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’From the BoJ with love
From the Bank of Japan on Tuesday, February 14:
At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided to amend the “Principal Terms and Conditions for the Asset Purchase Program”
UK banks are good to go
RBS is still in its loss making phase (1) which inevitably gives us communication challenges. The losses ironically are a measure of our recovery success…
– Stephen Hester’s memo to staff on Tuesday.
US MMFs versus the Eurozone, Part 2
In the first installment of US money market funds versus the eurozone, the funds were seen fleeing the continent as quickly as possible, leaving all sorts of funding chaos in their wake.
In part two,
Japan’s trade switcheroo
The WSJ has a gloomy piece about Japan’s economy, which is expected to report its first annual trade deficit since 1980 on Wednesday, (as well as missing its target date for balancing its budget).
The startling change is partly a result of one-time factors like the disastrous earthquake and tsunami last March,
The EBA 9% rule and the Eurozone crisis
Back in October 2011, James Ferguson, banking analyst at Arbuthnot Securities, warned that the EBA’s tough new capital rules could be about to make the eurozone crisis a whole lot worse because the absence of fresh capital meant banks would have no other choice but to contract their assets.
Japan’s positive if unreliable indicator
In this sea of bad news, FT Alphaville would like to highlight a rare positive indicator — Japanese machinery orders in November.
They soared 14.7 per cent compared to the previous month beating expectations by nearly 10 per cent.
Das transmission
Just to warm you up for Thursday’s European Central Bank policy meeting…
Though not many are expecting a rate change, Societe Generale’s Kit Juckes points out that the German two-year bond yield is close to going lower than Japan’s:
Equities, Japan and next decade
Morgan Stanley’s Graham Secker makes some interesting observations in his 2012 outlook report.
Chief among them is that the investment framework of the last 25 years is increasingly irrelevant and that Japan offers the best guide to what might happen in the equity market over the next decade.
The truth will out…
There’s deferring losses, and then there’s DEFERRING losses. From Olympus on Tuesday:
The Company hereby announces that, during this process, it has been discovered that the Company had been engaged in deferring the posting of losses on investment securities,
Inter-yention — it’s back
After the Japanese yen hit a record high of ¥75.311 against the dollar on Monday morning, the BoJ/Japanese government jumped in, selling an unspecified amount of yen which brought its valuation down about 5 per cent against the dollar and 4 per cent against the euro:
But what does Mrs Watanabe think?
Apparently Sarkozy has phoned Hu Jintao on Thursday, to beg er, ask China to wire cash through the EFSF. Somehow.
Shouldn’t someone also be calling Mrs Watanabe?
Japanese investors are among the biggest private sources of demand for euro-denominated debt outside the eurozone.
CDS as omens of impending doom: starring Morgan Stanley
Sometimes CDS react violently to sudden events that were unpredictable. Sometimes they react to pure, unadulterated uncertainty and fear. And sometimes, just sometimes, CDS spreads are full of hot air.
A US recession indicator
Interesting chart from Ruslan Bikbov at BofA Merrill Lynch.
As you see the yield curve has proved to be a very powerful recession indicator. So why is Bikbov drawing our attention to it now when the 2s5s curve is 74bps – 29 bps above its long term average?
The answer runs as follows.
The pre-conditions for a double-dip
Fed tightening, apparently.
(Not that there are a lot of examples to go on.)
This is from Spyros Andreopoulos at Morgan Stanley. He sifts through all the slowdowns — defined as two successive quarters of growth not exceeding 1 per cent — recorded since 1950.
[Something for the weekend] It’s not the banks, it’s the bankers
By Neil Collins
It’s not the banks, it’s the bankers
No inside information is needed to know what George Osborne is doing this weekend. He’s just taken delivery of the Vickers report, and must at least claim to have read it by the time everyone else sees it on Monday. We’ve a pretty good idea of the contents,
Your new safe havens are in Japan
And that would be not for currency, but property and equities.
If the low yields of Treasuries and Bunds are becoming too tedious for words, take a look at this in the FT:
Industry officials say US investment funds managed by large groups including Blackstone and Fortress Investment,
Curious crisis meeting du jour
Scheduled for Tuesday actually:
That’s South Korea’s financial regulator announcing a conference call with Chinese and Japanese peers, regarding (if we translate it right) “American and European financial health”
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,
The price of JGB-isation
Japanese history lesson by Citi rates strategist Mark Schofield — probably you can guess the subject:
It is tough to just look at the price action in Japan as the policy process was so long and drawn out.
Are US banks turning Japanese?
An important question given struggling financial stocks, a stalling US economy, US public sector cuts and concerns over the impotence of QE3. Take your pick, really.
Fortunately it was also a question tackled Friday morning in a special conference call hosted by Nomura’s US banking analyst Brian Foran,
Just cross it out and do bigger numbers
Because if anyone gets the true essence of doing quantitative easing after failing first time round, it’s Japan, no?
Related link:
Inter-yention action – FT Alphaville
Inter-yention stations
It wouldn’t be a proper dollar panic unless there were rumours, uncertainty and fear that the Bank of Japan is intervening in the yen:
So here we are. Rumour, uncertainty, fear:
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,
Not so fast, Japan
Japan’s June trade data surprised everyone on Thursday, squeezing narrowly into a Y70.7bn ($898.4m) surplus. Year-on-year exports declined only 1.6 per cent, versus a median forecast of -4.1 per cent according to Reuters.
The second biggest equity market in the world
It’s the UK, which has just over taken Japan according to Citigroup.
A stark contrast to the London Stock Exchange which is the world’s 10th biggest exchange company by market value.
Japan gets Moody-ed
Like so much in Japan these days, the economy is generating bad news and some good news. But circumstances — and some international views — appear to be conspiring against it.
On the day that Moody’s said it had put Japan’s credit rating on review for a possible downgrade,
Japan redefines ‘exemplary’…
A somewhat bemusing view of Japan’s responses to what we now know to be a partial nuclear meltdown after the country’s March 11 disasters comes via AP on Wednesday, (our emphasis):
TOKYO — An International Atomic Energy Agency team says Japan’s nuclear authorities underestimated the possibility of a massive tsunami hitting the Daiichi power plant but praised the overall response.
Goldman Sachs makes an expensive typo
The following is the formula for a properly structured warrant tied to Japan’s Nikkei index — which would (we presume) be easy enough to hedge for its issuer:
(Closing Level – Strike Level) x Index Currency Amount / Exchange Rate.