September, 2011
Pink picks
Comment, analysis, and other offerings from Friday’s FT,
Tim Geithner: What the world must do to boost growth
The world economy is in the midst of the second slowdown of this recovery from the financial crisis of 2008 and 2009,
Snap news
Breaking pre-market news on Friday,
- Investec to acquire Evolution Group for £232m; Canaccord Genuity withdraws — statement and statement.
- VW says its merger with Porsche will not be completed by year end — statement.
Found: 671,000 state and local government jobs
So apparently there’s a big stimulus speech on Thursday night.
We’re not sure whether this is “big” in the political sense, the economic sense, or the plain old silly media bubble sense.
But a speech there is,
Further further reading
For the commute home,
- Bridgewater is up over 25 per cent year- to-date — how?
- Dreaming of SDRs.
- Can the Swiss keep up the peg?
- Goldman is after your correlation.
- Should we worry about the US-China relationship?
- Another financial crisis movie!
- The impeccable Mr Trichet.
Does junk predict a funk?
Or: do wide high yield spreads over US Treasuries predict a recession?
We ask because this is an interpretation we’ve seen a fair bit in the media over the last few weeks.
And if true, it’s especially alarming since on Tuesday the BofA Merrill Lynch High Yield Master II Index,
Bernanke sets the stage for…
… some sort of easing, again.
He had already set it at Jackson Hole and the August 9 FOMC, and mostly confirmed by the minutes of that meeting.
He didn’t add much in today’s speech: no new details on potential upcoming policy changes such as Operation Twist or anything else you may have heard via Fedwire.
JPMorgan’s “alternate” eurozone-free universe
JPMorgan believes a break-up of the eurozone is “very unlikely”.
But it wants you to be prepared.
The bank launched its “Alternate States” series of research notes on Thursday, which attempt to describe the probable course of improbable events.
“This is really getting nuts”
A fair summary of recent Bank of America events, from Gary Lynch, the bank’s top attorney.
The quote is from this week’s Bloomberg Businessweek cover story, which asks whether Brian Moynihan can stop the rot at the troubled bank (click below to read the piece):
A few good central bankers
In case you missed Jean-Claude Trichet coming over a bit Jack Nicholson at Thursday’s ECB press conference we thought we’d reprise events.
They went a little like this (*cautionary note for those not familiar with A Few Good Men,
Risk-weighting down under
There might be some wiggling about liquidity but the worldwide work of getting banks ready for Basel III goes on. Though there’s been an interesting development in Australia recently.
Australian banks
Caging unilateral risk
There’s a great note from Marc Ostwald of Monument Securities this Thursday morning.
And he gets right to the heart of the issue.
The problem isn’t so much where FX and bond rates are going, but rather the uncertainty related to rogue unilateral actions of particular governments and central banks.
Markets Live transcript 8 Sep 2011
Markets Live chat transcript for the chat ending at 11:35 on 8 Sep 2011. Participants in this chat were: Bryce Elder/FT Neil Hume, FT BEGood morning BEAnd welcome to Markets Live
Why is Britain still AAA?
Viewers of European CNBC early on Thursday morning will probably have seen Danske Bank making their case for cutting the UK’s credit rating by no fewer than four notches, from AAA to A+.
(Which is about where Italy is at the moment.)
It’s an eye-catching call,
The corporate funding twist
Treasuries have gone through the looking glass.
As we’ve discussed, it’s largely because market participants have become overly obsessed with holding safe-haven securities, demanding Treasuries and nothing else.
The lesser spotted Glencore (updated)
Rarer than a willow tit Glencore International was seen at the top of the FTSE 100 leaderboard on Thursday morning.
Here’s the sighting from our markets twitcher.
That advance follows news that First Reserve,
The three Fed stooges (and Mr Gross)
The Federal’s reverse unofficial/official news service – FedWire, or Jon Hilsenrath of the Wall Street Journal — has spoken.
The FOMC has a menu of three options at its two-day meeting beginning on September 20,
Further reading
Elsewhere on Thursday,
- Krugman on gold, explained.
- More weirdness in the WTI-Brent spread.
- Why Martin Wolf is right.
- Preventing the runaway algorithm.
- The Fed’s three options.
- Too many assets can be a bad thing for hedge funds.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: China’s migrant workers expect more
Li Feifei, a 19-year-old migrant factory worker from China’s Hubei province, dreams of becoming a clothes designer,
Snap news
Breaking pre-market news on Thursday,
- Office of Fair Trading to investigate motor insurance market — statement.
- Home Retail Group says Homebase division hit hard by challenging market — statement.
Further further reading
For the commute home,
- The behavioural economist’s dilemma.
- A tentative defense of breaking windows.
- Some light AT&T background reading.
- Creativity is not always well received.
The Chinese funding risk is everywhere
Shibor, shibor everywhere and not a drop of cash to spare.
Bank of America Merrill Lynch rate strategist Bin Gao has a short note out on Tuesday entitled “A possible funding crisis in China?”
Here’s his exhibit A:
Kickback and relax with the mortgage reinsurance scandal
Jeff Horwitz has a cracking story in Tuesday ‘s American Banker on a previously undisclosed report by the Inspector General of the Department for Housing and Urban Development (HUD) into allegations that US banks took lucrative kickbacks from mortgage insurers.
Through the looking glass with US Treasuries and gold
We’ve been harping on for a while now about how a scarcity of quality collateral in the market (read US Treasuries) has been wreaking havoc in the repo markets — and how QE-related large scale asset purchases have only added to the problem.
The Bank of America “de-layering” bloodbath
Well, this is one way of trying to show that you’re in control and that Merrill Lynch is absolutely, totally, honestly, really, not going anywhere.
Here’s the top of the statement released by BofA on Tuesday evening:
More than 2.8m tonnes of hidden copper stocks
The debate over how much copper is being stored ‘off market’ in private inventories — not part of the LME inventory system — has been going on for a while.
The general position taken by investment bank analysts is that supply is tight.
BNP Paribas on BNP Paribas
We’re not sure if we’ve ever heard of a bank doing anything like this before. Ever. But here it is. Presenting BNP Paribas on BNP Paribas:
(Click image above for full FAQ or see here)
Includes details on funding,
Markets Live transcript 7 Sep 2011 (Part II)
Markets Live chat transcript for the chat ending at 11:40 on 7 Sep 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT
NHhi rabble
NHwe have had to start another chat
Regulatory arbitrage with Tony & Nat – redux
More on Tony Hayward’s first big oil deal at his new investment vehicle Vallares– the $2.1bn acquisition, via a reverse takeover, of Turkish E&P company Genel Energy.
We have already mused on whether Genel would be allowed to list in London given the share dealing misdemeanour’s of its executive team,
Markets Live transcript 7 Sep 2011 (Part I)
Markets Live chat transcript for the chat ending at 11:03 on 7 Sep 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT pastit2
NHRight, then
NHlet’s try again
Greek default event question of the day [updated]
Interesting provision on events of default in the €430m Hellenic Railways 2013 bond (highlight ours):
Hat-tip to our reader Yogi Bear for pointing it out. Full prospectus available here.
(Guarantor’s Greece,