Well, we think “Dutch-bottomed” is probably a better metaphor for what’s happened to SNS Reaal’s subordinated bondholders than Bond Vigilantes’ “Going Dutch”. That just means splitting the bill. Dutch-bottomed is empty, or perhaps fallen through the trap door.
The Netherlands government did an unusual thing when it nationalised SNS, a small and struggling mortgage bank on Friday. It expropriated subordinated bonds of the lender. Here’s the decree. It theoretically suggests the holders still have a claim on the value of the bonds, at some point: Read more
On a generally crappy day for equities and bonds across all the big western markets, Italian stocks stood out:
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Above is a chart from CreditSights of employment changes by sector since the start of the last recession. Education and health jobs account for roughly 15 per cent of the working labour force, and their number has grown by nearly 11 per cent. Only mining has posted a higher growth rate (17 per cent), but obviously off a much smaller base. Read more
The question is rhetorical.
Back in December we were able to share a long, angry letter penned by Vincent Tchenguiz concerning the legal dispute between the Tchenguiz brothers and the Serious Fraud Office. Read more
We have to admit we found a point made by Nomura’s Richard Koo last month a little confusing. He argued quite persuasively that deflation is simply not a serious problem for the Japanese today.
JP Morgan’s chief Japan economist Masaaki Kanno weighed in on the rather odd dichotomy in the FT on Monday, arguing that:
The key to understanding the success of Abenomics is the asymmetric response between the currency and the bond markets, which can be attributable to divergent inflation expectations. In the currency market, inflationary expectations rose among investors, mostly non-Japanese, while on the other hand the JGB market remains dominated by Japanese investors, whose inflation expectations appear more or less unchanged.
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Live markets commentary from FT.com
Foxconn plans Chinese union vote || Powerless Super Bowl disrupts advertisers || JAL increases full year forecasts || Argentina proposes new debt swap || Julius Baer boosted by Merrill Lynch || Chinese banks venture into ecommerce || Markets: Global stocks trading at 4½-year highs Read more
El Pais has a nifty interactive whereby you can search the 14 sheets of manuscripts allegedly penned over 18 years by Luis Gutierrez Barcenas, the party manager and treasurer at the heart of the supposed Rajoy “slush fund” scandal in Spain…
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So, it’s happening. The Banking Reform bill to be published today will give the Treasury and the bank regulator the power to break up a bank that doesn’t respect the ringfence between retail banking and the riskier stuff. Read more
The great debate over interest on excess reserves (IOER), base money and short term debt used ‘the floor’ analogy to describe what happens to short term interest rates. But that might not have been quite the right analogy, at least in the US case.
Izzy has already covered Manmohan Singh’s excellent paper and presentation. In it he raises a few points in regard to the supposed floor that IOER sets for rates, and it is worth exploring it a bit more. Read more
There’s an enlightening interview with Oleg Deripaska, chief executive of Rusal, in the Telegraph this Monday (h/t Neil Hume).
Turns out the metal tycoon believes aluminium may do better than expected this year, largely because much of the excess capacity that has plagued the industry has finally been cut back. Read more
Elsewhere on Monday,
- Why centralised capital models don’t necessarily mean no diversification.
- What is the least bad investment?
- Some not-very-encouraging D-list data. Read more
Barclays CFO and general counsel to depart: Finance chief Chris Lucas and general counsel Mark Harding, its general counsel, will both be retiring in coming months. Lucas, 52, will remain in post until the lender finds a replacement, a process which could take up to a year as his successor is likely to come from outside the bank – a move to signal a clean break with the past, people familiar with the matter said. The announcements came two weeks before new chief executive Antony Jenkins unveils his plan for the bank. Jenkins said both had said they wanted to step down late last year. (Financial Times)(Wall Street Journal)
Asian markets rose on Monday, with the MSCI Asia Pacific Index 0.9% higher on economic data from the US and China and Japanese earnings. (Bloomberg) Read more
This week on FT Alphaville…
- We made a video asking whether robots would take all the jobs. Read more
Political change in a democratic republic can be painfully slow, and thus even the improved chance of a meagre and incremental positive change is a good enough excuse to celebrate when it comes.
The two immigration proposals that emerged early this week from the Senate and from the President could well meet this standard, though it all depends how the politics shakes out. Read more
Further dispatches from the Danish Institute for International Studies’ conference in Copenhagen on “Central Banking at a crossroads”.
Today we focus on the new age of collateral-based finance and the presentation given by Manmohan Singh (speaking in an independent capacity rather than as a representative of the IMF). Read more
Another month, another payrolls number in the 150k range — except this one comes with big positive revisions to the prior two months. The unemployment rate ticked up slightly, but careful with this report, as it includes an updated population estimate in the household survey, and also the annual benchmarking in the establishment survey to reflect a new count of total jobs. Read the explanations at the bottom of the release for detail.
From the BLS: Read more
Live markets commentary from FT.com
US banks squeezed as mortgage profits hit || Hagel grilled by angry Republicans || US challenges AB InBev’s Modelo deal || Explosion at Mexico’s Pemex HQ kills 25 || Wasendorf jailed for 50 years for fraud || Markets update: a tentatively positive start to month Read more
The big story on Friday concerns the terms and structure of Qatar’s life-saving support for Barclays at the peak of the financial crisis in 2008. As Daniel Schäfer, Caroline Binham and Simeon Kerr report, the key issue is whether Barclays lent Qatar the money to buy shares in the bank. Read more
China’s official January manufacturing PMI fell to 50.4 from 50.6 while the HSBC survey rose to 52.3 from 51.5.
And yet it seems like only yesterday we were puzzling over why the HSBC survey seemed so much more bearish than the official figures… Read more
Elsewhere on Friday,
- Relax: banks’ risk measurements are rarely off by much more than a factor of ten.
- OCC leadership gets another surprise overhaul.
- Why the markets cannot influence financial institutions. Read more
China’s official manufacturing PMI falls, HSBC rises || Asian markets mixed, Japan rises on positive earnings || Barclays probed over whether it loaned money for Qatari stake || ‘London Whale’ warned others about his trades || US challenges AB InBev’s Modelo deal || Explosion at Pemex kills at least 14 || Samsung’s share of tablet market doubled in Q4 Read more
ROUND-UP
FT markets round-up: “A strong January for global stocks has finished meekly as an unexpected bout of caution over the US economy triggers a mild retreat of some benchmarks from cyclical highs. There has been renewed selling of the Japanese yen late in the New York trading day with the currency hitting Y91.56 against the dollar, its weakest level since June 2010. The proximity of the payrolls report was fostering the tentative mood in markets, delivering softness in industrial commodities and a stall in recently buoyant growth-sensitive currencies, but a mixed reaction across highly-rated fixed income products. Gold is cheaper by $14 at $1,663 an ounce. The FTSE All-World equity index is down 0.2 per cent after the Asia-Pacific region, excluding Japan, lost 0.3 per cent. The FTSE Eurofirst 300 drops 0.6 per cent, and Wall Street’s S&P 500 has settled 0.3 per cent lower and is back under 1,500.” (Financial Times) Read more
Getting a favourable leader in the Economist is pretty Establishment, surely.
At the very least, it’s interesting that the red-top weekly has managed to endorse and explain a fairly specific nominal GDP target for the Bank of England. Read more
LTRO-porn continues… this time it’s semi-core.
As we noted before, the higher than expected repayments by banks of the Long Term Refinancing Operations to the ECB might also push up the amount of paper in circulation as collateral which was tied up in carry trades is returned to banks. That would put pressure on markets which benefitted from the LTRO cash.
What we didn’t think of was Belgium. Poor thing. Read more
Yep, China again.
Here’s a table from a fresh IMF paper pondering the country’s Lewis Turning Point, the moment when people streaming into cities from farms will be fully absorbed, industrial wages will take off, and — an estimated 350m jobs later after it began — the era of cheap Chinese labour will end. Click to enlarge. Read more
FT Alphaville has just returned from the Danish Institute for International Studies’ conference on central banking in Copenhagen.
The theme was “central banks at a crossroads” — which we thought was particularly apt — and discussions ranged from collateral-backed finance and shadow banking to central bank independence. Indeed, many thanks to the DIIS for having us.
But one presentation, we would have to say, stood out more than most; that of Anat Admati, George G.C. Parker professor of finance and economics at Stanford Graduate School of Business, who’s out with a new book this month entitled “The Bankers’ New Clothes“. Read more
You gotta roll with fashion:
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Older entries
1Deripaska on the collateralisation of aluminium
2Why do CFDs baffle the cops?
3Robots, employment and sector safety
4Great, and not so great, inflation expectations in Japan
5A floor with a few holes
Show more6That ring fence will be electrified after all
7Weekender
8The Barcenas files
9Dutch-bottomed bank bondholders
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