June, 2011
UPDATED: Going off the bailout script, Greek-Irish style
[UPDATE: Courtesy of Reuters, Papandreou has announced in a recorded statement that he will reshuffle his cabinet and request from Parliament a vote of confidence for his new government. Journalist Matina Stevis is also reporting that finance minister Giorgos Papaconstantinou could be replaced in the reshuffle and that the vote will take place Sunday at 2200 BST.]
Or,
The UK flotation jinx
The curse strikes again!
At the close of play on Wednesday, Glencore International was trading almost 11 per cent below its IPO price of 530p.
Ouch.
And to think the stabilisation period is still running (to Friday in fact).
Britain’s Generation U pops up again
Not to put a downer on Wednesday’s news of the sharpest fall in UK unemployment for a decade but…
… the more we look at it, the more we’re finding reasons to be sceptical. Mostly regarding the post-crisis fate of Generation Y.
The eurozone central banks that ♥ gold…
Bullionvault’s head of research Adrian Ash has spotted an interesting trend among eurozone central banks this year.
Rather than selling gold, they’ve been buying it instead.
Not a lot.
But buying — mostly for gold coin trading purposes– nevertheless.
A CPI reversal of sorts
For a change, activity in commodity prices has tempered consumer price inflation in the US, at least for a month:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis,
The humble Greek depositor, and the ECB
As the tear gas swirls in central Athens…
Euphemism du jour, from an S&P downgrade of Greek lenders:
We observe that domestic customers of Greek banks have demonstrated their sensitivity to signs of deterioration in the sovereign’s creditworthiness…
Markets Live transcript 15 Jun 2011
Markets Live chat transcript for the chat ending at 11:14 on 15 Jun 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHsorry for being late
The Baltic Oil mystery
File this one with “the dog ate my homework”.
Here’s Aim-listed Baltic Oil Terminals explaining why its shares have been suspended on Wednesday.
From a company press release.
Emphasis ours.
In early 2011 the Company made significant changes to the senior management team at its operations in Kaliningrad,
What modern oil market intervention looks like
Is this the reason why the rest of Opec were miffed at Saudi Arabia last week?
Reuters reports on Wednesday (H/T John Kemp):
EXCLUSIVE-SAUDI, US DISCUSSED PROPOSAL TO SWAP LIGHT SPR CRUDE FOR SAUDI OIL AHEAD OF OPEC MEETING-SOURCES
SAUDI,
WGO – What’s going on in Brent-WTI? [updated]
First there was Cushing syndrome. Then there were Brent market antics. Now, nobody knows what’s going on in the Brent-WTI spread.
The difference between the two contracts has (once again) reached record levels.
Running the numbers on an Invensys pension deal
Invensys, the controls and automation group recently kicked out of the FTSE 100 to make way for Glencore, is a perennial takeover target.
But in recent weeks the speculation has centred on the disposal of a major division.
When China was the frontier
As a kind of book-end to recent market analysis of events in MENA…
It’s 1987 — a year of vaulting stock indices, an autumn crash and – CLSA’s first ever research note into China. A blast from the past,
French exposure to Greece, an Argentine deja vu
The Economist, Buenos Aires, 2002:
[Spanish] banks will be the hardest hit. Through the subsidiaries of BBVA and SCH—they own respectively Banco Frances and Banco Rio, Argentina’s second- and third-largest banks—the Spanish banks control a fifth of Argentina’s banking system.
Further reading
Elsewhere on Wednesday,
- Yield targeting as QE3? No thank you.
- High praise for UK bank capital.
- ‘Republicans have picked the wrong line to draw in the sand.’
- A US default would increase the deficit,
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: How China could yet fail like Japan
Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades.
Snap news
Breaking pre-market news on Wednesday,
- Glencore says not actively considering offer for ENRC — statement.
- Inditex announces 10 per cent rise in Q1 net profit — statement.
- Game Group revises down sales forecasts — statement.
Further further reading
For the commute home,
- A history of financial trash talk.
- Bernanke’s speech on fiscal sustainability. Shorter: stop using the debt ceiling as leverage.
- Wall Street is the same as it ever was,
Sino-Forest versus Muddy Waters and the maxed out shorts
As if Sino-Forest didn’t have enough problems, it seems like the Markets Live effect is alive and well.
FT Alphaville looked earlier at the company’s Q1 results and its rebuttals to the claims of Muddy Waters.
On powerpoint and political risk
Otto van Bismarck, who knew a bit about political risk, said the thing about revolutions was to intuit God’s movements in history and seize the hem of his garment as he sweeps by.
Easier said than done,
UK pensioners 1 Irish bank 0
Irish taxpayers… 0?
For your perusal — a letter sent on Monday by Brown Rudnick to Bank of Ireland, challenging some (coercive) terms in its debt buyback.
Click image for the full letter:
Old Greek bank risk in New Europe, again
In which FT Alphaville gets to ask once more why the sovereign crisis in Greece, where Greek banks are in danger, isn’t setting off contagion in Emerging Europe.
Where exposure to Greek banks happens to be rife.
Back to the future with UK RMBS
Your extend and pretend datapoint du jour, right here folks.
On Monday, Moody’s released a report advocating more disclosure of loan modifications within British Residential Mortgage-Backed Securities (RMBS). The UK’s Financial Services Authority already said something similar last month,
Xstrata extrapolated (thanks Glencore)
Glencore International has published its maiden results (as a listed company) on Tuesday and it’s having something of an impact on Xstrata.
That’s because Glencore’s numbers help us make a pretty good guess as to how Xstrata has performed in the same period.
A tale of two UK inflations
Here’s something to throw the Bank of England’s will to withstand high UK inflation (and low interest rates) in surprising, sharp relief.
It’s a new finding by the Institute for Fiscal Studies, connected to a study of inflationary effects on low-income households over the long term:
Sino-Forest transcript 14 Jun 2011
Markets Live chat transcript for the chat ending at 13:52 on 14 Jun 2011. Participants in this chat were: Tracy Alloway John McDermott TANihao, ladies and gents JMAfternoon
Psst. Over here. Behind this tree
It’s a not-so-secret Sino-Forest session over at Markets Live.
And here’s some related Q1 earnings reading material.
High-growth, high-stakes at Sino-Forest
It’s Tuesday — Sino-Forest results day.
The Chinese forestry firm already stands accused of being a “stratospheric” fraud by research and short-selling outfit Muddy Waters. Today Sino-Forest is set to offer a deeper look at its finances with Q1 results.
What to do with all that cash?
Use it as collateral of course.
We refer, of course, to the massive cash reserves built up by banks due to quantitative easing. Reserves which, as most deflationistas point out, have been stuck firmly on banks’ balance sheets rather than making their way through to the real economy — thus supposedly having little inflationary impact.
Markets Live transcript 14 Jun 2011
Markets Live chat transcript for the chat ending at 11:28 on 14 Jun 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola markets Rabble NHand welcome to Markets Live