November, 2011
Findings in the Goldman Sachs 10q filing
There’s a few interesting nuggets in Goldman Sachs latest 10q, which the bank filed on Wednesday.
As Goldman’s 3Q earnings suggested, it was a volatile quarter on the trading floors. Goldman traders lost money on 21 single days over the quarter,
Really, the wrong technocrats
OK, beyond the Nero jokes… we’re still very confused by this big movement to suppress political risk, or volatility, in the eurozone. Betting on “technocrats” to solve the debt crisis, as it’s called.
Glencore and big squeeze
Buying shares in a company ahead of an index re-weighting is rarely a good idea but that hasn’t stopped brokers pushing Glencore ahead of November 24th – the day the lock-up agreement with cornerstone investors expires.
What’s missing from China-Eurozone debate, RMB edition
It refuses to die. Buckets of ink are still being spilt on the will-China-save-Europe-narrative, looking at the political quid pro quos on offer, the incentive structure behind the EFSF and the relative size of China’s monetary fire-power.
Nero Berlusconi
Just to put the boot in on the historical analogies…
The Evening Standard of Londinium, AD 2011:
Silvio Berlusconi’s political career may have been going into meltdown but that did not stop him seemingly spending the night before a crucial parliamentary vote in the company of an attractive young woman.
Italy CDS vs bonds: CDS win!
Remember a month or so ago when we told you there was evidence that CDS spreads may influence bond yields?
“Influence” is a strong word. It was more about which one leads the other. In our previous post,
Podcast bleg: Alphachat returns
We’re recording the second edition of Alphachat later this week, and we’d like to know if you have any questions for our guest.
(To hear the first Alphachat, an interview with Michael Pettis on the Chinese economic model,
Decline and fall of the Berlusconi Empire
And now for some light relief as the Italian bond market goes under…
As the self-declared Napoleonite met his Waterloo yesterday, FT Alphaville is wondering how Silvio will be characterised in the annals of history.
Euro whiplash
The Bunga Bunga euro bounce is over. The only way is down, it seems:
Source: Thomson Reuters Eikon
The currency’s litany of woes include its strong correlation with weakening euro stocks, the poor performance of recent PMIs,
Fundamentally speaking…
From Olivier Jakob at Petromatrix on Wednesday:
While crude oil futures continue to be supported by the Iranium premium, the products are not following and the light-end cracks are suffering further. The Naphtha and RBOB cracks to Brent are going as we expected deeper into negative territory and the pressure is now also coming to the European Distillates physical premiums.
The Comet trousseau
OpCapita LLP is a private investment firm that focuses on operational change opportunities in the European retail and consumer sectors. The firm’s partnership combines financial expertise with in-house operating partners who have strong operational track records.
Markets Live transcript 9 Nov 2011
Markets Live chat transcript for the chat ending at 12:39 on 9 Nov 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola rabble NHactually NHwe’re gonna have to change the intro
Plotting a disorderly EZ break-up
Will the eurozone survive? If so, in what guise? If not, how will it be broken up and what might the consequences be?
These, among others, are some of the key questions currently occupying the minds of the financial great and good.
Liquidity and the Italian bond standoff
In addition to spiking yields, seems like the critical issue with the Italian bond market on Wednesday (at least as quoted by Reuters) is that there is little to no volume going through some issues.
That would be critical issues like the December 2012 BTPs,
Italian bond yields through 7 per cent
It’s happened: Tradeweb showed bid yields on 10-year Italian bonds quoted above 7 per cent on Wednesday morning. Reuters wasn’t far behind.
Seven per cent is generally seen as “needs a bailout now”,
LCH Clearnet SA raises margin on Italian bonds
Note — this is not the margin call many were looking out for.
As we’ve explained, LCH Clearnet SA follows a different framework to LCH Clearnet Ltd — operator of the RepoClear service which applies the famous 450bps spread “trigger”
Further reading
Elsewhere on Wednesday,
- Angela Merkel is only the eighth most powerful person in finance???
- SEC’s failures and the Citi.
- “Don’t reify the concept of an inflation rate”
- Further Japan 1980s-China 2010s comparisons.
Pink picks
Comment, analysis and more from Wednesday’s FT,
Martin Wolf: Thinking through the unthinkable
Will the eurozone survive? The leaders of France and Germany have now raised this question, for the case of Greece,
Snap news
Breaking pre-market news on Wednesday,
- Admiral says profits will be at the lower end of analyst estimates because of large personal injury claims — statement.
- Kesa Electricals sells Comet for just £2 — statement.
Grand Viceroy Rehn
Silvio may be going but Italy remains front and centre of the Euromess.
On Tuesday evening, Olli Rehn, the EU’s economic and monetary commissioner presented Giulio Tremonti, Italy’s finance minister,
Further further reading
For the commute home,
- On Berlusconi: “… he knows nothing about the Internet, but he’s really a pro at daytime television.”
- Isda vs NYT, explained.
- Negative interest rates are unnatural.
Addio, Berlusconi
Il Bunga Bunga festa è finita.
Across all the wires a few minutes ago came the news that Italy’s president, Giorgio Napolitano, had announced that Berlusconi’s resignation was imminent.
In a vote over the 2010 state budget accounts earlier in the day,
EFSF: a circular, counterproductive, and creative cannibal (continued)
Part two.
Unfortunately, Nomura’s analysis of the EFSF’s shortcoming is both more convincing and more extensive. Here are some choice extracts, with our emphasis:
1) Correlation or Circularity is deepened:Neither option solves the correlation or circularity problem (i.e.,
EFSF: a circular, counterproductive, and creative cannibal
The revamped EFSF risks becoming the wiggle side chair of financial engineering, lauded for its creativity but rarely used for its intended purpose.
On Monday, Nomura strategists released a useful note explaining the two new aspects of the EFSF — the special purpose investment vehicle (SPIV) and the credit insurance option — along with their pros and cons.
The eurozone crisis as balance of payment problem
Or, is Germany right to worry about inflation?
A theory to chew over…
An excess of savings over investment helps to create a credit boom in a current account deficit country and legitimises pro-cyclical fiscal policy.
If we ran the FTSE 100…
The story so far.
Last week, FTSE Group launched a consultation on the free float rules for its various indices. That followed an outcry from investors concerned about the wave of overseas companies seeking to list on the main market while keeping control out of public hands.
EFSF CDS, not your standard credit derivative
After getting their latest bond offering off the ground at last – the EFSF has circulated a document to help everyone work out how to leverage it.
(Click for full document)
This should be doing the rounds of among investors,