Almost a year ago the Telegraph’s Thomas Pascoe put out an interesting piece on gold. We’ve decided to reprise it this Friday because we think it offers an interesting and useful perspective on current developments in the gold market:
One of the most popular trading plays of the late 1990s was the carry trade, particularly the gold carry trade. In this a bank would borrow gold from another financial institution for a set period, and pay a token sum relative to the overall value of that gold for the privilege.
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(This is getting to be a genre.)
Robert Chote, head of the Office for Budget Responsibility – the UK’s independent fiscal watchdog – writes to David Cameron about this speech… Read more
In Part 1, we looked at the Futuretrack data that showed female graduates in the UK earning less than their male colleagues. This appears to hold even when graduates did the same degree, went to a similar university, and so on. It is particularly concerning to see data that show women start out on lower pay, given the potential knock-on effects for one’s future earnings.
In this post, we move on to look at a few academic studies about why this might be, particularly around pay negotiation. Read more
A welcome surprise, with private sector payrolls up a healthy 246,000, including a big boost from construction with 48,000. A few more notes:
– The rise in construction jobs supports the arguments made by Calculated Risk and Goldman economists: the effects of labour hoarding in the sector are diminishing, and more hiring is needed. We added some thoughts on this a couple of weeks ago. Read more
M. found himself waiting for Draghi surrounded by fellow journalists. He passed on a short piece of the conversation (we’ve protected the imaginary sources, naturally):
But we do often speak about the OMT, which I’ve never seen; you know D. doesn’t like me and never let me look at it, still its appearance is well known in the ECB, some people have seen it, everybody has heard of it, and out of glimpses and rumours and through various distorting factors an image of the OMT has been constructed which is certainly true in fundamentals. But only in fundamentals. In detail it fluctuates, and yet perhaps not so much as the OMT’s reality.
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Hurrah, it’s International Women’s Day! Time for a bunch of reports informing us of much less we earn than men! Aren’t you excited?
The formula:
- Sample data finds that women aren’t paid as highly as men, while holding various factors constant.
- Off into the tumbleweeds of academic studies that try to determine why.
- A pundit in question writes about it. (Why, hello…)
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Live markets commentary from FT.com
Goldman result surprises in Fed’s stress tests || OECD predicts Brent price of $190 by 2020 || China warns over fresh currency moves || Japanese GDP rose 0.2% || China’s exports far exceeded expectations || BP warns of higher settlement costs || Barclays chief wants 30% staff reduction || Kenyan election set for tight finish || BofA looks to play catch-up in Asia corporate banking || Troika discusses transactions tax for Cyprus, Russia may contribute || Top pension funds are reconsidering the size of their Aviva investments || Horse meat sales… up || L&G ex-trader jailed for insider dealing || Markets roundup || AV wrap Read more
An interesting anomaly is popping up in the world of Eastern Europe, Middle East, and Africa (EEMEA) flows, note Bank of America Merrill Lynch on Friday:
Investors are puzzled by the lack of EEMEA FX appreciation in spite of G-10 central bank printing. Waiting for the flow may be like Waiting for Godot: you wait and wait, but he never comes. Global rebalancing, deleveraging and higher US rates are responsible for this, in our view. In sum, the flow trends are consistent with the poor performance of EEMEA FX—and insofar as they are unlikely to change, currencies are likely to remain weak. Read more
Elsewhere on Friday,
- To boldly go to the moon for $30m.
- iBias, iLeverage, iFail spectacularly.
- And one day, when rates rise… Read more
Asian shares rise led by Japan || Japan grew in Dec quarter || China’s February exports beat, imports miss || Fed stress tests || BP warns of higher settlement costs || Troika discusses Cyprus capital gains tax || Pensions reconsidering Aviva holdings || Drax biomass support Read more
Stocks edged forward, ending up for the fifth day in a row. The S&P 500 closed at 1,544.26, a 0.18 per cent increase (Reuters).
Capital ratios at Goldman and Morgan Stanley barely passed the minimum set by the Fed’s latest bank stress tests. Goldman’s ratio fell to 5.8 per cent under the scenario of a fresh financial crisis, while Morgan Stanley’s fell to 5.7 per cent, compared to the regulatory requirement for 5 per cent. The two banks’ results make it less likely they will be authorised to return significant amounts of capital to their shareholders (Financial Times, Fed stress test results). The Fed will release a second stress test next week, incorporating forward-looking decisions into its data and giving its view of how dividends and buybacks would affect ratios — the step before it authorises whether banks can return capital. Read more
Results and details here, and click to enlarge the chart below showing the Fed’s estimate for how each bank’s ratio of tier one common equity to risk-weighted assets would deteriorate in a crisis — or if you prefer, “estimates of the minimum tier 1 common ratio during the severely adverse scenario for each of the 18 BHCs with all prescribed capital actions through the fourth quarter of 2014″…
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Abenomics does not suffer rules gladly so the BoJ’s self-imposed ‘banknote rule’ must be getting pretty nervous right about now.
It says the BoJ’s holdings of longer-term Japanese government bonds cannot exceed bank notes in circulation (unless they decide it can, naturally). Read more
Anyone who bought gold in 2008 is probably more than tempted to cash in their profits right about now.
Reflecting the scale of the change in sentiment — and confirming that there was indeed something of a choke level for gold at around the $1,908 mark — is the following chart from Macro Risk Advisors which neatly sums up the degree to which investors have been liquidating gold ETF positions. Read more
From Albert Edwards’ latest:
I was on gardening leave when the Dow reached its previous peak in October 2007. One echo from those days is that I was beginning to feel lonely. Pessimism (realism) is very rare on the sell-side so I took a coffee with my fellow bear, Bob Janjuah and cheered up tremendously, reinforced in my belief that this is all going to end very, very badly indeed. Read more
Enjoy! Some 148 pages of accounting-for-loan-losses reading:
It’s the IASB’s latest version of its attempt to make banks recognise “lifetime expected” losses on loans or bonds as soon as there are “significant” signs of a credit going bad, instead of waiting until it’s too late and risking a sudden wave of defaults. Read more
When James Mac is away, the bloggers will play, but this is a rather serious tale. It relates to the nationalisation of SNS Bank, inclusive of its holding company SNS Reaal.
The above video tells the story of one investor in SNS Bank subordinated bonds. Read more
… the Japanese seek inflation everywhere.
All this talk about Japan, JGB bond yields, QE, the yen… and hardly ever does anyone throw up the following chart.
So, without further ado, here is the most important Japanese chart of all courtesy of Capital Economics… the CPI: Read more
Live markets commentary from FT.com
Osborne to hand Carney more powers || Google tip-off leads to Microsoft EU penalty || BoJ rejects call for monetary easing || Aviva slashes payout after £3bn loss || Icahn muscles in on Dell deal || KPMG at risk of losing vital HSBC audit || Time Warner to spin off magazines || Equities rally sparks gold funds sell-off || Markets: Markets await central bank decisions Read more
This does smack of desperation, doesn’t it? From the FT on Thursday morning:
Osborne will use his Budget on March 20 to reinforce his message of “fiscal conservatism and monetary activism” by clarifying how the government intends to use monetary policy to get the economy growing again.
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Elsewhere on Thursday,
- What happens if people live forever?
- Tracy Alloway gets some MS Paint competition. Or maybe not.
- There is no shortage of gold. Read more
Asian stocks mixed, Nikkei slightly higher || Brussels to climb down on data privacy rules || BoJ holds policy in final Shirakawa meeting || Time Warner to spin off magazines || S&P raises Portugal outlook || Gavyn Davies on financial risk Read more
ROUND-UP
FT markets round-up: “Global stocks extended gains as sentiment was boosted by the sight of record levels for Wall Street blue-chips, following optimism over the US economy and expectations of continued stimuli from central banks. Away from equities growth-focused assets were less upbeat, however. Copper fell 0.7 per cent at $3.48 a pound and Brent crude traded below $111 a barrel for most of the session. This left so-called commodity currencies muddled relative to the greenback, the Australian dollar rose up 0.1 per cent but its Canadian namesake is off 0.4 per cent, the latter also impacted by a weak Ivey purchasing managers’ survey and after the country’s central bank held interest rates at 1 per cent. Yet, perceived fixed income havens generally struggled as they lost favour to stocks. Prices for Treasuries and Bunds eased back, forcing yields up 4 basis points to 1.93 per cent and 1bp to 1.46 per cent, respectively. The FTSE All-World equity index rose 0.2 per cent to 235.8 as it gained support from mildly firm performances in Europe and the US.” (Financial Times) Read more
Financial pundits, academics, fund managers and analysts all have an amazing tendency to over-complicate matters.
Sometimes, however, it takes just one person spelling out the obvious to really get to the root of the problem. Read more
That’s according to a note this morning by Birinyi Associates, which adds: Read more
Some excerpts from a lawsuit filed by the Export-Import Bank of China (Taipei) against Grenada in a United States district court on March 4, 2013…
If you have been following the pari passu saga on ratable payment of sovereign debt — they tell their own story. (Click to enlarge all images.) Read more
In case you didn’t fancy ploughing through our 3,000+ words on NML v Argentina last week at the Second Circuit…
Barclays’ analysts have boiled down the next turning point in the pari passu saga into two paragraphs, in their March 5 note (irresistibly titled ‘Cram-down or sanctity of contract? Is there a way out?’): Read more
Live markets commentary from FT.com
Older entries
1The age of infinite equity?
2Apparently you can't eat gold
3With great power etc
4A tale of bond investor woe
5More on the spot and forward price commodity disconnect
Show more6We seek inflation here, we seek inflation there...
7The wealth (declining?) effect
8Happy women’s day! You’re paid less than men! – Part 2
9Kaffeeklatsch der Bären
10Happy women's day! You're paid less than men! – Part 1
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