October, 2011
The ECB is not here to save the world
Oct 25 (Reuters) – Euro zone leaders will call on the European Central Bank to go on buying bonds in the secondary market to support the likes of Italy and Spain, according to draft conclusions obtained ahead of a summit on Wednesday…
The pictorial UBS beat
UBS beat profit forecasts with their Q3 results on Tuesday, coming in with a SFr 1.02bn ($1.13bn) of net profit.
In the absence of unauthorised gains to offset them, unauthorised (er) losses from the trading scandal cost the group SFr 1.85bn.
Markets Live transcript 25 Oct 2011
Markets Live chat transcript for the chat ending at 11:27 on 25 Oct 2011. Participants in this chat were: Bryce Elder/FT Tony Tassell BEGood morning BEAnd welcome, once again, to Markets Live
China GDP forecasts and net exports
The China outlook is at a rather delicate point right now – although in truth it has been that way for months if not longer. The twin spectres of contracting manufacturing and stubborn inflation have both turned around ever so slightly in recent weeks.
WTI is no longer a burden to passive investors
It was quite a day on Monday for the WTI US oil benchmark. The structure of the futures curve finally flipped into a subtle backwardation, seeing the contract join Brent in a formation which sees front month futures trade more expensive to those further out.
Writing down Greece at Deutsche, encore
Deutsche Bank’s third-quarter results, 2011:
- A €777m profit, double forecasts but down from €1.1bn in the second quarter (excluding charges from the Deutsche Postbank merger)
- Sales and trading revenue €1.9bn (Q2:
DPS vs. EPS
Dividends or earnings? Where should equity investors put their hope if Europe slides into a recession?
The former will likely outperform the latter, according to Morgan Stanley analyst Ronan Carr. He gives four reasons for this:
News Corp to the core
AGM vote tallies like this one released by News Corp late Monday don’t come up too often:
James Murdoch, the deputy chief operating officer, was particularly hammered for his perceived role in the phone hacking scandal,
Further reading
Elsewhere on Tuesday,
- The default landscape, beyond the Lehman/AIG metaphor.
- The concerns of small business owners (and the importance of phrasing).
- Italy no likey naked CDS ban, not that it’ll do much.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
George Soros: My seven-point plan to save the eurozone
1) Member states of the eurozone agree on the need for a new treaty creating a common treasury in due course,
Snap news
Breaking pre-market news on Tuesday,
- UBS Q3 net profit solid at CHF980m despite trading scandal – statement.
- BP Q3 RC net profit down 3.7 per cent at $5.14bn on lower output – statement
- Novartis says Q3 pharma sales $8.159bn, cuts 2,000 positions – statement.
Further further reading
For the commute home,
- Brad DeLong on when the Bank of England broke the law to become lender of last resort in a crisis. Thrice.
- Friendship, memory, stories and life.
- On the glorification of small businesses.
And on the eighth day He created a supranational institution with universal competence
From our Lord and Saviour, via his earthly representative and the New York Times:
The Vatican called on Monday for an overhaul of the world’s financial systems, and once again proposed the establishment of a supranational authority to oversee the global economy,
Bullish bears and the worst-case scenario
We do love us some sell-side honesty here at FT Alphville:
Having been a sell-side analyst for a decade, I can tell you that “owning” the low published estimate on First Call or Bloomberg isn’t easy.
“Stagnation beckons” for the UK
Mervyn King was right: this will be worse than the 1930s.
At least that’s the message from a depressing summary of the UK economy by Citigroup’s Michael Saunders and Ann O’Kelly, who argue that this recession-recovery cycle will be worse than after the Great Crash.
Merrill Lynch’s derivatives set sail for safe harbors
Over the last week, news outlets and bloggers have discussed Bank of America’s move to shift derivatives exposures from its Merrill Lynch unit to its deposit-taking, FDIC-insured bank.
A Bloomberg article kicked the whole thing off:
Harp II’s lack of ambition
Details of Obama’s allegedly supercharged Home Affordable Refinance Program are here, and the Wall Street Journal had the scoop on Monday morning.
For our part, we’ll focus on this, from the FHFA’s Q&A (our emphasis):
Dad, where does growth come from?
So much for emerging markets propelling the world economy out of its current malaise.
Forget China’s healthy manufacturing data; the debt crisis in the Eurozone, deleveraging in the US and sluggish economic growth across the developed world will restrain EM economic activity for the rest of this year and into 2012.
Chaat, ola leaves and the curious case of Raj Rajaratnam
Raj Rajaratnam has given his first interview since being sentenced to 11 years in prison for insider trading. Like the trial itself, it’s an odd mix of money, family, cop cliches and immigrant networks.
The 15:00, 15:50 and 15:59 effect
Anyone following the markets will know that end-of-day volatility has been a problem since at least the 2008 crisis.
Despite that, it’s only in the last month that mainstream pundits have begun to look more closely at the issue,
Counterparty musical chairs
If left standing when the music stops, you may still be trying to get your assets back years later.
While a deterioration in a bank’s creditworthiness may lead to a rather pleasurable accounting profit,
Markets Live transcript 24 Oct 2011
Markets Live chat transcript for the chat ending at 11:12 on 24 Oct 2011. Participants in this chat were: Bryce Elder/FT Tony Tassell BEGood morning BEHere we go again.
The price of pathological procrastination
Pathological procrastination by the sovereign debtor in acknowledging the severity of its problem and commencing the necessary workout process can make the ultimate resolution of the crisis far more costly for all concerned—the sovereign debtor,
A tale of two PMIs
China Flash PMIs out on Monday showed a seasonally-adjusted figure of 51.1 — the highest in five months and a big turnround from September’s 49.9. The preliminary PMIs are compiled by HSBC and Markit Economics,
Let’s face the euro shorts and dance
Euro troubles galore and yet the euro has proved remarkably resilient in October:
If you believe the market, much of that October rally has been down to one reason and one reason only: short covering.
Further reading
Elsewhere on Monday,
- Watch Merkozy share a giggle about Berlusconi and Italy’s debt efforts.
- The eurozone crisis, illustrated.
- And illustrated another way.
- The surreal, leveraged solution to leverage.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Lawrence Summers: Why the housing burden stalls America’s economic recovery
The central irony of financial crisis is that while it is caused by too much confidence,