldman Sachs private wealth group, which argues there is a “negligible, if not zero” chance the US will suffer a Japan-style lost decade (or two).
Prepare for a major market over-reaction
Albert Edwards is back – back, that is, from his annual search for January sun to counter the effects of Seasonal Affective Disorder (SAD).
And the sojourn looks to have been partly successful. Obviously the Soc Gen strategist remains bearish — he reckons the long-term downtrend in 10-year bond yields is under serious threat.
Goodbye, Mr Mubarak
Update: A snap from Reuters — CABINET SPOKESMAN TELLS REUTERS DECISION ABOUT EGYPT’S PRESIDENT STAYING OR LEAVING DUE IN HOURS
Breaking at pixel time — the Egyptian army appears to be levering the country’s president out of power:
It’s midnight in Tokyo
…and that must mean the yen is weakening. Interesting observation from Nomura’s foreign exchange analysts:
The secret behind the yen’s outperformance relative to US rates is likely to be found in Tokyo.
Claims-ian economics
Good news from the US Department of Labor Thursday morning as initial claims for unemployment insurance fell sharply last week:
In the week ending Feb. 5, the advance figure for seasonally adjusted initial claims was 383,000,
Return of the ECB bond purchases…
After a two-week hiatus, the European Central Bank is back; reportedly intervening to buy up Portugese bonds on Thursday after yields on the Club Med debt surged.
Markets Live transcript 10 Feb 2011
Markets Live chat transcript for the chat ending at 12:20 on 10 Feb 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHBonjour NHand welcome to Markets Live
The Bank of England’s big dilemma
All eyes on the Bank of England ahead of Thursday’s rate decision.
With inflation persistently above the Old Lady’s target, and with a couple Monetary Policy Committee members voicing their dissent over recent rate decisions,
Portugal, unmoored
Over in a quiet corner of the eurozone — Portugal’s government bonds have been slowly getting worse:
Yields on five-year and ten-year debt have been hitting fresh eurozone lifetime highs in recent days.
ARM(ed) and dangerous
Chip designer ARM Holdings is under pressure on Thursday morning.
And that’s a little surprising given the overnight news from one of the world’s biggest PC makers.
During the launch event for its new tablet and smartphones (featuring Serena Williams on stage,
PetroChina goes where BHP failed to tread
PetroChina on Wednesday gobbled up another chunk of the world’s resources, agreeing to pay C$5.4bn ($5.4bn) for a 50 per cent stake in a large natural gas field in Canada owned by Encana, the Calgary-based oil and gas producer.
Next up for Xchanging, a cash call?
How’s this for a feeble dead cat bounce?
Pretty pathetic huh.
But not entirely surprising given Wednesday’s car crash profit warning, CEO departure, goodwill write-down, etc. from the business process outsourcer.
Ambani’s $2.6bn worth of negative publicity
It’s more diabolical than any dark scenario of a Bollywood plot. As India’s stock market investors watched in disbelief, Anil Ambani saw a whopping $2.6bn wiped off the value of his Reliance ADAG group of six publicly-traded companies in a single day on Wednesday.
Return-free risk
Chart via JPMorgan’s Global Asset Allocation team:
As they explain further:
Bond sectors that were traditionally considered “safe” are no longer “safe”, inducing bond investors to rethink both their portfolios and risk management.
Further reading
Elsewhere on Thursday,
- Any VaR position is prop trading. Discuss.
- Leveraged loans alert: ‘I’m going to ring the bell’.
- Just how close did Morgan Stanley come to going under?
- Don’t buy stocks and volatility together.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper – Huffington is right to take the cash
Arianna Huffington and her fellow investors took almost all their money from AOL’s $315m acquisition of the Huffington Post in cash rather than AOL stock,
Snap news
Breaking pre-market news on Thursday,
- Rumoured takeover target Smith & Nephew says CEO to retire in April; Olivier Bohuon of Pierre Fabre to get top job — statement.
- Credit Suisse misses profit forecasts;
SEC probes ‘ETF-stripping’ by insider traders — FT
From the FT’s Kara Scannell on Thursday morning:
The Securities and Exchange Commission is investigating whether Wall Street traders are using exchange-traded funds as a means of disguising insider trading.
Further further readiing
For the commute home,
- Planet Money does Dodd-Frank rule-writing.
- In praise of Bernanke.
- What a few startups say about the future of jobs and technology.
- A roundup of the week’s economics papers.
Fact du jour, mortgage loan mod edition
Out of Ohio State University, and unlikely to surprise anyone (HT Mark Thoma):
Researchers found that mortgages owned by lenders were 26 to 36 percent more likely to be renegotiated than very similar mortgages that the original lenders sold to other companies,
The metamorphosis of the muni market
Wednesday’s House hearing into state and municipal debt had a touch of the “Scottish play” about proceedings.
When Meredith Whitney was finally mentioned, Chairman Patrick McHenry quipped that the rules had been broken.
EM debt markets and capital flows freak-outs
A tip of the top hat to the excellent Sid Verma of FT Tilt, who sends us to a recent paper by PineBridge Investments analysing the state of emerging market debt as an asset class.
Consistent readers will remember that we’ve been trying to keep a watchful eye on the capital flows story,
Conspiracies and a lack of contango in silver
It’s finally happened.
Last week silver on the Comex closed in a nearly-complete state of backwardation — that curious situation where the price for future delivery of the metal is lower than for immediate delivery.
Domesticating the debt
Forget Europe’s PIIGS. How about the big (American) hog?
Bob McKee of Independent Strategy, and author of ‘Sovereign DisCredit,’ makes the case in an eight-page note out on Wednesday. It’s worth taking
UK banks sorcery
The Government today welcomed the commitment by the UK’s biggest banks on lending expectations and capacity, the size of the 2010 bonus pool, pay disclosure and support for regional growth and the Big Society.