May, 2011
The ECB goes all-in
Central bank brinkmanship in full display this Thursday:
FRANKFURT (MNI) – If Greece were to restructure its sovereign debt, its bonds would cease to be accepted as collateral by the European Central Bank,
ESM seniority, from haircuts to scalpings
So the European Stability Mechanism will rank senior to other bondholders, but not explicitly so:
May 18 (Bloomberg) –The euro area’s planned permanent debt-crisis mechanism will probably refrain from detailing its seniority status in lending contracts,
Markets Live transcript 19 May 2011
Markets Live chat transcript for the chat ending at 11:23 on 19 May 2011. Participants in this chat were: bryce.elder Tony Tassell BEGood morning BEAnd welcome to Markets Live
Par-don me, what was that about Greek CDS?
Why are London’s lawyers thumbing the below section of the 2003 Isda definitions?
Because the prospect of a Greek debt restructuring has thrown up all sorts of questions for buyers and sellers of sovereign CDS.
Japan’s ‘temporary’ recession?
The news from Japan on Thursday reinforced some of the worst fears about the state of the economy, but not everyone is gloomy — far from it — although the latest growth figures are truly horrible.
As the FT reports:
Another commodities crash layer – the $100bn intervention
Tracking the causes of the commodities crash is starting to feel like peeling an onion.
One layer gets pulled back only to reveal another, and then another — and then you start to cry. Last week we had UBS analysts blaming “extreme positioning short the dollar and long commodities.”
So peeling back another layer,
Credit-enhancing a Greek restructuring
In which Greece’s grim sovereign-bank loop of ECB collateral and liquidity really starts to hit home.
Fresh signals were received from Planet ECB on Wednesday:
“I’m opposed to soft-restructuring because I don’t know what it means.
Glencore debuts… [updated]
Up 3 per cent from the IPO price of 530p at pixel time and trading on a conditional basis — chart via Reuters:
Apparently they’re hoping for a 5-10 per cent rise on the first day…
Update — Aargh.
Further reading
Elsewhere on Thursday,
- A routine OPEC meeting is suddenly is full of intrigue.
- China’s watermelon bust.
- It’s all about priority.
- When the shock “is larger than what precipitated the Great Depression”.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Don’t close the lid on bank fraud
The news this week that Eric Schneiderman, the New York attorney-general has launched yet another inquiry into Wall Street’s role in the mortgage crisis will no doubt be greeted with groans at investment banks,
Snap news
Breaking pre-market news on Thursday,
- Morgan Stanley gives pre-stabilisation notice on Glencore IPO – statement.
- Bank of Ireland says Irish economy has begun to stabilise – statement.
- Deutsche Bank said to have “privately accepted”
Further further reading
For the commute home,
- Why LinkedIn’s IPO will hand even more control to its founder. And is it time to jam like 1999?
- Tips breakeven spreads fall to a three-month low. Is that good news or bad news?
- More on the Fed’s exit plan from Real Time Economics and Calculated Risk.
Betting on the new IMF managing director
Odds from William Hill, chart from the Economist:
Kemal Dervis at 5-2 will please some. But Christine Lagarde at 14-1, anyone?
FOMC minutes from the April 27 meeting
These are the minutes from the meeting that preceded the big press conference.
While there’s been a well-publicised internal debate at the Fed about the timing of future policy tightening, it seems from these minutes that the discussion over how to tighten is less divisive.
Tim Geithner and stuffed elephants at the Harvard Club
The Harvard Club of New York hasn’t survived for 124 years without a haughtily dismissive attitude to irony. Stuffed elephant heads are nailed to nearly every wall, making it an appropriate venue for Tuesday evening’s ”Conversation with Tim Geithner”.
All hail the negative repo regime
The repo rate normally trades closely to money market rates. This is sometimes referred to as the general collateral rate. But sometimes a particular security is in demand for borrowing purposes. This is because there are many dealers who have gone short of that security.
‘Is it dangerous to borrow dollars?’
Or, remembering the crisis dollar swap lines, and noting a funding currency elephant in the room for Australian and Swedish banks.
Moody’s downgrade of four Australian banks on Wednesday was serendipitous in a way.
How profitable is ETF arbitrage?
….about 6.7 per cent per year, according to this 2010 paper by Ben R. Marshall and Nuttawat Visaltanachoti of Massey University, and Nhut H. Nguyen of The University of Auckland.
The academics arrive at the figure after investigating the arbitrage opportunities that appeared between two of the most liquid equity ETFs in the world:
Standard & Poor’s speak the truth on Europe’s stress tests
Standard & Poor’s has dug into the European banking stress tests before.
But its latest review — out on Wednesday — really sums up the matter. It’s always been politically impossible for the European Banking Authority to assume real (restructuring) losses in the exercise.
What a missing Libyan tanker tells us about sanctions
Reuters published a special report Monday on the Libyan rebels’ efforts to sell oil in spite of the ongoing civil war and high levels of legal uncertainty.
The last time we posted on the topic, the rebels had sold 1m barrels with the help of Qatar but were struggling with both the supply and demand for further sales.
Markets Live transcript 18 May 2011
Markets Live chat transcript for the chat ending at 11:22 on 18 May 2011. Participants in this chat were: bryce.elder Joseph Cotterill, FT BEWell, here we go again. BEGood morning everyone.
If it bleeds…
With hedge funds going into the meedja sentiment business this is probably worth exploring:
Finance news articles mentioning ‘crisis’ are at a three-year low, say Société Générale’s cross-asset research team using a famed indicator:
Chart du jour, zen and the art of inflation-targeting
If a 2 per cent inflation target is hardly ever reached, does it still exist? Oommmm:
Related links:
Mervyn crucified - FT Alphaville
Old Lady conspiracy theories – FT Alphaville
Further reading
Elsewhere on Wednesday,
- ‘The peak oil model for housing’s future prospects is now dominant.’
- Happy QE2, that puts us back to square one again.
- What’s going on in Vancouver?
- Selling Utah,
Pink picks
Comment, analysis and offerings from Wednesday’s FT,
Martin Wolf: The eurozone after Strauss-Kahn
The sight of Dominique Strauss-Kahn, managing director of the International Monetary Fund and prospective candidate for the French presidency,
Snap news
Breaking pre-market news on Wednesday,
- Icap says full-year pretax profit up 4 per cent – statement.
- Land Securities annual profit up 14 per cent on higher property values – statement.
- Corporate: