November, 2011
Credit Swiss and 13,000 redundancies
Later this month embattled UBS will hold its big annual investor day in New York at which interim chief executive, Sergio Ermotti, is expected to spell out his plans for the troublesome investment banking arm.
Long EM, short G10: FX hedge edition
Tin hats at the ready. If the eurozone trouble deepens, emerging market equities could once again overshoot fair value in a wave of deleveraging.
So it’s time to put a value on them hedges…
Let’s look at FX plays for now.
A tale of two stock markets
US equities could be in line for a secular bull market as soon as next year, but European stocks should be handled with care.
That is a synopsis of the latest thinking from Citi. For more details read on:
EFSF – transaction highlights
We already know something about the buyers of Monday’s difficult-to-get-away €3bn 10-year EFSF bond issue. And here, via JPMorgan, is a little more detail.
What’s interesting is the muted demand from traditional fund management community – insurance,
What’s the hard limit to ECB hard money?
Well, it’s the ECB’s own and apparently limitless obsession with inflation, of course. Also it’s Article 123 of the EU Treaty:
Though if you’re asking about sterilising purchases of debt, as a technical limit to the central bank’s printing euros,
Pettis and Kroeber go glass-half-full on China
Well, everyone needs a change sometimes.
We’ve written about so much bearish questioning on China that it wouldn’t be fair to ignore a couple of more upbeat comments from economists who are not the usual China bulls.
Slicing Italian debt, at the margin
Or, trying to reduce Italian solvency risk by changing the debt structure. Plus a little bit of financial repression?
FT Alphaville has just got off the phone with Luca Mezzomo, macroeconomist at Intesa Sanpaolo Group,
Is the Headless Horse lame?
So, the Headless Horse is thinking about ripping its revenue forecasts.
From the Lloyds Banking Group Q3 trading update.
As a result of the more challenging economic conditions that have arisen over the last few months we are reassessing our assumptions,
Markets Live transcript 8 Nov 2011
Markets Live chat transcript for the chat ending at 12:32 on 8 Nov 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola NHRabble NHwelcome to Confused Live
The Asian fuel-oil indicator
A particular grade of Asian fuel oil has, for want of another word, skyrocketed in price over the last few weeks.
The grade in question is called 380-centistoke, and its cash differential (versus the benchmark grade) has performed as follows:
The truth will out…
There’s deferring losses, and then there’s DEFERRING losses. From Olympus on Tuesday:
The Company hereby announces that, during this process, it has been discovered that the Company had been engaged in deferring the posting of losses on investment securities,
FT Alphaville needs your help…
… to explain Tuesday’s morning’s price action in European equities, which have moved higher in spite of rising Italian bond yields.
Short covering? Silvio to lose vote? One theory via the FT’s Jamie Chisholm:
Is it cool to be a Sifi?
On Friday, the Financial Stability Board published the provisional list of global systemically important financial institutions (G-Sifis).
This had been widely trailed but we’re still wrestling with a tricky question:
Further reading
Elsewhere on Tuesday,
- Another calling of the bottom of the sovereign debt crisis.
- “Let’s review all the breaks Jon Corzine’s beard has gotten.”
- Krugman on spiralling Italian bonds.
- What’s a technocratic government,
Pink picks
Comment, analysis and more from Tuesday’s FT,
Gideon Rachman: Saving the euro is the wrong option
As the European ship heads for the rocks, so the officers in charge are being thrown overboard,
Snap news
Breaking pre-market news on Tuesday,
- Olympus admits to covering up losses since 90′s — statement and statement.
- Lloyds Banking Group warns medium-term financial targets may be delayed; however Q3 Net Interest Margin in line with forecasts — statement.
Further further reading
For the commute home,
- Japan’s backup plan… to replace Tokyo.
- Michael Pettis: Germany has to bail out Europe, not China.
- How certain economic indicators affect the interest rate term structure.
Koo: price-to-rents back to normal. Does it matter?
Richard Koo, the balance sheet recessionista’s balance sheet recessionista, tucked this chart into the back of his note last week:
The graph shows that the historical relationship between home prices and rents is mostly back to pre-bubblicious normal,
Find out what credit adjustments can do for you
Valuation adjustments were the hot new item during New York bank earnings week.
Everywhere we looked, bank CDS spreads were widening, leading — paradoxically — to a positive adjustment to earnings.
What Americans are(n’t) buying
Other than what’s happening overseas, few topics have been more thoroughly scrutinised recently than the relationship between housing market activity, deleveraging and the US consumer.
James Hamilton tackled this in a post yesterday explaining the impact that sluggish spending on housing and autos is exerting on economic growth,
Vol nightmares unrealised, for now
Here’s something to ponder for the commute home, via Deutsche Bank:
One topic of conversation with investors is why realized volatility has been similar to levels during 2010 (the onset of the European sovereign crisis),
Sizing the mortgage default mess
The New York Times’ Joe Nocera has spoken to FT Alphaville favourite Laurie Goodman of Amherst Securities Group and is now convinced of the need for principal reductions to clean-up the US mortgage mess.
Jefferies’ $2bn toldjaso
None of our commenters took us up on last week’s wager for when Jefferies would release its next statement, and a good thing too — Monday was our guess, and here we go:
Jefferies announced today that its trading positions in the sovereign securities of the nations of Portugal,
Savage wave of repricing hits EFSF’s €3bn deal
Compare this note from IFR on Friday…
Frankel [Christophe Frankel, CFO of the EFSF] said that the recent spread underperformance would not necessarily hurt the EFSF’s prospects. “A very important part of our investor base is buy-and-hold and mostly insensitive to mark-to-market and,
Italy- the clock is ticking
First, a pictorial trip down memory lane.
(Click on top slide for more). That’s an Italian bond investor presentation from… 2003.
Fast forward to November 2011 and things look very different.
Meanwhile, in Greek haircut plans
It’s a bit weird to focus on this when the Greek government still doesn’t know when, or if, it’ll get its delayed bailout loan. (Which would plunge Greece into a default on payments if it doesn’t.) All the more so if Greece faces a fast exit from the euro.
…And Justice for All (in emerging Europe)
CEE Banker: If everybody agrees I’m innocent, how come I’m going BACK to the market jailhouse? The ECB is guilty of failing to shore-up monetary conditions in the CEE!
European policy-maker: You are out of order! We have provided a liquidity backstop for eurozone banks that operate in the region!
CEE :
Italian premier pokes Europe
Political risk jumps the shark, or Silvio Berlusconi’s Facebook page:
The Italian roughly translates to ‘na na na no I’m not going, so there’
Related link:
‘Papandemonium’ shakes investors –