August, 2011
Further further reading
For the commute home,
- James Hamilton’s preferred economic policies in a world that doesn’t exist.
- The American debt crisis, Infographed.
- Hope you took a summer vacation — you’ll be more productive.
Where now for AT&T and T-Mobile?
Wherein John McDermott and Cardiff Garcia try to understand the deal of the day and realise they should’ve gone to law school and become antitrust attorneys.
What just happened?
The Department of
Buying and selling in Sino-Forest
Bloomberg’s Christopher Donville has combed through Sino-Forest’s regulatory filings and found evidence that its senior executives have sold $83m of shares in the firm since 2006. Excerpt below, with our emphasis:
US government: not so fast, AT&T&T-mobile
Breaking: regulator grows a Bachmann-like titanium spine, markets caught by surprise.
Report from Bloomberg:
The U.S. government sued to block AT&T’s proposed $39 billion acquisition of T-Mobile USA Inc.,
Phew…
The Dow Jones is back in positive territory for the year, after rising to about 11,669 at pixel time on Wednesday morning, according to Bloomberg. It closed around 11,577 at the end of last year.
A new development in China’s copper collateral trade
FT Alphaville has talked volumes about China’s cash-for-copper collateral obsession.
Recently, however, speculation has picked up that these trades have started to be unwound — mainly because the Chinese government caught up on the funding loophole,
28 Day-Traders Later
Games of spoof can be very expensive. Just ask Mike Ashley, who reportedly lost £200,000 when playing against his advisors at Merrill Lynch. Or ask Peter Beck, the Canadian day-trading evangelist who has lost £8m to the FSA.
The overnight Black Swan
It used to be that lending was done on unsecured term durations, all the time.
Then we had the credit crunch, and unsecured term lending died.
Then everyone started lending on a collateralised basis.
Carried away in Switzerland [updated]
Negative rates have arrived! In Switzerland, anyway.
Which means the risk of the Swiss franc becoming a funding currency for carry trade — à la the Japanese yen — is very real.
That said, volatility is still the issue.
Stylised facts from Bob and Kevin
Bob ‘the Bear’ Janjuah and sidekick Kevin Gaynor are ready for a new school year at Nomura.
To help prepare, the strategists have compiled a smorgasbord of “stylised facts” to guide investors.
And here they are:
Euro splurge!
Have you heard about this new euro daaaahling? Is great. Lets buy thingz with it!
Yes, that’s our best euro-trash impression.
And we bring it up because the first chart above — from David Watts at CreditSights — rather superbly illustrates the euro-area buying spree undertaken by the region’s banks after the adoption of the euro.
Negative pledge — a periphery tour
Further to recent events in Greek foreign-law bonds and Finnish demands for collateral…
Portugal (€5bn Euro Medium Term note programme):
Italy (Medium Term Note programme):
Spain’s more complicated:
Further reading
Elsewhere on Wednesday,
- Ben Bernanke’s dream world.
- Paul Krugman is gloating.
- China can’t help flaking on contracts.
- Exxon’s land of opportunity.
- “Demand curves slope upwards.”
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Struggling with a Great Contraction
Many ask whether high-income countries are at risk of a “double dip” recession, the FT columnist writes.
Snap news
Breaking pre-market news on Wednesday,
- Tesco to sell Japan business – statement.
- IFG confirms approach from Bregal Capital, releases half-year results – statement, statement.
- Corporate: Sportingbet,
Further further reading
For the commute home,
- Asking the right questions of your financial adviser.
- Ben Bernanke doesn’t get the message.
- The stimulus increased employment by 1m – 2.9m, says the CBO.
- Are you feeling confident in the US economy?
- S&P 500 at inflection points.
FOMC minutes from the Aug 9 meeting
UPDATE: Having chewed on these for a little while, it seems the momentum on the committee is towards doing something more accomodative at the next meeting in September.
More than we had realised, anyway. We were completely unsure about this after Jackson Hole,
The cost of a crowded volatility trade
FT Alphaville just had a very interesting conversation with Ari Bergmann, managing principal at Penso Advisors, with respect to what’s been happening in the world of volatility hedging this year.
And specifically how things have changed since July.
Goldman’s Q(E3)&A
There was no press conference with Ben Bernanke after the August 9 FOMC statement or following his Jackson Hole speech — and there won’t be another until after Congress pays attention and starts pulling its weight around here November 2.
Do you comment on FT Alphaville? Then please read this
We’re super sorry to spring this on you at the last minute.
But FT Alphaville is, with great reluctance, changing.
From Tuesday 7pm London time/2pm New York time, commenters on the site will be locked into a single pseudonym.
Time to get your Roxxon…
Alternative headline: “Roxxon! You don’t have to put on the red light.”
Reported by Reuters a few minutes ago:
Russia’s top crude producer, Rosneft, and U.S. ExxonMobil signed a strategic agreement on Tuesday to jointly develop oil in the Russian Arctic.
From the alpha to the…. whatever this is
Or, the weak-form EMH strikes back:
Bill Miller, a previous Morningstar manager of the decade, who could do no wrong through the 1990s, has struggled with poor performance since 2005. Now his Legg Mason Capital Management Value Trust is ranked last of the 840 funds in its category over the past five years by Lipper,
The Fed’s convenient WTI ‘Cushing’ factor
Since the Treasury yield curve is becoming less responsive to Fed intervention, we’ve outlined the case for why it might make sense for the Fed to start targeting the energy curve instead.
Obviously the Fed mandate remains an issue.
The Fed’s oil easing
This post is going to address two fundamental points:
1) Why it might make sense for the Fed (or a respective government agent) to intervene in commodities.
2) Whether the Fed has indirectly already intervened and does this explain the mysterious WTI-Brent disconnect?
While we appreciate the above might be considered controversial,
Dear ESMA … about those Greek debt impairments
From Tuesday’s FT — some letter-writing:
Some European financial institutions should have taken bigger losses on their Greek government bond holdings in recent results announcements, according to the body that sets their accounting rules.
Anyone for some non-government debt eurobonds?
A “modest eurobond proposal,” courtesy of Deutsche Bank.
It’s meant to bypass some of those pesky EU Treaty issues, while overcoming the so-called ‘free rider’ problem that might come from very different eurozone governments issuing debt at identical costs.
Czech these periphery write-downs out
Only in a stress test, but still…
From the Czech central bank’s August stress-testing of its banks, published on Monday:
The Recession stress scenario assumes a drop in economic activity as a result of a renewed recession in the Czech Republic’s main trading partner countries,
Finland’s Greek collateral plan breaks negative pledge [updated]
You might have heard of the latest Finnish proposal to collateralise loans to Greece. This would transfer Greek privatisation assets to a Luxembourg-based société anonyme to be held as security against default,
Inter-company, intra-state Chinese lending
Here’s an on-the-ground update of a Chinese practice with some Japanese origins.
It’s what China expert Michael Pettis compared to the zaiteku undertaken by Japanese companies in the 1980s. Put simply,
Further reading
Elsewhere on Tuesday,
- A tale of two contracts.
- Some government inflation hedging in commodities.
- It’s not just ETFs which are causing correlation.
- Explaining the pre-Irene gasoline moves.