June, 2011
Depression or double-dip? One of them’s in the eurozone, UBS says
A handy table from Paul Donovan.
The UBS economist notes that recent global growth data has somewhat disappointed investors — prompting concern about a possible double-dip or even depression. To help illustrate the differences from the current economic situation — which Donovan labels an “entirely predictable”
A strange kind of bullishness
Nope, no US recession just yet, say Credit Suisse’s Andrew Garthwaite and his global strategy team:
That chart’s from a note doing the rounds on Tuesday, in which Garthwaite and team have gone to overweighting equities again,
Europe’s non-performing loan zones
Here’s PricewaterhouseCoopers’ (theoretical) non-performing loan (NPL) barometer:
If you’re a banking system, you want to be in Quadrant A — with a low percentage of NPLs that are relatively well-provisioned for,
Don’t kill the old!
The rankings of the new Global Aging Preparedness index from the Center for Strategic and International Studies — or, handicapping the Race to Sovereign Default 2040:
And some detail from the index’s authors on how its two subcomponents are constructed:
Introducing… Kilt-edged securities
At long last, Scotland is to meet the capital markets.
Scotland is one of a rare breed of nations: it has its own legal system but lacks sovereignty. It’s also a fiscal outlier. Unlike sub-sovereign entities in the US,
Further reading
Elsewhere on Tuesday,
- When helicopter drops go bad (all right, it was a C-130).
- The Maiden Lane II effect on credit.
- Lumpiness in the bond market.
- What links AIG and Blackwater? You’ll never guess.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Nouriel Roubini for the A-list: The eurozone heads for break up
The muddle-through approach to the eurozone crisis has failed to resolve the fundamental problems of economic and competitiveness divergence within the union.
Snap news
Breaking pre-market news on Tuesday,
- Avis Budget to buy Avis Europe for £636m/315p a share — statement.
- Glencore International reports first results as a listed company — statement.
- Tesco does not move back into growth in the UK — statement.
Further further reading
For the commute home,
- The future of MBA applicants: “You’re going to see guys who worked on one private-equity deal with an auto manufacturer try to play up their auto experience and look ridiculous.”
[Update] Sign of the times, Greek MP evacuation edition
UPDATE: Hands up — this correspondent needs to eat a bit of crow now, having been much too credulous about running the passage below. Thanks to blogger and commenter Lolgreece for pointing out that the original story’s sources are too thin,
Bitcoin’s Black Friday
When we first mentioned Bitcoin — the virtual currency — it was hovering at $8 against the US dollar.
Last week it reached $28. And we first mentioned Bitcoin last Monday — seven days ago.
The digital currency has not gone unnoticed by the City either.
Googling the British economy
In a world where hedge funds are using Twitter as a trading strategy… It was only a matter of a time before a central bank started using Google seriously for forecasts.
Or as the Bank of England is quite naffly calling it — ‘nowcasts’.
A bit more on the $775bn of missing muni bonds
Last week FT Alphaville noticed Citi’s claim to have “found” $775bn more municipal bonds in existence than had been previously assumed by most of the market.
The revised aggregate estimate ($3,700bn) came from an upgrade in the amount of holdings by retail and,
Dynamic indexing — a contradiction in terms?
Clive Capital is jumping on board the dynamic commodity indexing bus alongside Goldman Sachs.
As the FT reported on Monday:
Goldman Sachs, the bank that popularised commodities investing among pension funds and other conservative money managers,
Bove says Goldman hasn’t gotten him
Rochdale Securities banking analyst Dick Bove is mildly annoyed this Monday.
Having reversed his position on Goldman Sachs and its alleged subprime short after Andrew Ross-Sorkin sprang to the bank’s defence last week — it seems Bove has become the focus of some criticism.
The collateral crunch
It gets less attention than its credit-denominated relative, but the 2008 financial crisis actually sprung from a massive ‘collateral crunch’ within the shadow banking system.
Read Manmohan Singh on rehypothecation,
Questions to which the answer is yes, AIB credit event edition
Has a credit event occurred with respect to Allied Irish Banks’ buyback of sub debt?
YES (says Isda)
Did this credit event occur on June 9, 2011?
YES
Is this anything more than a mild speed-bump in the bailing-in of Irish bank bondholders?
NO
Related link:
Painting Portugal’s debt decline
Courtesy of Tradeweb data (and via FT Alphaville’s rubbish MS Paint skills) here’s a chart of those dying peripheral bond trading volumes in 2011, as reported by the FT on Monday:
Greece, flatlining.
The foreigners are frightened
Ouch.
China’s B shares index, which contains 53 Chinese companies that foreigners are allowed to own, has finally succumbed to those fraud and accounting scandals, losing 12.8 per cent last week alone.
Markets Live transcript 13 Jun 2011
Markets Live chat transcript for the chat ending at 11:29 on 13 Jun 2011. Participants in this chat were: bryce.elder Neil Hume, FT
BEGood morning
BEAnd welcome to Markets Live
Europe’s hidden, peripheral volatility
I dream of single-name volatility calculations on peripheral eurozone CDS…
Markit’s VolX indices do some of this already, of course. They track realised volatility for European and North American CDS markets using the standard CDX and iTraxx indices.
ENRC(ore) International?
Leading the FTSE 100 leaderboard on Monday morning, is Friday’s biggest faller.
That follows a Sunday Times report that claimed everyone’s favourite commodities trader is plotting a transformational £12bn bid for the Kazakh mining group,
Brussels, not Basel
Also: why ‘maximum harmonisation’ might end up getting someone’s Vickers in a twist.
An odd bump in Lloyds and Barclays on Monday:
It’s probably helped by a great note doing the rounds from Citigroup banking analyst Ronit Ghose,
Transfer dealings – Gulf Keystone edition
This almost certainly does not pass the smell test.
One of Gulf Keystone Petroleum’s biggest shareholders (the confusingly named Gulf Keystone Petroleum Co. LLC) has transferred legal title over 5.25 per cent of the £1bn Kurdish exploration company (which discovered billions of barrels of oil) to among other people,
The hot new Greek basis trade
They’re baaaa-aaaack.
Greek basis trades, that is. About a year ago, banks first started recommending negative basis trades — which saw investors buying a (cash) Greek bond and then taking out insurance (CDS) on the holding.
Further reading
Elsewhere on Monday,
- John Hempton hugs trees, bashes Sino-Forest.
- ‘Silly extrapolations’ and oil for Chinese cars.
- ‘But then again, insolvency is only weakly correlated with bankruptcy’
- Frannie as regulatory disgrace — and a counter-point.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Lawrence Summers: How to avoid our own lost decade
Even with the 2008-2009 policy effort that successfully prevented financial collapse, the US is now halfway to a lost economic decade,
Snap news
Breaking pre-market news on Monday,
- Imperial Tobacco warns of £110m hit to profits from Spanish price war — statement.
- Horizon Acquisition acquires APR Energy for $855m — statement.
- Wood Group to return £665m to shareholers — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Europe set to face an Asian advance
First it was manufacturing but now prepare for outsourcing in the investment industry. European asset managers will face a wave of competition from fast-growing Asian rivals in the next five years,
Further further reading
For the commute home,
- US equity outflows are the largest in 10 months.
- Fortune profiles Groupon Chairman Eric Lefkofsky .
- Further further further reading — China fraud edition.
- The absurdity of the Goldman huddle verdict.