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’The rush from risk
Quick Yahoo snaphot at the end of a bloody day on Wall St:
‘Greece simply doesn’t register,’ or, the world according to Goldman
It’s better than you think, says Goldman Sachs chief economist Jim O’Neill.
The bank held a webcast last Friday, entitled “Why the world is better than you think,” and late on Wednesday published an accompanying note.
The Treasury non-conundrum, or why yields are trading below 3.6%
SocGen economist Aneta Markowska affects bemusement at the benign bond yield environment in the US. As she put it in a recent note (any emphasis/links FT Alphaville’s):
Sovereign debt concerns have rocked many economies in recent months.
US monetary base growth is really quite off the chart
From the latest edition of the St Louis Fed’s Monetary Trends:
Err, time to expand those parameters maybe?
On a more serious note, the St Louis Fed’s May Monetary Trends also has a short section on the effect of monetary policy on asset prices — including house prices and equities.
Some good sovereign debt news
What’s this? Could this be some good news on the sovereign debt front, for once? It surely can.
On Wednesday the US Treasury quietly announced it would be cutting back the size of its bond auctions,
US lawmakers free to continue their short selling, speculative ways
On Monday, the Wall Street Journal reported that “some members of Congress made risky bets with their own money that US stocks or bonds would fall during the financial crisis”.
On Wednesday, the newspaper published a follow-up,
‘the deterioration in fiscal balances has been structural rather than cyclical’
The credit portfolio strategy team at BNP Paribas is worried.
In a note published on Thursday, the credit analysts mused on Greece’s funding requirements and associated refinancing risk, as well as broader aspects of sovereign risk and the potential for a ‘hung parliament’ in the UK.
Credit where it counts?
*Poof* That is the sound of US bank credit evaporating.
Or maybe, a giant *Pop* would be more apt given the credit frenzy pre-2007.
Gluskin Scheff’s David Rosenberg estimated in February that $740bn of bank credit had evaporated since the credit crisis began.
Swooning canaries, exploding debt
An analogy for a Tuesday morning…
is to
As . . .
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The FT’s Gillian Tett makes the point in her Tuesday column that the recent inversion of 10-year swap spreads could be heralding something important,
BofAML on Obama’s health care reforms: what about the budget?
As FT Alphaville noted in the aftermath of the signing into law of the Obama administration’s health care bill, US companies are waking up to the reality of what health care reform means for them.
Back at the White House,
The healthcare party is over – now comes the (accounting) hangover
It was a long fight but on Tuesday President Obama signed the historic healthcare reform legislation into law promising coverage for 32m more Americans at the modest price of $950bn over 10 years, the FT’s US Business Correspondent Jeremy Lemer writes.
What’s in a company name? If it’s ‘China’, it matters
Interesting story from the WSJ on the positively bubblicious effect that adding the word ‘China’ has on a company’s equity:
Dozens of tiny companies have gotten big stock-market boosts simply by adding the word “China”
When regulation fails, regulators turn to…more regulation
What do regulators do in the face of overwhelming evidence that they have failed at their jobs? They dust themselves off and try again, obviously.
Here’s American Banker on Monday:
Acknowledging that regulatory guidance to limit banks’ concentration in commercial real estate has failed,
How do you say ‘bank bailout’ in Spanish?
Just in case you thought the financial crisis in the US of A was concentrated on the mainland, here’s some food for thought from Dow Jones (emphasis ours):
The Federal Deposit Insurance Corp. is seeking buyers for three banks in Puerto Rico,
US households’ absolute deleveraging
Alternate titles: Frugality is the new black. Frugality is the new frugality. Americans discover thrift. Etc.
From the FT on Friday:
Americans reduced their household debt for the first year on record last year as they aggressively cut back on spending to cope with the recession,
A sovereign vulnerability scorecard
From Andrew Garthwaite and his team at Credit Suisse, a scorecard of OECD countries most likely to face government debt funding problems.
Click to enlarge:
So, Greece, Ireland, Spain and the UK are seen as the most vulnerable – but what about the US,
Fed: we need to shrink our balance sheet, but how?
The Federal Open Market Committee released the minutes of the Jan 26-27 session on Wednesday.
The meeting minutes revealed disagreement — or at the very least, debate — over the nature and timing of any moves to reduce the size of the Federal Reserve balance sheet.
Treasuries, dollars and sense
See what you’ve done?
All the clamouring over recently-published US Treasury data has forced Capital Economics to print a note on the subject. TIC December data had China selling $34.2bn in USTs during the month.
America is Lehman-fied
Last month FT Alphaville mentioned that Europe had become Lehman-fied in terms of CDS liquidity.
That is, its Fitch Solutions liquidity score was lower than it had been in September 2008, after Lehman collapsed.
FHA says everything is A-OK – but defaults are running at 9%
In February, HousingWire reported on upbeat comments from an official at the Federal Housing Administration, a government agency which insures mortgages:
The 2009 books is solid,” said Margaret Burns,
US banks have $176bn in exposure to troubled Europe, BarCap says
US banks’ exposure to Greece, Ireland, Portugal and Spain represents approximately 5 per cent of their total foreign exposure, analysts at Barclays Capital said in a note on Tuesday.
In absolute terms,
The cost of eurozone disunion is 55bps, Deutsche says
Here’s a CDS curio for you to ponder this Tuesday.
The analysts on Deutsche Bank’s fixed income team have done some number-crunching/modeling and come up with some interesting perspectives on how eurozone CDS stacks up against the US and UK.
Of vacuums and central bank policies
FT Alphaville noted earlier today the extent to which the US government is propping up the housing market. Programmes such as the Hamp are explicitly aimed at supporting house prices; while the Federal Reserve is due to buy $1.25 trillion worth mortgage-backed securities (MBS).
Hoenig the hawk
As expected, the Fed’s zero rate strategy holds for now, but for the first time in a year there was a dissenting voter: Thomas M. Hoenig…
Statement (our emphasis):
Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating.
More from the ‘save our leverage’ coalition
As reported earlier on FT Alphaville, the CFTC is cracking down on the US retail forex market in a big way.
As well as publishing proposals to license all off-exchange retail operators — which the industry broadly accepted as ‘fair enough’ — the regulator unexpectedly announced it wanted to curtail leverage extended to clients to 10:1.