Forget about the $1 trillion coin debate.
The most exciting wonky discussion being had right now is between Steve Randy Waldman and Paul Krugman over whether “base money” and short-term debt are perfectly substitutable or not, and what that may or may not mean for central bank policy.
We confess that we have a bit of a vested interest here because for a long time we’ve been arguing much the same point as Waldman.
That’s not to say that Krugman is necessarily wrong; he may just be taking Waldman slightly too literally. Read more
This one paragraph, describing the nature of the curve trade that JPMorgan’s Chief Investment Office had in the Markit CDX.NA.IG.9 index by the end of January, fills us with mixed emotions. There’s a bit of “oh, they did think they were doing that?” and a bit more of “‘but why?? WHY?”. Read more
The 17th annual Sohn conference took place last May in New York and drew a star-studded panel of fund managers to offer (a few of) their best trade ideas.
Everyone was there, from David Einhorn to John Paulson and Bill Ackman. Topics as diverse as palladium, French CDS and Argentina’s sovereign debt were discussed.
But were the trade ideas any good? Read more
JPMorgan’s Whale report just keeps on giving: from the blow by blow account of internal P&L swings after the first articles were published about the CIO’s trades, to discussion on how achieve the firm-wide goal of reducing risk-weighted assets.
Let’s start with the former, shall we? Read more
JPMorgan’s Chief Investment Office was given an edict to try to reduce risk-weighted assets, as part of a firm-wide initiative in the face of regulatory changes, and also to shift the synthetic credit portfolio to be more in keeping with the more bullish view of the economy that senior management held. All confirmed by the bank’s own Task Force Report out on Wednesday.
It appears there was a key moment, when the bank was caught off guard by the default of a “significant corporate issuer” in mid-January. Did it change the course that the portfolio otherwise would have taken? Read more
Add Goldman to the list of large US financial institutions to report expectations-beating earnings for Q4.
From the release:
NEW YORK, January 16, 2013 – The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $34.16 billion and net earnings of $7.48 billion for the year ended December 31, 2012.
Read more
It’s history, JPMorgan Task Force Report style. Or rather, it’s a mostly oral history, lacking in technical detail, and it’s not all independently verified. Oh, and heavily reliant on one guy. All of which is prominently outlined in this footnote… Read more
Live markets commentary from FT.com
Japan’s airlines ground Dreamliner fleets || Hardliners shift stance on US debt ceiling || Morgan Stanley defers bonuses for top staff || Silver Lake at centre of Dell deal talks || Facebook ramps up Google search fight || Alibaba Group reported to have hired Credit Suisse and Goldman for IPO || Apple rolls out China credit facility || White House questions Syrian weapons claim || Markets: mostly in the red Read more
An IMF working paper by Serkan Arslanalp and Takahiro Tsuda published last month runs through just how big the exposure is of advanced economies to foreign official debt holders (governments, central banks and the like).
As the authors write, holdings of sovereign debt by the foreign official sector are important, because shifts in the sovereign investor base can affect government borrowing costs and refinancing risks. The composition of sovereign debt holdings can also reveal a vulnerability to bank-sovereign linkages.
So far, so familiar. But stay with us. Read more
How much would you pay for a bundle of 100 1-renminbi bills?
Is the answer Rmb109? Read more
Elsewhere on Wednesday,
- Instead of a trillion-dollar platinum coin…
- Today ‘would be a good day to authorize paying the bills’.
- So, if you have been following this debate, you are a dork. Read more
What’s this? A new publicly listed bank?
And before you ask, we are not talking about Metro Bank or those RBS branches ear-marked for sale being rolled up into some Aim-listed shell vehicle. Read more
Asian shares fall || Japanese 787 flights suspended after emergency landing || Rajoy calls for Germany to do more || Morgan Stanley to delay bonuses up to 3 years || World Bank cuts global growth forecast || Chinese officials defend export data Read more
ROUND-UP
Markets: Global stocks ended the session on a cautious tone as many growth-focused benchmarks hovered just shy of recent cyclical peaks. The FTSE All-World equity index, which at the start of the week hit its best intraday level since May 2011, was little changed, while the FTSE Eurofirst 300 ended the session fractionally higher. The S&P 500 recovered from earlier losses to close slightly higher at 1,472 as US retail sales for December came in stronger than expected, but the New York Fed’s manufacturing survey underperformed forecasts. (FT’s Global Market Overview) Read more
Cast your mind back to the Valukas report into the collapse of Lehman Brothers. Back to Repo 105, and the immortal lines, “It’s basically window‐dressing. We are calling repos true sales based on legal technicalities.”
If it could be called a sale, it could be removed from the balance sheet whenever a reporting date — and inconvenient questions about leverage — threatened. Read more
Sadly, FT Alphaville’s New York wing couldn’t make it to this year’s Societe Generale-run bear sighting in London — the bank’s Global Strategy conference starring Albert Edwards and Dylan Grice (who’s off to the buyside).
But we did hear that Albert had called European stocks “unambiguously cheap”. It’s a “once in a generation” buying opportunity, and so on. Is Albert, no longer a equities bear!? Read more
After the two sides fired shots across each others’ bows — the Republicans through Politico and Obama via satellite — Fitch released a threatening note this morning:
Fitch Ratings’ expectation is that Congress will raise the debt ceiling and that the risk of a U.S. sovereign default remains extremely low. Nonetheless, and in line with our previous guidance, failure to raise the debt ceiling in a timely manner will prompt a formal review of the U.S. sovereign ratings. … Read more
LTRO repayment chat is speeding up the closer we get to the fateful day at the end of January when Euro-banks might actually start sending back once cheap cash to the central bank. How much will be repayed, by whom and when are the questions that need to be answered.
Thing is, it seems that by at least one measure, the market is mispricing the amount of cash that’ll flow back to the European Central Bank. And maybe ignoring the ECB’s motives in this whole debate. Read more
The state of Hugo Chávez’s health continues to be a closely guarded secret, yet his inability to attend his own inauguration last week suggests it remains delicate. While his absence from the ceremony last week is seemingly no bar to Chávez continuing his third term as president, a new election would of course have to be called in case he is unable to continue in his post due to his health, or in case he dies.
So what would happen then? What would Chavismo look like without the man himself? And how would the opposition react to this? Read more
The US retail sales figures for December will be out later on Tuesday and we’ll use the occasion as an excuse to take a look at the wider picture for the American consumer this year.
The image is fuzzy. We already know that the expiration of the payroll tax cuts was an especially damaging outcome of the fiscal cliff negotiations. It will total approximately $125bn less in wage-earners’ pockets, and is showing up immediately in reduced paychecks. As Credit Suisse economists noted: Read more
Live markets commentary from FT.com
Remember the whipsawing days of 2008? The days when commodity prices couldn’t get crazier?
Read more
Obama warns Republicans on debt limit || Amplats outlines radical SA overhaul || Slowing German economic growth || JPMorgan under fire for ‘whale’ errors || HMV calls in the administrators || Westminster hits at Goldman Sachs bonus plan || Junk bond prices point to return of bulls || Demand fears bruise Apple’s share price || Markets: mixed but erring on the soft side Read more
On Monday, the Office of the Comptroller of the Currency and the Federal Reserve issued “enforcement actions” against JPMorgan, which makes it sound a lot more exciting than it is.
The slaps on the wrist for the “London whale” trades, and failures concerning anti-money laundering procedures, come with no fines and no admission or denial of any wrongdoing. The Fed does, however, reserve the right to take further action and the UK’s Financial Services authority said it’s still looking into it. Read more
Ben Bernanke was interviewed Monday by Susan Collins, dean of the Ford School of Public Policy at University of Michigan.
As the NYT’s Economix blog notes, Bernanke seemed quite relaxed and even jovial…
Read more
Elsewhere on Tuesday,
- Steve Jobs, Steve Jobs, Steve J — oh, never mind.
- Peak coal in China?
- I HATE you, JC Penney. Read more
Yen rises || HMV in administration || JP Morgan ordered to strengthen risk controls || EU berates China over steel subsidies || Dell shares jump on buyout talk reports || EU undoes good work on bank bailouts Read more
Having tracked (with some glee) last year’s gut wrenching slide in the iron ore price…
… it’s high time we made a few observations on the recent dizzying ascent of the steel making commodity. Read more
Older entries
1Caption competition: Ben Bernanke
2Commodity volatility, where art thou?
3Ambushing the yen, China style
4Albert and those 'cheapest for a generation' equities
5When cash costs extra (9% extra)
Show more6JPMorgan slapped on wrists by regulators who forget to slap own wrists too. Grrr.
7China's non-conforming GDP growth
8Debt ceilings and downgrades: who cares?
9Iron awe
10About that sovereign-bank link we said we'd break...
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