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Some highlights from Monday’s FTfm.
EU rules threat to pensions
The Association of British Insurers has said it fears pension products could be caught up in the EU’s packaged retail investment products (Prips) directive which is designed to create a single,
The Weekender
This week on FT Alphaville,
- Remember the Chinese RRR cut? It was only Monday. But it wasn’t ‘easing’.
- Some mystery liquidity providers popped up in the oil market.
- Another Monday mystery:
It’s gotta close greenshoe!
Update after the close: It closed green(shoe) at $38.23 according to Bloomberg data. But not until after a few moments close to $38.00, as seen below earlier…
Facebook shares at pixel time, a few minutes before the close.
[JPM Whale-Watching Tour] Tracking trades down
The last twenty-four hours have brought us some interesting insights into the JPMorgan chief investment office’s $2bn loss story. The FT revealed that the CIO has been a huge player in certain structured asset markets.
BoE goes ex-Posen
This is careless. The Bank of England has managed to lose Adam Posen, the outspoken American dove on the Monetary Policy Committee. He’s off to the Peterson Institute in Washington, from whence he came three years ago,
Another day, another SNB rumour
Swiss franc traders have been pretty bored of late, with the euro/Swiss franc flatlining for months. But it seems they’ve had some rare excitement this week: someone out there is buying as many euros against the franc as traders care to offload.
With Facebook, give thanks for greenshoes
After an open of $42.05, against the $38 IPO price, Facebook stock quickly reverted to the sale price on Friday — at which level we presume those banks with the over-allotment mandate (MOST, JPM, GS) will have been very busy indeed.
18/05/2012 (Before-FB)
Is life as we know it gonna change after 11am New York time on Friday?
Will Mark Zuckerberg be crowned emperor of the dweebs (just as Napoleon was crowned emperor of the French exactly 208 years ago today) or will he fall flat on his puli sheepdog?
While we await for that all-important first trade,
Spanish banks, wider still
A flurry of short-covering, encouraged by rumours that the Spanish authorities might re-introduce a ban on short-selling, saw Spanish bank stocks bounce on Friday.
But that “recovery” has not extended to the CDS market…
Is the Lafite bubble about to pop?
Wine is not something FT Alphaville often writes about but we all need a break from the euro crisis, and this chart caught our attention. It’s the Liv-ex Fine Wine 50 index, which tracks the daily price movements of the most heavily traded commodities in the fine wine market – Bordeaux first growths. It has fallen off a cliff in the past few months.
Markets Live transcript 18 May 2012
Markets Live chat transcript for the chat ending at 11:05 on 18 May 2012. Participants in this chat were: Paul Murphy Bryce Elder/FT PMit’s tin hat time! PM11am PMriday
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
Central counterparty clearing and settlement was always intended to make the financial system safer. Izzy discusseshow there may, however, be unintended consequences.
A contrarian view of China’s power data
Is the slowdown in China’s electricity output growth a sign that the life is going out of the country’s economy?
It’s not been the only poorly-performing economic indicator out of China recently — there’s also trade,
A bund, a bund, my kingdom for a bund…
Zee 2, 5 and 10-year yieldz are still compressing…to fresh all-time lows.
At which point will the Buba be forced to intervene and repo-out the state’s German bund stock?
Related links:
German
Further reading
Elsewhere on Friday,
- Don’t become the market, it might bite you
- Company sells stock (our favourite Facebook-related headline so far)
- And a few more Facebook links to keep you busy
- How American’s couldn’t care less about the problems in Europe
- S&P 500 vs.
The 6am Cut London
The Spanish government called for investor calm on Thursday as shares in Bankia tumbled nearly 30% and Moody’s conducted a sweeping downgrade of other lenders, reports the FT. The deputy finance minister Fernando Jiménez Latorre said it was not true there was a deposit flight. Moody’s downgraded 16 Spanish banks,
The Closer
ROUND-UP
Back to risk-off today as the US 10-year Treasury yield closed just below 1.7 per cent, almost hitting the lows of last September. The US S&P 500 closed down 1.51 per cent at just below 1,305.
Trap door opens under US Treasury yields
1.697 per cent at pixel time. Worries about Europe, collateral crunching, people changing their minds about buying Facebook (which, by the way, priced at $38 a share)… take your pick.
[JPM Whale-Watching Tour] The high yield tranche piece
Coverage of the $2bn $3bn loss emanating from JPMorgan’s Chief Investment Office on its synthetic credit portfolio continues a pace, and FT Alphaville’s tour continues too.
The desire to understand what the trade was and the rationale behind it continues to bug us and many others.
Funnily enough, operational risk is more prevalent in Germany than Greece
Settlement fails.
Whether one considers them a systemic problem or not is definitely debatable.
A new study by post-trade experts Omgeo (based on a survey by Global Custodian) nevertheless, suggests that up to $976bn in equity transactions per year and $308bn in fixed income transactions is potentially being put at risk annually due to the problem.
The undercollateralisation risk
Central counterparty clearing and settlement was always intended to make the financial system safer.
If you use a CCP, the idea goes, you’re far more robustly protected against counterparty default.
About that Spanish bank downgrade…
Yes, it is definitely happening and it looks comprehensive.
The FT’s Madrid correspondent, former Alphavillan Miles Johnson writes…
Moody’s is preparing a sweeping downgrade of the Spanish sector likely to be announced as early as tonight,
Dylan Grice on sovereign comeuppance
Maybe all the Anglo-Saxon central banks have done is create the illusion that our sovereigns are more solvent than they are, and that our budget constraints are really a safe distance away. But I don’t think they are.
Greece: when the drugs run out
Beneath the political stasis — another sign of a sharp turn for the worse in Greece’s liquidity crisis.
The country’s pharmacies are owed €500m by the state-backed healthcare insurer, according to reports.
And contagion is running wild…
Any vague “connection” to Europe is enough to get you hammered:
That’s French Connection down 24 per cent. This is getting out of hand.
(See here for the real reason for the dive.)
Flight of the euros
A flight from:
With even Brent crude affected:
… and headed to:
A flight to quality, charted
That’s German bund futures, on Wednesday. Fresh record.
Oh, Bankia.
The capital monster listed in July 2011 at €3.75 a share. At pixel time, after a heavy fall during Wednesday trading (on this El Mundo report), the shares are hugging €1.20.
The broader context
RoRo and the carry trade’s fight back
There have been rumours of the so-called carry trade’s demise knocking about for a little while now, but HSBC think it is staging a quiet comeback and taking a chunk out of RoRo’s (Risk on/Risk off) importance in the FX markets.