September, 2011
Why cutting IOER could be suicidal
By Jove! Someone’s finally got it.
Cutting interest on excess reserve is a hugely risky option for the Fed, and could do more damage than good (leading even to major systemic issues). We’ve said as much,
Eurozone crisis porn
For those who get a vicarious thrill from watching the eurozone sovereign debt crisis and imagining how it might end (like you – Ed.) will seriously enjoy Wednesday’s scribblings from David Zervos,
Don’t even look at China for help
Chinese premier Wen Jaibao threw some shade on the eurozone on Wednesday, and the US too — insisting they get their own fiscal and monetary houses in order and recognise China as a market economy if they really want to see some investment.
Moody’s downgrades SocGen and Credit Agricole; BNP review extended
Moody’s downgraded long-term debt of Société Générale and Crédit Agricole, while keeping BNP Paribas on review; SocGen and Credit Agricole are also remaining on review over long-term funding.
The top lines from each statement follow.
Further reading
Elsewhere on Wednesday,
- On market monetarism…
- …The problem with quasi-monetarism.
- Why you shouldn’t trust the WSJ piece on BNP Paribas.
- Not recovery in sight for the (Latvian) prostitute index.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Time for Germany to make its fateful choice
“Perhaps future historians will consider Maastricht a decisive step towards the emergence of a stable,
Snap news
Breaking pre-market news on Monday,
- BNP Paribas targeting additional $60bn reduction in US dollar funding by end 2012; to sell €70bn of RWA’s — presentation.
- Swedbank halts share buyback programme;
Fiscal flailing
We’re late to this, but here’s a nifty chart from Goldman showing the expected fiscal drag on the US economy through next year, adjusted for the range of potential outcomes of the American Jobs Act:
And a bit of commentary:
Further further reading
For the commute home,
- The first bank living wills will be ready by next summer.
- Super Committee, not superhero.
- The world’s biggest employers.
- Google Travel launches.
- The marvels and flaws of intuitive thinking,
Markets Live – Retail Special
It’s a busy week for the UK retail sector, what with Next, John Lewis, Kingfisher and Kesa Electricals reporting results and the Office of National Statistics releasing its sales survey for August.
So FT Alphaville needs some expert help to tell us what it all means.
Fire your adviser
You don’t need one right now…
“The difference between investing in Emerging Markets equities, Developed Markets equities, and High Yield bonds is now effectively zero.”
That’s from a short note out today by ConvergEx,
Beyond the QE2 adventure
While everything blows up… a blow-out speech by Adam Posen:
Make no mistake, the right thing to do right now is for the Bank of England and the other G7 central banks to engage in further monetary stimulus.
Closing the Autonomy deal
From Dealbook:
Hewlett-Packard has extended its offer for the Autonomy Corporation, as it attempts to win over shareholders.
In August, H.P. struck a $11.7 billion deal to buy the British software maker.
Merkozy on, Merkozy off (updated ad nauseam)
Markets are/were rallying!
EURO EXTENDS GAINS, HITS SESSION VERSUS DOLLAR OF $1.3710
RTRS-EURO HITS SESSION HIGH VS STERLING OF 86.58 PENCE
On news that Germany and France are/were riding to the rescue:
Anything for collateral…?
The inversion of the gold forward rate curve continued to intensify on Tuesday, with seven out of eight banks that submit quotes to the London Bullion Market Association quoting short-term (one or two month) rates above 12-month rates:
Markets Live transcript 13 Sep 2011
Markets Live chat transcript for the chat ending at 11:28 on 13 Sep 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHBonjour NHwelcome to Markets Melt Down Live
Zut alors! – The French bank sell off… (Part deux)
A little earlier we drew attention to this quote from the Wall Street Journal:
“We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore,” a bank executive for BNP Paribas,
If Greece can leave, anyone can leave
Also: think about the governing law of your government bond when a currency union is collapsing. Willem Buiter of Citigroup on Tuesday, exploding a certain meme:
A Greek exit is indeed often viewed as
Zut alors! The French bank sell off continues
Some more ‘Hard Facts’ from the French banking sector.
Tuesday’s early price action in SocGen and BNP Paribas.
A little snippet from Gary Jenkins of Evolution Securities:
SocGen’s attempt
Chinese whispers, the Italian bond non-reaction
Right then, how has news that the Chinese government is considering making significant purchases of Italian bonds affected the yield on the 10-year note?
Oh dear.
But it’s really not surprising,
Chinese bond purchases won’t help
The Chinese are supposedly on their way to rescue Italy from its bond market problems.
As the FT reported on Monday:
Italy’s centre-right government is turning to cash-rich China in the hope that Beijing will help rescue it from financial crisis by making “significant” purchases of Italian bonds and investments in strategic companies.
Scandinavia’s brief time in the sun
After the Swiss National Bank surprised pretty much everyone by pegging the Swiss franc to the euro, some safe haven-seekers went to Scandinavia instead, pushing the Swedish krona and Norwegian krone up more than 2 per cent.
Further reading
Elsewhere on Tuesday,
- Irish debt, or, think of the children!
- Why economists are less keen on inequality these days.
- On the invention of money.
- The US as bank of the world.
- Another Vix ETN bites the dust.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: The long slide into protectionism
While there are plenty of politicians who can eloquently describe the current dangers,
Snap news
Breaking pre-market news on Tuesday,
- Mitchells & Butlers says Piedmont’s 230p a share offer significantly undervalues company — statement.
- Cairn Energy announces further disappointing results from Greenland drilling campaign — statement.
Further further reading
For the commute home,
- Emerging market currencies give up this year’s gains.
- Winnie Jiau gets ten years.
- Text of the G7 communique.
- Exercise, physical activity, and exertion over the business cycle.
Nomura make the (likely, ambiguous) case for the defense
Not intentionally, perhaps, but Nomura’s equity analysts do a half-decent Perry Mason impersonation in a note sent out late Friday.
The note offers a fresh estimate for how much the banks sued by the FHFA stand to lose,
Sundry secret Greek liquidity [updated]
Update — See reader comment below. This may be a case of mistaken identity (or a Bank of Greece accounting change), not liquidity usage in July. We stand corrected if this is accounting changes. ELA’s not easy to spot!
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sun·dry
Adjective:
A tale of two strategists
Whatever it is Merrill Lynch’s David Bianco is smoking we’d like some of it…
… because we can’t help feeling things are going to get a whole lot worse before they get any better.
Much like Morgan Stanley’s Graham Secker in fact,
Chinese coal and the business card paradox
Something was different at this year’s McCloskey Asia-Pacific Coal Summit, says Michael Parker at Bernstein:
Maybe it was the change of venue from Dalian to Beijing, but attendance by local Chinese participants was down and stage-rushing at the end of each presentation to hand out business cards was down too.