Tracy Alloway
Plus ça (accounting) change at Goldman
What’s this? Something you haven’t seen before in Goldman Sachs’ results?
Net revenues in Investing & Lending were $2.14 billion for 2011. Results for 2011 included a loss of $517 million from the firm’s investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC) and net gains of $1.12 billion from other investments in equities,
MF Global – 2008 parallels like you wouldn’t believe
For today’s edition of history rhyming, have a look at this (seminal) piece of research from Citigroup’s Matt King.
On September 5 2008 — just weeks before Lehman Brothers collapsed — the Citi credit strategist sent out a research note carrying the provocative title of “Are the brokers broken?” The thesis was simple:
Origins of the EFSF monoline plan
Or, Allianz talking out of its… ah, never mind.
The German insurer has recently taken to touting a proposal for the EFSF to insure sovereign debt.
Interestingly, the nub of the EFSF bond insurance plan was put forth at least nine months ago by a small European consultancy called Redefine.
Hooray for, erm, Greek ELA?
Things you might not have noticed in recent Greek bank results:
Eurobank EFG ability to generate recurring profits is reflected in pre provision income, which amounted to €749m in 1H2011 or €324m in 2Q2011,
Eurozone wars, or vigilante vs vigilante
Bond vigilantes — per James Carville — are intimidating things.
And no more so than in Europe. Rising bond yields in the region have managed to force austerity onto places like Greece, and are currently testing political will in Italy.
No tail risk, please. I’m a bank
Spotted by the sharp-eyed creditplumber in a new paper from the Bank of England’s Paul Fisher:
And the footnote:
How many indeed.
Un petit French funding problème
Rumours of funding problems at French banks have been rife this summer.
Without even getting into specific financial firms, you can see a potential issues.
French banks do have a relatively higher reliance on wholesale funding,
Further reading
Elsewhere on Thursday,
- Why Buffett’s BofA deal is bad news.
- George Magnus says, give Karl Marx a chance.
- What is debt? An anthropological point of view.
- And facts about Ireland’s mortgage debt.
Phew…
The Dow Jones is back in positive territory for the year, after rising to about 11,669 at pixel time on Wednesday morning, according to Bloomberg. It closed around 11,577 at the end of last year.
Stylised facts from Bob and Kevin
Bob ‘the Bear’ Janjuah and sidekick Kevin Gaynor are ready for a new school year at Nomura.
To help prepare, the strategists have compiled a smorgasbord of “stylised facts” to guide investors.
And here they are:
Euro splurge!
Have you heard about this new euro daaaahling? Is great. Lets buy thingz with it!
Yes, that’s our best euro-trash impression.
And we bring it up because the first chart above — from David Watts at CreditSights — rather superbly illustrates the euro-area buying spree undertaken by the region’s banks after the adoption of the euro.
Snap news
Breaking pre-market news on Wednesday,
- Tesco to sell Japan business – statement.
- IFG confirms approach from Bregal Capital, releases half-year results – statement, statement.
- Corporate: Sportingbet,
Dear ESMA … about those Greek debt impairments
From Tuesday’s FT — some letter-writing:
Some European financial institutions should have taken bigger losses on their Greek government bond holdings in recent results announcements, according to the body that sets their accounting rules.
Anyone for some non-government debt eurobonds?
A “modest eurobond proposal,” courtesy of Deutsche Bank.
It’s meant to bypass some of those pesky EU Treaty issues, while overcoming the so-called ‘free rider’ problem that might come from very different eurozone governments issuing debt at identical costs.
Inter-company, intra-state Chinese lending
Here’s an on-the-ground update of a Chinese practice with some Japanese origins.
It’s what China expert Michael Pettis compared to the zaiteku undertaken by Japanese companies in the 1980s. Put simply,
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: 2011, the year of global indignation
Is there such a thing as a global mood?, asks the FT columnist. It certainly feels like it.
The unintended tightening
Not good, not good at all.
From Morgan Stanley’s US rates team on Tuesday:
The funding markets had been stressed previously in April-June 2010 due to risks associated with the sovereign debt crisis in Europe.
The US’s Greece-y new debt dynamics
Some debt doom and gloom from Independent Strategy’s Bob McKee…
… a man who, quite literally, wrote the book on sovereign debt crises.
He notes that the debt deal reached earlier this week does little to address the most pressing of the US’s fiscal issues.
How Andy Haldane gets his haircut
It’s no coincidence that with the shift to central clearing looming on the horizon, the Bank of England’s director for financial stability is talking about this subject.
Haircuts, that is.
As readers will no doubt be aware,
A gilt-y inflation record
Yields on 10-year gilts fell below 2.77 per cent on Tuesday — the lowest level for about 50 years.
However real yields are also at historic lows, with gilts yielding 2.2 per cent less than inflation.
Anatomy of a failed Chinese railway bond
By any account, last month was not a good time to sell a Chinese bond backed by its railways.
A local cash crunch had already limited the pool of available buyers, while concerns about the country’s local government debt problems persist.
Greece as a test for auditors
Much like the rating agencies, many auditors have suffered a crisis of creditability in recent years.
That will make their reaction to the IIF’s proposed financing offer for Greece all the more interesting.
A glance at UK GDP – across the North Sea
Things that impacted the UK’s second-quarter GDP, as announced by the ONS on Tuesday:
The additional bank holiday for the royal wedding
The royal wedding itself
The after-effects of the Japanese
Gold’s not as stretched as you might think, Citi says
One for the gold bugs, this.
The possibility of a surge in the price of gold is growing, according to the commodities team at Citigroup.
In fact, they say, the probability of a short-lived spike in gold is now above 25 per cent (up from 5 per cent just a few weeks ago) and that’s even without a worst-case economic scenario actually happening.
Moody’s puts Spain on review for downgrade
So much for a quiet August.
Just a week after eurozone authorities announced a new bailout package for Greece (and just before the start of Europe’s traditional August holiday period), Moody’s has put Spain on review for downgrade.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: Five questions for the Fed and Treasury
This week, a cacophonous hubbub is overwhelming America’s airwaves, notes the FT’s Tett.
Dick Bove says – the search for a new safe haven is on
Gold? Pffft.
The euro? Too euro-trash.
The dollar? Puh-lease.
Rochdale banking analyst Richard Bove reckons the search is on to find a new global safe haven. Because even if this US debt debacle gets sorted by lifting the ceiling,