Tracy Alloway
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,
Around the world, in leverage
So much focus on government debt lately — won’t somebody please think of the household leverage?
Morgan Stanley’s Global Monetary Analyst team has:
(And yes, Ireland has been classified as both Anglo Saxon and periphery).
Ready, set, impair those Greek bonds!
Hey European banks! Have you seen this?
[International Accounting Standards IAS39 - Paragraph 59] A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if,
Snap news
Breaking pre-market news on Thursday,
- Credit Suisse Q2 net income falls 52 per cent, plans to cut jobs – statement, report.
- XStrata Coal to acquire First Coal for CDN$147m – statement.
- Royal Dutch Shell adjusted Q2 earnings up 77 per cent to $8bn – statement.
The Lehman flip-clause flap gets settled – sort of
That’s a big deal for the structured finance world, though you might not know it.
It’s to do with the loooong and continued unwinding of Lehman Brothers. Specifically it’s to do with a synthetic special purpose vehicle called Saphir (part of Dante) that Lehman set up back in 2002.
A peek at private placements
We know that private placements have become a popular method of European bank funding recently.
Though smaller, the deals do allow issuers access to cheaper, more flexible funding — or even money that might not otherwise have been available to them given recent eurozone sentiment.
Why here? Why now? Why this particular eurozone peripheral?
It’s a question FT Alphaville has been pondering for some time.
Why do markets suddenly seem to ‘wake up’ to the problems of one particular country or market, while ignoring similar and even worse issues in other areas? It is,
Snap news
Breaking pre-market news on Wednesday,
- Santander first-half profit down 21 per cent to €3.5bn – statement.
- ArcelorMittal beats forecasts with 22 per cent rise in first-half Ebitda – statement.
Italian volatility, l’accounting differenza
Because some day you might want a detailed breakdown of how Europe’s banks are accounting for their Greek, Spanish — and even Italian — bonds, here’s a helpful table from Deutsche Bank.
It comes from Mohit Kumar and Abhishek Singhania,
The eurosion of sovereign CDS
Here’s the smart thing in the eurozone plan unveiled last week.
Whatever it does for Greece’s debt sustainability (little) and to ensure private sector involvement (nothing) it really sticks a knife,
What’s prudent in collateral portability
Did you notice this bit from the reams of CRD IV material released on Wednesday?
Where an institution acting as a clearing member enters into a contractual arrangement with a client of another clearing member in order to ensure that client the portability of assets and positions referred to in point (b) of paragraph 5,
Further reading
Elsewhere on Friday,
- Debt and delusion.
- So can the eurozone survive?
- The subprime crisis, alternative theories.
- The long shadow of (sovereign) CDS.
- Market thickness matters — insights from an Irish fire sale.
Willem Buiter thinks water will be bigger than oil
The folks at Citigroup are a thirsty bunch.
In a 37-page note on Thursday, the bank’s global strategists recommend investors play the urbanisation trend by buying into water companies (these ones to be specific),
Mirror, mirror on the wall, who has the highest DTAs of all?
Deferred Tax Assets (DTAs) have been mentioned (usually critically) on this blog many times before. Put very simply, they are tax carryforwards that can be included in banks’ Core Tier 1 capital ratios.
Further reading
Elsewhere on Thursday,
- Michael Burry speaks.
- The language of market bubbles.
- Rent or buy?, in hindsight.
- Forget the stress tests, just look at the resolution regimes.
- Is gold money? No,
Italy’s record-busting, CDS-moving week
We know that Italian bond yields reached record highs last week.
But did you know that the country made some CDS history too?
CDS referencing Italy saw a huuuuuge increase in trading activity last week,
The CoCo cap – a mere €150bn?
The CoCo death spiral is the process by which the expectation of a swathe of bank-issued Contingent Convertible (CoCo) debt converting into equity can exacerbate share price declines.
Or more specifically,
Yes, Greece could devalue (while staying in the euro)
An eye-catching headline from UBS.
On Wednesday, economist Stephane Deo explains how Greece could use a sort of proxy for currency devaluation — the erm, traditional answer to debt overloads — to help haul its way out of crisis.
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Analysis: Europe – an elusive debt resolution
European leaders have been drawn into one of the most agonised debates seen since the eurozone debt crisis erupted nearly two years ago.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gavyn Davies’ blog: Default risks in the US and Italy
Martin Wolf said to me last week: “I am off for a holiday. By the time I return, two G7 governments may have defaulted on their debt.” I think he was only joking,
Is the debt ceiling drama really all about the GSEs?
You’re looking at an excerpt from the 2008 Housing and Economic Recovery Act. That’s the thing which created the Federal Housing Finance Agency (FHFA), which is currently charged with regulating the US’s massive Government Sponsored Enterprises (GSEs),
Goldman answers 10 questions on Italy
Got questions? Goldman has answers.
The calamari bank — like most of the market — turned its attention to Italy late last week. In particular, economist Lasse Holboell Nielsen took some time to answer 10 “key questions”
Playing provisions to pass a test
It’s not hard to criticise the methodology of Europe’s stress tests.
From the inclusion of mitigating factors not yet undertaken by banks, to the lack of a full sovereign default, you can take your pick,
Snap news
Breaking pre-market news on Monday,
- Glencore to acquire 70 per cent stake in Mina Justa Project for $475m – statement.
- Man Group to acquire Lehman exposure from its GLG Partners subsidiary – statement.
Stress, mitigated
So, eight banks officially failed Europe’s 2011 stress tests.
Exactly 20 banks would have dipped below the 5 per cent Core Tier 1 capital pass rate had it not been for capital raising undertaken between January and April of this year,
Eurozone CDO – it’s triple-A time
Readers may recall a likening of the eurozone to a giant collateralised debt obligation earlier this week.
Greece, Ireland and Portugal formed the equity slice, with Italy in the middling mezzanine,