December, 2011
Pink picks
Comment, analysis and more from Wednesday’s FT,
Martin Wolf: Merkozy failed to save the eurozone
If the most powerful country in the eurozone refuses to recognise the nature of the crisis, the eurozone has no chance of either remedying it or preventing a recurrence,
Snap news
Breaking pre-market news on Wednesday,
- Olympus director resigns, panel to examine legal steps – Reuters.
- ING to take insurance charge up to €1.1bn – statement.
- Blacks Leisure invites offers,
Further further reading
For the commute home,
- Meet GREK, the Greek stock ETF.
- A floating Silicon Valley for techies without green cards.
- Are CMBS delinquencies in the calm before the storm (it’s been an awfully long calm)?
- Lawyers prepare for eurozone breakup.
The unusual case of Green Bay Packers shares
FT.com reporter Jason Abbruzzese submits this guest post for FT Alphaville.
The NFL’s Green Bay Packers, currently atop the National Football Conference, on Tuesday provided the fifth stock offering in their storied history.
More talk of a magically bigger firewall
A good start to the week for anyone studying the FT Effect. Although in this case, the rally petered off by the close of trading.
The latest 3pm-ish scoop from the paper that keeps markets on edge for at least an hour a day:
The problems with the ECB-IMF switcheroo
It’s been the subject of more rumours than Kim Kardashian but the ECB-IMF switcheroo is increasingly likely, at least according to reports from Bloomberg and Reuters.
One would think the involvement of the credible-again IMF would be good news.
All Know Holdings vs SEC
Securities and Exchange Commission Civil Action No 11 CV 8605.
Presented without comment, obv.
SEC FREEZES ASSETS OF FOUR CHINESE CITIZENS CHARGED WITH INSIDER TRADING
On December 5, 2011, the Securities
Step inside the mind of Willem Buiter — but tread carefully
Bobby Robson, the former England football coach, once described a player as being so truculent he could have an argument with himself.
Willem Buiter has gone one better. In his latest note, the Citigroup chief economist has invented someone so he can have an argument.
Why France could be on the wrong side of the Eurozone crisis
Anyone betting that France will make it through the eurozone crisis because it’s a AAA country (just about), might want to a look at this chart and think again:
The chart, courtesy of Eric Dor, director of research at the IESEG School of Management,
Corporate bonds to the rescue?
Back in September, the FT reported an interesting estimate by JP Morgan.
Twenty-eight European banks would have faced a total liquidity shortfall of €493bn at the end of 2010, if they had been forced to meet new liquidity requirements (which actually come due in 2015) then and there.
I am altering the PSI. Pray I do not alter it any further
Or, to rip off Thucydides — official creditors of sovereign debtors do (and promise) what they please… and private creditors suffer what they must.
Felix Salmon thinks that official creditors in the eurozone are making an historic mistake by promising to not even ask bondholders to take losses from restructuring sovereign debt:
How Germany is paying for the Eurozone crisis anyway
The European Central Bank has always been a special case in the world of central banks.
While policy is decided centrally, actual enforcement and implementation of that policy is conducted on a national central bank (NCB) level.
Collateral crunch, meet BoE
In light of the continuing exceptional stresses in financial markets, the Bank of England is today announcing the introduction of a new contingency liquidity facility, the Extended Collateral Term Repo (ECTR) Facility.
Markets Live transcript 6 Dec 2011
Markets Live chat transcript for the chat ending at 12:20 on 6 Dec 2011. Participants in this chat were: Bryce Elder/FT Izabella Kaminska Paul Murphy BEGood morning BEAnd welcome to Markets Live
‘This economy is no place for young men’
GMO’s Jeremy Grantham’s latest letter is briefer than his other recent efforts (in fact he says it’s his shortest ever), and it doesn’t offer much insight into the eurozone crisis other than to say it’s a terrifying situation.
Will a Basel risk-free ‘about turn’ be enough?
News that Basel III is reconsidering the use of government bonds as eligible capital to be held in banks’ so-called liquidity buffers, couldn’t have come quicker.
The world, for want of another phrase,
The non-Yakuza bounce
Olympus shares on Tuesday:
The shares rose ahead of the release of the first independent panel report into the epic loss-hiding scandal that was first revealed by former chief executive Michael Woodford.
Yes! We have no collateral today
Didn’t think the quality collateral scarcity issue was a big problem?
Seems the fast diminishing pool of ‘risk-free’ assets is a big enough issue to have the Basel Committee on Banking Supervision completely change its mind on the role of government bonds in its new banking rules.
Further reading
Elsewhere on Tuesday,
- European volatility neck-and-neck with emerging markets.
- Is the eurozone going to repeat Ireland’s terrible mistake?
- Yes, Virginia, the Germans bailed out the banks.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
After MF Global: how to protect customers’ cash
Customer money is missing at MF Global. After three mysterious weeks, we don’t even know whether the shortfall is $600m or $1.2bn,
Snap news
Breaking pre-market news on Tuesday,
- Xstrata announces further significant increases to mineral resources in South America – statement.
- Frontline plans to raise $250m new equity as part of restructuring – statement.
The S&P statement
Fifteen eurozone countries placed on CreditWatch negative, not just the six AAAs, as we’d expected earlier.
Here’s the statement:
FRANKFURT (Standard & Poor’s) Dec. 5, 2011–Standard & Poor’s Ratings Services today placed its long-term sovereign ratings on 15 members of the European Economic and Monetary Union (EMU or eurozone) on CreditWatch with negative implications.
Further further reading
For the commute home,
- WSJ reports that all 17 eurozone countries will be put on watch by S&P.
- Falling Italian yields, charted.
- Hot money could make banks sweat.
- Felix on American plutocracy.
Flipping ‘eck — the size of the second home bubble
Finance writers and television shows have used flipping houses as a symbol of the pre-crisis housing bubble.
But we weren’t aware of any statistical evidence until we saw this post on Monday from Liberty Street Economics,
S&P plays Grim Reaper for the upcoming death of AAA
A major FT exclusive on Monday:
Standard and Poor’s has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening economic and political turmoil in the single currency bloc.
Post-euro currencies, charted
Click Nomura chart to enlarge:
Along with “redenomination risk” for eurozone financial assets, this is another of those pieces of bank research that’s as interesting for being considered necessary to be written in the first place,
Spot the Dog let off the leash
Who or what does the following quote refer to?
Far too much mediocrity is rewarded for nothing other than destroying value.
If you guessed the fund management industry, then you were right.
In its December investor letter,
Signor Monti, sensazionale [updated]
The price action in on Italian bonds on Monday, that is.
Out of the danger zone, for now.
Thanks Angela. From the FT:
In an apparent concession, Ms Merkel agreed that private sector bondholders would not be asked to bear some of the losses in any future sovereign debt restructuring,
Tracking the ‘dollar for euro’ arbitrage
These two charts, courtesy of Icap’s Euro Repo Weekly, tell it all:
The images reflect the effective euro rate a borrower of euros would pay in exchange for lending dollars at US libor. (The charts are the same,
The Occupy Wall Street bank
Presented below is a note prepared for the December 4th meeting of the Occupy Wall Street General Assembly by its alternative banking working group. We present it – without comment – as a document for understanding the aims of OWS (as per John Gapper’s recent column).