December, 2011
Germany 1 – France 0
Danger, danger: Merkozy tape bombs exploding on Monday afternoon.
They have a deal!
(emphasis ours)
RTRS-FRANCE’S SARKOZY SAYS THE FRANCO-GERMAN AGREEMENT IS COMPLETE, WILL BE SENT TO VAN ROMPUY ON WEDNESDAY
RTRS-SARKOZY SAYS FRANCO-GERMAN PROPOSAL WILL MEAN MODIFIED EU TREATY,
Micro and negative yields in Germany
Who said demand for German debt was floundering?
Monday’s auction of six-month Bubills pulled in an impressive average yield of no less than 0.0005 per cent — yes, that’s to the fourth decimal point.
Missing piece of the puzzle – US housing to bottom in 2012?
As Monday’s Lex notes regarding the US stock bounce has a sting in the tail
Don’t look now but amid the negative news on everything from the shambles in Europe, America’s debt wranglings or worries over China,
Markets Live transcript 5 Dec 2011
Markets Live chat transcript for the chat ending at 12:22 on 5 Dec 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola Rabble NHwelcome to ML NHwe are back to our usual line up
When you depend on collateralised collateral
We know from the ICMA European Repo survey that European repo market participants have been using more covered bonds for collateral in 2011 than ever before.
The thinking, we imagine, is that in a world where there isn’t enough ‘risk free’ collateral to support outstanding funding needs,
UK on brink of recession — QE2.2 to the rescue?
This is how Goldman Sachs sees the UK economy in the next few months:
We now expect an outright recession in the UK, with two consecutive quarters of -0.1%qoq growth in 2011Q4 and 2012Q1 (where previously we expected marginally positive growth in these quarters).
Dexia’s collateral-crunching guarantee
It is an irrevocable, unconditional, direct, autonomous and first demand guarantee. The guarantee is joint but not several, and the allocation between the States (respectively 60.5, 36.5 and 3% for Belgium,
The decline of “safe” assets
Presenting the unwanted mutant offspring of the most important chart in the world*…
You’ll find the above on page 143 of the Credit Suisse 2012 Global Outlook, which we’ve stuck in the usual place.
The Fed hath spoken
The Fed has been talking for some time about, er, how it talks. And writes.
According to Fedwire, a move to more explicit communication of the central bank’s long-term goals looks like being finalised early next year — and it could be quite explicit indeed:
Further reading
Elsewhere on Monday,
- Eurozone leaders: not quite getting it. Still.
- File under: futile corporate tactics.
- Does David Brooks understand market economics? (H/T DeLong).
- As per the prophecy,
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Edward Luce: Now on Broadway! Waiting for Euro
It used to be that when American policymakers looked across the Atlantic they would quote Henry Kissinger:
Snap news
Breaking pre-market news on Monday,
- Dexia provisionally secures temporary guarantees — statement.
- Tui Travel says happy with Winter trading but bookings have slowed since previous update — statement.
FTfm on AV
Some highlights from Monday’s FTfm.
Active managers spark row
The new DC Investment Forum claims passive funds may damage savers’ interests, but its views have been attacked as ill-conceived belly-aching
Managers warn of windfall targets
Managers are warning of the dangers of investing in defensive sectors,
The Weekender
This week on FT Alphaville,
- The German bond market was all about ‘buy and hold’.
- Redenomination risk popped up in the strangest places.
- The ECB was the Pawnbroker of Last Resort.
- We asked whether this was a Minsky moment in the eurozone?
- The UK provided liquidity support to the banks.
[Something for the weekend] Don’t offer this man a Rakoff
Jed Rakoff is quite the hero. A New York District judge, he has done what the rest of us would love to do, and busted a cosy deal between bankers and their regulators. In early 2007, just when everything was starting to slide,
Further further reading
For the commute home,
- Pssst… Wanna buy a law?
- Newt must run, says Arianna (in 1995).
- How many jobs did the US economy really create in November?
- We’d stop short of “very good”, but the week certainly could been much worse.
Markets Live transcript 2 Dec 2011
Markets Live chat transcript for the chat ending at 16:14 on 2 Dec 2011. Participants in this chat were: John McDermott, FT Cardiff Garcia John Gapper JMGood morning CGHello!
US Markets Live with added Gapper: 10am New York time
That’s 3pm London time for you folks across the pond.
Today we have a special guest, John Gapper, the FT’s chief business commentator, and all round brilliant chap, who we’re reliably told was at one point one of the 100 most influential men in Britain.
Euro banknotes — the movie
Because, with the week we’ve all had… there is something strangely therapeutic in watching the printing en masse of euros — even if the printing was ten years ago. Via the ECB:
(And a full blast of the synth Ode to Joy for everyone making snide comments about needing a sequel for the roll-out of the drachma!)
Related link:
US unemployment rate falls to 8.6 per cent, payrolls up 120,000
Consensus expectations were for 9 per cent and 125,000.
But don’t be deceived by the eye-catching drop in the unemployment rate: this report was good but not great.
The fall in the unemployment rate,
Debt swaps: we can do this the easy way or…
… we can just not call your bonds like you thought we would.
This is the tactic that Santander and Lloyds have seemingly been taking, as they try to get bondholders to exchange subordinated debt for senior bonds that improve capital.
Central counterparties are too big to fail
Dressing up a pig as a princess, doesn’t make the pig a princess, and concentrating all the counterparty risk in the financial system into one place, doesn’t make it vanish. It’s still there. For the most part.
Markets Live transcript 2 Dec 2011
Markets Live chat transcript for the chat ending at 12:08 on 2 Dec 2011. Participants in this chat were: Paul Murphy Izabella Kaminska PMYo! PMMorning rabble. PMMurphy here
Further reading
Elsewhere on Friday,
- Indexing and managing sovereign credit.
- “Monetary policy is a bunch of watered-down hooey…”
- Immunise yourself to sales pitches.
- Losing momentum, valuing ignorance.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: This time they may save the euro
Take a deep breath. Here is a mad proposition: Europe is about to save the euro. Don’t bet the bank on it.
Snap news
Breaking pre-market news on Friday,
- BNP unveils new management team — statement and statement.
- RBS sells almost 1,000 pubs to Heineken — statement and statement.
- Randstad says demand for workers continued to slow in Q4 — statement.
Further further reading
For the commute home,
- Bloomberg has a new economic history blog.
- On Draghi and transmission mechanisms.
- Italian government appoints wrong person to junior cabinet position.
- How Citi sank itself on the Fed’s watch.
BoE charts, risk weights you can’t trust
The Bank of England gets the claws out in its Financial Stability Report released on Thursday:
Structural vulnerabilities can amplify shocks stemming from the macrofinancial environment. Fault lines in the regulatory framework are one example of such structural risks.
What ECB QE could look like
Oh Mario, you big tease. From the FT on Thursday:
Mario Draghi, European Central Bank president, has called for a “fiscal compact” between governments to restore investor confidence in the eurozone – and hinted such a step could pave the way for a more aggressive ECB response to the region’s debt crisis.
Le plan, negatifs taux d’intérêt, redux
Here we go again… hints of a negative rate regime in Switzerland.
But this time it’s not the SNB that’s hinting it, it’s the Swiss government.
Via Bloomberg:
Switzerland’s government said it may consider additional measures including negative interest rates to support the country’s central bank in its fight against the appreciation of the Swiss franc.