Diamonds are a Girl's Best Friend

Avoid Retailers in 2012.

antonne — Fri, 03 Feb 2012 06:49:46 +0000

Retail shares continue to be first in the firing line to be shot by the stockmarket as the British consumer struggles with George Osbornes’ austerity plan. The tax rises haven’t even started to bite yet – they only kick in come April 2012. Yet Tesco has already disappointed the market (its shares fell 20% after [...]

The Fed Shows Us the Way.

antonne — Fri, 27 Jan 2012 23:12:00 +0000

Chairman Ben has shown us the assumptions the FOMC is using to set monetary policy and Bernanke has also got his way with publishing a 2% inflation target. In his press conference he was keen to stress that the Fed will look to stimulate the economy further provided inflation stays under control as unemployment is not falling fast [...]

Don’t Fight the ECB.

antonne — Fri, 13 Jan 2012 06:27:55 +0000

Just as the US markets have their “Don’t fight the Fed” adage, it will not pay to fight the ECB during 2012 now that it has brought out its “Superwaffe” and started to conduct regular 3-year Long-Term Refinancing Operations (LTROs). Buoyed by the success of the first 3-year LTRO (conducted in December 2011) and the effect [...]

Andrew Perloff defends high earners.

antonne — Fri, 23 Dec 2011 06:08:58 +0000

In the spirit of goodwill to all men for Christmas 2011, the following is an abridged reprint of what Andrew Perloff (Chairman of Panther Securities, a property company) had to say in defence of high earners earlier this year. Mr Perloff’s full, unabridged, ”Chairman’s Ramblings” can be found here. “The banking and related finance industry probably employs about 1,000,000 [...]

The ECB Bridges the Gap with its Superwaffe.

antonne — Fri, 16 Dec 2011 06:37:18 +0000

Amidst all the sound & fury generated by last Friday’s EU summit (where the UK dug its heels in against the other 26 EU countries), the announcement the day before by the ECB that it is to offer unlimited 3-year money to euro-zone banks went largely unnoticed. Banks which take this longer-term refinancing operation (LTRO) 3-year money [...]

Draghi the Honorary Bundesbanker.

antonne — Fri, 09 Dec 2011 17:57:42 +0000

It hasn’t taken very long. At only his second ECB press conference the new President Mario Draghi firmly sided with the Bundesbank on the important matter of opposing Quantitative Easing; he also made it very clear that he would obey the spirit of this policy by ruling out finding a legal ’trick’ to side-step the rules [...]

Bring Back the SGP, All is Forgiven.

antonne — Fri, 02 Dec 2011 06:44:49 +0000

Whilst the short-term solution to the Euro-zone’s sovereign debt problem is for the ECB to bring out its “superwaffe / bazooka” and buy bonds of solvent euro-zone countries in unlimited quantities (or lend to the EFSF or IMF), the only long-term solution is for the members of the Euro-zone to get their budget deficits down and to set [...]

The Difference between Euro-bonds and the EFSF.

antonne — Fri, 25 Nov 2011 06:31:22 +0000

It is becoming increasingly clear that Mrs Merkel is not going to end this current Euro-zone debt crisis until she gets a water-tight commitment from the Euro-zone countries to bring their budget deficits and debt levels down. This is why Germany wants lending to be channeled through the EFSF and/or the IMF – because these institutions will attach conditions [...]

The Death Spiral will have to be Broken

antonne — Fri, 18 Nov 2011 21:32:55 +0000

This week has seen increasing pressure on the sovereign debt markets of all Euro-zone countries save Germany. This broadening of market pressure to Euro-zone countries other than the PIIGS cannot be entirely ascribed to worries about budget deficits in core Euro-zone countries. Several Euro-zone banks have disclosed in recent results announcements that they have been selling [...]

Italy is Going to Force the ECB into Dramatic Action

antonne — Fri, 11 Nov 2011 06:30:28 +0000

There currently seems to be an assumption in the markets that Italy is going to go the same way as Greece, Portugal and Ireland. The same script is being followed with Italian 10-year bond yields grinding higher amidst “limited & temporary” buying by the European Central Bank, LCH Clearnet raising margin requirements on Italian debt [...]

The Euro-zone has Almost got its Act Together

antonne — Fri, 28 Oct 2011 04:30:41 +0000

Continental European politicians never fail to entertain us. After cobbling together a not-quite-good-enough plan in July and then spending August on the beach, they have taken all of September and October before finally agreeing the outlines of a credible plan to allow Greece to default whilst containing the fall-out amongst Euro-zone banks and ensuring the [...]

The Fed Fires a Blank

antonne — Fri, 23 Sep 2011 22:19:02 +0000

After waiting a whole six weeks since changing policy at their last meeting, the FOMC decided this week to try to loosen monetary conditions further by lengthening the duration of their $1.65 trillion bond portfolio from its current 75 months to 100 months by end-June 2012. This was nothing more than the FOMC falling victim [...]

The Fed runs out of Bullets.

antonne — Fri, 02 Sep 2011 05:49:22 +0000

In his August 2011 Jackson Hole speech, Ben Bernanke paraphrased the 9th August Fomc statement and said the Fed “had a range of tools that could be used to provide additional monetary stimulus” to the US economy. However he was somewhat coy in revealing what the remaining bullets in the Fed’s gun actually were. The [...]

The EFSF Waits for 17 Countries to Vote

antonne — Fri, 12 Aug 2011 21:33:05 +0000

Markets are heading South whilst the politicians are away on their holidays. Europe’s political leaders thought they had fixed the problem when they agreed on July 21st to give the EFSF new lending powers and €440 billion to play with. However the markets know better than to trust a bunch of politicians to pass a [...]

Baguettes, Options and Coconuts.

antonne — Wed, 10 Aug 2011 19:02:22 +0000

I have spent many years working in investment banks, sitting close to options departments and observing them at work. Many of the world’s option departments are staffed with a high percentage of French nationals. The French schooling system ensures that its pupils learn mathematics and trust in logic. This tends to let most French option traders down just at [...]