August, 2011
Further further reading
For the commute home,
- Ahmadinejad’s economic savvy.
- Mortgage delinquencies by loan type.
- Well played: DC earthquake devastation.
- Would shoplifting create jobs?
- On S&P’s new president.
JPMorgan says BofA may need a capital raise
No, not that it’s about to buy the bank in an earthquake-causing deal.
But in a short note published on Tuesday, JPMorgan did upgrade BofA from underweight to neutral, explaining that the pressures on the bank “may actually increase the chances of a credit-positive development,
Bastiat’s revenge, east coast earthquake edition
Or, an excessively literal test of the Broken Windows fallacy.
An earthquake registering 5.9 on the Richter scale centered in Virginia and felt in the Washington DC area and right up the east coast of the United States. From the New York Times:
Closer to profits recession, global edition
Though perhaps still not that close.
And it’s not just a European thing, though by at least one model Europe does bear the highest risk of falling into a profits recession of any region in the world:
Bank of America, inverted
Chart courtesy of Otis Casey at Markit:
Usual caveats about illiquid one year CDS markets, et cetera. BofA was trading at $6.25, down 2.5 per cent, at pixel time.
Good morning Bank of America
(Fall, then…) rise and shine:
BofA’s stock was still down around 2 per cent at pixel time, following an 8 per cent decline on Monday. There’s a worrying relationship between its stock and credit at the moment,
The Greek collateral grab — a credit event after all?
The latest in Finland’s mooted deal to get cash collateral from its part of the Greek bailout — well, maybe, Finland will change the deal after all. That’s after other lenders moaned about special treatment.
China and the commodities bears
The China Flash PMI for August of 49.8 was met with relief today, even though it’s the second negative month in a row.
It’s that kind of scene now, however, when equity markets seem to be hoping for some kind of QE3 announcement at Jackson Hole on Friday even though a) it’s not an FOMC meeting,
FX swap lines to the rescue?
Some believe that of all the emergency facilities initiated by global central banks in 2008 the most helpful was in fact the introduction of unlimited FX swap lines.
As the Bank of International Settlements wrote in May 2010:
Collateral (credibility) damage
Compare:
Contrast:
Search us on whether this means Europe could do another bailout without demanding collateral of some kind. We don’t know whom to trust any more.
Heh — gold and equity are real assets.
Against “Japan-ification”
Given that it’s the question of the hour…
The US economy, says Nomura’s Paul Sheard, is not looking anything like Japan in the early- to mid-1990s.
Well, maybe just a bit. But not really anywhere near similar enough to be staring down the barrel of a “lost decade”,
Further reading
Elsewhere on Tuesday,
- More Marx citations: Eighteenth Brumaire, this time.
- Expecting the unexpected at Jackson Hole.
- Gold goes parabolic.
- Mistaken lessons from Japan.
- Guess how many hours this took to compile (also,
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Michael Lind: The intellectual collapse of left and right
Democrats and Republicans alike are failing to convince the American people that they have the answer to their country’s problems,
Snap news
Breaking pre-market news on Tuesday,
- UBS to cut 3,500 jobs, to take SFr450m restructuring charge in second half — statement.
- G4S group turnover up 5 per cent, says it has “strong pipeline of M&A opportunities”
Further further reading
For the commute home,
- Why FT Alphaville has such sky-high productivity.
- Forecasts over-predict the federal funds rate during easing cycles and under-predict it during tightening cycles.
- Lloyd Blankfein hires an attorney;
Prosecutors request that DSK charges be dropped
L’affaire sordide is nearing its end:
New York prosecutors asked a judge to dismiss sexual assault charges against former IMF chief Dominique Strauss-Kahn on Monday, a stunning reversal that could revive the political future of a man many had seen as the next president of France.
The Bank of America explanation game
Who wants to play our Bank of America game?
Be your very own markets reporter by filling in the blank in the mock lede below. Bonus points for use of the words “swoon”, “pare”, “checked”, “fears” and “rumours”.
[Demographics and destiny] Labour force and consumer spending edition
A decent review of a theme we’ve been exploring recently, courtesy of Moody’s Analytics:
Several important demographic trends will influence US activity for some time. They include (i) the slower growth of Americans aged 15 to 49 years,
ITV hedges its death risks
Unlike its bet on the underlying liabilities, the longevity swaps industry lives on.
ITV on Monday announced it had agreed to a £1.7bn swap deal with Credit Suisse whereby the firm will pay the bank monthly fees to take on the obligation for paying its employees’ pensions.
MMFs end exposure to Italian and Spanish banks
Worries about European banks’ US dollar funding have been growing lately, even though the latest Fed data show foreign banks still have huge piles of cash on an aggregate basis.
But that’s just one part of the funding story.
Crisis! We’ve got new words for the crisis
Sometimes, existing words just don’t cut it and you have to come up with some new ones. Or get your readers to do it for you.
In the current economic climate FT Alphaville has been running out of imaginative ways to convey a sense of imminent destruction.
“Dangerously close to recession” — earnings edition
Or, earnings recession risk, and still not getting it in equities.
Interesting spot from Morgan Stanley’s European equities analysts, following the bank’s major downgrade of global growth forecasts and its belief that Europe in particular is “dangerously close”
Finance, more progressive than policy?
“At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within this framework of which they have operated hitherto”.
Moody’s not pleased with Greek collateral grab
Following Finland’s cash collateral deal with Greece — an issuer comment from Moody’s on Monday:
If generalized, these bilateral agreements would be credit negative for Greece and other countries now receiving or potentially in line for bailouts,
When US Treasuries diverge from Italian bonds… [Updated]
Attention algobots, headline traders and French regulators.
In this post we are going to direct readers to some publicly available information about Lyxor’s (Societe Generale’s asset management arm) fixed income ETFs.
The Gaddafi effect on oil
It looks like a potential Libyan regime change is already beginning to affect oil prices on Monday:
It’s only 2.2 per cent down at pixel time, and there are many other factors to consider in these economic times.
Tu quoque is not a eurozone crisis solution
Confidence-building with Wolfgang Schaeuble (via Reuters):
One should differentiate here. We’ve got debt problems some individual countries, not only in the euro zone. The United States have higher debts than even the most difficult countries in the euro zones.