April, 2011
Snap news
Breaking pre-market news on Friday,
- Hennes & Mauritz same store sales fall in March — statement.
- Elliott Advisors says National Express should consider transformational merger to create UK champion — statement.
Further further reading
For the commute home, where you always over-deliver on expectations,
- Google misses earnings expectations.
- China changes how it reports GDP.
- Meet the Glencore IPO’s bankers. And its winners and losers.
Two more views on inflation expectations
Analysts, it seems, are indefatigable on the subject of inflation expectations these days.
Not that we blame them — we’ve contributed to the cacophony of opinions. And since it’s inflation week here in the US,
A G20 “victory”, part 2
Crossing the Reuters tape a little while ago, it seems members of the G20 have learned to play nice(r) since their last meeting in November:
G20 CONSENSUS REACHED ON CAPITAL CONTROLS AND EXPANSION OF IMF CURRENCY BASKET FOR SPECIAL DRAWING RIGHTS
But more on this in a minute.
The ever-shrinking Budget deal
The House is currently debating and about to vote on the budget deal struck on Friday. But perhaps its members should’ve read the small print.
There was a mini-storm in the Tea Party cup on Wednesday evening when the $38bn of “cuts”
More thoughts on what’s behind low volatility
We’ve pondered before why volatility is currently so low .
One theory we presented was the rise of new strategies to fund tail-risk protection, focused on long-dated far out of the money options, funded by options sales nearer the front.
Bob the bear sees a hard landing ahead
And it ain’t pretty.
Nomura strategist (and former FT Alphaville guest editor) Bob Janjuah is out of hibernation again.
Bob reckons we’re still broadly in a risk-on phase but don’t worry (or, actually,
Interest rate risk hurts — hurts like a 9 per cent market value loss
The mortgage market — lurching from one risk to another, right?
No sooner had Fitch Ratings gotten more comfortable with credit losses than it starts warning on interest rate risk. It’s kind of back to the future for the Mortgage-Backed Securities (MBS) industry too.
Greek-out! Again!
Greek CDS to the moon! And all because of one German finance minister.
(Chart courtesy of Markit)
Wolfgang Schäuble’s cited by Die Welt on Thursday, saying Greece may have to seek debt restructuring if a joint IMF/EU audit in June questions its ability to pay creditors.
European banks by the (NPL) numbers
Out this Thursday — the latest European bank report from PricewaterhouseCoopers.
In it, the accounting firm estimates the region’s banks have more than €1,300bn of non-core loan assets, which are expected to take at least a decade to run off or dispose of.
Markets Live transcript 14 Apr 2011
Markets Live chat transcript for the chat ending at 11:30 on 14 Apr 2011. Participants in this chat were: bryce.elder Neil Hume, FT BEGood morning BEAnd welcome to Markets Live
Blackrock’s prudent collateral approach, no periphery debt please
When it comes to physically-replicated Exchange-Traded Funds (ETFs), the key criticism — if any — usually pertains to providers’ tendency to top-up management fees with stock lending revenue.
The theory is that the practice exposes investors to unnecessary counterparty risk,
This year’s oil bill – $2,400bn according to Morgan Stanley
Crude oil doesn’t necessarily spring to mind when one thinks of natural wealth redistributors.
Yet in 2010 the transfer of income from oil-importing countries to oil-exporting countries amounted to some $1,600bn — or 2.6 per cent of the importers’ GDP.
Key man risk, redefined
Courtesy of consumer goods company Reckitt Benckiser, which has had £1.8bn sliced from its market valuation following the surprise retirement of chief executive and driving force Bart Becht.
Glencore’s trading strategies disclosed!
Courtesy of Glencore’s intention to float filing on Thursday an insight (finally!) into the previously shy commodity powerhouse’s closely held trading strategies.
From the document:
Types of arbitrage strategies Many of the physical commodity markets in which Glencore operates are fragmented or periodically volatile.
Glencore prepares for take-off
After weeks of speculation (and spin) Glencore has finally published its Intention to Float document.
A lot of it is has already found its way into the public domain, but there are some additional nuggets like details of Glencore’s trading strategies (to follow in a separate post).
Bank of Ireland – on the liquidity brink back in January, and err, April
From Bank of Ireland’s just-published annual report for 2010:
The Central Bank requires that banks have sufficient resources (cash inflows and marketable assets) to cover 100% of expected cash outflows in the 0 to 8 day time horizon and 90% of expected cash outflows in the 8 day to 30 day time horizon.
Further reading
Elsewhere on Thursday,
- “Shame on Michael Lewis.”
- Basel III includes reputational coverage ratios for banks.
- Economists who think for themselves? Innovative.
- Peak fish, and other agricultural insights.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Brent Scowcroft: Obama must broker a new Mideast peace
The ‘Arab Spring’ that is flowering in fits and starts in most countries of the Middle East has significantly altered the geopolitical situation in the region,
Snap news
Breaking pre-market news on Thursday,
- Glencore to raise $9bn-$11bn in London IPO — statement.
- BP and Rosneft extend share swap deadline to May 16 — statement.
- Commerzbank prices cash call at €4.25 a share — statement.
Further further reading
For the commute home, where the only industrial policy is your children’s allowance, and returns decline by the year,
- Dani Rodrik vs Russ Roberts on industrial policy and entrepreneurs.
- Karl Marx hearted capitalism.
Cash, oil and barter in Libya
Last month FT Alphaville asked: “Might access to Libyan oil decide the conflict just yet?”
News from both rebel- and regime-held parts of Libya on Tuesday and Wednesday provide a bit more help in answering this question,
Beige Book on the impact of the Japan earthquake
The Fed’s latest Beige Book mostly confirmed what was already known about the US recovery: continuing moderate growth, labour markets gradually improving, raw materials and energy costs putting pressure on prices,
Goldman says there’s been a copper collateral crackdown
You never can tell with Goldman Sachs, can you?
On the one hand they revise their copper market outlook and advise to take profits; on the other hand they claim not to believe in the surplus inventory story.
Now the IMF is warning about ETFs
International regulator conspiracy? Unfortunate coincidence for the ETF industry? Or are regulators finally on to something via the power of group think?
We ask because hot on the heels of the Financial Stability Board’s warning about exchange traded funds on Tuesday comes “Annex 1.7″
Obama’s deficit speech [updated with the full text]
It starts at 1:35pm EST, and we’ve embedded the live video below so that you can watch it here.
Early reports from Reuters are that the president will propose cutting $4,000bn within 12 years and will aim to hit the following targets,
CMBS issuance update and the B-piece buyer problem
In search of further proof that the CMBS market is back, FT Alphaville stopped by a presentation on the topic hosted by S&P on Tuesday. We’re planning a deeper look into CMBS later, but for now here are some data points and trends related to issuance that we picked up while we were there:
Elkjøp – the new name for Dixons
Following its recent profits warning we mused on whether Dixons Retail should consider another re-branding.
One idea was to take on the name of its profitable Scandinavian operation, Elkjøp.
And it seems many a true word is spoken in jest.
Generation U and the greying of UK employment [updated]
The aggregate UK employment figures released on Wednesday were optimistically received although they should have been treated with caution.
The LFS unemployment rate fell to 7.8 per cent from 8 per cent in the three months to February with employment increasing by 143k.