August, 2011
Further reading
Elsewhere on Wednesday,
- Eurozone bond yield divergence gets worse.
- Return of the d-word.
- The sweary case for poachers turning gamekeepers.
- US stimulus — a massive failure of infrastructure funding.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Sandbu: Washington’s battle is a diversion
The US, home to Hollywood and the inventor of televised politics, could be counted on to produce a cliffhanger of a show around the debt-ceiling debate,
Snap news
Breaking pre-market news on Wednesday,
- Societe Generale says it will struggle to reach 2012 profit target because of Greece/economic back drop — statement.
- Northern Rock announces half year loss (underlying) of £78.8m — statement.
Further further reading
For the commute home,
- An excellent primer on the goings-on in Central Falls.
- And another one.
- For f’s sake: A fact free fiscal farce.
- Reinhart and Rogoff receive a grilling.
- What in the world is the bond market saying?
- Where — not how – to live out your American Psycho fantasies.
Reality, bites
Introducing the debt ceiling relief rally:
That’s the seventh daily decline in a row for the S&P 500, placing it in negative negative territory for the year.
Italy is the single point of failure. Including its auctions
Here’s the thing about “cancelling” an Italian bond auction. You have lots and lots of opportunities to do it (click to enlarge):
(Dates for August and September from the Italian treasury’s very own,
Swiss bank avalanche
This might be a deferred sell-off following Monday’s holiday in Switzerland. In the words of one analyst though, they’re ‘stuck between a soft dollar and a hard franc…’
(That’s because the wealth management arms of both banks have mainly US dollar revenues and Swiss franc costs).
Was demographics destiny after all?
Interesting USDA chart, pointed out by Big Picture Agriculture:
It’s from this data set. We’re interested in it, anyway. There’s an argument out there that falling Mexican emigration to the United States (caused in this theory by a crackdown on illegal immigrants) was a “missing”
The vanishing debt ceiling deal
The Budget Control Act will reduce annual US federal deficits by at least $2,100bn by 2021, according to the CBO. But will it?
Analysis published Tuesday by Barclays Capital argues that it won’t. This is due to the overly optimistic growth assumptions underpinning the CBO’s new deficit projections.
Wall Street’s next top model
No it’s not Tyra Banks. Sorry.
According to a technical paper published on Risk.net by Alex Langnau, global head of analytics at Allianz Investment Management and Daniel Cangemi, head of FICC trading at EFG Financial Products,
What’s inside Pandora’s box?
Not all of the world’s evils but from an investor perspective something just as bad — a seriously huge profit warning.
A warning so large that’s it’s knocked almost 70 per cent from the share price of the eponymous charm bracelet maker.
How to value a Greek bond like a CDO
There are two fun things about BNP Paribas’ €534m Greek bond impairment (sat right at the top of its second-quarter results press release…)
First, less than half of the bank’s total gross Greek bond exposure is subject to the impairment provision because of the debt not being eligible for the IIF bond offer,
Markets Live transcript 2 Aug 2011
Markets Live chat transcript for the chat ending at 11:33 on 2 Aug 2011. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHwelcome to ML NHsorry for being late
How Andy Haldane gets his haircut
It’s no coincidence that with the shift to central clearing looming on the horizon, the Bank of England’s director for financial stability is talking about this subject.
Haircuts, that is.
As readers will no doubt be aware,
Hargreaves LansDOWN
The Financial Services Authority (FSA) has today [Monday] published rules on platforms regulation. This follows a review of the regulation of platforms in the context of the objectives of the Retail Distribution Review (RDR).
A REIT repo exposure
With the US debt ceiling debacle still in full play, anyone scouting for stress signals is very much tuned into developments in the US repo market.
Overnight general collateral rates are on the rise,
A gilt-y inflation record
Yields on 10-year gilts fell below 2.77 per cent on Tuesday — the lowest level for about 50 years.
However real yields are also at historic lows, with gilts yielding 2.2 per cent less than inflation.
About those Greek privatisations..
Confusion in Greek bailout Mk 11 — not just for bondholders. This time it’s about the privatisation receipts.
Deutsche Bank has set its economists Abhishek Singhania and Alexander Duering to the task of addressing client questions over the differences between the EU and IMF financing documents.
Selling Italy, buying UK [updated]
Compare….
Contrast…
That’s a modern record low for the 10-year gilt yield and a record eurozone high for its Italian peer. Outwardly, it’s an amazing gulf in some respects as both sovereigns are doomed to low growth.
What *will* you do, S&P?
As has been noted everywhere, the debt deal approved by the US House of Representatives on Monday night holds little promise of achieving the $4,000bn in spending cuts that ratings agencies are thought to be wanting.
Further reading
Elsewhere on Tuesday,
- Bank capital, and agreeing with the maestro.
- The House bought the deal, but will the world buy it?
- Dissecting the debt ceiling vote.
- ‘…the rate of collapse of an empire is independent of its age.’
- ‘The tails are getting fatter.’
- How Apple learned to think like the Chinese Communist Party.
Pink picks
Carmen Reinhart and Vincent Reinhart: Deal or no deal, a US downgrade is deserved
Negotiations between President Barack Obama and congressional leaders found a sliver of common ground this weekend write Carmen Reinhart,
Further further reading
For the commute home,
- John Cassidy on smoke, mirrors and Obama’s humbling.
- Greg Ip looks at the nuts and bolts of the deal.
- The facts, from the Congressional Budget Office.
- The debt trigger,
Debt ceiling: losers
The winners have been profiled. Now for the ugly part.
Losers
1. The budgetary process. The debt ceiling is an anachronism that should be abolished but it has now supplanted the traditional process of budgets and continuing resolutions.
Debt ceiling: winners
Barring a Republican rebellion in the House of Representatives, the Budget Control Act of 2011 will be passed by both houses of Congress on Monday, and sent to the President for his signature.
Despite the resurrection of real market-shifting news on Monday,
Inter-yention stations
It wouldn’t be a proper dollar panic unless there were rumours, uncertainty and fear that the Bank of Japan is intervening in the yen:
So here we are. Rumour, uncertainty, fear:
