Kate Mackenzie
Further reading
Elsewhere on Wednesday,
- USA! USA!
- WA! WA!
- May Greece survive long enough to tell the tale.
- Although the CDS trigger looks a cert
- A template for future European sovereign restructurings.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Prepare for a golden age of gas
The world is in the midst of a natural gas revolution, writes the FT’s Wolf. Even the sober International Energy Agency refers to a scenario it calls a “golden age of gas”.
Germany doesn’t want more of your eurozone goods
Remember how this eurozone mess largely boils down to a balance of payments problem? The peripherals have current account deficits and the northern countries have surpluses. As the eurozone is a semi-closed/unified economy,
Eurogroup maths
So the deal is in, and it combines bigger private sector “voluntary” haircuts (53.5 per cent of face value, as opposed to 50 per cent agreed in October) with the ECB passing the profits from its Greek bondholdings onto the national central banks,
‘Deal is done’
Reuters quotes two sources saying a deal is done with a nominal PSI haircut of 53.5 per cent, or more than the 70 per cent net present value previously discussed:
Another official confirmed that the financing would total 130 billion euros with the aim of reducing Greece’s debts from around 160 percent of GDP now to 121 percent by 2020,
Finance for Xboxers
Nice to see that one European bank is not too concerned about the eurozone teetering on the edge of a bail-out-agreement-cum-sovereignty-crisis-slash-civil-uprising:
Saxo Bank executes world’s first base jumping FX trade
Moody’s is reviewing a long list of European and global banks
Moody’s ratings of Credit Suisse, Morgan Stanley and UBS are set to fall up to three notches after the ratings agency announced reviews of both European banks, and global banks and securities firms with credit market operations.
Dick Bove has the (very short) answer to what’s going on with Greece
His latest missive, in its entirety (less all the regulatory guff):
Tongue in Cheek
Paying Down the Greek Debt
A client suggested to me that the Greeks have become so expert at manipulating the U.S.
A fate worse than a hard landing for China
What IS a hard landing in China?
Well, BAML’s latest survey of fund managers defines it as less than 7 per cent growth. And incidentally, only 8 per cent of those surveyed believe it will happen, half the percentage of the November survey.
The hedgies’ tool of choice
The letter.
From an old New Yorker story on Daniel Loeb:
Loeb’s favored device is the scolding letter, formally addressed, publicly released, and ruthlessly frank in its assessments of managerial competence.
Pink picks
Comment, analysis and more from Wednesday’s FT,
Martin Wolf: Much too much ado about Greece
Why does Greece – a country with little more than 2 per cent of the eurozone’s gross domestic product – cause such headaches? asks the FT’s chief economics commentator.
Another piece of the LTRO puzzle
The point has been made before that rising deposits at the ECB do not, (repeat, not) indicate that banks are “hoarding liquidity”.
Here’s Guy Debelle, assistant governor at the Reserve Bank of Australia,
UPDATED: Not German enough
UPDATE: The report is out — click to open the pdf:
We explained earlier that the EU’s first report on economic imbalances (the Alert Mechanism Report) is due to be published later on Tuesday, laying out which countries pass and which fail a scorecard on matters such as current account balance,
The Roubini-Rosenberg indicator
We missed this on Friday… H/T the delightful Brazilian Bubble.
Further reading:
Hold the presses, Dr Doom is turning bullish – WSJ MarketBeat
A new bull market? Are you out of your mind? – BI
China gets some can-kicking practice
Just last week, Patrick Chovanec was warning about the looming need to roll over debt in China:
Chovanec tells Nouriel Roubini the conflict between driving growth through investment-directed credit,
Further reading
Elsewhere on Monday,
- Best of the #FedValentines
- Juicy goings-on over at Maiden Lane, Goldman edition.
- ‘A battle of wits with a remarkably poorly-armed man’.
- The number of problem US banks is unchanged.
John Paulson vs Hartford Financial
You’ll have to imagine how it sounded.
But here’s an interesting demonstration of John Paulson at work… stepping onto Hartford Financial’s earnings conference call to lambast the insurer’s performance.
Optimistic forecast of the day, Greek GDP edition
Some detail on the draft agreement Greece’s political leaders want to submit to their international saviours (assuming they can agree to pension cuts).
Via Bloomberg (emphasis ours):
Further financing may be needed for the country as the economy contracts at a faster pace than originally estimated.
UK banks are good to go
RBS is still in its loss making phase (1) which inevitably gives us communication challenges. The losses ironically are a measure of our recovery success…
– Stephen Hester’s memo to staff on Tuesday.
Further reading
Elsewhere on Wednesday,
- Roubini is bullish; time to short everything!
- What on earth has Bill Gross been reading?
- Extreme optimism.
- New year, new CLO structures.
- Repackaging austerity.
The dramatic final days of MF Global
From the Powerpoint of the trustee’s update on their investigation — re-ordered slightly, for narrative flow.
Let’s start with the timeline of margin calls…
(On October 24, Moody’s downgraded MF’s debt to Baa3,
Pink picks
Comment, analysis and more from Tuesday’s FT,
Jagdish Bhagwati: Shame on you, Mr Obama, for pandering on trade
President Barack Obama infamously killed the multilateral Doha Round last December by instructing his representative at the World Trade Organisation to be a “rejectionist” negotiator,
China’s hard landing odds, updated
Remember Nomura last year estimated there was a 1-in-3 chance of a hard landing in China?
Anyway, they’ve updated the index on which it was based. Nomura’s chief Asia economist, Rob Subbaraman, says the 1-in-3 odds indicated by the China Stress Index remain,
Pink picks
Comment, analysis and other offerings from Monday’s FT,
Edward Luce: The reality of American decline
Something puzzling just happened in Washington: a liberal American president who opposed the invasion of Iraq endorsed one of its chief neoconservative advocates,
Sino-Forest’s diminishing returns
Here it is, and only a day past deadline: the Sino-Forest independent committee’s final report into the company’s assets and relationships between various poorly-understood entities.
[We looked at the independent committee a while back.]
So,
China’s not so amazing PMIs
China’s official PMIs went to 50.5 for January, but European markets were not that impressed.
The HSBC/Markit Economics PMIs, meanwhile, were an uninspiring 48.8, compared to 48.7 in December.
Societe Generale’s Wei Yao says that,
Pink picks
Comment, analysis and more from Wednesday’s FT,
Martin Wolf: Europe is stuck on life support
Economic decision-makers are more optimistic than two months ago, mainly because of the ECB’s actions,