October, 2011
You shall not default, the ECB commands it
If you’ve ever read about central bankers in the 1930s objecting to countries coming off the gold standard, this post may cause a slight feeling of déjà vu…
On Thursday, the European Central Bank published its usual monthly bulletin on economic developments in the eurozone.
Fund management woe – redux
Another grim update from UK fund management sector. This one’s from Ashmore.
The emerging markets specialist, which recently joined the FTSE 100, has revealed a big fall in assets under management and a Paulsonesque performance from its recently acquired equities business.
“Voluntary” Greek bond exposure quotes du jour
At a conference in the German capital, [Deutsche Bank chief executive Josef] Ackermann also said the bank’s obligation to hold Greek bonds had cost it 400 million euros this year.
That’s via Reuters. No one’s forcing Deutsche to hold the debt,
Further reading
Elsewhere on Thursday,
- How voting works in Europe… sort of. Step 1, agree to agree.
- On multipliers, crowding out, and stimulus.
- China: Booming or popping?
- A young protester takes a stand against fractional reserve banking.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Don’t boot out tomorrow’s Nobels
With the award of the Nobel for economics to Thomas Sargent and Christopher Sims this week,
Snap news
Breaking pre-market news on Thursday,
- Glencore International set to sign $800m-$900m loan deal with Bakrie Group — report.
- Ashmore says assets under management fell 10.5 per cent quarter-on-quarter;
Further further reading
For the commute home,
- The latest “FT effect”: European banks could sell assets.
- Rollover risk and market freezes.
- Occupy Wall Street gets the full Foreign Affairs treatment.
- Prison time for insider trading is increasing.
Is there such a thing as the “FT effect”?
“So, what do you do?”
“I’m a journalist.”
“Ah, who for?”
“The FT”
“Cool. Is that the pink one?”
– the FT effect (one version)
There is, however, another FT effect, at least according to analysts at Birinyi Associates.
Correlation… still really high
“When the storm comes, everyone gets wet.”
Remember when we facetiously told you to shelve your adviser? Probably no need to bring him back yet.
The quote above and the chart below are in the latest monthly update of 30-day correlations from ConvergEx,
FOMC minutes from the September 20-21 meeting
Also known as the Great Monetary Policy Brainstorm.
That’s a pithy summary of the minutes from the September FOMC meeting, which were released on Wednesday afternoon. You already know the policy decisions.
Erste’s fumble, and where (else) to hide sovereign marks
Those helpful sea creatures at Goldman Sachs have called 36 banks to see if any of them were treating CDS protection sold in the same way that Erste Group was.
To recap, Erste announced a number of extraordinary charges on Monday,
Pointless Greek bond swap dead — long live pointless Greek bond swap
(Reuters) – Losses for private investors on Greek debt in the second financing package for Athens are likely to be between 30 and 50 percent, rather than the earlier agreed 21 percent, euro zone officials said Wednesday…
Harrisburg, PA files for bankruptcy [updated]
It started with an incinerator and ended with burnt fingers.
From Reuters on Wednesday morning:
(Reuters) – The Harrisburg, Pa., city council passed a resolution on Tuesday night authorizing a Chapter 9 bankruptcy filing,
Premier Foods is worth less than nothing
Here’s something you don’t see everyday – a negative share price target.
Now, Exane analyst Jeff Stent readily acknowledges negative equity value is an academic concept, for no stock is worth less than zero.
Origins of the EFSF monoline plan
Or, Allianz talking out of its… ah, never mind.
The German insurer has recently taken to touting a proposal for the EFSF to insure sovereign debt.
Interestingly, the nub of the EFSF bond insurance plan was put forth at least nine months ago by a small European consultancy called Redefine.
EFSF – A very European monoline
What the world needs, what Europe needs, is clearly another monoline.
On Tuesday, the WSJ broke the news that a proposal by Allianz for the EFSF to act as a bond insurer was gaining traction. This would enable the firepower of the bailout fund to go from €440bn to something in the region of €3,000bn.
Markets Live transcript 12 Oct 2011
Markets Live chat transcript for the chat ending at 11:29 on 12 Oct 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT pastit2 NHMorning rabble NHwelcome to ML
The descent of Man (Group)
Missing – dead cat bounce. Answers to the name of Man Group. If found, please contact Peter Clarke on 0207 144 1000.
Ugly eh?
Since last month’s dismal results, shares in Europe’s biggest hedge fund manager by assets have sunk further and further and further.
A Finnish view on Greek debt losses
Europe’s leaders have apparently accepted that Greece will default, although they can’t agree by how much it should write down its debt.
Perhaps someone might try asking Finland?
They seem to have one answer at least.
We, concerned Europeans…
… That’s George Soros and 95 others calling for a common treasury, supervision, regulation and deposit insurance in the eurozone.
Further reading
Elsewhere on Wednesday,
- Benford’s Law meets corporate America; horror ensues.
- The case for sovereign CoCos.
- Volcker rule found living inside bid-ask spreads.
- Presenting…. CLO 2.0.
Pink picks
Comment, analysis, and other offerings from Wednesday’s FT,
Martin Wolf: First aid is not a cure
David Cameron, the UK prime minister, has called on eurozone leaders to adopt a “big bazooka” approach to their woes.
Snap news
Breaking pre-market news on Wednesday,
- Burberry maintains guidance — statement.
- Fresnillio lowers guidance for 2011 silver production to 41m ounces — statement.
- BAE Systems warns of hit to earnings from flood damage,
Further further reading
For the commute home,
- Did the TAF work?
- Retail banks are looking okay; investment banks not so much.
- A nuanced look at gold, Euro, and S&P correlations.
- Greater competitiveness doesn’t necessarily mean greater inequality.
Ty kokos! Slovakia rejects EFSF expansion
EFSF, fail:
Tuesday, October 11, 2011 4:12:18 PM RTRS – SLOVAK PARLIAMENT REJECTS PLAN TO EXPAND EFSF, GOVERNMENT LOSES CONFIDENCE VOTE
But, wait, they’ll have another pop at it. (Known in Panglossian Brussellian as the Irish Lisbon manoeveure.)
Tuesday,
S&P and Fitch downgrade Spanish banks
Where the sovereign goes, the banks follow. (And vice-versa, of course.)
Fitch and S&P downgraded a slew of Spanish banks on Tuesday evening. The rating rationales are pasted below.
There’s probably little new information here to FT Alphaville readers but a few things caught our eye and we’ve highlighted the excerpts accordingly.
Where’s a good crisis when you need it? [updated]
Tough news for both the prophet and the profiteer of doom.
John Paulson, who made his name and fortune shorting the sub-prime bubble, on Tuesday said he was reducing the leverage of his Advantage Plus fund to 1.1 from 1.5 times.
It’s going to be a miserable third quarter for banks, say banks
US bank reporting season is almost upon us and we’re looking forward to investigating the mysteries surrounding the performance of the bulge bracket since the turn of the year.
To give you a sense of how bad it’s been for the 1 per cent,
A PrimeX primer, also featuring ABX
Last week, Fitch completed a review of U.S. Prime RMBS looking at transactions involving thousands of bonds. As a result of their review, 42 per cent of the portfolio was downgraded. Since then, a tradeable index linked to a subset of prime mortgages has been falling in value and was last seeing travelling towards par.