An excellent observation from John Kemp over at Reuters on Tuesday regarding the spot/forward disconnect we’ve been talking about:
The increasingly close linkage between hedge funds and spot prices since 2010 has also coincided with a sharp reduction in the correlation between front-month and far-forward prices. Correlation between spot month and forward prices, generally above 90 percent until 2010, is now often less than 50 percent (Charts 5-6). Read more
It’s the end of an affair. From the FT:
Prince Alwaleed bin Talal, the Saudi investor whose interests range from the Hotel George V in Paris to a stake in Twitter, announced on Monday that he had “severed ties” with the Forbes billionaires list, accusing it of a “flawed” valuation method that displayed a bias against middle eastern investors.
Now we know why. Kudos to Forbes for a riveting write-up of Prince Alwaleed’s dealings with the magazine, including its attempts to figure out how Kingdom Holdings (the prince’s publicly-traded investment vehicle) contributes to the wealth of the Arab world’s richest man.
Some extracts… Read more
Like Top Trumps, just not as much fun…
Live markets commentary from FT.com
On the day the Dow is expected to open at a record high, the hottest M&A story of the year — Glencore and Xstrata — brings us the following.
First the collective news (via the FT): Read more
China is retaining its GDP growth target of 7.5 per cent for 2013 || The Pari Passu Saga continues || Yellen on asset purchases || Talk of a bubble in student loans || The FSA cracks down on payment for access to chief executives || London banks consider suing EU over bonus caps || Heinz chief could be entitled to $56m deal || Profits fall at Glencore and Xstrata || Chavez’s breathing problems worsen || Swiss bank Wegelin to pay US $74m over tax violation || StanChart expected to report record earnings || Anadarko and Videocon eye $4.5bn sale || Alwaleed challenges Forbes over billions || China said to back new sanctions against North Korea || Gas resumes flowing from ENI’s Libya plant || Cyprus has agreed to submit to review || Apple’s market cap fell below $400bn || SEC allowed to pursue Deloitte China subpoena || France eyes tougher merger rules || Australian rates on hold || Semark in line to run UBS dark pool Read more
In the UK, that is. Perhaps. Just.
The Markit UK services PMI is out and the headline seasonally adjusted Business Activity index posted 51.8 in February, slightly above January’s 51.5. Read more
China’s National People’s Congress annual plenary began today, with soon-to-be-former premier Wen Jiabao outlining the official economic targets for 2013. We’ve written a few posts lately about how China’s growth has become increasingly driven linked to credit and, particularly, fast-growing shadow finance. More recently, there are signs the authorities are feeling less comfortable with letting shadow finance run riot — but at the same time, its role in fuelling growth makes a big or sudden curtailment look unlikely.
The targets announced today added to signs of discomfort with unchecked credit growth, according to various China watchers. Read more
Elsewhere on Tuesday,
- A big moment for monetarists.
- NYT story on comment trolls confirms every blogger’s observations.
- Don’t count on rapid progress for the SEC investigating Chinese audits. Read more
Asian markets mostly up || China maintains 7.5% GDP target, raises deficit || FSA to crack down on CEO access fees || London banks consider suing EU over bonuses || StanChart record profit expected || Complaints about Lloyds and PPI rise sharply || France eyes tougher merger rules || Alwaleed challenges Forbes over rich list || Cyprus agrees to money laundering review Read more
ROUND-UP
FT markets round-up: “Stocks on Wall Street staged a late rebound, pushing blue chip stocks to their highest close since 2007, as investors saw value in growth assets after recent declines. Earlier in the day, a sharp fall for Chinese stocks triggered selling across global bourses after attempts by Beijing to cool the country’s property market raised fears of another headwind for global growth. The dollar index ended the session slightly lower after earlier hovering near a six-month high and core fixed income prices were in retreat, pushing 10-year Treasury and Bund yields up 3 basis points to 1.87 per cent and 1bp higher to 1.42 per cent, respectively. Gold fell $3 to traded at $1,572 an ounce. The FTSE All-World equity index erased an earlier loss to finish little changed on the day as the FTSE Eurofirst 300 ended only a fraction lower. The S&P 500 shrugged off most of its opening-bell slide to rise 0.5 per cent at 1,525.” (Financial Times) Read more
This post by the FT’s US economics editor Robin Harding is cross-published from FT Money Supply.
Today’s speech by Janet Yellen is a mirror of Ben Bernanke last week when it comes to the costs and risks of continued asset purchases. “At this stage, I do not see any [risks] that would cause me to advocate a curtailment of our purchase program,” she says. Read more
It’s the kind of motto one sees on a T-shirt in a shop in the touristy part of town, but over the last few years it’s had a particularly painful ring of truth to it. Students in America are staying in education longer and are struggling to obtain full, gainful employment once they leave. This, combined with the rising costs of tuition, has seen the outstanding balance of student debt go past the one trillion mark and delinquency rates increase.
Talk is in the air of a bubble, as pundits point to student loans themselves and to the securities that are built from them. But is what’s going on “a bubble” in the usual sense? And more importantly, what does this say about college education in America? Read more
Via Bloomberg:
The American Securitization Forum, the leading trade association for the securitization industry, fell into turmoil last week when most of the board resigned in a dispute with the group’s executive director over governance and bonuses, according to six people familiar with the matter. … Read more
Alright, we put our hands up, we’ve been reading Zero Hedge.
His Anonymous Handsome Midriffness is busy being his usual self, and on this topic he’s made us go hmmm about a certain Wall Street Journal story concerning SecondMarket Holdings, Inc. The platform is launching a service that will allow lenders to sell exposure in student loans to (accredited) investors. The WSJ describes it thus (emphasis ours): Read more
For those who have a life are less interested in messy details, the explanation for the dealmaking optimism of recent months goes something like this:
– Since roughly last summer (OMT), tail risks are perceived to be down. And despite Washington’s reverse midas touch, the private sector has shown signs of staying resilient, including a streak of a spookily consistent employment reports. Read more
Evidently it’s time to get very excited about the risks posed by increasing student debt in the US, particularly as rates of delinquency are on the rise. Pretty graphs first, details follow…
Holy household debt, Batman! Student loan balances have surpassed credit card use and are still growing! Read more
Click above to see the survey/competition being run by a German Green party MEP, Sven Giegold. Read more
The 12th National People’s Congress convenes tomorrow in Beijing and, by the time it ends, Xi Jinping will be named head of state and Li Keqiang will be appointed premier.
There’s naturally much speculation around the signals for policy direction that might emerge. Although the events are more akin to formalities than actual decision-making fora, they are being watched closely for clues about the new leadership’s appetite for reforms — which may be revealed through bureaucratic reshuffles, as the FT’s Jamil Anderlini explains. Read more
Live markets commentary from FT.com
HSBC lifts dividend 50% || Kuroda says ‘will do whatever we can’ at BoJ || Nikkei rises, yen little changed || New Chinese property tightening announced || New Look to open shops in China || Swiss vote for pay curbs || Steinmetz launches $2bn distressed European property fund || New homes bonus ‘a flop’ || No end in sight for Italian gridlock Read more
The question mark in the header is just so as to (reluctantly) give the Bank of England the benefit of the doubt.
Here are the latest stats on the Funding for Lending Scheme, which was supposed to pump £100bn into households and businesses in the UK. Six months in, £13.8bn has been drawn down by British banks, £9.5bn of that coming in the final quarter of 2012. Read more
BoJ governor nominee Haruhiko Kuroda has already been fairly clear that he wants to expand the asset-purchasing programme, and buy longer-term bonds. So how significant are his Draghi-sounding “whatever we can do” comments, really? Read more
Elsewhere on Monday,
- Opaque finance, again, and solutions.
- Afghanistan’s mobile money revolution.
- Will biotechnology provide food security? Read more
Asian shares mostly lower || Kuroda says ‘will do whatever we can’ at BoJ || Nikkei rises, yen little changed || New Chinese property tightening announced || New Look to open shops in China || Swiss vote for pay curbs || Steinmetz launches $2bn distressed European property fund || New homes bonus ‘a flop’ || No end in sight for Italian gridlock Read more
Headline via the Harlan Ellison short story. “Timewise, it was jangle…”
What a week for the pari passu saga, and the fight to show that an order for Argentina to pay holdouts ‘ratably’ alongside its restructured sovereign debt is both over-reaching, and an unfair threat to third-party bondholders and banks.
Yep, FT Alphaville also went along to the oral argument before three judges of the Second Circuit in NML v Argentina on Wednesday, along with about 300 other people. A pretty crazy affair in itself, the hearing has now led to a follow-up order from the court, telling Argentina to give “precise terms” explaining how it would pay holdouts, and how it would obey any decision of the Second Circuit. Read more
Food prices are not a topic we cover often cover, but then a note from Toscafund landed in our inbox arguing that there’s no impending food supply crisis. Indeed, worries about surging inflation are simply misplaced. The hedge fund’s Savvas Savouri argues that rising food demand from a growing global population will trigger a supply response, with technology facilitating it.
So there’s going to be more processed food, not less of it. Read more
We haven’t written up our full take on Wednesday’s (nuts) oral argument in NML v Argentina (sorry), though you should read this, just out from the Second Circuit on Friday…
The court has ordered Argentina to specify “precise terms” of how it would wish to pay holdouts, differently to the current injunction to pay them ‘ratably’ in full: Read more
It’s Friday quiz time! Ready? Here goes:
What do you get?
[Hint: It's America.] Read more
Older entries
1An FLS fail?
2Having toilet-papered a tree, students move on to trash ABS market
3The pollution constraint on China's future growth
4Damn straight I'm a college grad! Paper or plastic?
5Janet Yellen and the Fed’s labour market dashboard
Show more6A vote on toxicity
7Further reading
8A triple-dip avoided?
9"Repent, Argentina!" said the ticktock judges (part two)
10Fantasy central banking
Show fewer