World economy talk

[Monseratto]

Merkel-Sarkozy meet today, and sovereign bond sale...

Germany will sell 4 billion euros ($5.1 billion) of six- month bills today, while France will auction a total of 7.7 billion euros of debt maturing in 364 days or less.

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last week Germany was able to sell 4 billion euros of 10yr paper at 2% yield. demand was strong

France also sold 10yr paper last week. demand was weaker than Dec 2011 auction. yield was also higher

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somebody told me to look at the Shanghai composite



it looks ugly

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Hildebrand resigns

SNB now leaderless

currency speculators driving CHF higher

remember the 1.20 peg

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Germany sold 3.9 billion euros of 6-month zero-coupon bills

investors paid 100.00616 euros and will get 100 euros back in 6 months

get that?

THAT'S FREAKING NEGATIVE YIELD!

investors are actually paying Germany to borrow money

Jan. 9 (Bloomberg) -- Germany sold six-month treasury bills at a negative yield for the first time amid demand for the debt securities of Europe’s largest economy as a haven from the sovereign debt crisis in neighboring nations.

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ugly China stock market?

no problem

China Stocks Rise as Trade Data Spurs Policy Easing Speculation - Businessweek

China’s stocks regulator will “actively” push pension and housing funds to begin investing in capital markets, and encourage long-term investors such as insurers and corporate pension plans to buy more shares.

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USD/Iran rial

[wowiesy]

somebody told me to look at the Shanghai composite



it looks ugly

yes ugly.. but why is it falling? anong effect nito sa iba?

curious lang po..

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^^

China slowdown

the Shanghai Composite is said to be a leading indicator of the S&P500

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EURUSD below 1.27

Fitch: ECB must do more to prevent "cataclysmic" collapse of the euro

and

rumor France got 12-hour notice from S&P for downgrade

[Monseratto]

Euro bond testing the water...

Spain tests demand for weaker euro zone states' bonds | Reuters

MADRID, Jan 12 (Reuters) - Spain will provide 2012's first real test of demand for debt from the euro zone's bruised periphery on Thursday when it sells around 5 billion euros ($6.39 billion) of bonds.

Italy will also venture into markets with a short-term debt sale before embarking on this year's massive campaign of bond issuance at an auction on Friday.

The two countries are among weaker euro zone states scrambling to convince markets they can slash their deficits while somehow also stimulating growth and creating jobs and are seen as especially vulnerable should the debt crisis escalate.

Spain's Treasury will auction a new three-year benchmark bond and reopen two bonds each maturing in 2016, in a sale that is expected to attract substantial support from domestic banks flush with European Central Bank cash.

Both Spain and Italy saw their short-term funding costs halve in December after banks that borrowed nearly 500 million euros from the ECB at its unprecedented offer of three-year funding used the ultra-cheap loans to buy higher-yielding debt.

Spain's borrowing costs will remain high, however, despite a rally in periphery debt on Wednesday that eased concerns about its funding.

A Treasury bill sale will meanwhile give Italy a first taste of investors sentiment before it auctions up to 4.75 billion euros of bonds on Friday.

Rome is scheduled to sell 8.5 billion euros in 12-month BOT bills and 3.5 billion euros of bills maturing at the end of May.

The Jan. 2013 BOT bill on offer on Thursday was trading at around 3.5 percent in the grey market on Wednesday, a sharply lower yield compared with the near 6 percent rate Italy paid to sell one-year paper in mid-December.

"Since the ECB flooded the market with extra liquidity most demand has been seen at the front-end, so this means the sales will likely be well supported on Thursday," said an analyst at a major euro zone bank.

Italy must refinance more than 90 billion euros of longer-term bonds falling due between February and April, and with no end in sight to the European debt crisis, its bonds remain under intense pressure, with yields at levels viewed as unsustainable.

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successful auctions for Italy and Spain

supported by the ECB's 3 yr LTRO

banks used the carry trade (borrow cheap money from the ECB then buy govt bonds)

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talk of mass downgrade in the eurozone

[Monseratto]

S&P massacres the Eurozone...

BERLIN/ATHENS (Reuters) - Standard & Poor's downgraded the credit ratings of nine euro zone countries, stripping France and Austria of their coveted triple-A status but not EU paymaster Germany, in a Black Friday 13th for the troubled single currency area.

S&P cut the ratings of Italy, Spain, Portugal and Cyprus by two notches and the standings of France, Austria, Malta, Slovakia and Slovenia by one notch each.

The move puts highly indebted Italy on the same BBB+ level as Kazakhstan and pushes Portugal into junk status.

It put 14 euro zone states on negative outlook for a possible further downgrade, including France, Austria, and still triple-A rated Finland, the Netherlands and Luxembourg.

Germany was the only country to emerge totally unscathed with its triple-A rating and a stable outlook.

The clock is ticking for Greece...

In a potentially more ominous setback, negotiations on a debt swap by private creditors seen as crucial to avert a Greek default that would rock Europe and the world economy broke up without agreement in Athens, although officials said more talks are likely next week.

If Greece cannot persuade banks and insurers to accept voluntary losses on their bond holdings, a second international rescue package for the euro zone's most heavily indebted state will unravel, raising the prospect of bankruptcy in late March, when it has to redeem 14.4 billion euros in maturing debt.

The two sides are divided principally over the interest rate Greece will end up paying, which determines how much of a hit banks take. While both appear to be engaged in brinkmanship, there are also doubts about the take-up rate of any voluntary deal, since some hedge funds have bought up Greek debt and want to be paid out in full or trigger default insurance.

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Greece bondholders are supposed to take voluntary 50% loss

diba that was agreed some months ago?

things have changed. months ago, bondholders were mostly European banks. banks have since sold the bonds to reduce exposure (pressured by their governments). hedge funds bought the bonds

unlike the banks, hedge funds won't accept voluntarily loss

they wanna make a killing

they bought the bonds cheap and wanna get paid in full

if Greece receives another bail out, they'll get paid in full

if Greece defaults, credit default swaps will be triggered and they'll get paid in full

obvious why they won't accept voluntary loss

not surprising the talks broke down

they want Greece to either get bailed out or default

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http://www.nytimes.com/2012/01/18/wo...ke-losses.html

ATHENS — Taking direct aim at hedge funds and other private holders of Greece’s debt, Prime Minister Lucas Papademos says he will consider legislation forcing the creditors to take losses on their holdings if no agreement can be reached in critical negotiations scheduled to resume Wednesday.

[Monseratto]

http://www.nytimes.com/2012/01/18/wo...ke-losses.html

If Greece does that, the euro zone will be placed in a bigger bind. The bondholders will now doubt other debt laden euro countries, who may follow suit...

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stocks are rallying but US 10yr yield is still below 2%

stocks signal risk on but the 10yr yield signals risk off





ONE OF THEM IS WRONG

[Monseratto]

A lot of companies are drooling over those patents. More ammo to sue each other...

Kodak files for bankruptcy, secures $950 million lifeline - Yahoo! News

(Reuters) - Eastman Kodak Co, which invented the hand-held camera and helped bring the world the first pictures from the moon, has filed for bankruptcy protection, capping a prolonged plunge for what remains one of America's best-known companies.

Kodak once dominated its industry and its film was the subject of a popular Paul Simon song, but it failed to quickly embrace more modern technologies such as the digital camera -- ironically, a product it even invented.

In recent years, Chief Executive Perez has steered Kodak's focus more toward consumer and commercial printers.

But that failed to restore annual profitability, something Kodak has not seen since 2007, or arrest a cash drain that has made it difficult for Kodak to meet its substantial pension and other benefits obligations to its workers and retirees.

Perez said bankruptcy protection would enable Kodak to continue to work to maximize the value of its technology assets, such as digital-imaging patents it licenses for use in mobile and other devices and its printing technology.

Kodak said it was being advised by investment bank Lazard Ltd, which has been helping Kodak look for a buyer for its 1,100 digital patents.

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Brazil cut rates again

emerging economies are done fighting inflation and are now trying to stimulate growth

hey Bangko Sentral...