March, 2011
Further reading
Elsewhere on Wednesday,
- Why reactor design in Japan has long been questioned.
- Bon Jovi attacks Steve Jobs.
- Meltdown macroeconomics.
- The Fukushima 50.
- Beware of the coming margin compression.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Japan can meet the earthquake test
Of the pain and anxiety of the human beings buffeted by the forces of nature, I will not write.
Snap news
Breaking pre-market news on Wednesday,
- Porsche faces new $1bn lawsuit from angry hedge funds — report.
- InterContinental Hotels Group says CEO Andrew Cosslett to step down on June 30 — statement.
Moody’s downgrades Portugal to A3 from A1
So concludes the credit rating agency’s latest review of the eurozone periphery, which began in December.
From the Moody’s release on Tuesday evening (extracts):
Moody’s Investors Service has today downgraded Portugal’s long-term government bond ratings to A3 from A1 and assigned a negative outlook.
Further further reading
For the (rather late) commute home,
- If only the Tea Party went downtown.
- Why market aftershocks will continue.
- Tax expenditures would be a good target for deficit reduction.
- A small but rare political protest in Syria.
Meanwhile, in Bahrain…
Call it the first response to the Abdullah-Brehznev doctrine.
The FT reports Tuesday that Bahrain has declared a state of emergency and asked the military to reassert its control over the capital, Manama,
Betting on a Nikkei rebound
Well, tomorrow’s Nikkei surely can’t be any worse than today’s.
As FT Alphaville noted on Friday, the iShares MSCI Japan Index Fund (EWJ) is proving an interesting barometer for investor sentiment about where the Nikkei is heading the next day.
FOMC statement – 15 March 2011
Full release below and here are a few things to note:
– The FOMC reiterated that the fed funds rate would remain low for “an extended period”.
– One change from the January statement was a new line that “concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks”,
Jefferies: limited risk of TSY selloff by insurance companies
The 1995 Kobe earthquake took place on January 17, but it wasn’t until September of that year that Japanese investors became net sellers of US treasuries:
The graph is from Jefferies (HT Anousha Sakoui),
Simply amazing commodity collateral shenanigans in China
Last week FT Alphaville drew attention to a seemingly ingenious financing strategy being implemented by some Chinese commodity firms — the use of copper inventories as collateral for loans.
We only had a few sketchy details at the time,
A quick US morning market round-up
“This isn’t a flight to quality, it’s a flight from disaster.” [Via Bloomberg]
That, from Colin Embree from Bank of Nova Scotia Asia, sums up movements on Tuesday morning.
The S&P was down 1.8 per cent at 1,272 at pixel time.
Libor fixings! UBS subpoenaed for interbank rate
Libor — the interbank rate set by, erm, the banks and curated by the British Bankers’ Association (BBA) — has not been without its critics in recent years.
And the creation of the rate has been also not been without scrutiny.
Isda says ‘no’ to Irish credit event
So that was a quick deliberation on the anonymously-submitted question to Isda, asking whether sovereign CDS should be triggered following Ireland’s bailout:
Supplying Japan’s fuel needs, inventory edition
Media are starting to report on fuel shortages affecting most of the earthquake and tsunami-torn area in Japan, including the capital Tokyo.
With the area having suffered major logistic and transport infrastructure collapse,
Japan’s banks already facing stock losses, CreditSights says
In addition to being big Japanese government-bond buyers, Japan’s megabanks are also (wait for it) heavily invested in equities. Though not as much as they used to be.
There’s a slightly ironic backstory here that has to do with Japan’s very long banking crisis.
Rio Tinto, irony du jour
From the outlook section of Rio Tinto’s freshly released Annual report on Tuesday:
Global demand for uranium is expected to remain strong due to a desire for base load electricity generation with reduced greenhouse gases,
YoYo-ing yen
Some price action in the yen/dollar exchange rate on Tuesday:
And yes, we already have speculation about the Bank of Japan intervening –though RBC Capital Markets’ Elsa Lignos says it was a computer wot did it:
Markets Live transcript 15 Mar 2011
Markets Live chat transcript for the chat ending at 12:24 on 15 Mar 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHand welcome to Markets Live
Homo Britannicus Inflatus [updated]
Desperately chugging the champagne as the lights go out — or, 2011′s new and improved UK inflation basket:
Sparkling wines are also being added due to their increased consumption, showing that despite difficult economic times,
Another market overreaction?
It’s probably not the time to say this, given Tuesday’s sharp sell-off, but are some financial markets overreacting to the Japanese earthquake?
From Nomura:
An annual standard deviation for the Nikkei in just three days! For Nomura’s Owen Job,
Euro nuclear, paralysed and paralysing [updated]
A nasty stasis in shares in E.ON, RWE and EDF at pixel time:
That’s as markets absorb the German government’s suspension of plans to extend the lifespan of nuclear plants in the country. Which might have put around a third each of RWE’s and E.ON’s 2011 clean net income at risk,
China’s Japan syndrome
For those wondering about the wider implications of Japan’s earthquake crisis, don’t go too far. Consider how it will impact China — the country’s top trading partner.
BNP Paribas took a closer look at the effects of ruptured trade flows between the two countries on Monday.
A nuclear primer from BarCap
Here’s a nice piece of research from Barclays Capital.
The UK bank has enlisted the help of a former nuclear safety employee to discuss events at Fukushima Daiichi, the Japanese nuclear plant hovering on the edge of meltdown.
Europe’s secret liquidity goes berzerk?
We already knew Irish banks’ reliance on emergency lending is higher than ever — but how high can it go?:
While the Irish banks’ dependence on ECB funding dropped by another €9bn in February, their use of the Irish central bank’s Emergency Liquidity Assistance facility is estimated to have risen by nearly €19bn (currently standing at €67bn),
Spent fuel leakage confirmed at Fukushima
Here’s the latest on the situation at Japan’s distressed nuclear plant in Fukushima from the IAEA:
06:20 – IAEA SAYS TOLD BY JAPAN SPENT FUEL STORAGE POND AT REACTOR ON FIRE, RADIOACTIVITY RELEASED INTO
Nikkei routed
Via Reuters, the Nikkei’s biggest percentage fall since October 2008 — a staggering 10.5 per cent.
