August, 2011
FTfm on AV
Some highlights from Monday’s FTfm
Greek rescue plan worries hedge funds
Hedge fund managers are seeking legal advice about the worth of their holdings of Greek credit default swap contracts amid
Friday: five stories, five questions
A long, strange, volatile day. Charted:
Stocks suffered large swings, with financials taking some of the biggest hits. Yields on 10-year US Treasuries were up by their largest amount this year — ending up around 2.57 per cent.
Meanwhile, in Bank of America news
Sure, it’s been a bad year but there must be a reason why BofA is the biggest Friday faller (down 8 per cent) on the DJA and S&P.
It’s because BofA’s 10-Q reveals the bank underestimated the cost of those dastardly GSE settlements.
The safest of havens…
Here’s this year’s biggest one day rise in US 10-year yields:
Rumours of S&P announcing something on the US rating after the bell are jostling for attention with the Berlusconi Bounce.
Italian to be next ECB president
RTRS-ITALY’S BERLUSCONI -WE WILL ACCELERATE MEASURES IN AUSTERITY PROGRAMME WITH AIM OF BALANCED BUDGET IN 2013
Related link:
Here comes the rescue – FT Alphaville
Here comes the rescue
The bazooka is seemingly being readied on Friday afternoon:
RTRS-ECB READY TO BUY ITALIAN, SPANISH BONDS IF BERLUSCONI COMMITS TO BRING FORWARD SPECIFIC REFORMS -SOURCES
RTRS-ECB EXPECTS ITALY TO FAST-TRACK WELFARE REFORM,
[Competition] Calling stressed traders everywhere!
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Do you feel pictures like these are simply not doing your kind any justice?
Do you think
Going south — CDS inversion edition
An interesting pair of charts compiled by Markit’s Lisa Pollack:
Essentially they show the severe flattening of Italy and Spain’s CDS curves over the last few days — notably the gap between protection for three years and for five years has come in quite a lot in August.
US Markets Live transcript 5 Aug 2011
Markets Live chat transcript for the chat ending at 15:14 on 5 Aug 2011. Participants in this chat were: Cardiff Garcia John McDermott Izabella Kaminska CGHello! JMGood morning
US Markets Live begins at 10am New York time
Payrolls up, futures up, but you’re still feeling down?
Not to worry, we’ll be taking our usual meander through crisis land at 10am New York time, which is 3pm London time for those staring bleeding-eyed at the FTSE 100.
About that better than expected jobs number…
Some reaction to better than expected non-farm July payroll numbers, following an August sell-off, from Reuters:
“Wall Street breathed a sigh of relief because the employment news was bad, but not terrible.
Jobs not that terrible shock: July NFPs +117,000
Partial redemption?
The July jobs report released on Friday was a sweet upside surprise compared to the battering that took place last month. Private sector payrolls increased by 154,000, government jobs fell by 37,000,
There are many ways to impair a Greek bond
Many ways to fudge them too.
Compare and contrast…
1) Marking Greek bond impairments to market:
Examples du jour: RBS and Allianz.
RBS has written down £733m of its £1.4bn holdings of Greek bond holdings.
Markets Live transcript 5 Aug 2011
Markets Live chat transcript for the chat ending at 11:21 on 5 Aug 2011. Participants in this chat were: Neil Hume, FT bryce.elder Joseph Cotterill, FT Izabella Kaminska NHTin Hat NHcheck
Shock and awe in the Eurozone
What was the ECB trying to achieve on Thursday by reactivating the SMP but purchasing only Irish and Portuguese government debt? (It appeared that the ECB was buying them again, at longer maturities, on Friday.)
There are plenty of theories.
Il sorpasso
Only just (by all of 5bps — it was 60bps back in the depths of the late 2008 crisis) but interesting that it’s punched straight through further rumours of Spanish and Italian bond purchases by the ECB.
Keep calm and carry on [updated]
Friday’s newspaper round-up (with a little help from Sky News and now with added Daily Mirror).
And finally the Sun…
Introducing the 2011 deposit crisis
The key to understanding the current crisis is to understand that this is no longer a funding crisis, but rather a deposit crisis.
Yes, there are funding issues in peripheral European banks. But don’t let that distract you from the main point.
Carnage
Sometimes charts speak louder than words.
Friday’s early price action.
Further reading
Elsewhere on Friday,
- “That. Was. Unpleasant.”
- There’s always “currency reform” for Europe…
- The case for emergency tax cuts.
- Welcome to liquidity premia.
- Markets are not worried about Greece,
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: Eurozone crisis resembles US turmoil in 2008
No sooner did the markets breathe a sigh of relief over the resolution of the US debt ceiling dramas,
Snap news
Breaking pre-market news on Friday,
- RBS takes £733m hit on Greek government bonds; Ulster Bank impairment charge £1.25bn — statement.
- Allianz takes €326m hit on Greek debt — statement.
- Hunting to acquire Titan Groupfor £475m;
Obliteration
Charted:
So (deep breath….) that’s all the 2011 gains for the DJA gone, 1-month T-bills went negative, brent crude dropped around $6, the yield curve flattened like a pancake, industrial stocks were hammered,
Trichet – the verdict
We already know what the markets made of Thursday’s moves by the ECB to try and halt the contagion in the eurozone from spreading.
Here’s the verdict from the sell side. Think moving with the handbrake on.
The cash killing BNY Mellon: details
Cash may be king but it’s going to cost the subjects. Negative interest-rates are here and that’s rarely a good sign. Click through for the two-page explanatory note sent to clients by BNY Mellon. A 13 basis point fee will be charged on accounts with an average monthly balance of over $50m “per client relationship”.
The cash killing BNY Mellon
The search for a safe haven just got even trickier. BNY Mellon announced on Thursday that it is to charge a fee on all those cash deposits piling in as investors flee risk assets. Presenting, then, the latest cash killers — flashes courtesy of Reuters:
Markets Live transcript 4 Aug 2011
Markets Live chat transcript for the chat ending at 16:36 on 4 Aug 2011. Participants in this chat were: Neil Hume, FT Joseph Cotterill, FT John McDermott NHHola Rabble NHI will start again