March, 2011
Where is Charlie Sheen’s CFTC comment?
The FT’s Jeremy Grant flagged up an interesting development in the CFTC position limit story via a video interview with Adam Sussman, head of research at Tabb Group.
According to the latter the actor Charlie Sheen — or at least someone calling himself Charlie Sheen –submitted in March a meticulously worded comment to the CFTC on the subject of silver market position limits.
Back to the future with Europe’s stress tests
There are plenty of strange things about Europe’s banking stress tests. Notably, the idea of engaging in a test which is meant to assure nervous investors with its rigorousness — but not frighten them too much by actually finding big problems.
The £160m FTSE 100 company
The highlight of the latest FTSE reshuffle?
The almost certain promotion to the FTSE 100 of an investment adviser that generated sales of just £160m last year.
Based on Tuesday’s closing prices,
Running for covereds – but not for long?
The story of bank funding in 2011 so far, in a single chart:
The chart is from UBS banking analysts Alastair Ryan and John-Paul Crutchley. While bank debt issuance has been slightly ahead of maturities so far this year — most of it has come in the form of covered bonds.
Further reading
Elsewhere on Wednesday,
- Charlie Sheen dials the CFTC.
- Directives from China’s ‘Ministry of Truth’ leaked.
- Farmers love Twitter. And so do commodity traders.
- The economics of pricing yourself out of the gas market.
Pink picks
Comment, analysis and other picks from Wednesday’s FT,
Martin Wolf: Why the eurozone will survive
On December 16 2010, European heads of government solemnly declared they were “ready to do whatever is required” to protect the eurozone,
Snap news
Breaking pre-market news on Wednesday,
- Rolls-Royce and Daimler launch joint bid for Tognum; offer pitched at €24 a share — statement.
- Lloyds Banking Group announces management shake-up — statement.
Further further reading
For the commute home, or while wondering about Farhat Omar Bengdara’s whereabouts,
- The governor of the Libyan central bank is missing.
- The latest Montier paper.
- Reducing the systemic risk in shadow maturity risk transformation.
Naked CDS and political nudity – a report
A timely piece of research, this.
Presented without comment, the European Union’s official – though unpublished – account on the nature of the sovereign CDS market, its impact upon bond spreads, both theoretical and empirical,
For the millionth time, naked CDS is not the problem
CDS liquidity –> lower yields –> lower cost of sovereign funding. Without protection, many are less likely to buy in the first place, pushing up borrowing costs.
We’ve said it before.
The man who sells the UK’s national debt said it again last week:
QE as ‘shock therapy’
Most of the world’s focus is on Libya-related contagion spreading into other Middle Eastern countries and kingdoms.
But, suggests a report from Standard & Poor’s research arm on Tuesday, it may be time to start looking a little further afield.
Introducing: US Markets Live, every Friday at 10am EST
Like a decent payrolls report, this has been a long time coming.
On Friday, FT Alphaville will launch the first US edition of our popular real-time service, Markets Live.
The Yankee version of Markets Live will be a little different from the daily chat hosted by Neil Hume and Bryce Elder in London.
China’s yuan-child policy, relaxed
Relax, kids: a demographic tidbit from Citi’s emerging market round-up on Monday:
China will relax the one-child policy in five provinces this year and probably switch to the two-child policy within five years.
Hedging the Sauds
How to hedge the Saudi monarchy?
We’ve asked it before on FT Alphaville, given how unrest would throw the oil market into extreme volatility. We’re sceptical you could even try, but we’re sure there’s more to it than the ‘all bets are off’ line we often hear about the prospect of Saudi protests.
Greek spreads… the day after the downgrade
The 10-year spread is wider by almost 47 basis points following Monday’s three notch move by Moody’s. Chart via Citi:
Shares in National Bank of Greece (heavy bond exposure) were down 5.76 per cent at pixel time.
From dollar debate to playground insults
Roll up, roll up.
See a Federal Reserve economist call anti-Fed campaigner and congressman Ron Paul a “pinhead” in the course of reviewing Paul’s 2010 book, End the Fed.
Writes the St. Louis Fed’s David Andolfatto:
The Chinese debt shuffle
Chinese regulators have relaxed the extra reserve requirements they had imposed on some banks in 2010 to stop too much lending, says Reuters.
So goodbye, crazy Chinese lending growth?
Maybe ask the head of the planet’s biggest bank first (via China Daily):
An explanatory CoCo death spiral
Investors are tired of hedging against unrealised tail risks. That much we know.
What happens, though, when that tail risk does emerge and investors rush to hedge the unthinkable, once it’s a bit more thinkable? Please meet the CoCo death spiral.
The Saudi capacity puzzle
Could Saudi Arabia be telling porkies when it comes to its spare capacity capabilities?
It’s something Goldman Sachs analysts are wondering on Tuesday.
For example, they’ve deduced — from reverse-engineering the kingdom’s production levels — that Saudi may have raised output before the crisis in Libya ever broke out.
Markets Live transcript 8 Mar 2011
Markets Live chat transcript for the chat ending at 12:20 on 8 Mar 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola markets rabble NHand welcome to Markets Live
Black Swan fatigue
Black·Swan·Fat·igue (n. Abbr. BSF) A form of investment and/or risk management lethargy. Symptoms: General disinclination to hedge against ‘tail risk’ events. An unerring belief that sloshing global liquidity and cooperative policymakers will abet the recovery.
The meaning of entrepreneurship
The Kauffman Index of Entrepreneurial Activity (KIEA) released on Monday reports that the 2010 US “entrepreneurial activity rate… represents the highest level over the past decade and a half.”
Swell — but what does this actually mean?
The KIEA measures rates of new business formation using the Current Population Survey (CPS).
Further reading
Elsewhere on Tuesday,
- Why there will be QE3 and QE4.
- Trading at picoseconds now, or not?
- The economics of the Business Insider model.
- Will Volcker have the last laugh?
- The velocity of Federal Reserve deposits.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Francesco Guerrera: Monsters that lurk in the shadows of Wall St
Lobbying campaigns are like New York subway trains: you can hear the rumbling well before they arrive,
Snap news
Breaking pre-market news on Tuesday,
- UK High street sales weakest for two years — report and statement.
- Antofagasta to pay special dividend of $1 a share — statement.
- Betfair maintains earnings guidance;
Further further reading
For the commute home,
- Today in competing Fed president speeches: Fisher says tighten, Lockhart says loosen, in response to rising oil prices.
- Speaking of which, open interest for call options to buy New York crude for June delivery at $200 a barrel is spiking.
A flight to quality to… munis?
That’s what this chart, released on Friday by Citi’s municipal bond team, apparently suggests:
The chart only begins in June 2010, but it shows that Markit MCDX and Markit EM.CDX had been tracking each other for some time before breaking down in late 2010 and early 2011.
A stress test mugged by reality
The thing you want from a bank stress test is for the ‘stress’ to be much tougher than anything that could really happen in reality. A good kitchen-sinking, in other words.
By that standard, European stress-testing is in the toilet.