Great call by @jimcramer on the GSE trade, part of a growing number of politically driven themes in today's market $FNMA
13 minutes ago
Europe Channel: Latest Posts
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Don't Shoot the Messenger
“There Is No Deflation Threat In Europe” – Jean Claude Trichet – Oh Really!
He’s at it again. Last year he was busily trying to worry us all that inflation was set to get completely out of hand among the 16 countries who make up the eurozone. Now the President of the European Central Bank, Jean-Claude Trichet, is hard at it on another tack and is busying himself trying to convince us that there is no credible deflation threat facing these countries. Apart from getting it wrong on both occasions, the common point here would be a certain inbuilt “inflation bias”, a bias which was earlier called “the original sin of the Bundesbank” by nobel prize winning Italian economist Franco Modigliani.
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Europe
Ireland in Crisis
The increase in secondary-market spreads on Irish government debt in the past five months is symptomatic of the sudden emergence of a twin crisis in the banking sector and in the public finances.
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Europe
Collapse in Eastern Europe? The rationale for a European Financial Stability
As if core Europe did not have enough problems of its own, a new threat has arisen – collapse of the European periphery. The deteriorating foreign exchange and financial conditions of satellite countries in the euro area – from the Baltic region to Eastern Europe, Turkey and Ukraine, not to mention the imploded Icelandic financial system – add yet another source of uncertainty.
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Don't Shoot the Messenger
Italian Business Confidence and Retail Sales Fall As Bond Spreads Rise
Italian business confidence fell to a record low in February as concern that the fourth recession in seven years will damp orders more than offset lower oil prices and borrowing costs. The Isae Institute’s business confidence index dropped to 63.2, the lowest since the index was created in 1986, from a revised 65.4 in January.
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Don't Shoot the Messenger
Russia’s Economy Declines At An 8% Annual Rate In January
Russia’s economy contracted at an annual rate of 8.8 per cent in January, according to the latest statement by the Russian economy minister. This data point, which provides us with the latest confirmation that a very sharp contraction is now taking place in Russia, follows last week’s announcement by economic development minister Elvira Nabiullina, economic development minister, that the economy shrank by 2.4 per cent between December and January. Industrial production also fell 16 per cent year-on-year in January, while there was a 17 per cent decline in construction.
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The Wilder View
Chilling economic charts: inflation
Gross domestic product across the Organisation for Economic Co-Operation and Development (OECD) countries fell 1.5% in the fourth quarter of 2008, following an 0.2% contraction in the third quarter of 2008. There are 30 membercountries of the OECD, and according to the two consecutive quarters of negative economic growth definition, the OECD is in recession.
In continuing the series of really scary charts, which I have re-named chilling economic charts, I present what the world economic crash – of course, initiated here in the US of A – has done to global inflation rates. End result: the world recession is slashing inflation across the globe.
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Europe
Nationwide: U.K. house prices down 17.6% in year to Februay
The Nationwide has released its latest house price survey, showing a very large 1.8% fall in British house prices between January and February 2009. This brings the yearly decline to a record 17.6%.
Yet, incongruously, the Nationwide revealed this information on its website under the heading “improving affordability helps new and existing buyers.” If this does not smack of cheerleading, I don’t know what does.
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Europe
The Back Of My Mind
So suddenly, here we are closing in on the end of the month again. And yes, here we are contemplating the passive rebalancing flows that are likely to occur on the heels of yet another month of execrable equity market performance. Early readings would suggest buying USD (again) to adjust MSCI EAFE passive hedges, and to buy equities/sell bonds from the pension crowd.
Macro Man just cannot shake the nagging feeling that equities want to rally here. Not only should month-end flows provide some sort of support, but the newsflow can be construed as at least marginally positive. Here in the UK, RBS earnings were slightly less awful than expected, and the asset insurance program from the government more generous than the martket had thought.
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Europe
RBS reports a record loss of 24 billion pounds
Royal Bank of Scotland just reported a record loss for a Britsh company of £24.1 billion pounds. That’s about £400 for every living sole in the country:
Royal Bank of Scotland (RBS) has announced the largest annual loss in UK corporate history.
RBS, which had to be bailed out by the government last year, said that its 2008 loss totalled £24.1bn (£34.2bn). It also said it would put £325bn of toxic assets into a scheme that offers insurance for any future losses.
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Europe
Bailouts: the next step up?
A few months ago, we were anxiously discussing whether governments should bail out banks. They did. And then they went into the business of bailing out car companies, just as central banks – a branch of government – started to lend directly or indirectly to the private sector. And now we start discussing whether governments should bail out… governments within the euro area.
