June, 2011
On Fed tightening, again
Ahead of tomorrow’s FOMC statement and press conference, your (US) inflation graphs du jour:
The graphs show the findings of MIT’s Billion Prices Project (BPP), plotted against the latest CPI numbers through the beginning of June.
Fact or fiction, Sino-Forest edition
Only one of these exhibits is real:
Exhibit A:
BriefingWire.com, 6/21/2011 – Washington, D.C., June 21, 2011 — The Securities and Exchange Commission has charged Carson Block and Muddy Waters LLC in a stock manipulation ring that allegedly published false information,
Crouching Vix, hidden volatility
As FT Alphaville has written before, the volatility is out there.
You just have to look for it — and not by glancing at industry-standard, the CBOE Vix index.
A point aptly made by ConvergEx recently:
Kim Jong-il risk in a China fund
Can this really be true? From Anthony Bolton’s account of why his China Special Situations fund has tanked recently, contained in its first annual report. Not so much China, or Chinese fraudcaps, as…
Credit Suisse slashes Chinese banks
Credit Suisse on Monday joined those bashing China’s useless banks, downgrading the sector to underweight due to “asset quality concerns”.
As ever, definitional and measurement issues ensure that one man’s NPL is another man’s PL.
Copper’s inventory inconsistency, charted
There’s a bitter divide amongst the copper market commentariat at the moment.
In one camp are the “inventory realists”, mostly independent analysts, who claim prices are too high based on where global inventories stand.
Federal shadow housing inventory is getting bigger
A housing milestone, of sorts.
Federally-backed loans already make up a majority of the mortgages classified as ‘seriously delinquent’ in the US financial system. In other words, there are more soured loans held or backed by the US’s giant GSEs — Fannie Mae and Freddie Mac — plus the Federal Housing Administration (FHA),
Australia, flowing sideways
Notice anything in the below chart, of five-year CDS for Spain, Japan and Australia?
European shocks have managed to feed through into normally-quiet (CDS) markets like Japan’s (though of course,
In a dark, dark wood
The Globe and Mail on Sino-Forest, June 20:
Its corporate structure has opened Sino-Forest up to criticism that it is too opaque. The company has scores of subsidiaries in China and offshore locations such as the British Virgin Islands.
Markets Live transcript 21 Jun 2011
Markets Live chat transcript for the chat ending at 11:25 on 21 Jun 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola markets Rabble NHwelcome to ML
Foster’s – the amber nectar? [updated]
The price action in SABMiller on Tuesday morning after its $10bn offer for Foster’s was knocked backed:
If anything, it’s surprising SAB shares haven’t fallen further because it’s difficult to see the logic of the bid for Foster’s,
One Madoff superyacht for sale in Monaco
Selling off the liquidated assets of a convicted fraudster? Go to Monaco’s annual hedge fund extravaganza a.k.a the GAIM conference and hand delegates this:
(H/T Lianna Brinded.)
Europe calibrates its bailouts, comforts markets
Well, you can’t say the European Union isn’t flexible.
Eurozone authorities have been busy tweaking their bailout programmes this week.
First, the European Financial Stability Facility, which we’ve said for ages would need to be increased to match its €440bn headline lending figure.
Notes from Athens
That’s one (very Acropolis Now) view from Greece, recently. (Photo via GreekSky).
Credit Suisse economist Giovanni Zanni has also been taking in the view from Greece — undertaking a trip to Athens to meet ‘key officials and experts.’ He’s collated his views into a seven-page note on Tuesday.
Squaring the Greek circle
The ratings agencies have left no one in any doubt where they stand on a voluntary rollover of Greek bonds.
Overnight from Reuters:
Fitch Ratings said on Tuesday that it would regard both a Greece sovereign debt swap and a rollover of maturities,
George Clooney roils the Bitcoin market
Alright, alright — someone calling themselves George Clooney appears to have roiled the Bitcoin market.
Bitcoin — the virtual currency — has had a tough time of it lately. Having recently gained some mainstream prominence and become the world’s fastest appreciating currency,
Further reading
Elsewhere on Tuesday,
- The cost of austerity.
- How Greece is affecting your portfolio.
- Is Zurich the most boring city on the planet?
- What if eight per cent is really zero per cent?
- Quantitative easing:
Pink picks
Comment, analysis, and other offerings from Tuesday’s FT,
Gideon Rachman: Political union cannot fix the euro
As the Greek crisis worsens, so voices are being raised demanding new and more radical approaches,
Snap news
Breaking pre-market news on Tuesday,
- SABMiller seeks engagement with board of Foster’s after $10bn bid is rebuffed — statement.
- Aegon to resume dividend payments — statement.
- Top directors and executives at Jupiter Fund Management to sell 31.3m shares — statement.
Further further reading
For the commute home,
- The regulator down the hall (inside the bank).
- The neuroscience behind asset bubbles.
- The housing market… to the rescue?
- Strongly neutral feelings about New York City.
FOMC preview: countdown to more of the same, probably
We plan to pummel you with unrelenting promotion remind you once or twice more before Wednesday, but we’ll be hosting a Markets Live session during Bernanke’s press conference after the FOMC meeting.
Despite the many obvious signs of slowing growth since the FOMC last met in April,
Wall Street crime, New Yorker edition
George Packer has written nearly 11,000 words on financial crime for this week’s New Yorker. Like most New Yorker articles, it’s an exercise in curious ambivalence and worth a read if you have a spare half hour.
Guess the year: 2007 vs 2011 edition
JP Morgan’s corporate finance advisory group plays a guessing game in its new report about the eventual demise of our cheap capital environment (hat tip to the FT’s Helen Thomas):
You can click through to the report to see the answers,
The (M&A) buyer bump
Here’s a trend we were vaguely aware of but hadn’t seen quantified anywhere (not that we’d been looking, to be honest):
That’s via the latest edition of Bloomberg Businessweek, and what the chart shows is that corporate acquirers are delivering impressive outperformance in their shares (relative to a market index) on the day after their purchases have been announced.
Around the world in 25 megabanks
…Around the world, and (potentially) sat on the face of the global recovery.
There’s an impressive note out from Morgan Stanley’s Huw van Steenis and his team of banks analysts on Monday, in which they ponder (actually,
The Sensex is bipolar
Joe Saluzzi of Themis Trading has spotted a sharp almost flash-crash like move in India’s Sensex index on Monday:
And yet, is it all that unusual?
When you take a longer view of the index you realise that the Indian equity benchmark is hardly impervious to choppy technicals — though it is true they usually tend to the upside:
The Bank of Japan doesn’t seem to like 1 per cent Topix drops
Not price-keeping, but signalling at the Bank of Japan .
Nikkei reports on Monday that “Japan’s stock investment community is buzzing with rumors about the Bank of Japan’s ’1% rule’.” Readers will recall that the BoJ started buying ETFs and JReits late last year,
Pile of crap: suspending coverage
Timeline courtesy of Sino-Forest’s erstwhile supporter, Dundee Securities:
June 1:
Sino-Forest has a 16-year track record of operations, during which time it repeatedly completed debt and equity offerings without once being the subject of legal concern.
RBS sells RBS
RBS is the biggest faller in London on Monday.
The reason for the decline (apart from generalised Greek fear) is this — an RBS placing circular:
RBS is acting as a sole bookrunner on the below transaction:
Syntagma Square and the price of sovereign equity
You appear to be violently protesting about privatisation and it is scaring markets, says the Eurogroup to the Greek people. Please privatise some more then. About €50bn before 2015 should do it.