March, 2011
Goldman Sachs says Tips mean (gold) prizes!
Take a close look at this chart from Goldman Sachs:
See the (until recent) correlation between an inverted US 10-year Tip (Treasury Inflation Protected bond) rate and the Comex gold price?
It’s a point Goldman Sachs has made before,
US Markets Live transcript 18 Mar 2011
Markets Live chat transcript for the chat ending at 15:01 on 18 Mar 2011. Participants in this chat were: Cardiff Garcia John McDermott thereformedbroker Neil Hume, FT CGGooooood morning Rabble
The usual Portuguese bond gyrations
Rumours flew in the market on Friday that the ECB was back to buying Portuguese government bonds.
Well, if they did, and managed to push down Portugal’s sky-high yields for a bit, it appears the yields promptly fought back:
Who’s been buying Japan like crazy?
Here’s an about-turn for the books:
That chart’s from Reuters, and according to the newswire, investors pumped a record $956m of new cash into Japanese equity funds in the week ended March 16.
The majority of those flows headed into the iShares MSCI Japan fund,
The ripple effect reaches local US governments
The municipal bond market has calmed in the last two weeks as the flight from disaster ushers in a return to relatively safe havens.
But as two annual reports released by Moody’s on Thursday make clear,
SocGen on a ‘reasonable worst case scenario’ at Fukushima
It’s a worse-case scenario — Japan’s “slow motion” Chernobyl.
But not necessarily an unreasonable one.
And Societe Generale’s Friday research is based on comments from UK chief science officer professor,
Markets Live transcript 18 Mar 2011
Markets Live chat transcript for the chat ending at 12:39 on 18 Mar 2011. Participants in this chat were: Neil Hume, FT bryce.elder
NH
Morning rabble
NHI am back safe and sound from Cheltenham
Egypt’s MSCI countdown
Tick tock, tick tock.
Egypt faces another problem.
If the Cairo stock exchange does not reopen by the end of the next week, it could be kicked out of the MSCI regional indices (that’s Emerging Markets,
Not just a no-fly zone [updated]
Update (1245 UK time): Hold the prospect of any military action for a while, it looks like — flashes via Reuters:
RTRS-LIBYA DECIDES TO HALT ALL MILITARY ACTION-LIBYAN FOREIGN MINISTER
RTRS-LIBYA ACCEPTS THE UN RESOLUTION FOR AN IMMEDIATE CEASEFIRE – LIBYAN FOREIGN MINISTER
RTRS-LIBYA ENCOURAGES OPENING OF ALL DIALOGUE WITH ALL SIDES
No word yet from Gaddafi himself,
Sunrise over Erbil
Just in from Kurdistan, the first pictures of Gulf Keystone’s Shaikan-2 well.
(click for the full slide show).
Now, those pictures actually aren’t anything to worry about. In fact they are positive.
The Kaupthing share support operation
You’ve read the story in the FT…
Lawyers acting for the UK arm of the collapsed Icelandic bank Kaupthing, which is at the centre of a fraud probe, have withdrawn a request to retail entrepreneur Kevin Stanford to repay nearly $2m (£1.2m) as part of efforts to recover funds owed to the bank….
Pointing out Japan’s (Pfandbrief) effects
Pfandbrief, ultra-boring — yet they never cease to surprise in a crisis.
Did you know, for instance, that the bond structures beloved by German banks have some exposure to Japan? Granted, it’s not much — but we think it’s surprising.
Those European stress test details
In case you forgot that other crisis…
The European Banking Authority has just published parameters for the upcoming European bank stress tests. A first glance has them about as meek as expected.
Major points and assumptions below:
G7 yen intervention: A ‘one-day wonder’?
Extraordinary times indeed call for extraordinary measures. When the yen surged more than 4 per cent in less than an hour to a fresh post-war low of Y76.25 on Thursday, it was clear that something had to give.
Further reading
Elsewhere on Friday,
- Why currency interventions never work.
- Do we need big banks?
- The peculiar economics of event ticketing.
- Uh oh, no more sushi!
- The NYT paywall arrives.
- The Geiger counter fund is not doing well.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Trevor Houser: Oil-hungry China needs energy security rethink
Beijing’s decision to suspend approval for new nuclear facilities in the aftermath of the Japanese nuclear crisis caught world markets by surprise and suggested a Chinese energy policy in crisis,
Snap news
Breaking pre-market news on Friday,
- France’s Lactalis declares 11.4 per cent holding Parmalat; seeks boardroom representation — report.
- Gulf Keystone Petroleum says substantial oil flare from Shaikan-2 visible from office in Ebril — statement.
Intervention!
While you were sleeping…
Statement from the G7: (emphasis ours)
‘We, the G7 finance ministers and central bank governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.
UN Libya NFZ resolution — with added asset freezes [updated]
Update (11:41pm, GMT): The UNSC vote passed with 10 nations in favour, plus five abstentions including Russia, China and Germany.
The UN Security Council is voting on a new resolution that would endorse a no-fly zone over Libya and the use of force to protect civilians from attacks by Muammer Gaddafi’s troops.
Further further reading
For the commute home, good luck with the St Patrick’s Day crowds,
- Highlights from the WaMu lawsuit.
- Is Germany’s labour market miracle really a mirage?
- The hollowing out of the US labour market.
Prepare to buy Japan… with both hands
So says SocGen’s resident value investor Dylan Grice, who doesn’t go in for saloon bar nuclear physics.
From his latest ‘Popular Delusions’ note:
Something I’ve found striking watching the endless interviews with nuclear experts on the various TV news shows has been their confidence that there won’t,
Tomorrow: US Markets Live, Reformed Broker edition
From Cardiff Garcia and John McDermott
We promise to stop sending out these reminders once we’ve beaten you into submission and broken your will to withstand our hectoring at some point, but as it’s still early…
Beware the simple sectarian story in Bahrain
In Bahrain, 5-year CDS spreads are widening as the violent crackdown continues. Sheikh Ali Salman, the leader of Al-Wefaq (the largest of the protest groups), called for the withdrawal of the 1,000 or so Saudi Arabian security forces that arrived on Monday.
UN (finally) to vote on Libya no-fly zone
It’s taken a while, but Thursday afternoon should see a UN Security Council resolution (click here to read the draft) to endorse a no-fly zone over Libya and to “take all necessary measures to protect civilians and civilian objects in the Libyan Arab Jamahiriya”.
Mrs Watanabe fears a global market dislocation
Talk of Japanese investors repatriating their foreign exchange holdings continues.
And with headlines like “Japan’s Mrs. Watanabe says: ‘hold off on carry trade,” how could it not? Hold the thought,
The headline-core CPI gap
Well, the warning signs were all there in this week’s earlier releases.
Import prices in February climbed much faster than expected, as did producer prices, and the Federal Reserve adjusted the language in its latest FOMC statement to reflect the “upward pressure”
PRDCs, the 30-year swap spread and Japan
FT Alphaville has already cautioned about the chaotic effects the Japanese crisis is having on variance swaps. But here’s another potential (derivatives) spillover.
It’s the effect on “Power Reverse Dual Currency Notes”
The situation in Tokyo, a view from the ground
The US embassy website said it all about the situation in Japan on Thursday:
The U.S. Embassy in Tokyo informs U.S. citizens in Japan who wish to depart that the Department of State is making arrangements to provide transportation to safehaven locations in Asia.