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Elsewhere on Wednesday,
- Henry Blodget wants to tell you what really went on with the Facebook IPO research.
- Where is that giant RORO switch and who keeps flipping it?
- Literally sweating over a trade means you’re a nicer person.
The 6am Cut London
Risk assets continued their retreat in Asia on Wednesday as renewed fears of a Greek eurozone exit appeared, says Reuters, with the MSCI Asia Pacific falling 1.7%.
Germany restated its opposition to eurozone bonds,
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.
The Closer
ROUND-UP
“After a strong session for global equities, the mood turned sour again as fears over Greece’s potential exit from the euro region mounted after the country’s former prime minister, Lucas Papademos,
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:
Markets Live transcript 22 May 2012
Markets Live chat transcript for the chat ending at 11:10 on 22 May 2012. Participants in this chat were: Paul Murphy Bryce Elder/FT PMhi there PMit’s Tuesday PMIt’s Ill o’clock
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
Money keeps leaving Italy: David looks at Italy’s Balance of Payment numbers, out on Monday. In March, foreigners ran away from Italian liabilities at their fastest pace ever,
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.
Further reading
Elsewhere on Tuesday,
- JP Morgan has an excess deposit problem (although it’s not just JP Morgan who has that problem).
- And, oh look, a trading opp!
- *This* is how much southern Europe is overvalued by.
The 6am Cut London
France is determined to push the idea of jointly guaranteed bonds as a new form of borrowing for eurozone countries despite Germany’s opposition, the FT reports. Pierre Moscovici, finance minister, told a press conference on Monday that it was a “strong idea”
The Closer
ROUND-UP
The S&P 500 went into rebound mode, closing up 1.6 per cent at 1,315.99, its largest one-day gain in two months (Bloomberg). Shares in Apple rose 5.8 per cent, helping the Nasdaq along to its biggest rise in one day since December (Reuters).
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.
A new step for Man (and sector valuations generally?)
Man Group caught the hedgie sector off-guard on Monday with an intriguing deal to buy institutional fund-of-funds specialist FRM Holdings.
It’s intriguing because Man seems to have acquired an extra $8bn of assets under management for the princely sum of nothing.
MOST, averaging down
Looks like Morgan Stanley are trying to support the Facebook price at $35, a short 8 per cent below the issue price.
Oh, wait!
[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,
Markets Live transcript 21 May 2012
Markets Live chat transcript for the chat ending at 11:06 on 21 May 2012. Participants in this chat were: Paul Murphy Bryce Elder/FT PMHello there PMFresh week PMBryce is here
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
China loves the dollar: Izzy looks at the frantic dash to secure dollars in China and wonders if the Chinese central bank, now selling dollar liquidity in the market,