Cardiff Garcia
Lame duck paralysis and fiscal-cliff-mageddon
Last November, we pondered the various fiscal issues that might have to be confronted by the winner of the Presidential election and the lame duck Congress in the period between the elections and the end of the year — at least if they wanted to avoid further fiscal drag at a time when the economic recovery is likely to still be fragile.
The Closer
ROUND-UP
“Risk appetite built after a strong survey of German economic sentiment and firm demand for an auction of Spanish government bills reduced anxiety about the eurozone fiscal crisis. A generally positive batch of US earnings reports added to the upward momentum for stocks,
Revenge of the muppets?
This isn’t ideal, in any case:
Net revenues in Fixed Income, Currency and Commodities Client Execution were $3.46 billion, 20% lower than a solid first quarter of 2011, as higher net revenues in interest rate products were more than offset by lower net revenues in the other major businesses.
China: once again a net buyer of US Treasuries
Hey, remember when China was net-selling US Treasuries and drawing down its FX reserves? …
That was so December 2011. This hasn’t been widely discussed in recent days amid the higher-profile news that Chinese growth in Q1 decelerated by less than expected and the RMB was allowed to trade in a wider band,
Italy/Spain and US Treasury yields
The correlation is back:
That’s via RBC, which notes that this is the highest negative correlation between Spanish/Italian CDS and 10-year Treasury yields since last September, when the latter traded in a range of 1.80-1.90 per cent.
US Markets Live transcript 13 Apr 2012
Markets Live chat transcript for the chat ending at 15:07 on 13 Apr 2012. Participants in this chat were: Cardiff Garcia Joseph Cotterill, FT CGHello! CGWho’s here? JCBonjour nos amis
Reminder: US Markets Live at 10am New York time, 3pm London
We’re back to our normal hours this week, and this morning we’ll be discussing bank earnings, Google, China GDP, and CPI. Or we’ll scrap all that and just talk about whatever crosses the tape. See you at the usual place.
JPM earnings
Not a bad start to bank earnings season. We’ll have a proper breakdown during US Markets Live later on Friday, but for now here’s the announcement.
Revenues and net income each came in higher than analysts expected,
The Closer
ROUND-UP
US and European equities finished higher today with the glaring exception of Spain, where domestic bank Banesto set aside €475m against bad property loans and the prior day’s rally for Spanish sovereign bonds fizzed out.
MMF investors are getting antsy
Looks like some investors are getting nervous…
Money market mutual funds saw a noticeable reduction of assets under management for the sixth week in a row (third consecutive double-digit decline), with AUM down by $15.2bn for the week ending April 4.
SEC: Ephren Taylor II (double-)crossed it up
Here’s a video of the charismatic, self-described ‘social capitalist’ Ephren Taylor II convincing a church congregation to “cross it up”…
We’re not entirely sure what he means. But crossing it up sounds an apt description of what the SEC now accuses him of doing to investors.
The IMF on the bleak near-future of the safe asset shortage
It’s chapter three of the latest Global Financial Stability Report, and it is especially good on the varying roles of safe assets in global financial stability, mispricing before the crisis and the decline in quantity since,
DoJ to Apple, publishers: E-Crooks!
The WSJ had it first, we think:
The U.S. filed an antitrust lawsuit Wednesday against Apple Inc and five of the nation’s largest publishers, alleging they conspired to limit competition for the pricing of e-books.
The Closer
ROUND-UP
The S&P 500 followed global equity markets down, falling 1.71 per cent on the day as Spanish and Italian sovereign bonds sold off while yields on US Treasuries and German bunds plummeted.
One cheer for slower earnings growth…
Official earnings season in the US will kick off with Alcoa after the close of trading on Tuesday, and here’s one item that economy-watchers will be minding as companies report in the coming weeks.
First from RBC:
Counting the collateral, Main Street edition
Our earlier post on the excellent Credit Suisse collateral note risked alerting Blogger Interpol for its verbiage, but there was one more item we thought worth noting.
Specifically the bit that covers the household collateral situation — which is obviously and inextricably linked to the collateral issue in the shadow banking system,
When safe assets return
Like so many others, FT Alphaville has spent much of the past year thinking about collateral shortages in the shadow banking system and how safe assets function as a kind of currency.
But it’s about time someone actually calculated just how much money these assets might represent.
The Closer
Round-up
US equity markets fell and the dollar rallied after the minutes to the FOMC’s March 13 statement indicated that the Fed might be less likely to engage in quantitative easing than previously thought.
FOMC minutes for the statement of 13 March 2012
Dollar up, US equities down, with the Dow falling more than 100 points — that was the immediate reaction to the release of the FOMC minutes.
A few things to note as we come across them:
UPDATED:
The pros and cons of the Fed’s three options
Nothing was decided in the March 13 FOMC statement, though it did include the Fed’s cautious recognition that the prospects for the US economy had improved since the start of the year.
But the minutes from the meeting,
The 6am Cut London
- The US manufacturing sector expanded in March, “underlining the diverging fates of the world’s biggest economy and the eurozone,” the FT writes. The US ISM index slightly bested estimates with a 53.4 reading,
MMFs, deposit insurance, and regulation in the age of shadow bank runs
Deposit insurance on non-interest bearing accounts — it was in October 2008 that the FDIC started it, through the Transaction Account Guarantee, or TAG.
Until we looked a bit more closely, we hadn’t guessed that the issue could offer much insight into the complexities of shadow banking regulation.
What’s keeping US gas prices aloft
Courtesy of the Credit Suisse crew, a diagram that tracks how the composition of US retail gas prices has evolved in recent years (click to enlarge):
The share of the gas price dominated by crude has grown,
US Markets Live transcript 30 Mar 2012
Markets Live chat transcript for the chat ending at 15:10 on 30 Mar 2012. Participants in this chat were: Cardiff Garcia Joseph Cotterill, FT Izabella Kaminska CGHello! JCHello, and welcome to Markets Live.
The Closer
Round-up
The day was split in two for US equities as they overcame an early decline to rally nearly back into the black by the close of trading. European shares had a rougher day, the Euro fell against the dollar,
US Q4 GDI up 4.4%, GDP unchanged from 2nd estimate at 3%
So much for the Okun’s Law mystery?
Those who think Gross Domestic Income, whose first quarterly estimate arrived in the same release the third estimate of GDP, is the more useful growth measure of the two will be encouraged by this:
Adam Posen: why the US has recovered faster than the UK
Posen, of course, is the Bank of England’s perennially frustrated dove and proponent of looser fiscal and monetary policy.
His case is that although the recoveries in both countries have been inadequate,
Michael Pettis challenges The Economist, global economic bragging rights and sweet gig for Chinese band at stake
At the end of last year, The Economist predicted that Chinese GDP would surpass US GDP at market exchange rates in 2018. (Click table to enlarge)
There’s always a touch of frivolity in making predictions such as these.
Presenting the absurdly sanguine Promontory presentation
A big thanks to the FT’s regulatory correspondent Kara Scannell for passing along the May 2011 presentation by consultancy Promontory to the MF Global board’s audit and risk committee.
As Kara and Tom Braithwaite write in their piece this morning,