March, 2011
Further reading
Elsewhere on Tuesday,
- The Japan syndrome.
- Nikkei in freefall.
- Uranium stocks take a thrashing.
- There are limits to arbitrage and hedging in commodities.
- Why is Egypt’s exchange still closed?
- A pact for the euro.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Nick Butler: Nuclear power halted in its tracks
For the energy sector as a whole, events in Japan complicate an already divergent story, writes Butler,
Snap news
Breaking pre-market news on Tuesday,
- Japan says spent fuel storage pond was on fire at an earthquake-stricken reactor – Reuters.
- Lancashire Holdings says premature to estimate indicative reserving range for Japanese earth quake — statement.
Panic in Japan
By Cardiff Garcia and John McDermott
The Nikkei 225 had fallen roughly 13 per cent on Tuesday just before pixel time after panic gripped the country on fears of a radiation leak. The Bank of Japan has offered to pump a further five trillion yen ($61bn) into the financial markets and will continue to offer huge amounts of funds via market operations even if bids are not forthcoming,
Further further reading
For the commute home,
- A collection of economics papers on monetary policy at the zero lower bound.
- Don’t expect hawkish language in tomorrow’s FOMC statement.
- Crisis fatigue.
- A contrarian view on Japan.
Rocky Balboa
FT Alphaville was all set to work through the early morning examining the release of allegedly damning documents relating to the actions of Bank of America Merrill Lynch or its subsidiaries in the ongoing struggle to provide settlements in the foreclosure crisis.
What Japan’s earthquake could mean for reinsurers – part two
A guest post in two parts by Paul J. Davies, the FT’s insurance correspondent. This is part two.
So, to the really interesting question, how long will any upswing last and what might it look like? Here’s a chart from Guy Carpenter,
What Japan’s earthquake could mean for reinsurers – part one
A guest post in two parts by Paul J. Davies, the FT’s insurance correspondent. This is part one.
There are two big questions for reinsurers following the Japan quake. Number one: will it put a floor under the weak pricing for catastrophe risk of recent years and even lead to sharp increases? Number two,
The surprise party is over
A chart courtesy of JP Morgan Asset Management on Monday:
That’s the Citigroup Surprise Economic Indicators Index, calculated daily to reflect how economic indicators have performed against consensus expectations during the prior three months.
Shorting Japan with ETFs
No prizes for guessing what triggered this halt on short-selling. From Reuters on Monday:
Several Japanese Exchange Traded Funds (ETFs) triggered the newly created short-sale restriction shortly after the market’s open on Monday.
The need for an IOER-fed funds spread
Here’s an interesting view we caught sight of in Bank of America Merrill Lynch’s latest ‘US rates weekly’ note.
The Fed’s interest on excess reserve (IOER) policy — which currently pays out 25 bps
A quick look at the US nuclear sector
With Japan’s nuclear crisis still uncertain, analysts on Monday began to tentatively assess the potential read across to sectors, companies and funds in the US.
Research reports from Citi and Credit Suisse both look at risks to the nuclear sector from fears of a seismic disaster in the US and from increased regulatory and/or public scrutiny.
Weirdo bond-buying in Europe
Lest it be overshadowed — Europe’s bailout fund will finally be given an effective lending capacity of €440bn, judging by an EU summit decision. Long awaited, this…
Lest it be forgotten, however — the bond-buying feature they’ve also come up with for the EFSF and the ESM on the side.
The UK’s Japanese natgas exposure
As we reported earlier, liquefied natural gas (LNG) cargoes are being diverted to Japan to help it overcome its fuel shortages.
This, though, is having an impact on European natural gas prices — British national balancing point (NBP) prices in particular.
Super-catastrophe and super-banking risk
We ♥ John Hempton.
So we thought we’d present the Australian hedge fund manager’s latest thoughts on the financial fallout (no pun intended) from Japan’s devestating earthquake:
Warren Buffett once said that Fannie Mae had more supercatastrophe risk in it than Berkshire Hathaway.
Japan’s ever more exposed nuclear plant
Fukushima Daiichi has now become the focus of Japan’s earthquake fallout.
So far authorities have been at pains to point out that the nuclear plant, owned by Tepco, will not be the next Chernobyl. The primary containment area of the reactor remained intact — even if the secondary containment was broken apart by Saturday’s explosion.
How stress tests make Europe’s bank funding worse
Set aside those unrealistic macroeconomic assumptions in Europe’s stress tests.
Focus instead, on the complete lack of a sovereign bond ‘shock; in the 2010 version. And that’s despite the whole sovereign-bank loop thing,
Markets Live transcript 14 Mar 2011
Markets Live chat transcript for the chat ending at 12:24 on 14 Mar 2011. Participants in this chat were: bryce.elder Izabella Kaminska Tracy Alloway Joseph Cotterill, FT BEHello London.
Greek debt: restructured
Given questions over Irish sovereign credit events (for which there’s full background here, via Lorcan)…
…Did anyone notice this weekend’s Greek debt restructuring?
It’s ‘only’ the official EU and IMF loans that have seen terms altered following Friday’s EU summit.
Time to start watching the uranium-fossil spread
If energy markets were ever confused, it’s now.
On the one hand the Japanese earthquake immediately implies bearishness for crude oil on account of lower demand. On the other hand it implies a hike in demand for refined products.
Japan’s megabank-bond tremors
This is not your typical Japanese government bond post.
After Friday’s almighty earthquake, Japanese government bond futures rallied (the cash market was closed immediately after the event), reportedly on safe haven demand.
Japan: The markets react
The initial equity reaction to Japan’s tri-catastrophe crisis (earthquake, tsunami, nuclear disaster fears).
In Japan the Nikkei is down over 6 per cent:
As might be expected Tokyo Electric Power company – operator of the troubled Fukushima nuclear power plants – was among the top losers on Monday,
Don’t compare Sendai quake to Kobe, Nomura FX analysts say
Recent exchange action between the Japanese yen and the US dollar:
It’s a tangled currency web woven largely by insurers.
Risk modeller AIR Worldwide said over the weekend that insured losses could be $14.5bn to $35bn,
Spotted on the Isda website… [updated]
And specifically, in the Isda Credit Derivatives Determinations Committees section:
There’s about $4.15bn worth of (net notional) CDS on Ireland, according to the DTCC.
Update: For reference, the request was submitted anonymously,
Further reading
Elsewhere on Monday,
- Are the world’s megacities too big?
- This is how QE really works.
- Why not to worry about Japan’s nuclear reactors.
- A yen reversal for Japan.
- Banking and super catastrophe.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Peter Tasker: Japan is rich in resilience
If 1995′s Kobe earthquake meant sayonara to the myths of official omnipotence and industrial supremacy,
Snap news
Breaking pre-market news on Monday,
- Explosion at Japan thermal power plant in Fukushima-Jiji – Tepco statement.
- Tepco says sees 330,00 households affected by rollover blackout – Reuters.
- Munich Re says too early to estimate losses in Japan – statement.
Bank of Japan to the rescue with ‘thoroughly considered’ action
As suggested on Friday, the Bank of Japan is getting ready for some “thoroughly considered” action in the wake of Friday’s devastating 8.9-magnitude earthquake and tsunami in Japan’s northeast.
On the weekend,
FTfm on AV
Some highlights from Monday’s FTfm.
DC pension savers head for poverty
People in such schemes have lost an average £10,000 a year of future retirement income over the past decade and will need to save a third of their salary to make up the shortfall,
Further further reading
For the commute home,
- More analysis of the crisis at Fukushima.
- Tarp, by the numbers.
- Reuters reports that the Fed, as soon as next week, may let banks pay dividends again.
-Henry Blodgett on John Doerr,