May, 2011
Snap news
Breaking pre-market news on Friday,
- RBS announces first quarter loss as Ulster Bank takes a £461m hit– statement.
- International Airlines Group says rising fuels costs, Japan earthquake and unrest in North Africa will hit profits — statement.
Rout
A bloody day across the commodities complex.
Further further reading
For the commute home,
- Top 5 reasons the MBS lawsuits are just beginning (HT Shanny Basar).
- Goldman is lobbying hard to weaken the Volcker Rule.
- Weird sentences by David Brooks.
- Gillian Tett on ETFs.
Yen moves, reversed…
The Yen, at pixel time trading at 80.02, since the start of April:
As you can see, the appreciation — which has now more than reversed the decline that followed the G7 intervention on March 18 — has been ongoing for roughly a month now.
Food prices and crop yields
The day’s commodities focus understandably has been on the big oil sell-off, but earlier today the Food and Agriculture Organization also released its April tally for world food prices.
The short story:
Commodity sell-off 2011: is this it?
Some commodity market curios on Thursday May 5, 2011:
Number 1 – Standard deviations.
Courtesy of Reuters’ John Kemp, and regarding the day’s exceedingly epic oil price move (as illustrated below):
When indicators disappoint
For reasons we’ve mentioned before, we don’t frequently write about the US initial weekly claims number — it’s too noisy, frequently is revised later, and it isn’t adjusted for changes in the percentage of the eligible jobless who actually apply for unemployment insurance (the “take-up rate”).
The silver crowd
The wonders of Google auto-suggest, silver vox pop edition:
Which is the perfect lead-in to John Kemp’s excellent take on the generalised commodities sell-off of recent days.
As the Reuters columnist wrote on Thursday:
‘Monitor very closely’
Code word time again. Trichet at Thursday’s ECB rates decision (held, at 1.25 per cent) presser:
With interest rates across the entire maturity spectrum remaining low and the monetary policy stance still accommodative,
When commodity ETFs go wrong…
Olivier Jakob of Petromatrix observes an interesting point on Thursday regarding one of our favourite whacko ETFs, the United States Natural Gas Fund, or UNG for short.
Readers might recall how the ETF was forced to load up on natural gas swaps last year,
Markets Live transcript 5 May 2011
Markets Live chat transcript for the chat ending at 11:20 on 5 May 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHwelcome to another 60 minutes of market frolicks
What’s going on in IPO land?
First it’s RenRen, then Dunkin’ Donuts and of course, the mother of them all, Glencore, to name a tiny handful of the highest-profile IPOs – planned or executed – making headlines on Thursday.
In the US alone,
The O’Lloyds zombie, in context
Not too surprising to see Lloyds’ effort at kitchen-sinking Irish exposures in its Q1 results, with impairments up £500m more than guided to £1.14bn…
Even so, it’s a nice test case of how bad Irish property loan losses could conceivably get,
Flybe – the latest flotation flop
The curse of the UK IPO strikes again.
That’s low-cost airline FlyBe. It came to market five months ago at 295p and at pixel time on Thursday its shares were changing hands for just 179p.
That follows a grim pre-close trading update.
Spanish covered bond disclosure. It’s the (unheeded) law
Moody’s is on the warpath against sketchy Spanish structured finance data again.
But this time the agency’s sites are firmly set on the mother of all SF — covered bonds.
Remember, covered bonds are meant to be ultra-safe — almost to the same degree as sovereigns bonds — and Spain has spent many of the previous months trying to soothe investors with new disclosure rules.
Glencore’s Achilles’ heel
FT Alphaville has been poring over the Glencore prospectus overnight and we’ve come across a few further points of interest on the matter of funding.
As we noted earlier last month, Glencore’s marketing business is very much focused on tried and tested arbitrage strategies unconnected to the ‘flat-price’ of commodities,
Antonio Horta-Orsorio clears the deck at Lloyds
RTRS-LLOYDS CEO SAYS “I REALLY DO NOT SEE ANY KITCHEN SINKING IN THESE RESULTS”
Well, Antonio Horta-Orsorio might see it that way, but it’s very unlikely the City will agree.
The size of the provision Lloyds has taken cover potential payouts to thousands of purchasers of PPI loan insurance (£3.2bn) is way,
Further reading
Elsewhere on Thursday,
- ‘Until you lose a decent amount, you don’t really understand how the market works.’
- Lehman and Bear Stearns, a TBTF reality check.
- Feeding the 10 billion.
- Handy Portuguese election primer.
Pink picks
Comment, analysis and offerings from Thursday’s FT,
Alan Beattie: Britain was right to sell off its pile of gold
The continued run of the gold price is a global investment sensation, writes the FT’s international trade editor.
Snap news
Breaking pre-market news on Thursday,
- Lloyds Banking Group reports loss after taking £3.2bn PPI provision; impairment charge £500m higher than expected due to Ireland– statement.
- Société Générale posts lower than expected Q1 results due to own debt market down/Arab spring — statement.
Further further reading
For the commute home,
- James Hamilton on whether high oil prices bring a new recession.
- Curb your enthusiasm over this Friday’s employment report.
- Groupon-omics.
- Make sure you never refer to David Merkel as “the old guy”.
The headline-core CPI gap is all about motor fuel
While we’re on the subject of fuel prices, here’s a chart posted Tuesday in a paper by the St Louis Fed:
It shows how closely headline CPI, which includes food and energy, has tracked core CPI after stripping away the headline number’s motor fuel component.
The problems with fuel consumption data
John Kemp has an excellent column out Wednesday on the latest auto sales data, emphasising that buyers of US cars are increasingly shifting towards compact, fuel-efficient vehicles, and pointing to recent analyses arguing that $4 gas won’t reduce demand the way it did in 2008,
CMBS 1.0 vs 2.0
We’ve been monitoring trends in CMBS 2.0 — the next generation of Commercial Mortgage-Backed Securities — since early this year, when it became clear that issuance was set to begin climbing again.
And,
More from the Glencore prospectus
Remember this?
It’s the Glencore CDS spread, courtesy of Markit, in December 2008.
We never fully got the bottom of why it surged to 3125 bps other than the fact the trading house was heavily reliant on short term debt markets to fund its marketing activities.
Emerging loan demand
If you’ve ever wondered what a survey of senior lending officers in 45 emerging markets might look like (as opposed to, say, all those stagnant developed loan market surveys) here’s your chance.
The Institute of International Finance (IIF) has just released first-quarter data from its (enlarged) emerging markets lending conditions survey,
Portugal, sell your gold!
The terms of Portugal’s draft bailout agreement have been revealed. But no mention within the documents about what happens to the country’s ample stash of gold bullion.
Some 12.3m troy ounces in fact,
Meet the $9.6bn man (and Glencore’s other billionaires)
It’s out, and longer than Tolstoy’s War & Peace.
Presenting the Glencore prospectus, which is so big we can’t upload it to our servers — but you can find the 134MB file on Scribd once it loads!
A quick glance at the document reveals that the 15.8 per cent stake of chief executive Ivan Glasenberg will be worth around $9.6bn at the mid points of the 480p to 580p range.
Revealed: the Portuguese agreement
A great scoop from the Portuguese newspaper Expresso — they’ve managed to get a copy of the draft memorandum of understanding between Portugal and the EU/IMF/ECB, as part of its three-year bailout.
You won’t find the total cost of the bailout or its interest rate here,