October, 2011
SuperGoof
It’s arrived — the first in what all probability will be a string of profit warnings from the maker of over-priced Japanese themed T-Shirts sweaters, pumps.
SuperGoof press release:
At the end of August SuperGroup implemented an upgrade programme to its warehouse management systems to increase capacity and efficiency at its Barnwood site to meet future growth in demand.
Further reading
Elsewhere on Wednesday,
- “Long Live the Great Wall Street Revolution!”
- Bank recapitalisation — get it right this time.
- When VXX ate Vix’s lunch.
- On getting pretzeled.
- ”We need to know exactly where the Fed stands.”
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: How to keep the euro on the road
The eurozone was launched on a wing and a prayer, writes the FT’s Martin Wolf. The wing has fallen off and the deities are not listening to prayers.
Snap news
Breaking pre-market news on Wednesday,
- SuperGroup warns on profits; blames warehouse management systems upgrade — statement.
- Tesco says UK same stores sales down 0.5 per cent — statement.
- Premier Oil buys Encore Oil for £221m/70p a share in cash — statement.
Further further reading
For the commute home,
- The FT story that (probably) caused today’s late rally.
- It’s not the iPhone 5, or the iPhone 4S; it’s the iTilt.
- The Reformed Broker makes a good case for winning the open and the close.
Declassamento del debito italiano
Moody’s has obviously been bitten by the volatility macaque.
32 minutes after US markets closed with a whopper of a rally on the back of this FT story about European bank recapitalisation, the rating agency announced a three notch downgrade of arguably the most important sovereign debt in the world right now.
Introducing the Volatility Macaque
It looks like the face-ripping close coincided with this report from the FT that European officials are — finally — considering bank recapitalisation plans:
EU ministers look at bank aid plans
CDS as omens of impending doom: starring Morgan Stanley
Sometimes CDS react violently to sudden events that were unpredictable. Sometimes they react to pure, unadulterated uncertainty and fear. And sometimes, just sometimes, CDS spreads are full of hot air.
Another one for the ETF apologists
There’s nothing like a trading scandal and regulator attention focused on a subject once defended to the hilt to encourage a little reflection.
Here’s a nice example.
On the week that the UBS trading scandal broke out,
Ka-Pow! Deutsche hit by the VAT man
As with UBS, there’s more than meets the eye to this Tuesday trading update from Deutsche Bank.
And we’re not talking about the missed €10bn pre-tax profit target (that’s no surprise) or another round of redundancies (again no surprise).
Rise of the central execution desk
The UBS rogue-trading scandal has shone a light on the way banks have transformed their trading divisions in the last decade.
Simply put, trading is not what it used to be.
With pressure to cut so-called “proprietary desks”
James Gorman recommends some light reading
Today in cognitive dissonance, with a hat tip to the gang at Deal Journal:
October 3, 2011 To: All Employees From: James Gorman Subject: A Message from James Gorman
Over the past few weeks, there has been an enormous amount of confusion and misinformation about Morgan Stanley and others in our peer group.
Welcome to the bear market, America
Arbitrary worry gauge alert! The S&P 500 has now fallen over 20 per cent since its April 29 high:
Tuesday, October 04, 2011 9:32:10 AM RTRS – S&P 500 .SPX ENTERS BEAR MARKET, DOWN MORE THAN 20 PCT FROM 2011 INTRADAY HIGH.DJI.IXIC.SPX
At pixel time the index had reached 1,087,
The Greek collateral grab — looking a bit bond swap
Newsflash — Finland to take part in Greek bond swap! Sort of. Via Bloomberg:
Under the accord, Greek bonds will be transferred from Greek banks to a trustee, which will sell them [no actual swap then,
China’s medium-soft landing
The bearish-on-China is going all mainstream on us. Or at least, more prominent. For example, 12 per cent of economists in a Bloomberg survey last week believe the country’s growth will fall below 5 per cent.
Europe’s web of revenue [updated]
Graphics and analyses of the interconnected nature of the global economy are mighty popular with the world’s latest financial crisis. Debt exposures, counterparty exposures, and now revenue exposures — courtesy of Morgan Stanley’s Global Exposure Guide.
Scaring the US into caring about eurozone
A few days ago we saw this post on Talking Points Memo, intriguingly linked from Twitter as ‘The Biggest Story in American Politics and No-one’s Talking About It’.
And the story is?
It could easily force the United States back into recession and become the issue on which the 2012 elections turn.
Markets Live transcript 4 Oct 2011
Markets Live chat transcript for the chat ending at 11:24 on 4 Oct 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola NHWelcome to Markets Meltdown Live
Please fasten your seat belts
The jet wash from American Airlines sell-off has created turbulence on this side of the Atlantic on Tuesday morning.
And with good reason in the case of AirFrance KLM, which has a toxic combination of high leverage and high operational gearing.
UBS flatters to deceive
UBS expects to report a modest net profit for the Group and positive net new money in its wealth management businesses for the third quarter of 2011
What a relief. In spite of that “unauthorised” trading loss UBS is still going to make a profit. However,
Dexia garantie (encore) [updated]
RTRS-FRENCH, BELGIAN GOVTS, WITH CEN BANKS WILL TAKE ALL NECESSARY MEASURES TO SAFEGUARD DEXIA SA ACCOUNT HOLDERS, CREDITORS -FRENCH MIN
RTRS-BELGIUM AND FRANCE WILL GUARANTEE DEXIA’S FINANCING -FINMIN STATEMENT
(Chart via Scott Barber of Reuters)
There is already a patchwork of state guarantees within Dexia’s capital structure but this new statement is an important move.
Goldman on who’s really wagging the oil market
If you’re wondering what Goldman Sach’s view on crude is — it can be summed up in one neat sentence from their latest research note:
The world crude oil market remains exceptionally tight.
The reasoning is pretty straightforward.
Dexia en chute encore, encore
What’s French for penny dreadful?
(Centime horrifique? — Ed.)
Related links:
Crisis-hit Dexia running out of time – FT
Dexia en chute encore – FT Alphaville
Further reading
Elsewhere on Tuesday,
- Ten commandments for rescuing the euro.
- Don’t get so excited about those ISM and car sales numbers.
- This is just getting weird.
- Well, perhaps they read this.
- What the Bernanke put is now worth.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: China or the US? Make your choice
The defining geopolitical drama of the next century will be the battle for power and influence between China and America,
Snap news
Breaking pre-market news on Tuesday,
- Dexia starts work on bad bank for its non-strategic asset portfolio — statement.
- UBS expects to report modest net profit for third quarter; benefits from Sfr1.5bn of own credit gains — statement.
Further further reading
For the commute home,
- It was a cadaverous day on Wall St.
- A bumper essay collection on the future of economic research.
- The role of default in macroeconomics.
- Sprint to “bet the company”
Papandreou mulls resignation, says FT Deutschland
Well, wouldn’t you?
From FT Deutschland, via Google Translate:
The Greek Prime Minister George Papandreou has information to the Financial Times Germany over the past three weeks, twice spoken with confidants about his resignation.
American Airlines in trouble
Spotted flying at a few hundred feet above bankruptcy:
AMR (American Airlines’ parent company) stock was halted three times in 23 minutes on Monday amid rumours that the firm is to file for Chapter 11,
Not even breaking even at Goldman Sachs
Credit Suisse bank analysts have gone one further than their Nomura counterparts by forecasting Goldman Sachs to register its second quarterly loss since going public in 1999.
It’s the second cut that the CS analysts have made to their estimates in a month.