May, 2011
Markets Live transcript 12 May 2011
Markets Live chat transcript for the chat ending at 11:23 on 12 May 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHplease bear with me for a moment
Yen moves: what next?
Having seen a steady rise back up from lows immediately after Japan’s March 11 disasters, the yen continues to defy economic gravity. It’s now up about 5 per cent against its post-March 11 low of Y85.53 against the dollar on April 6.
Argentina: the default scenario for Greece
We did warn that financial markets would have to come to vivid terms with the comparison one day…
This is not a flattering chart for the eurozone:
It’s a two-thirds haircut on Greek debt,
Bagehot, bailouts and banks – the entwining continues
It’s a moonless night in October, 2008.
A hooded figure turns the corner of Threadneedle Street. It’s Fred Goodwin, head man of the languishing British bank, RBS. He glances behind him. No one’s there.
Superdroop [updated]
The owner of the rapidly expanding Superdry fashion brand is experiencing some growing pains:
Although Thursday’s fourth-quarter trading update is in line with expectations, SuperGroup has experienced a slowdown in its UK high street business.
Crackageddon
The justification for Wednesday’s commodity rout is still that RBOB futures fell (or crashed) after the EIA reported larger than expected US stockbuilds in gasoline. The more than 8 per cent move, in the usually much more stable contract,
Which came first – the margin call or the commods mayhem?
Silver prices rose by over 60 per cent between the start of the year and April 25.
They’ve now fallen by over 30 per cent — unwinding some 80 per cent of the upward move in the space of two weeks, according to Société Générale figures.
Euro exit as legal quagmire
Ignore (for now) the question of whether, or when, or should the periphery leave the euro, as part of a debt restructuring or a long process of fixing their balance of payments crisis.
We want to have another look at its legal possibility.
Further reading
Elsewhere on Thursday,
- It’s not just “Fountainhead” — reading lists of the (really) rich.
- Matt Taibbi (again) on Goldman (again).
- Why Wall Street should worry about the ‘Raj precedent’.
Snap news
Breaking pre-market news on Thursday,
- Allianz says net profit down 45 per cent following claims from Japan and other natural disaster — statement.
- Dixons Retail maintains profit guidance — statement.
Further further reading
For the commute home,
- Cisco beats expectations after the bell.
- What is the Gulf Cooperation Council?
- Oil prices and trading mechanics.
- More on those new CDOs, ETFs.
- Microsoft caused the dot-com bubble.
Commodity rout – Mark 2
Right…
So here’s the story.
After dumping last week, silver staged a rather spectacular recovery over the current week. It was led in part by a major inflow of fresh money into silver exchange traded funds…
[Galleon] Raj Rajaratnam: the sentencing book
Q: What sentence awaits Raj Rajaratnam?
A: You tell us. Put your best guess in the comments below and the winner receives a mystery prize. (So mysterious we don’t know what it is yet.)
Official guidelines suggest a total stretch from 15.5 to 19.5 years (not per count as some TV stations have been saying).
If we build it, they will come
FT Alphaville has explored the financing and bespoke servicing role of ETFs before.
The FT’s Gillian Tett has now openly likened the products to CDOs.
Given that, we thought we would provide some further context to the nature of such things in the commodity world.
[Galleon] Raj Rajaratnam: guilty of all charges
After a deliberation length that would make Henry Fonda blush, Raj Rajaratnam has been found guilty on all 14 counts of conspiracy and securities fraud. Bernie could now have a cell mate.
From the FT,
The shrinking AIG stock offering
Welcome back AIG, or um, another 15 per cent of you.
From the bailed out insurer’s public offering prospectus, released Wednesday morning:
American International Group, Inc. (“AIG”) is offering 100,000,000 shares of its common stock,
HSBC’s big strategy day
It’s going to take some time to plough through HSBC Strategy Execution plan, announced on Wednesday.
There’s an RNS statement and presentations from the chairman, CEO and finance director to get through,
The BoE and the bank funding gulf
There’s a lot to pick over in the Bank of England’s latest inflation report, out on Wednesday. (Full PDF here)
But not so much on inflation. Rather on bank funding relative to interest rates.
Here’s a chart which might well be the signal for tightening Bank Rate for the first time since the crisis.
Markets Live transcript 11 May 2011
Markets Live chat transcript for the chat ending at 11:16 on 11 May 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHwelcome to ML NHsorry for the late start
Chinese commodity imports are falling
It’s probably fair to say that in the commodity world, all eyes are now very firmly set on the state of Chinese imports.
Some interesting signals are now emerging. Namely — and perhaps not surprisingly to some — that Chinese imports are struggling with high global commodity prices.
Microsoft and Skype, for and against
Microsoft’s agreed $8.5bn acquisition of Skype evokes shades of the frenzied dotcom bubble era and M&A tech mania: the deal, unveiled on Tuesday, brings this year’s total of announced tech deals to $94.5bn — a 56 per cent increase from last year – and also marks the highest levels of tech M&A activity since 2000,
Webvan slows down
The first cracks in the Webavan 2.0 investment case or something altogether less sinister?
From Ocado’s unscheduled trading statement on Wednesday:
The Board is encouraged by the progress of the business so far this year.
The deflation risk is still out there, SocGen says
This is what happens when markets are built on sand (silicon QE, anyone?).
They can crumble all too quickly.
A reminder of market fragility, from Societe Generale’s cross-asset research team:
Presumably you need the Baltic Dry line in the first chart — an indicator of ‘real’ economic recovery — to match up with commodities prices,
The Greeks investigate the Germans
You knew this would end in tears.
Friday’s report in German paper Der Spiegel that Greece was considering leaving the eurozone — a prospect later denied by Greek and European officials — will be given the ol’ investigatory treatment.
Further reading
Elsewhere on Wednesday,
- Economics in an imperfect world.
- Did Microsoft overpay for Skype? Hell yes.
- Silver’s modern day panic.
- Are banks hiding derivatives?
- China’s currency and trade balance,
Pink picks
Comment, analysis and other offerings from the FT,
Martin Wolf: The eurozone’s journey to defaults
A story is told of a man sentenced by his king to death. The latter tells him that he can keep his life if he teaches the monarch’s horse to talk within a year.
Snap news
Breaking pre-market news on Wednesday,
- HSBC launches $2.5-$3.5bn cost cutting programme; to review US retail operations — statement and presentation.
- J Sainsbury dividend cover falls to the bottom end of guided range;
Further further reading
For the commute home,
- A new toy for Bill Gross: the UltraShort 20 Yr Treasury ETF (TBT) performance simulator.
- Primary materials on secondary markets from today’s House hearing.
- One, two,
Egypt: the revolution continues
Zhou Enlai famously advised Henry Kissinger it was too early to conclude on the outcome of the French Revolution. Little wonder, then, that the economic contours of the new Egypt are still fuzzy two months after Hosni Mubarak was topppled.
From Quito, to Kingston, to Athens?
Moody’s 2011 sovereign default study is out — and it features this illuminating chart on recent sovereign bond recovery rates:
Odd serendipity this. The only two sovereign defaults since the financial crisis can’t have been more different as approaches to restructuring,