December, 2011
A sub-optimal solution to the Euromess [updated]
Policy changes the ECB announced last week will help banks directly and governments indirectly. But the EU fell short on every element of a comprehensive deal. On Friday, investors reacted positively to what was sold to them as a “fiscal compact”.
China’s mysterious November iron ore imports
In November, China’s PMIs signalled contraction, house prices fell in most cities, and inflation fell sharply. Trade, we learned over the weekend, is down down down. And as the FT notes, prices of petrochemicals,
You’ve paid how much? – LSE edition
A few years back, the FSA warned banks to be careful about their choice of code words in M&A deals:
Use appropriate code names to disguise the identities of relevant parties. This only works if the code names are sufficiently different from the names of the relevant parties so their real identities cannot be determined.
Further reading
Elsewhere on Monday,
- The moment Cameron lost his EU argument.
- US traders starting work at 2.30am, nerves twitching…
- Correlation and causation
- More on the secret Fed loans.
- And more secret Fed loans.
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Wolfgang Münchau: Snags, diversions – and the crisis goes on
The European Union last week destroyed the illusion that the eurozone and the UK could happily coexist inside the EU,
Snap news
Breaking pre-market news on Monday,
- Pearson sells 50 per cent stake in FTSE to the London Stock Exchange for £450m — statement and statement.
- France’s Areva to announce big loss; shares suspended pending statement — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Volcker rule dismays managers
Under one interpretation of the Volcker rule it may become illegal for bank-owned managers to run money for European or Asian investors
Hedgies’ average return is ‘zero’
Performance data is biased because hedge funds choose whether to report – when the returns of hedge funds that do not report to databases are factored in,
Further further reading
For the commute home,
- Diet craze leaves Norwegians starved of butter.
- On the aesthetics of financial scandals.
- NPR asks politicians and lobbyists for the names of small business owners who would be affected by a millionaire’s tax.
The Weekender
This week on FT Alphaville,
- Post-euro currencies and post-euro economies were both charted.
- The EBA released its latest capital hole estimates.
- Private creditors got their hopes up, but why?
- Apparently there was a summit in Brussels.
[Something for the weekend] The SGP without stability or growth
Ah, the Stability and Growth Pact. You remember. Joining the SGP, members promised fiscal restraint, and in return were allowed to junk their soggy old currencies for a Deutschemark with a suntan. They all promised to keep the gap between revenue and spending to below 3 per cent of GDP,
Dove, actually…
… is all around, though in this case not until after the holidays.
The FOMC meeting on Tuesday of next week isn’t expected to produce any major policy decisions (more on which in our next post).
But there will be much talk about what might be done in the first quarter of next year,
The gap between summit rhetoric and reality
Judging by markets’ immediate responses to the EU summit, Gavyn Davies’ summary of the new reality seems spot on:
My initial take on the deal is that it will be sufficient to dampen the acute phase of the crisis,
“The 60′s. Cool Decade. Lousy Age.”
That’s the title of the Citi research note on US managed care where we came across this chart:
The big impending climb in boomers hitting retirement age is something everyone has worried about for a long time,
US Markets Live transcript 9 Dec 2011
Markets Live chat transcript for the chat ending at 16:06 on 9 Dec 2011. Participants in this chat were: Cardiff Garcia John McDermott, FT Joseph Cotterill, FT CGHello! JMHello
US Markets Live: 10am NY time, 3pm London time
Okay, so we’re not holed up in a convention centre in the city of permanent meetings. But Merkoky’s latest patchwork policy quilt is all anyone is talking about so we’ll be doing the same at the usual time and place.
Chinese CNH – YOURS!
Something is happening in China.
That’s the ominous title of an FX note posted by George Saravelos of Deutsche Bank on Friday morning.
It seems something is up in the big emerging market arbitrage window of the sky known as the onshore/offshore Chinese currency market.
Nomura on Draghi’s failure to address the collateral problem
There are a growing number of voices suggesting that much of the Eurozone funding crisis could be simmered by addressing one of its most identifiable symptoms. The quality collateral crunch in the system.
Markets Live transcript 9 Dec 2011
Markets Live chat transcript for the chat ending at 12:20 on 9 Dec 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT
NHHola Rabble
NHWelcome to ML
NHan hour or so
Lloyd C. Blankfein wants YOUR feedback
Well, not yours, obviously. But random market professionals in the City of London who in recent days have been contacted by the mighty Goldman Sachs.
From: Lloyd C. Blankfein [mailto:gsbrandsurvey@ny.email.gs.com]
Sent:
Shadow banking and the seven collateral miners
In the words of Goldman Doc, Morgan Grumpy, JP Happy, Bank of Sleepy, Barclays Bashful, Sneezy Citi, and Dopey Deutsche:
We dig dig dig dig dig dig dig from early morn till night
We dig dig dig dig dig dig dig up everything in sight
We dig up diamonds by the score
A thousand rubies,
Quotes du jour – Eurofudge edition
For those of us of a certain age, the fiscal language looks to be copied and pasted from the original Stability and Growth Pact with a few bells and whistles added to imply that ‘this time we mean it.’ - Steven Englander,
Is this enough to save the eurozone?
… or at least to agree a date for the next summit.
The first day’s negotiations went on until 5am Brussels time and culminated in this statement from European leaders (click through to read)…
From the statement,
Further reading
Elsewhere on Friday,
- “I thought [EU summit] disasters were all meant to happen over the weekend?”
- Making it two lost decades.
- George Soros bought MF Global’s peripheral bonds.
- FM Global’s PR has something to say.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Now the Franco-German question
Germany will have to learn leadership, and France followship. Both will find it a wrenching experience.