July, 2011
[Paul Donovan] Why Germany and Greece are right to blame each other
The ongoing epic of the eurozone crisis is by no means over.
Greece will probably selectively default next month (or thereabouts), and then have a pause before properly defaulting (with a debt haircut) at some later date.
UK GDP *pass*
The preliminary estimate of second quarter UK GDP is out, and it’s bang in line with expectations.
And the ONS says quarter-on-quarter growth could have been as high as 0.7 per cent without several “special factors”.
Back to the drawing board at UBS
New capital and regulatory requirements, combined with a weakening economic outlook, are likely to weigh on future returns, constraining growth prospects for the industry. While we believe we will deliver higher profitability,
Italian volatility, l’accounting differenza
Because some day you might want a detailed breakdown of how Europe’s banks are accounting for their Greek, Spanish — and even Italian — bonds, here’s a helpful table from Deutsche Bank.
It comes from Mohit Kumar and Abhishek Singhania,
Australian RMBS grabs Moody’s attention
Moody’s is taking another look at the way it rates Australian Residential Mortgage-Backed Securities.
We anticipate increases to Moody’s Aaa mortgage default probability and house price stress rate assumptions.
Further reading
Elsewhere on Tuesday,
- The bonds of August.
- The AAA is dead, all hail the AAA.
- HFT is “just volume”, not liquidity.
- The risks of ETF securities lending.
- Understanding the budget deficits.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Greece needs a new political culture
To secure the fresh funds promised by the eurozone last week, the Greek government has had to commit to years of strict austerity.
Snap news
Breaking pre-market news on Tuesday,
- UBS to cut costs by Sfr1.5bn-2bn; 2012 profit target abandoned — statement.
- Q2 results from Deutsche Bank miss forecasts — statement.
- BP reports weaker than expected Q2 underlying profit of $5.6bn;
Further further reading
For the commute home,
- New York Magazine profiles Lloyd Blankfein.
- Bloomberg profiles Gary Cohn.
- Anthony Lane on Murdoch and NOTW.
- How we got into this fine mess.
- The polygamy tax.
American football, basketball and inside baseball
Three big negotiations at three different stages. One deal.
On Monday National Football League (NFL) players voted to accept a deal to end the league’s 135-day lockout. Meanwhile, in Washington, debt ceiling negotiations drag on,
What the United States could learn from Chile
The many worlds interpretation of quantum physics posits that all alternative histories and futures are real. If true, somewhere out there is this version of the United States federal budget:
The chart is from the Congressional Budget Office’s “Budget and Economic Outlook:
How not to draft a sovereign debt restructuring
This is the authentic, accept-no-elisions list of financial institutions in support of the IIF’s Greece financing offer:
It’s been the source of much confusion on Monday, as Greek banks mysteriously disappeared from an original list – only to appear later once again.
What’s as good as gold, but potentially much more volatile?
The Swiss franc.
It has indeed often been cited as being as good as gold.
But while, on the surface, its similarities with the yellow metal might seem obvious, there is one very important difference to bear in mind.
Oh, it’s just another eurocrash [updated]
Lighting up the list of Europe’s biggest fallers at pixel time — banks:
Yes, you are reading this after Thursday’s eurozone summit. Italian spreads seem to be the cause but this was a violent move.
Greek debt swap — spot the missing banks [updated]
Interesting series of elisions from the Institute of Finance’s original ‘Greece financing offer’ document and later versions… (H/T a friend of FT Alphaville)
Before:
After:
Did you spot who fell off the list?
Banco de Credito de Peru,
Settlement failure financing, ETF edition
FT Alphaville has referred in previous posts to the emerging global settlement failure issue. We’d now like to address the curious case of settlement fail patterns across the repo universe.
As we have already noted,
(Settlement) failure is an option
What if the persistent number of settlement fails was deliberately done?
A sort of unconventional financing for the market participants doing the failing, if you will.
It’s not far-fetched. We know that back in 2008 for instance,
ETF arbitrage, Chinese trust edition
For those who still question the notion that ETFs “manufacture arbitrage” for anyone smart enough or well positioned enough to exploit the opportunity, we bring you the latest example of ETF arbitrage in action,
A Bank of Ireland mystery
Behold, a modern-day banking miracle.
From a Bank of Ireland press release on Monday:
The Governor and Company of the Bank of Ireland (“Bank of Ireland” or “the Bank”) welcomes today’s announcement by the State of an investment of up to €1.123 billion in the Bank by a group of significant institutional investors and fund managers.
Markets Live transcript 25 Jul 2011
Markets Live chat transcript for the chat ending at 11:20 on 25 Jul 2011. Participants in this chat were: Neil Hume, FT bryce.elder pastit2 NHHola Rabble NHgood morning
What’s wrong with Greece bailout II…
… in three easy-to-read paragraphs.
From Jacques Cailloux and his team at RBS.
1. Greece Bail Out II now detailed, rolling crisis still likely: The Euro Summit was first and foremost a summit aiming at concluding the negotiations surrounding Greece Bail Out II.
For Greece alone
While some European bankers are feeling confused over the matter of private sector participation in the new Greek bail-out, what might it mean for Ireland and Portugal?
The insistence from EU leaders that the Greek programme was “for Greece,
The eurosion of sovereign CDS
Here’s the smart thing in the eurozone plan unveiled last week.
Whatever it does for Greece’s debt sustainability (little) and to ensure private sector involvement (nothing) it really sticks a knife,
Further reading
Elsewhere on Monday,
- John Mack on saving Morgan Stanley.
- How the US resembles a developing country
- Dubai, ahead of its time.
- “The Fed’s rule of thumb could easily be off by a factor of two.”
Pink picks
Clive Crook: Washington is drowning America
When I moved from Britain in 2005 to live and work in the US, I was a born-again admirer of the American people, the American project and the American system of government,
Snap news
Breaking pre-market news on Monday,
- Bank of Ireland welcomes €1.1bn equity injection from the private sector — statement.
- ING to sell Latin American operations for €2.6bn — statement.