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US-China: through a Treasury bond, darkly
With a hat tip to Blood and Treasure, the Committee of 100 (how mysterious does this lede sound already?) has released a big survey of how the US and China see each other. Previous one was in 2007.
There are some fun financial/economic sidelights…
Stock splits and the volume-price correlations
We ran a couple of posts last week about the declining daily trading volume in US equities the last few years (during a time in which share prices have climbed).
The first asked what could explain the trend — and the second wondered aloud if perhaps this isn’t as mysterious as it seemed.
Greek funny money, redux
First it was John Dizard arguing that Greece could issue scrip and have this circulate as “money” during a funding stand-off with the Troika — without getting chucked out of the eurozone.
There are precedents that vaguely resemble this kind of stopgap approach:
Book excerpt: “Abnormal Returns”, by Tadas Viskanta
FT Alphaville doesn’t know if Tadas Viskanta, proprietor of Abnormal Returns, was the first curator in finance blogland — but we do know that he is still very much the best. And as Tadas was certainly among the first to start linking to us frequently back in our early days,
The ultimate Bank audit(s)
A fresh talking point for Monday after noon in London…
The Court of the Bank of England has today commissioned a set of three reviews into areas of the Bank’s performance and current capabilities in order to learn lessons and to ensure the Bank is best equipped to carry out its responsibilities in the future.
[JPM Whale-Watching Tour] Oh, so now it’s a $5bn loss?
Morgan Stanley’s research team came out with a note on Friday, guesstimating that JPMorgan’s losses on the synthetic credit portfolio held by its Chief Investment Office will come to $5bn by the end of the year,
Wen to the rescue
Asian markets were mostly in positive territory early on Monday, which was widely attributed to comments by Chinese premier Wen Jiabao on Sunday, emphasising the need for more support amid signs that growth is sputtering.
China’s mega dash for the dollar
We noted last week that there was a rising tussle over dollars in China, spurred by capital outflows and RMB-denominated selling on signs that the world’s key economic powerhouse may be slowing. A situation which was arguably thrusting China into a dollar short position.
Greece – don’t call it a backtrack…
Real games of chicken are about fundamentally misaligned incentives.
“I like to play poker…”
So, at the weekend’s G8, Europe’s voice was heard, and it muttered something under its breath about Greece ‘respecting the commitments that were made’ to its second bailout’s terms.
It’s gotta close greenshoe!
Update after the close: It closed green(shoe) at $38.23 according to Bloomberg data. But not until after a few moments close to $38.00, as seen below earlier…
Facebook shares at pixel time, a few minutes before the close.
[JPM Whale-Watching Tour] Tracking trades down
The last twenty-four hours have brought us some interesting insights into the JPMorgan chief investment office’s $2bn loss story. The FT revealed that the CIO has been a huge player in certain structured asset markets.
BoE goes ex-Posen
This is careless. The Bank of England has managed to lose Adam Posen, the outspoken American dove on the Monetary Policy Committee. He’s off to the Peterson Institute in Washington, from whence he came three years ago,
Another day, another SNB rumour
Swiss franc traders have been pretty bored of late, with the euro/Swiss franc flatlining for months. But it seems they’ve had some rare excitement this week: someone out there is buying as many euros against the franc as traders care to offload.
With Facebook, give thanks for greenshoes
After an open of $42.05, against the $38 IPO price, Facebook stock quickly reverted to the sale price on Friday — at which level we presume those banks with the over-allotment mandate (MOST, JPM, GS) will have been very busy indeed.
18/05/2012 (Before-FB)
Is life as we know it gonna change after 11am New York time on Friday?
Will Mark Zuckerberg be crowned emperor of the dweebs (just as Napoleon was crowned emperor of the French exactly 208 years ago today) or will he fall flat on his puli sheepdog?
While we await for that all-important first trade,
Spanish banks, wider still
A flurry of short-covering, encouraged by rumours that the Spanish authorities might re-introduce a ban on short-selling, saw Spanish bank stocks bounce on Friday.
But that “recovery” has not extended to the CDS market…
A bund, a bund, my kingdom for a bund…
Zee 2, 5 and 10-year yieldz are still compressing…to fresh all-time lows.
At which point will the Buba be forced to intervene and repo-out the state’s German bund stock?
Related links:
German
Trap door opens under US Treasury yields
1.697 per cent at pixel time. Worries about Europe, collateral crunching, people changing their minds about buying Facebook (which, by the way, priced at $38 a share)… take your pick.
[JPM Whale-Watching Tour] The high yield tranche piece
Coverage of the $2bn $3bn loss emanating from JPMorgan’s Chief Investment Office on its synthetic credit portfolio continues a pace, and FT Alphaville’s tour continues too.
The desire to understand what the trade was and the rationale behind it continues to bug us and many others.
Funnily enough, operational risk is more prevalent in Germany than Greece
Settlement fails.
Whether one considers them a systemic problem or not is definitely debatable.
A new study by post-trade experts Omgeo (based on a survey by Global Custodian) nevertheless, suggests that up to $976bn in equity transactions per year and $308bn in fixed income transactions is potentially being put at risk annually due to the problem.
Greece: when the drugs run out
Beneath the political stasis — another sign of a sharp turn for the worse in Greece’s liquidity crisis.
The country’s pharmacies are owed €500m by the state-backed healthcare insurer, according to reports.
And contagion is running wild…
Any vague “connection” to Europe is enough to get you hammered:
That’s French Connection down 24 per cent. This is getting out of hand.
(See here for the real reason for the dive.)
A flight to quality, charted
That’s German bund futures, on Wednesday. Fresh record.
Oh, Bankia.
The capital monster listed in July 2011 at €3.75 a share. At pixel time, after a heavy fall during Wednesday trading (on this El Mundo report), the shares are hugging €1.20.
The broader context
RoRo and the carry trade’s fight back
There have been rumours of the so-called carry trade’s demise knocking about for a little while now, but HSBC think it is staging a quiet comeback and taking a chunk out of RoRo’s (Risk on/Risk off) importance in the FX markets.
Discuss among yourselves, inflation trend path comparison edition
A chart from Market Monetarist:
And one from James Bullard (that’s US PCE below):
Caveats related to commodity prices, the ECB’s actual inflation target, the differing time series, NGDP, etc…
FOMC minutes for April 24-25 meeting
Yes, of course, there was a lot of stuff in the minutes about recent trends in the economy and the looming fiscal cliff and inflation forecasts and so on. The word “uncertainty” was used an awful lot with respect to the various forecasts in the SEP.
Shifting ECB liquidity to ELA, Greek bank recap edition
NOT HALTING. SHIFTING. THEN IT GOES BACK LATER.
Today was really not the best day for the ECB to signal this:
May 16 (Reuters) - The European Central Bank has stopped monetary policy operations with some Greek banks as they have not been successfully recapitalised,