July, 2011
Eurocrashing [updated]
Europe’s biggest fallers at pixel time (via Reuters). Notice a trend?
The Italian 10-year bond yield is above 5.5 per cent. Its Spanish peer is closing in on 6 per cent…
Updated — Spanish 10-year through 6 per cent.
Being partially pregnant in the debt market
Only in the eurozone can you make sovereign defaults “partial” and without any effects on actual debt burdens…
We’d emphasise that last point for Greece, but we’re also quite interested again in what the CDS market does here,
What are gold fund outflows really saying?
The FT reported last week that because investor inflows into gold exchange-traded funds have recently stagnated, many analysts have begun questioning if the decade-long rally for the gold market might be nearing exhaustion.
Feedback loops to give you (credit) nightmares
It’s a changed, changed world.
The introduction of bail-ins and burdensharing means capital markets will never be the same.
Intuitively, making creditors share some of the pain of public bailouts make some sense,
Rococo risk hedging, a sovereign-bank tale
What price sovereign risk within a bank bond? BIS answer here:
That’s a chart from a fresh paper on sovereign effects on bank funding, released by the Bank for International Settlements on Monday.
Markets Live transcript 11 Jul 2011
Markets Live chat transcript for the chat ending at 11:07 on 11 Jul 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHand welcome to ML NHhang on a moment
Dear Ofcom…
… please help rid me of this wretched BSkyB buyout.
What keeps an EU finance minister awake at night?
The upward trend in Italian government bonds, of course.
And the reason this is such a concern is because Italy is not far from the danger zone.
As Gary Jenkins of Evolution Securities explains:
China’s stagflation question
You wouldn’t want to be a Chinese local government official, just now:
(Reuters) - China will link local officials’ performance appraisals to the level of debt held by local governments, state media reported Monday,
If you pay peanuts for ETFs, you get…
We had always heard stories about how profitable ETFs were for banks.
For example, people had told us that official management fees were clearly a red herring. By and large, the money was being made in the background,
Tranching up Europe’s interest rate rises
Ever pondered the big questions? The meaning of life? Are we alone in the universe? What will happen to European RMBS once interest rates start rising? We have.
And we have an answer — to the last one anyway.
Crunching the carbon price for Aussie miners
After much wailing and gnashing of teeth name-calling and politicking Australia’s minority government on Sunday announced details of its carbon pricing scheme.
Planned for a mid-2012 start, the scheme would initially price CO2 emissions at $23 per tonne,
Can-kicking in the UK – BSkyB edition [updated]
And you thought kicking the can down the road was something they only did in continental Europe.
Wrong.
The UK government is also prepared to use to its size nine to boot – although in this country the can is kicked into the long grass not down the road.
Further reading
Elsewhere on Monday,
- A wasted crisis.
- Debt ceiling options: When you have eliminated the impossible…
- ‘Financial markets won’t care much’ and other debt ceiling myths debunked.
- If the blue line crosses the red line,
Pink picks
Comment, analysis and other offerings from Monday’s FT,
The A-list: George Soros – True Europeans now need a ‘plan B’
The European Union was brought into existence by what Karl Popper called “piecemeal social engineering”.
Snap news
Breaking pre-market news on Monday,
- Shares in Southern Cross Healthcare Group suspended after restructuring update announced — statement.
- Nestle to buy 60 per cent of Chinese confectioner Hsu Chi International for $1.7bn — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Low cost ETFs reap fat profits
FTfm interprets two sets of data and discovers exchange traded fund providers in Europe are generating profit margins more than four times higher than the mutual funds industry.
The Weekender
This week on FT Alphaville,
- We peered through the holes in Chinese local government balance sheets.
- We pondered some creative solutions being thrown around for the debt ceiling debacle.
- Some were super-top-secret solutions.
Further further reading
For the commute home,
- US jobs analysis: charts, links and a punchy piece.
- What Murdoch made.
- Daivd Einhorn’s Q2 letter to investors.
- Government size and economic growth.
- Gender and the great recession.
US housing feedback loops
In case you needed any reminding that there was another horror story in the US economy, Nomura has a nice little note out on the prolonged impact of foreclosures on the housing market.
House prices are in double-dip territory,
Sky falls in — takes News Corp with it [updated]
Shares in BSkyB down around 4 per cent-plus at pixel time. Is there an arbitrage trader left in this thing?
Seems not.
Never mind News Corp’s bid for BSkyB getting kicked well into autumn by now.
US Markets Live transcript 8 Jul 2011
Markets Live chat transcript for the chat ending at 15:04 on 8 Jul 2011. Participants in this chat were: John McDermott Cardiff Garcia JMBoom! CGGreetings JMWe’re back together in NYC
Reminder: US Markets Live starts at 10am New York time
For those unmoved by Monday’s Independence Day fireworks to set their clocks to US time, that’s 3pm in London.
We’ll kick things off with a discussion of the ghastly payroll numbers and related market reactions,
An awful June employment report: payrolls up 18,000…
… and unemployment rises to 9.2 per cent.
A disastrous report, with not a single piece of good news that we can discern. To wit:
– private sector jobs increased 57,000; public sector jobs lost 39,000
– Employment-to-population ratio declined from 58.4 to 58.2 per cent,
Danish covered bonds at dawn
A break in the clouds, for Denmark’s stormy covered bond market:
(Bloomberg) Denmark’s covered bonds are likely to be snapped up by U.S. buyers even after Moody’s Investors Service downgraded the securities,
Sky falls in
There goes BSkyb straight through 800 pence to as low as 775p:
That’s on this DCMS bombshell:
If it’s about media plurality, surely the closure of the News of the World isn’t definitely a bad thing here?
(Just a thought).
Volatile Venerdi
A small case of contagio bancario italiano seems to be hitting European markets on Friday.
At pixel time Unicredit shares were down 6.8 per cent after being halted briefly due to excessive losses brought about by euro crisis contagion fears:
Markets Live transcript 8 Jul 2011
Markets Live chat transcript for the chat ending at 11:14 on 8 Jul 2011. Participants in this chat were: bryce.elder Joseph Cotterill, FT Izabella Kaminska BEGood morning, and welcome to Markets Live
Haldane on HFT’s market-making problem
Sharp thoughts on Friday from Andrew Haldane, executive director for financial stability at the Bank of England, on the changing topology of the market — including the rise of high-frequency trading.