Lisa Pollack
The remarkable resurgence in synthetic credit tranches
On a scale of meh (0) to tin hats at the ready! (10), FT Alphaville is thinking that the bank-led synthetic securitisation market is currently at about a 3. While worth keeping an eye on, these bespoke deals are still relatively small beans compared to what the market was just before the crisis struck.
From more Russians, with longer life expectancy
In this quad of graphs, can you spot the odd one out?
While its fellow BRICs have rapidly growing populations, Russia’s has only recently been bucking its trend of decline. In 2004, downside forecasts had the country’s population falling to 125 million by 2025 — something that doesn’t exactly shout “invest here!”.
Dammit Pandit, we wanna talk to you
The river was deep but we swam it, Pandit.
The future is ours so let’s plan it, Pandit.
So please don’t tell me to can it, Pandit.
I’ve one thing to say and that’s
Dammit, Pandit, we wanna talk to you…
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
Federal Open Market Committee: Full statement in this post. The short version – “expanding moderately”, rates on hold, and a Lacker dissent. Gold initially sold off,
The sum of a car’s parts
The sum of the average global car’s component parts was $14,350 in 2011, according to estimates by analysts at Bank of America Merrill Lynch. It was estimated to be $11,100 in 2000. Assembly costs are excluded from this figure.
Rank by correlation, European edition
As markets ponder France’s post-election future, and the Dutch deal with the collapse of their government, some analysts are wondering which countries even qualify as being in the “core” of Europe.
In so contemplating,
Further reading
Elsewhere on Wednesday,
- Yves Smith on a paper about what financial reform missed.
- US property god says the price trend looks bad and will overshoot to the downside.
- ‘Dear Rogoff, I do not like your parable.
Once upon a time in Italian banking
In a land called Italia, where Savers saved, and Borrowers wanted to borrow from the Savers, there were some Banks.
The Banks took the savings from the Savers, and lent some of it to the Borrowers. And as long as the spread on the interest rate paid to the Savers was less than that paid by the Borrowers,
Further reading
Elsewhere on Tuesday,
- Wanna talk risk to the banking sector? So, interest rates…
- China and Russia are playing Battleship.
- The Netherlands falls off its bike.
- What could go wrong in the next 11 days.
Funding Spain and the year of the negative feedback loop
On Friday, FT Alphaville discussed the process of de-euroisation that is currently underway as foreign investors continue to withdraw from the sovereign bond markets of peripheral countries. For Spain and Italy,
Goodwill in France, plus bonus data quality pop-quiz
On Friday morning when a report landed in FT Alphaville’s inbox with the headline “Lagging Corporate France… The French – at least their brands are popular”, our interest was piqued. It’s a one-pager from independent equity research firm AlphaValue.
[JPM Whale-Watching Tour] Shamu in the swimming pool
Hedge funds are not happy.
Don’t everyone run to their defence at once now.
Echo?
Come on, guys, hedge funds are run by people too! And as ProPublica says:
… just because a hedge fund is biased doesn’t mean it’s wrong.
[JPM Whale-Watching Tour] The curve trade
A “tempest in a teapot”. That’s how JP Morgan CEO Jamie Dimon described the fuss caused by the bank’s Chief Investment Office apparently entering into large credit trades. It may well be teapot-sized,
[JPM Whale-Watching Tour] Thar she blows!
Whale-watching in the credit default swap market has become something of a pastime for pundits and market participants alike.
For the uninitiated, the short version of this story is that many believe that a trader (aka “The London Whale”,
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
Italy has raised its deficit- and debt-to-GDP targets for 2012. However, Paul took a look at JP Morgan’s forecasts of the sovereign’s budget numbers and it doesn’t look like this will be the last revision.
Basel III study demonstrates impact of getting rid of BS capital
Basel III is looming. There is no escape. Tougher capital requirements for banks are on the way.
But the phase-in doesn’t begin until next year, and the ramp-up process is long. Not until 2019 will Basel III be fully baked in.
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
Governor Zhou and China’s money creating machine: Everyone already knows China has the world’s largest stock of M2 money. But what the team at Standard Chartered thinks is more important in the Zhou era is China’s importance as a creator of new M2.
What five years of crisis history tells us
Who doesn’t like a good dataset?
As markets wade into the second quarter of 2012, reflect for a moment on the fact that the crisis sparked by subprime mortgages now has nearly five years’ worth of observational data.
Return of the Stability and Growth Pact
Don’t laugh. European politicians mean it this time. True, the Stability and Growth Pact turned out to be a bit useless and toothless. The lessons of the past have been learned and now there are newer,
All the best tax breaks are Made in America
While in some countries avoiding tax is a national pastime, in America the government offers all manner of mechanisms to reduce one’s bill.
From deductions on mortgage payments, to the low rates on long-term capital gains that private equity moguls benefit from,
The latest in regulation-induced innovation – Part 2
In Part 1, we discussed the interest Spanish banks, and the likes of JP Morgan, have shown in securitisations that may lower their regulatory capital burdens by bundling up assets and selling the riskiest pieces of the resulting structures to investors.
The latest in regulation-induced innovation – Part 1
Regulations set forth by the Basel Committee that govern the amount of capital that banks have to hold are meant to set a level playing field round the world.
Or at least, we thought harmonisation was the point.
JP Morgan’s giant unwitting catalyst trade
For those new to the story, Bloomberg and WSJ reported on Friday that a handful of hedge funds and dealers claimed that a trader in JP Morgan’s Chief Investment Office has been selling so much protection on the Markit CDX.NA.IG.9 credit index that it was “distorting”
Hedge funds and the Whale, credit index edition
What is this a story of? Bloomberg’s headline:
JPMorgan Trader’s Positions Said to Distort Credit Indexes
The WSJ’s:
‘London Whale’ Rattles Debt Market.
To summarise, a number of market participants are pointing their fingers at JP Morgan’s Bruno Iksil,
The mystery of Morgan Stanley’s footnote unravels – Part 2
The story so far:
In Part 1, we reminded you of Morgan Stanley’s footnote in their fourth quarter earnings, whereby the bank stated that it had reduced its exposure to Italy by $3.4bn while benefiting from a positive hit to net revenue of $600m.
The mystery of Morgan Stanley’s footnote unravels – Part 1
Or, “This House believes all interesting things are in footnotes and FT Alphaville reader comments.”
Allow us to make the case in favour of the motion. Beginning with:
Exhibit A – The Morgan Stanley Footnote (January 19,
The return of the US manufacturer
The US manufacturing PMI released by the Institute of Supply Management (ISM) on Monday beat expectations, coming in at 53.4. But that’s not what we really want to talk about here. Instead, we want to ask the question that the team at Bank of America Merrill Lynch asked themselves in an impressive 73-chart,
The Lunch Wrap
Good morning, New York
FT ALPHAVILLE
The ISM beat: the strategists at Deutsche Bank ran a regression of the US manufacturing index against the S&P 500, finding that there’s still room for upside in stocks.