November, 2011
Financial tsunami warning: credit edition
Imagine you are a structured credit investor standing on a cliff by the ocean. From your senior perch you observe more junior investors sunning themselves and reclining with e-readers on the beach below.
The flight and plight of US Money Market Funds
The trying days continue for US money market funds.
They’re still attracting some haven-chasers for now, but the combination of complying with the SEC’s Rule 2a-7, increased credit risk from Europe and the endless low interest rate environment is making it difficult for them to cover costs.
Germany – the only first class passenger on the Titanic?
Further reflections on that German bund action fail from RBS rate guru Harvinder Sian.
He says there are lots of excuses and explanations for Wednesday’s flop ( it’s year-end for primary dealers, the bond was off-benchmark,
PMIs kick market when down
German bond auctions failing, IMF non-announcements driving market sentiment, Spain paying through the nose to fund itself, credit spreads blowing out, Dexia dragging down triple-A France, eurobonds getting vetoed again,
CDS indices hit records while uncleared sovs spike
We’re sure there’s a drinking game in here somewhere, given that Wednesday’s headlines about new records for credit default swap indices will be usable many a time over the coming weeks as the sovereign crisis lurches along.
The bund that broke the Bundesbank [Updated]
There is mystery afoot in the European bond market.
Or you could say, Professor Merkel has been found in the Bundesbank with the lead German bund.
This tale revolves around what analysts are already describing as the worst auction of German bunds in recent times.
Markets Live transcript 23 Nov 2011
Markets Live chat transcript for the chat ending at 12:29 on 23 Nov 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT neil collins NHHola Rabble NHsorry for being a touch late
What if the UK misses its deficit reduction target
Dr Gloom (Tullett Prebon’s Tim Morgan) has just published the second part of his UK Reform trilogy.
With Coalition government’s deficit reduction plan doomed to failure, Morgan says tax cuts are the only policy left for the Chancellor and he must take it.
Interventions and bank queues in Eastern Europe
Reuters is reporting that Poland’s central bank stepped into the spot market for the fourth time in less than three months on Wednesday to help support the zloty versus the euro, which was once again nearing levels last seen in 2009.
Dexia’s midnight liquidity
Nov 23 (Reuters) – France, Belgium and Luxembourg are discussing how to provide temporary state debt guarantees for failed financial group Dexia… the deal has still to be confirmed, leaving the bank dependent on emergency liquidity assistance of about 30 to 40 billion euros ($40.5 – $54 billion),
The reverse dash for trash
Alternative non PC title : The Flight from Sh**e.
Here’s the price action in Cable & Wireless Worldwide following its awful half year results and resignation of chairman John Pluthero.
(Note,
Further reading
Elsewhere on Wednesday,
- Fundamentals don’t drive markets. Politicians do.
- And they have a plan within a plan within a plan wi..
- The state of the German finances.
- And Obama’s stimulus hill.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: To the eurozone: advance or risk ruin
Investors are increasingly loath to trust the debt of many eurozone sovereigns, notes FT columnist Martin Wolf.
Snap news
Breaking pre-market news on Wednesday,
- France, Belgium Luxembourg seek temporary deal on Dexia — report.
- Compass Group launches £500m share buyback; dividend up 10 per cent — statement.
- Playtech launches £100m equity fund raising;
Further further reading
For the commute home,
- Funds battle banks over $300 trillion derivatives market.
- The difference between northern and southern Europe.
- Why our brains make us laugh.
- Can GDP and energy be decoupled?
- The Fed has launched its new stress tests.
Central bankers: pursued by a bear
That is US and UK central bankers pursued by über bear Albert Edwards of Société Générale.
Edwards is rather peeved that researchers at the Federal Reserve seem to have concluded that the Fed wasn’t responsible for the housing boom that has turned into the biggest bust since the 1930s.
What goes up, must come down
SuperDroop has closed below its 500p IPO price target for the first time on Tuesday, as the market continues to digest the recent sell note from Numis Securities.
Your eyes do not deceive you, this purveyor of kanji-flaunting yoofwear really did trade at more than £18.00 a share.
Randomness and the lost lesson of Bill Miller
In “The Drunkard’s Walk”, Caltech physicist Leonard Mlodinow’s book about how people misunderstand the amount of randomness in their lives, there’s a short but fascinating passage discussing Bill Miller’s 15-year streak,
The butterfly effect: spotted in the financial industry
As FT Alphaville revealed on Monday, more than 98 per cent of credit derivatives contracts are recorded in the trade repository run by The Depository Trust and Clearing Corporation. This demonstrates that this previously opaque market is much more transparent than it used to be.
Hung out to dry in emerging Europe
Once upon a time foreign ownership of domestic banking sectors was deemed a “rating strength” in central and eastern Europe.
Before the financial crisis, foreign banks had demonstrated their willingness and ability to support their subsidiaries,
Markets Live transcript 22 Nov 2011
Markets Live chat transcript for the chat ending at 12:17 on 22 Nov 2011. Participants in this chat were: Neil Hume, FT Tony Tassell NHHola NHand welcome to Markets Live
Spain pays 5.1% for three month money
There was a rather concerning auction of Spanish bills on Tuesday morning. Rarely does the front-end of the curve get this much attention.
Via Reuters:
RTRS-SPAIN SAYS 3-MONTH BILL AVERAGE YIELD 5.110
Package holidays in the era of Expedia
Thinking of booking the next summer holiday with Thomas Cook?
Tuesday’s price action might make you think twice.
And so might the statement which triggered the slide.
Thomas Cook Group plc announces that as a result of deterioration of trading in some areas of the business in the current quarter,
Further reading
Elsewhere on Tuesday,
- What the supercommittee failure means, according to Goldman.
- And also what it means for investors.
- And for ratings.
- But everybody loves US Treasuries.
- Sovereign CDS,
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: The markets are not the monster
Last year, Angela Merkel promised to show the markets who is boss. “There is a kind of battle over what power the financial markets have and how much room for policymaking the politicians have,” said the German chancellor.
Snap news
Breaking pre-market news on Tuesday,
- Thomas Cook in discussions with lenders following downturn in trade; to delay full year results — statement.
- Xchanging loses BAE Systems HR contract — statement.
Further further reading
For the commute home,
- OWS, the hedge fund.
- The neuroeconomics revolution.
- XKCD does money. Lots of it.
- Basel III counterparty credit risk — frequestly asked questions.
- Hedge funds kiss their alpha goodbye.
Jefferies: lies, damned lies and the anonymous hedge fund who tells them
Another stridently penned letter from Jefferies that seeks to reassure the markets about its exposure to Europe and worries about access to short-term funding:
The note rehashes a few points the broker had already made in prior statements,