November, 2011
Further further reading
For the commute home,
- European banks edge closer to the Twilight Zone.
- Why Americans spend and other countries save.
- The rise and fall of Bitcoin.
- Should we worry less about fracking and more about carbon?
- Welcome to Austerityville,
Manufacturing quality collateral
Regulators are demanding that banks set aside larger amounts of high-quality liquid assets to help them withstand periods of market stress.
The securities generally deemed acceptable are AAA-government bonds.
European banks: Gone ECBing
Morgan Stanley is not making recommendations about which European banks to invest in. They are just telling you which ones are even worse than other ones, as they go through the exercise of banks deleveraging assets to the tune of somewhere between €1,500bn and €2,500bn.
One man’s haircut is another man’s unsecured risk
Collateral management and secured lending are the big post-crisis themes in financial markets.
But what happens when a strategy that’s designed to protect the system backfires? Not because you don’t hold enough collateral to cover the counterparty risk,
Markets Live transcript 25 Nov 2011
Markets Live chat transcript for the chat ending at 12:22 on 25 Nov 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHThat’s better NHno bug NHright let’s try again
Italian bond watch/alert
First the good news.
Italy managed to raise the targeted amount of €10bn at Friday’s short-term debt auction.
Now the bad news:
RTRS-ITALY 6-MTH BOT BILL AUCTION YIELD 6.504, UP FROM 3.535 PCT AT END-OCT.
The first major retail casualty of 2012?
In association with Blacks Leisure, the UK’s leading retailer of outdoor specialist clothing, footwear and equipment, we bring you another tale of woe from Britain’s high street, which not long from now will consist of nothing more than tanning salons,
The S&P 500 ETF that’s a little bit zut alors, sacrebleu!
Back in October, iShares, the world’s leading exchange traded fund provider, decided to set an important transparency example for the ETF industry. The ETF provider began providing the market with details of its securities lending operations.
Honey, I shrunk the seniors
We missed this earlier — these are Societe Generale credit strategists’ 2012 forecasts for supply of bank and corporate bonds issued in euros.
Spot the odd (shrunken) one out?
Five years ago,
Further reading
Elsewhere on Friday,
- It’s a fracking boom.
- Apparently we can’t live forever.
- How Germany could save Europe.
- The Tally stick credit system.
- Manufacturing quality collateral in Australia.
Pink picks
Comment, analysis, and other offerings from Friday’s FT,
Martin Wolf: Why cutting fiscal deficits is an assault on profits
Reducing the government’s debt was “proving harder than anyone envisaged”,
Snap news
Breaking pre-market news on Friday,
- Premier Foods finance director to leave in the middle of a delicate refinancing negotiation – statement.
- Blacks Leisure issues yet another profits warning;
Further further reading
For an excuse to avoid the relatives,
- The Economist asks if this is the end (women and work?!)
- Oh, actually worse things are happening.
- What you need to believe about Eurozone bonds.
- Or even Eurobonds,
The game of investment banking
For Thanksgiving, or just to cheer you up after the latest market gloom, we’ve made a game out of Tricumen’s report on investment banking.
Here’s how it goes: the below chart shows the average quarterly revenue derived from different investment banking silos segments,
Merkel/Sarkozy/Monti…fail (again)
This pic begs a caption competition:
While this pic tells the story:
You might have expected euro sovereign debt traders to have gone home already. Except they hadn’t at pixel time (6pm, London). Italian 10y paper was threatening to bust through the 7.269 per cent high seen on November 9.
One Eurobond to rule them all
In order to be effective, a central bank must act as a monopoly. It, just like Sauron, must control all. That’s the point.
All central banks thus routinely corner markets. If they didn’t, they would compromise their own position.
Dumb investors
From the FT:
Bank stocks are seen as a “dumb” place for investors to put their money, according to the head of part-nationalised Royal Bank of Scotland.
In an often tetchy interrogation by the Treasury select committee on Wednesday,
The state of investment banking
Market intelligence provider Tricumen released their report on the state of the investment banking industry on Wednesday.
Their researchers sorted through an inordinate amount of company filings in order to determine the revenues by product segment,
On the perils of plunging repo rates
Understanding repo markets is not easy. It’s a complex and very opaque market.
But there are some developments in Europe, which are worth following. One of them is the ‘specialness’ of German bonds being used for collateral funding — reflected by falling General Collateral rates — versus rising rates for other European debt markets.
BHL sur la crise
We don’t know. We really really don’t know.
Bernard-Henri Lévy writing for the Huffington Post:
Rome and Athens, epicenters of the economic and financial storm currently shaking Europe and the world.
Markets Live transcript 24 Nov 2011
Markets Live chat transcript for the chat ending at 12:36 on 24 Nov 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola NHand welcome to Markets Live
Borrowing costs in the United States of Europe
Here’s another way of looking at Wednesday’s German bund auction.
It’s a combined eurozone 10-year government bond yield weighted by each country’s GDP. It’s a rough approximation of the borrowing costs for an imaginary United States of Europe if you like,
Bund auction reaction, the liquidity case
Germany’s technically uncovered 10-year bund auction has stirred much debate.
To us, the mystery is the inconsistency. How do you reconcile low auction demand, with supposedly high demand for haven assets like bunds and the low or “special”
German bund watch [updated]
Thursday early price action:
Almost level pegging with gilts! Who’s the haven now? Mwahahaha.
Update: 10.44am (London time)
Two excellent charts from Scotty Barber at Reuters.
Related link:
Further reading
Elsewhere on Thursday,
- The German bond auction that supposedly failed.
- Maybe it’s just that investors got their calculators out.
- But we’re not panicked, we’re concerned.
- China PMI versus China PMI.
Pink picks
Comment, analysis, and other offerings from Thursday’s FT,
John Gapper: Greenberg is entitled to nothing
There are various words, many unprintable, that could be used to describe Hank Greenberg’s $25bn suit launched this week against the US government and the New York Federal Reserve over the rescue of American International Group in 2008.
Snap news
Breaking pre-market news on Thursday,
- Dixons Retail reports lower than expected half year loss; however profits fall in Nordic division — statement.
- Philip Green’s Arcadia reports sharp fall in profits — report.
Further further reading
For the commute to wherever you’re spending Thanksgiving,
- What statecraft can teach you about Thanksgiving travel.
- Turkeynomics.
- Faster toward the end.
- The lessons of Margin Call.
- GDI,
Las Vegas bets on a tech future
FT Alphaville takes a break from the gambling tables and reports from Las Vegas.
The Cosmopolitan Hotel in Las Vegas is so trendy that FT Alphaville put all its chips on green, lost, and escaped as quickly as the floors full of preening pseudo-hipsters allowed.