March, 2011
Things fall apart, Portugal edition
The Portuguese sovereign’s access to funding has been a-ok thanks to the European Central Bank’s liquidity ops. That of its banks and corporates — not so much.
Off Bloomberg:
March 21 (Bloomberg)
Japan’s supply-chain loss, Europe’s gain?
The supply chain issue affecting Japan appears to be getting much worse than initially expected.
For example, as Reuters reported on Tuesday, a shortage of parts is now threatening to force Sony to cut production or suspend output at five more plants in Japan.
Further reading
Elsewhere on Tuesday,
- The fuel rods and the sea.
- The rise of the HFT machines continues.
- A 60-year look at muni-bond ownership in America.
- Is the AT&T/T-Mobile deal the most complex one ever?
- Here comes $4 gasoline.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Hotheads, fainthearts and Gaddafi
The argument over whether to fight in Libya had many aspects to it – ideology, national interest,
Snap news
Breaking pre-market news on Tuesday,
- Punch Taverns to spin off managed pubs business, Spirit — statement.
- Forth Ports recommends £16.50 a share offer from Arcus European Infrastructure Fund — statement.
Further further reading
For the commute home, unless your iPhone’s AT&T coverage remains terrible (which it does) and therefore you can’t read this yet,
- The Fed has five days to release details of emergency loans it made to banks in 2008.
The yen and economic fundamentals
How do we know that foreign funds are being repatriated into Japan? Because the yen strengthened against the dollar after the earthquake and until the G7 intervened. Why did the yen strengthen? Because funds were being repatriated,
US deleveraging isn’t just about defaults and charge-offs
So the New York Fed is now blogging, and its first post happens to be about one of our favourite topics, consumer deleveraging.
More specifically, the authors scrutinise the Consumer Credit Panel report in an effort to discern how much of the deleveraging since the crisis is the result of households actually paying down debt rather than defaulting on various types of loans.
Why no Canadian, Australian housing busts?
Here’s a chart to ponder from the peer review of residential mortgage practices, just published by the internationally-coordinated Financial Stability Board:
Set aside Switzerland and the Netherlands.
Oil and the cash battle in Libya
Coalition forces over Libya are not trying to kill Gaddafi, or to co-ordinate air strikes with the rebels, the Pentagon said on Sunday.
Assuming that’s true…
We could get a long war. In that case,
The incredible increasing EFSF
Remember the incredible shrinking EFSF?
Europe’s bailout fund had a nasty but predictable habit of decreasing every time another troubled eurozone peripheral hit it up for cash. But forget it — for now.
Watching Japan’s return from Oz
The repatriation effect on the yen is being closely watched by analysts all over the world following the Tohoku temblor and subsequent Bank of Japan intervention.
As most have commented this is on account of the patterns that followed on from Japan’s Kobe earthquake in 1995,
Irish mortgages everywhere – but not a one to collateralise with?
So. This is an interesting chart:
Those are covered bond details for AIB Mortgage Bank, part of troubled Irish bank, AIB. Focus for a second on the two overcollateralisation figures — which are basically the degree to which the bank’s covered bonds are overstuffed with assets.
Markets Live transcript 21 Mar 2011
Markets Live chat transcript for the chat ending at 12:29 on 21 Mar 2011. Participants in this chat were: Neil Hume, FT bryce.elder
NHHola rabble
NHand welcome to Markets Live
Japan, to buy or not to buy?
It’s still early days yet on the “what next” question about Japan, but as we noted on Monday, there are some intriguingly counter-intuitive lines emerging on the question of whether to ‘buy’ (or ‘sell’) Japan in the wake of the devastating March 11 earthquake and tsunami and ensuing crisis at the Fukushima nuclear power plant.
China’s missing M2
Have you seen China’s missing M2 monetary measure?
The thing seems to have gone missing, at least in its old form, from its past two iterations. According to the latest data from the People’s Bank of China,
Deutsche Telekom’s win/win deal
Wow!
The price action in Deutsche Telekom on Monday morning:
That’s a rise of 12 per cent for the €40bn company.
Make no mistake, the deal to sell its struggling US business to AT&T for $39bn in cash and stock is an excellent one.
The Bank of Japan’s big chance
Just when I thought I was out, they pulled me back in.
Into a global liquidity push, that is. Even as other central banks are very slowly heading for the exits (again?), the Bank of Japan last week unleashed some ¥28,000bn of liquidity as it sought to avert an earthquake-sparked credit crunch.
Psst, chancellor
Ahead of this week’s ‘pro-growth’ but pro-austerity UK budget, comes a no-growth finding from the Institute for Fiscal Studies:
We are used to our incomes rising over time. Since 1961, median (middle) household income before housing costs in the UK has increased by 1.6% per year on average.
Further reading
Elsewhere on Monday,
- Crude’s watchdog is ready to bark.
- “You can’t build a car with 97 per cent of the parts.”
- Japanese mafia to the rescue.
- Get genetic screening for your financial advisor?
- Chinese reverse mergers,
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Robert Skidelsky and Felix Martin: A way out of Britain’s growth dilemma
As he prepares for Wednesday’s Budget, the UK’s Chancellor George Osborne faces a dilemma,
Snap news
Breaking pre-market news on Monday,
- Swiss Re estimates Japan claim costs at $1.2bn – statement.
- Deutsche Telekom planning €5bn buyback following sale of US business — statement.
- Gem Diamonds in preliminary merger discussions with Lucara Diamond Corp — statement.
Tokyo: A view from the ground, Part II
“Let them eat (radioactive) spinach….”
Further to our earlier ‘view from the ground’ in Tokyo, here’s an update of the situation on Sunday night:
In the devasted and freezing regions around the crippled Fukushima nuclear power plant northeast of Tokyo,
FTfm on AV
Some highlights from Monday’s FTfm.
Investors fear default in Europe
Institutional investors increasingly believe Greece and other troubled peripheral European countries will be forced to restructure or default on their debt,
Further further reading
For the commute home, we wish you a great weekend,
- Treasury + Fed = better QE.
- Gulf SWFs are adopting more active investment strategies.
- Is the dismal science really a science?
- March Madness,
Bank dividend day
And so it begins, again.
No surprise that the KBW Bank Index and the financials component of the S&P 500 both beat the broader index (red line below) on the day:
We’ve known that Bank Dividend Day was coming since last November,
100,000-year ‘tail risk’
Ever wondered why there was so much spent fuel in water pools around the Fukushima nuclear plant? We have.
Only we’d never realised the answer’s striking lesson (metaphor?) for tail risk in financial — especially,
The Bank of Japan – almost back to 2004 numbers
The Bank of Japan unleashed ¥28,000bn ($345bn) of fresh liquidity through its emergency quantitative easing operations over the course of the past week.
Which means we’re already not far off from the ¥34,000bn that the central bank was pumping into the market at the height of its QE programme back in 2004/2005.
Fallout from a flock of Black Swans
What’s that saying?
You wait for a Black Swan for ages and then three show up at the same time?
Citi FX strategist Steven Englander noted last week — just a few days before Japan’s disastrous earthquake sent asset prices swinging — that “investors are tired of being told to hedge against risks that have not emerged.”
Who’s exposed to Japan?
So it begins.
The first research we’ve seen quantifying European bank exposure is out to Japan following last Friday’s terrible earthquake and subsequent nuclear problems is out.
It comes from BNP Paribas and it uses the dreaded BIS statistics (So FT Alphaville’s standard disclaimer about the numbers applies) to come up with aggregate figures.