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The death of equities… again?
Thursday’s FT declares “the end of a six-decade passion for equities”. Quite a claim.
Institutional investors, from pension funds to mutual funds sold directly to the public, have slashed holdings in the past decade.
China flash PMIs point to contraction, again
[Updated] The number for May is 48.7, compared to 49.3 in April. This is the seventh straight month of contraction and the more important components of the index look fairly bad.
Here’s a summary of the direction and speed of movement of each component:
EU summit: the full nothingness
Tonight’s text on Greece from the EU summit. Not much, to be honest.
(Click to image for full doc – more/less from Van Rompuy, here)
From Citi, another Grexit scenario
Grexit not this year. Maybe in 2013, with a 10 per cent drop in GDP. Continued financing from the IMF and the EU (through the Balance of Payments Assistance facility, possibly) to cushion the blow.
All those prognostications and more…
It’s Lee Buchheit’s world, we just get to live in it
Thank you, Reuters.
We’ve long been admirers of Lee Buchheit, who helped mastermind the Greek restructuring at Cleary Gottlieb.
See Buchheit’s early co-authored proposals for Greece,
What Bagehot said…
Brad DeLong’s note on the first decades of central banking practice and theory didn’t get as much attention as his paper on fiscal policy at the zero bound (co-authored with Larry Summers) — but we really think it’s worth a read for anyone with an interest in the topic.
Capital is leaving Europe…
There are two stories regarding capital flows and the eurozone: flows between member states, and flows to and from the eurozone as a whole.
We’ll ignore the flows into Germany and away from Italy for a moment.
A small, last minute cash call…
Three Alphavillans are running around Canary Wharf in East London this evening in support of the British Heart Foundation.
Left to right: Lisa Pollack, David Keohane and Masa Serdarevic
Click here to make it worth their while.
India: a sliding rupee in a frozen system
“Bas! Bas!” is surely a familiar cry in the Reserve Bank of India right now as India’s rupee continues to plummet. So far, it has dropped 15 per cent against the US dollar since the start of February, hitting multiple new record lows on its way.
China’s ’1 per cent’ risk
FT Alphaville has been focusing on signs that China may be suffering a “capital outflow” problem.
We also think global markets may be under appreciating the problem.
As far as we see it, markets have become far too used to a one-way discourse when it comes to China.
I find your lack of faith disturbing
The ‘Greece’ section of the Bundesbank’s latest report on the German economy must be read to be believed (emphasis ours):
Current developments in Greece are extremely worrying. Greece is threatening not to implement the reform and consolidation measures that were agreed in return for the large-scale aid programmes.
The great CLO deleveraging
Back in December, the FT’s Tracy Alloway and Robin Wigglesworth explained how that which was financed by collateralised loan obligations was no longer going to be so financed. This will lead to a credit crunch for sub-investment grade companies that looks set to kick off in earnest in a couple of years.
Beware the quant models
If you thought the headlines were bearish… you haven’t seen the bank quant models (the ones which presumably can’t read headlines).
Looking at SocGen’s latest cross asset quant research, the picture painted on all signal fronts is increasingly coming across on the dire side:
Euro neuro
From the lyrics of this year’s Montenegran Eurovision entry “Euro neuro” (pronounced: ɛw-ro nɛ-ro):
EURO neuro
Euro neuro
Euro neuro
Monetary brake dance
Euro neuro
Euro neuro
Euro neuro
Give me chance to refinance
And…
Cove Energy, after flirting with Shell, gets offered bigger ring
Shell had set May 23 as the date for acceptance of its April offer of more than £1.1bn for Cove Energy. It could have been such a beautiful day… but Thailand’s PTT Exploration has decided to come storming back into the picture with an improved of of 240p per Cove share.
Not such dramatic outflows from Italy, after all?
Italy’s March balance of payments data showed a big net outflow for investment
This was something picked up by Deutsche Bank’s Alan Ruskin (and us, here) as suggesting an accelerating outflow of foreign capital from Italy,
Drachma-tic equity
Coca-Cola Hellenic Bottling SA — a pretty unexciting play on the Eastern European soft drinks market. Volume growth a bit flat. Only eight per cent of profit is Hellenic.
Although, riskily for holders of its stock…
That US fiscal cliff hangs over a pile of recessionary rocks below
The fiscal cliff and “Taxmageddon” are terms for what might happen at the end of this year, when various US tax cuts and benefits expire, and the automatic “sequestration” spending cuts agreed as part of last year’s debt ceiling/Super Committee deal are due to kick in.
Tourist-trapped, in the Greek bailout
Or the Greek-German relationship, told through tourism.
I ask Germans to choose Greece for their summer holidays.
That’s Alexis Tsipras speaking to reporters in Berlin on Tuesday – and we don’t think it was a joke. He may not want the bailout memorandum,
Greenshoes, Facebook phantoms and ETF magic
Successful or not, Facebook’s IPO has taught us one very important thing over the last two days.
The blogosphere/Twittersphere knows extremely little about greenshoe IPO mechanics. And yet, because who shouts loudest makes the most waves…the idea that Morgan Stanley had “lost face”
Eurozone exposures charted (a.k.a. Malta’s sorrow)
The little guy always gets ignored, as these charts from Nomura’s Jens Nordvig and Dimitris Drakopoulos show:
What stands out is how poor Malta’s vulnerability has gone unnoticed … although it is not so surprising when you see what a lack of context does to its potential suffering:
Oh Schatz! No coupon
This. Is. Marktverwerfung:
That’s a 0.00 per cent coupon on €5bn of two-year German debt to be sold this Wednesday.
Marktverwerfung – market dislocation – is a translation of thoughts from Marc Ostwald at Monument Securities on Tuesday:
Pershing Square’s presentation on JC Penney
Hat tip to Dan McCrum for passing along. Ackman’s bullishness on JC Penney is mostly about CEO Ron Johnson and his new management team, but there’s a lot in here on pricing models, sales trajectories,
ELA, a life in the public eye
Finally, we have seriously reiterated our request to take advantage of a direct financing line from the Greek Central Bank, via the ELA (emergency liquidity assistance), the public tool of access to banking liquidity…
A formula to end the dollar’s reserve currency domination
One reserve currency to rule them all.
But does it need to be this way? Or is it indeed possible to have two, or even several such currencies? Or to get straight to the heart of it: can the euro or Chinese yuan ever have the status of the US dollar?
FT Alphaville has previously traced the historical travels of the US dollar on its road to reserve currency stardom,
Depressing eurozone summary du jour
Another day… another round of eurozone soul searching. This time UBS has sent out a Tuesday triptych of eurozone angst.
The first note, from Paul Donovan, covers off the flaws in the eurozone’s conception (little new ground but always worth remembering) and touches on Target2 liabilities and parallels:
Real estate won’t be supporting Chinese steel demand much longer
Something is up with China’s steel production. It reached record levels in March, driving up expectations of rising coking coal and iron ore prices. As the FT and Reuters have reported, there are accounts of both thermal coal and iron ore shipments being deferred or even defaulted on,
Flat-line Britain
What headline factoid to use?
Hands-Off policy fails UK
Hysteresis hysteria hobbles Britain
Prices will come down, IMF tells Cameron
Osborne told: ‘Go for growth’
QE3 NOW! (maybe)
Save our SMEs!
Anyway,
The not-so-creeping process of de-euroisation
The de-euroisation continues and is, in Italy at least, getting faster… these charts show foreigners running away from Italian liabilities in March at their fastest pace ever, and illustrate just how quickly the LTRO sheen has faded.