July, 2011
Dodd-Frank — a real work of art
Inspired by a printer bleed of a Dodd-Frank diagram from Deloitte, via Politico, here we present a slight diversion from FT Alphaville’s bailiwick.
Every now and again we come across pictures meant to simplify the complexities of the landmark legislation.
Breaking! Ten-year old news from Argentina
Or, why is that when we hear that Thursday’s euro leaders summit (and the ECB) will allow selective default in a Greek bond swap and buyback — we get taken back to Appendices 7 and 8 of the IMF’s famed postmortem on the Argentine disaster?
Give ‘em a read.
Markets Live transcript 21 Jul 2011
Markets Live chat transcript for the chat ending at 11:23 on 21 Jul 2011. Participants in this chat were: bryce.elder Tony Tassell Joseph Cotterill, FT BEGood morning everyone BEAnd welcome to another Markets Live
China, nothing to see here
The HSBC/Markit flash China PMI for July fell below the 50-mark to 48.9. It was 50.1 in June, making the biggest fall since March 2009 and the first negative result since July 2010.
Whew.
(Cue some more slowdown/stagflation worries.)
The news apparently was a bit of a dampener on markets,
Willem Buiter thinks water will be bigger than oil
The folks at Citigroup are a thirsty bunch.
In a 37-page note on Thursday, the bank’s global strategists recommend investors play the urbanisation trend by buying into water companies (these ones to be specific),
Mirror, mirror on the wall, who has the highest DTAs of all?
Deferred Tax Assets (DTAs) have been mentioned (usually critically) on this blog many times before. Put very simply, they are tax carryforwards that can be included in banks’ Core Tier 1 capital ratios.
Cook’s consol plan for Greece
Long-standing FT Alphaville commenter and UCL senior research fellow, Chris Cook, has had an interesting letter published in the Financial Times on Thursday.
It’s a letter with a plan. A plan for Greece,
Not so fast, Japan
Japan’s June trade data surprised everyone on Thursday, squeezing narrowly into a Y70.7bn ($898.4m) surplus. Year-on-year exports declined only 1.6 per cent, versus a median forecast of -4.1 per cent according to Reuters.
Further reading
Elsewhere on Thursday,
- Michael Burry speaks.
- The language of market bubbles.
- Rent or buy?, in hindsight.
- Forget the stress tests, just look at the resolution regimes.
- Is gold money? No,
Pink picks
John Gapper: The best way for Rupert Murdoch to leave
There is no doubt which Murdoch family member emerged best from the phone-hacking hearing before a UK House of Commons select committee this week,
Snap news
Breaking pre-market news on Thursday,
- Roche raises 2011 earning target — statement.
- Q2 results from Ericsson undershoot — statement.
- Swedbank results top expectations — statement.
- AstraZeneca says FDA approves Brilinta for use in the US — statement.
Happy Birthday, Dodd-Frank
Is there any point in getting a one year-old a birthday present? It’s a question of etiquette that has stumped FT Alphaville for many years. Should you just get the parents something? Or put something in trust for when they grow up? Spend it on a six-pack to get you through the wailing cacophany of a birthday party? What to do?
A similar pickle presents us with the Dodd-Frank Act,
Further further reading
For the commute home,
- Michael Burry posing with black swans.
- Fed to test facility for draining excess reserves.
- Larry Summers shares his thoughts on the Winklevoss twins with an anatomy lesson;
Chinese patent problems
Here’s a chart posted a couple of weeks ago by economist Mark Perry, based on data from different regions’ patent offices and collected by the World Intellectual Property Organization:
In addition to wondering about potential methodological differences in the patent process across countries,
The central bankers’ worry lists
Looks like there’ll be no sleep at Jackson Hole.
Courtesy of Morgan Stanley’s global economics team, two tables that list and rank each major central bank’s current “challenges”.
For the G10 (click to expand):
Italy’s break(ing) even point…
… is not until a whopping 300 bps rise in interest costs across the yield curve, from today’s levels, according to Morgan Stanley.
In a note out Wednesday MS’s Daniele Antonucci and Elaine Lin ask how sustainable is Italian government debt?
They run some numbers and conclude that for the Italian debt load to trend upwards,
Euro-Tarp, abridged
Not just sovereign debt: there’s also vague talk afoot that the EFSF might be directed to purchase bank equity. So we liked this guide to the (weak) pros and (strong) cons from Nomura. Cut out and keep!
Related link:
A commercial real estate mini-pop
Just one month after registering a new index low, an eye-catching top line from Moody’s:
The Moody’s/REAL Commercial Property Price Index (CPPI) measured a 6.3% increase in May, the first positive move in six months and the largest one-month increase since the inception of the index.
Are EFSF bond purchases safe?
Buyback — boondoggle! It’s a noun phrase we’re used to here on FT Alphaville, following this seminal 1989 paper, by Messrs Rogoff and Bulow.
The boondoggle is the tendency for market purchases of distressed sovereign debt to subsidise creditors,
Goldman: debt ceiling debacle already hurting economy
We’ve all heard of the bad things that await should the debt ceiling not be raised or if the US’s sovereign rating is downgraded.
But any impact of the Washington quarrel on the US economy now is harder to spot.
Italy’s record-busting, CDS-moving week
We know that Italian bond yields reached record highs last week.
But did you know that the country made some CDS history too?
CDS referencing Italy saw a huuuuuge increase in trading activity last week,
Greek contagion quote du jour
Markets are saying pretty much what I’m saying too: that Greece is doing what it can, but that Greece is not going to be able to carry the weight of all of Europe and the other problems that Europe has…
The CoCo cap – a mere €150bn?
The CoCo death spiral is the process by which the expectation of a swathe of bank-issued Contingent Convertible (CoCo) debt converting into equity can exacerbate share price declines.
Or more specifically,
Markets Live transcript 20 Jul 2011
Markets Live chat transcript for the chat ending at 11:23 on 20 Jul 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHand welcome to Markets Live
Dear Uncle Trichet
Doing the rounds in the City of London on Wednesday morning.
Dear Uncle Trichet,
Would you please be so kind as to whip out your impressive chequebook in the next few days and stem this self-fulfilling crisis in Europe.
When doves don’t cry – BoE edition
The minutes of the last MPC meeting are out and here’s the price action in the Great British Krona.
Something of a bounce, which is perhaps surprising because on first read the minutes appear to be fairly dovish.
An Apple a day…
… puts a rocket under your share price.
To recap, Apple’s third quarter results (published late on Tuesday) smashed expectation with both iPhone’s and iPad’s sales growing at an exceptional rate.
The Romans always copy the Greeks (including the repo market)
Readers might recall the following two FT Alphaville posts “Take HDAT, Greek politicians” and “Frozen in the Greek repo market”.
Both discussed the idea that Greece may have unwittingly sparked its own funding disaster by encouraging excessive shorting in Greek bonds when it moved to act on settlement fail issues (because the move mostly involved moving the settlement failure goal posts,