The first LTRO repayment opportunity is fast approaching. David has already considered how it may or may not impact European lending rates, including the chances of Eonia rising significantly if the repayment is larger than expected.
Yet as we also noted, this is hardly the key concern. Read more
Are you in the equities business, needing something to surpress your natural optimism? Ditto ETF traders, those in securitised derivatives, even bonds? Click the following images for the instant, full-sized depressive effect… Read more
Some might say it’s labour hoarding; some might say it’s “flexibility”; some might say it’s the gutting of the City. Many would think the UK productivity puzzle goes on, and some would just ponder the strong showing of full-time jobs in the latest figures.
Here’s the view from Nomura’s Philip Rush, with some charts (click to enlarge)… Read more
Just passing along this chart (click to enlarge) we came across on page 41 of the big ILO global employment report:
Nomura’s Richard Koo is back, suprising us with another note following quickly on his last. But we can see how it happened. Heck, some people are suggesting that the West’s balance sheet recession is over. Read more
Commenting on the survey findings, Bank of America’s Chief Executive Officer Brian Moynihan said, “Leaders around the world recognize the value and need for greater global collaboration.”
Moynihan displays a certain lack of concern about the 10 per cent of “global decision-makers” who were found to be riding the Steamboat Lonewolf up the Wantspacetothinkippi River in a single occupancy first class cabin, quietly hatching plans to take over the world, according to a survey commissioned by the bank. Read more
Given the boost that Goldman’s economists gave to the nominal GDP level targeting movement when they endorsed the idea near the end of 2011, it’s probably a good idea to listen to them when they write about the subject (whether you agree with them or not).
NGDPLT itself has many more high-profile evangelists now than it did then: the Fed adopting an Evans Rule was the latest shift in its direction, and of course the idea is being openly debated in the UK after Mark Carney suggested it would be more potent than flexible inflation targeting. Read more
Live markets commentary from FT.com
Apple pre-earnings || Correlation, like kryptonite || Severfield-Rowen gets grated || The UK to vote on EU in 2017, says Cameron || Job cuts at Barclays || Microsoft in talks over Dell buyout || IBM beats || Ireland preps for OMT || Fewer class action suits in the US Read more
A new and scary note is out about China’s risk from GMO’s Edward Chancellor and Mike Monnelly, who make a good argument that China’s financial system is showing many of the hallmarks of a not-too-distant bubble:
China’s thriving shadow banking system has much in common with the American version, which thrived before Lehman’s collapse: trust loans that finance cash-strapped property developers have a whiff of the subprime about them; wealth management products that bundle together a miscellany of loans, enabling the banks to generate fees while keeping loans off balance sheet, bear a passing resemblance to the structured investment vehicles and collateralized debt obligations of yesteryear; while thinly capitalized providers of credit guarantees are reminiscent of past sellers of credit default insurance.
The brutalist architecture movement has broken Severfield-Rowen.
This Yorkshire-based structured steel specialists, which counts the Olympic Stadium and the Shard amongst its successful projects, warned on profits on Wednesday and parted company with its chief executive, Tom Haughey. Talks are also underway with the firm’s bankers… Read more
A lot of people think you can just throw a bunch of chaos into a situation and walk away. That is not the case. The most you’re going to get outta that is mayhem. Good disaster, like really muah [kisses fingers], should be catastrophic and that, my friends, takes preparation and patience.
In the case of the synthetic credit portfolio of JPMorgan’s CIO, they had a good three months to build positions that would subsequently cause billions of dollars of losses. Our previous post outlined how, according to the bank’s Task Force Report, the CIO was going to unwind profitable high yield shorts at the beginning of 2012. Instead, the unit ended up building those positions further, along with long positions in the Markit CDX.NA.IG.9 index that were meant to hedge and finance them. Read more
The WSJ talks of “iPhone-like hype” around the next Samsung smartphone model. And Bloomberg notes that in China, iPhones are way behind. It must be that time again!
Yep, Apple reports its first-quarter earnings at 5pm EDT, so feast your eyes on this five-year chart in the meantime : Read more
Elsewhere on Wednesday,
- Is there a Google ‘x-phone’ in the pipeline?
- Keep banks out of macro, implores Sumner.
- Fundamentals vs panic in a crisis. Read more
The new Rio boss has a few nice words about his predecessor, followed by a flash of steel, in a letter to staff. And it’s about all you’re likely to hear from Walsh until annual results on Valentines Day. Read it after the jump: Read more
Cameron to promise EU referendum || Asian stocks fall on stronger yen || Barclays to axe up to 2,000 investment bank jobs || King defends inflation targeting || London sewer could be publicly funded || ‘Inshoring’ is not so big really Read more
From the SEC order…
B. Respondent EJR’s NRSRO registrations for the classes of (a) issuers of asset backed securities and (b) issuers of government, municipal and foreign government securities be, and hereby are, revoked. EJR shall have the right to apply to the Commission for registration in those classes after eighteen (18) months from the date of this Order. Read more
We have Weidmann worrying the currency wars are kicking off again with Japan leading the way and a whole host of others either joining in and/ or complaining hypocritically. Read more
If it’s alright by you, FT Alphaville has a confession to make. This whole London Whale thing, the billions that JPMorgan lost as a result of the actions of its Chief Investment Office primarily in the first quarter of 2012… we kinda made a cottage industry of trying to figure out what the trades were. Not that it was just us, mind you.
Naturally, we had been hoping that we’d finally get some answers when the Task Force Report came out last week. The report has revealed in painful detail how a large, well-respected bank can get so much wrong. There were bad risk management practices, model deficiencies, spreadsheet errors, complacent management and more. But trade details? That’s left for us to piece together from various scraps. Read more
It’s no secret that FT Alphaville pays attention to the periodic papers released by the team of Jonathan Wilmot, James Sweeney & Co. Their earlier work on shadow banking and collateral was thoughtful and ahead of its time, and we also agreed with Sweeney’s generally optimistic view of an accelerating US economic rebound led by the knock-on effects of a recovery in household formation, a favourite subject of ours.
Their latest is an extension of a prior piece that looked at the state of global investor risk appetite — and which concluded that although there remain obvious problems in parts of the developed world, overall the global recovery from the trough in early 2009 has actually outpaced previous recoveries, exactly as would be expected given the fall in the output gap this time round. Read more
Live markets commentary from FT.com
BoJ adopts 2% inflation target and unlimited asset purchases || House Republicans introduce bill to temporarily extend debt limit || Rules to ease office-to-flat conversions || Jens Weidmann warns of currency wars || Deutsche to face US energy trading fine || European (lack of) writedowns questioned || China says top 10 steel mills to control 60 percent of capacity by 2015 || Rio rethinks Mozambique business || Markets Read more
John Kemp at Thomson Reuters has pointed us in the direction of colleague Clara Ferreira-Marques’ piece on the likely repercussions of Rio Tinto’s $14bn revaluation of aluminium and coal assets last week. As she notes, it’s almost certain that Rio Tinto’s hit will now set the stage for a wave of writedowns across the industry. Read more
Remember how Richard Koo was saying last week that inflationary expectations are actually far more widespread in Japan these days than deflationary expectations? And people fear inflation more than deflation?
We found that idea a bit surprising (and we recommend Krugman for more on the issue) but HSBC made a good argument as to why the concentration on inflation is itself a very legitimate concern. And the idea that recent weakness in the yen might in fact reflect a fear that the BoJ/ MoF will fail to control inflation once it has been loosed (our emphasis): Read more
Are the BoJ’s newly-announced measures really that dramatic?
For all Shinzo Abe’s talk of urgency in meeting the new 2 per cent inflation target, the BoJ itself doesn’t actually expect it to happen that quickly. In the forecasts accompanying today’s statement, the BoJ has maintained the 2013 CPI forecast of 0.4 per cent made back in October — which is probably fair enough as the open-ended programme doesn’t actually start until next year — and only moved its 2014 up to 0.9 per cent from 0.8 per cent. Read more
Updated with some context: Bumi, the London-listed Indonesia-focused coal miner set up in 2010 by Nat Rothschild when he convinced Indonesia’s influential Bakrie family to reverse their coal assets into his cash shell Vallar, has been, well, rollicked as the share price plunged because of sliding coal prices, concerns about Bumi’s corporate governance, high debt levels and the out-break of investor warfare. Shocking. And Bumi is under particular stress right now because of allegations of financial irregularities at two of its subsidiaries.
The release below concerns the long awaited report into that mire by law-firm Macfarlanes. Well, we don’t actually get the report itself, but we do get some details… Read more
The Nikkei rose as much as 1 per cent after the BoJ announcement, and then fell nearly as much before recovering somewhat: Read more
Older entries
1The end of 200 years of expansion?
2Can haz spredshetz
3Dying markets, illustrated
4The practicalities of the currency wars
5China's massive credit dependency
Show more6NGDP level targeting: Yellen it from the rooftops, but nobody heard
7Positioning for credit losses, the JPMorgan way
8Long-term pessimism, short-term frothiness, and the recovery in world wealth
9Japan 2.0 (and that's a target, mind)
10Location, Location, Location
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