US Markets Live transcript 24 Jun 2011

Posted by Cardiff Garcia on Jun 24 15:01.

Markets Live chat transcript for the chat ending at 15:17 on 24 Jun 2011. Participants in this chat were: Cardiff Garcia John McDermott Izabella Kaminska

CG

Hello!
CG

Who’s here? It’s 10:01 — earliest start ever
JM

Good. Morning. Alphamerica.
JM

10:01
JM

I’m hitting the alphasnooze button
CG

A new era in punctuality
JM

@paver — are you pals with Warren B? should have asked before
CG

Paul Murphy is spinning in his…well, he’s still alive, but you get the point
Former FT Alphaville editor and founder of the site. Now in charge of something called FT Tilt.
JM

Cardiff
CG

good question, jm, wonder if paver eats at the same steakhouse
JM

i’m a bit worried
JM

remember our bernanke presser from this week
JM

otherwise known as the hilsenrath love-in
CG

how could i forgot
JM

well, he was tired
JM

we were tired
CG

think Bernanke said soemthing along hte lines of: “The economy sucks, and my work is finished.”
JM

it had been a long week
CG

true
JM

it was the second time
JM

so it’s never going to be like the first
CG

novelty had worn off
JM

anyway
JM

i wonder if we were too hard on the poor guy
CG

yankchat! thanks WhenI, I rather like that
JM

“Bernanke Public Approval Falls to Lowest With Too-Slow Economy,”
JM

poor chap
JM

new poll out this morning
JM

“Federal Reserve Chairman Ben S. Bernanke’s standing with the public has slid to its lowest level in almost two years of polling on the issue, even as faith in the Federal Reserve holds up. Bernanke is viewed favorably by 30 percent of those polled, compared with 26 percent who view him unfavorably … In September of 2009, Bernanke enjoyed 41 percent approval and 22 percent disapproval. The Fed itself is viewed favorably by 42 percent of voters, little changed from previous surveys. The Bloomberg National Poll, conducted June 17-20, shows that the reputation of Bernanke, who led the central bank through the longest U.S. recession since the Great Depression, has slid lower as the unemployment rate has remained stuck near 9 percent or higher for 26 consecutive months.”
CG

you’re going soft on me, John — we’re journalists: ruining people’s lives is part of the gig
CG

and we’re the bloggy types, so a double-dose of schadenfreude for me! mwahaha
JM

those are near Congress levels
JM

alright
CG

anyways, wouldn’t read too much into those — they rise and fall with the economy itself
CG

speaking of which
CG

hello Bull
JM

what have you got
CG

shall we start with some 2H forecasts?
JM

euro at session low vs the USD
JM

sure
CG

because you know how much i love forecasts — they give me something to hate on when they don’t work
CG

okay, lots of second half stuff going on
CG

let’s start with GS, which is worried indeed
CG

Periods of low growth are more likely to be followed by recessions than by a return to “normal” growth. A recent paper by Jeremy Nalewaik of the Federal Reserve Board (“Forecasting Recessions Using Stall Speeds”, April 14, 2011) shows that growth is typically weaker in the prelude to recessions. For example, Nalewaik finds that since 1947, when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. This is more than twice as high as the unconditional probability that an economy in expansion enters a recession within a year (about 19%). When year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time. The exhibit below, based on calculations along the lines of Nalewaik’s, illustrates how recessions are much more frequent after a period of slow growth.
CG

Thud, we’re taling ORCL a bit later int he show
CG

please stick around
JM

Are we?
CG

yep
JM

(Thud, I’ll dig around just for you)
CG

but first — and how close are we to hitting stall speed
CG

With the economy hovering around stall speed, an assessment of the likely second-half growth pace–and any shocks that could affect it–seems especially important. We see two main upside risks in the very near term, and one key downside risk. The good news is that a large part of the recent growth weakness looks to be attributable to temporary factors: higher oil and gasoline prices and the disruptive effects of the Japanese earthquake on vehicle production. Our assessment of those effects is covered in detail elsewhere; each is likely worth at least 1/2 point on second-quarter growth, and under certain assumptions could be worth closer to a full point. With gasoline prices now easing and vehicle production rebounding, we think growth is likely to move back above 3% in the third quarter. The obvious downside risk is potential spillovers from the debt crisis in the Eurozone periphery into US financial and credit conditions. Though markets are clearly on edge, we continue to believe that these risks will be contained in the near term.
CG

and now for the more optimistic take
JM

The obvious downside risk is potential spillovers from the debt crisis in the Eurozone periphery into US financial and credit conditions.
CG

this one from barcap, which sees
JM

Yup
CG

(gulp) buying opportunities coming up
JM

BarCap, putting the gloss in Panglossian
JM

(They can have that for their pens)
CG

We do not, however, advise any further pullback in positions, and instead see the current market correction as having opened a number of tactical opportunities. Market sentiment has continued to swing more sharply than actual economic prospects and the recent decline in sentiment has probably become somewhat overdone. We believe that the news over the next few months will take a turn for the better in several areas: the next wiggle in growth should be up, the surge in inflation should ease back a bit, the US debt limit is set to be extended and the Greek problem will probably get kicked down the road again. It is reasonable to position for a bounce in equity markets into the summer, absent a rejection by the Greek Parliament of a new austerity package, in which case a buying opportunity would likely emerge after a further selloff. Such a trade would be entirely tactical, however. The maturing global economic cycle with its associated rise in inflation and monetary tightening, combined with policy risks surrounding fiscal consolidation in the US and Europe, are unlikely to be resolved in the next few months and will tend to cap any potential upside.We continue to focus risk on equities, particularly in the US, where valuations remain reasonable in absolute terms and cheap relative to both cash and bonds. Credit also now offers some opportunities, particularly in high yield, where spreads have risen to their highest levels of the year. A pickup in growth and some alleviation of concerns regarding a near-term Greek default would also tend to provide a modest lift to cyclically sensitive commodity prices and certain emerging market equities.

CG

specifically, they’re feeling US equities and High yield debt,
CG

following the recent pullback
JM

high yield debt?
JM

just as everyone is leaving
JM

in record droves
JM

highest one week pullback since 1992
CG

and they think we’re less, not more, vulnerable to a crash now
CG

Markets and economies are especially vulnerable to a crash when households, businesses and investors are very (or overly) confident, valuations are stretched, policy is restrictive and getting more so, and there is evidence of excessive behavior in important sectors. None of these conditions hold at present. Equities may not be a compelling buy on an absolute basis, but still look attractive relative to alternatives, especially in the US. Earnings yields in the high single digits seem compelling compared with money market rates around zero and returns on risk-free assets near historic lows. Meanwhile, the US corporate sector is more competitive than it has been in decades, owing to a weak US dollar and a very low cost base, driven by massive cost-cutting during the recession. That is evident in the continued run of strong corporate profit gains quarter after quarter.
CG

i can’t tell if this is a good call
CG

or the worst bet since chevy chase bet against Rocky in Rocky III (second fight)
CG

(that’s in the movie Dirty Work — underappreciated, check it out)
JM

will do
CG

anyways, finally
JM

i think the answer is somewhere between barcap
CG

something interesting in a JPM note related to the IEA
JM

and albert edwards
JM

(400 S&P)
CG

way to shrink the space, mon frere
CG

so
CG

on the IEA, JPM reckons the macro impact of this is substantial
CG

first here’s their forecast
CG

Amidst the uncertainty it creates, it is clear that consumer countries are prepared to fill
the projected 3Q2011 oil supply gap and want to see a lower oil price. We have
therefore lowered our 3Q2011 price projection to $100/bbl from $130/bbl,
effectively restoring the forecast we had before the disruptions to Libyan
production and exports. If pursued rigorously, the 60 mb sale over 30 days is a
sufficient volume to cause a very substantial drop in the oil price—
significantly more than is factored in to our quarterly average price projections.
IEA countries have replaced OPEC as the supplier of the marginal barrel to the
market, with significant pricing power conferred to the US by virtue of its large
contribution to the release pool.
CG

and now for the important stuff
CG

Amidst the uncertainty it creates, it is clear that consumer countries are prepared to fill the projected 3Q2011 oil supply gap and want to see a lower oil price. We have therefore lowered our 3Q2011 price projection to $100/bbl from $130/bbl, effectively restoring the forecast we had before the disruptions to Libyan production and exports. If pursued rigorously, the 60 mb sale over 30 days is a sufficient volume to cause a very substantial drop in the oil price—
significantly more than is factored in to our quarterly average price projections.
IEA countries have replaced OPEC as the supplier of the marginal barrel to the
market, with significant pricing power conferred to the US by virtue of its large
contribution to the release pool.
CG

@praxis22, true, though they started loving Volcker towards the end, I believe. they hated him when he was plunging the US in recession to kill inflation
JM

markets taking a downward turn
CG

and that’s where Bernanke is now
CG

(well, not a perfect analogy, but you get the gist)
JM

ftse euro300 going -ve
CG

S&P down 0.75 at the mo
CG

EUR at 1.41
JM

footsie holding up
JM

(uk banks getting smashed)
CG

oy
CG

wti at 91, brent crude at 106.7
CG

risk
CG

off
JM

disaster on
CG

btw, this morning gdp revision was nothing — slight upward revision to 1.9, no news there, though durable goods came in better than expected
CG

and everybody should watch for all the pmi’s coming out next week
CG

but i’m done with macro stuff
CG

John, shall we shift gears?
JM

sure
JM

@Peanut
JM

just the cue
CG

yep, perfect
JM

Greek PM has just been speaking
JM

we’ll come back to that in a sec
JM

but we’ve bypassed
CG

lots of action on your end of the pond
JM

G
JM

I
JM

P
JM

and S
JM

today
JM

is all about Italy
JM

and Italian banks
CG

ah yes
CG

those crafty buggers at moody’s at it again, eh?
CG

what’s the latest?
JM

bad day for UBI Banca
JM

to try a cap increase
CG

yes
CG

timing a little off
JM

latest is that sub numbers are bad but getting less bad
JM

this from about an hour ago
JM

UBI Banca cap increase more than 75pct subscribed
JM

this from 10 mins ago
JM

– UBI Banca cap increase around 90 pct sub
CG

okay
CG

so steadily improving, all is not lost
JM

perfect timing for draghi to be announced as the next ECB boss
CG

ah yes
CG

heard they’re trying to find a for bin smighi (sorry) to be put out to pasture, so to speak
CG

btw, welcome to the 21st century; new head of ECB announced via tweet
CG

http://twitter.com/#!/euHvR/status/84197375110946816
JM

Citi btw
JM

reckons Italian banks were 15pc undervalues as of yesterday
CG

now THAT’S a bet I’m not taking
JM

nope
CG

(@Old, agreed)
CG

anyways, tons of other things happening over there
JM

apparently
JM

i’m stuck here
JM

for one
JM

but papa has been speaking again
JM

in the last few minutes
CG

Big Papa
JM

– Greek PM says Greek tax system is Greece’s great injustice
CG

got some flashes?
JM

– Greek PM admits tax reform not achieved
CG

there they are
JM

Ready
JM

For the big one?
CG

hit me
JM

– Greek PM more benefits to staying in the euro
JM

than…..?
JM

new caption competition!
CG

did he specify for whom? Emoticon
CG

yes!
JM

anyway for our American reader(s)
JM

here’s the timetable for next week
JM

put it in your Gcal with a giant red flag
JM

WEDNESDAY, JUNE 29
Parliament votes on a 28 billion euro ($40 billion), five-year austerity package of tax hikes and spending cuts agreed with the European Union and the International Monetary Fund. The session starts at 10 a.m. Athens time (0700 GMT) and will conclude sometime in the afternoon with a vote.
JM

THURSDAY, JUNE 30
Parliament votes on a separate implementation law spelling out the fiscal measures in more detail — potentially more difficult as the laws will cover individual privatisations, tax steps and spending cuts.
JM

SUNDAY, JULY 3
Deadline set by the EU for the Greek parliament to pass the austerity laws. Euro zone finance ministers hold an extraordinary meeting on this date and have said the laws must be passed by then for Greece to obtain its next, 12 billion euro tranche of bailout loans. Greece has said it will be unable to pay its debts by mid-July if it does not get the tranche.
CG

(Welcome @Death)
CG

July 3rd?
JM

It’s the day before independence day
CG

Very un-American — people are readying their barbecues
JM

Aka treachery day
CG

yes, the war of colonial secession, as you call it
CG

but john
CG

i did some googling
JM

protestant civil war
CG

and you can celebrate the battle of bladensburg
JM

actually
CG

from the war of 1812
CG

when the Brits burned Washington
CG

just don’t forget who won the big one
JM

great
JM

i’ll get those kabobs ready then
JM

back to greece
JM

for a sec
CG

okay
JM

Remember when AP started referring to the Libyan Civil War
JM

Well a semantic event of equal importance happened on FT AV
JM

When Tracy referred to when Greece defaults
JM

Which is more accurate
JM

Than if
JM

And Merv agrees
JM

(King, that is)
JM

“Right through this crisis from the very beginning … an awful lot of people wanted to believe that it was a crisis of liquidity,” Mr King said. “It wasn’t, it isn’t. And until we accept that, we will never find an answer to it. It was a crisis based on solvency … initially financial institutions and now sovereigns.”“Providing liquidity can only be used to buy time,” Mr King said. “Simply the belief, ‘oh we can just lend a bit more’, will never be an answer to a problem which is essentially one about solvency.”

JM

I’m taking that from paver…
JM

The time for the troika to decide on the next tranche of the Greek rescue package is approaching. However, complicating matters is the German Constitutional Court’s formal hearing on July 5, which will judge if the first Greek package of May 2010 was in line with the German and European Constitution. The German government must prove that its actions did not violate the ‘non-bailout’ clause. It will have to argue that sovereign financial transfers will act only as ‘bridge funding,’ implicitly suggesting the private sector will take a bigger burden if it comes to restructuring peripheral debt. EUR debt investors will not like that, in our view. Although Morgan Stanley’s base case is that the Court will not rule the previous bailout as unconstitutional, the uncertainty surrounding the situation poses a key risk ahead.
CG

yes
JM

And you want a further complication
CG

not a universal belief, but damn close to it
JM

Those rollovers
JM

That were agreed last week
JM

Well
JM

Citi — as TA showed earlier — has run the numbers
JM

And asks, why would you want to do that?
CG

yes, roll(up)over
JM

on-bank investors (both Greek and non-Greek) own about 45% of the total stock of debt but much of this, particularly the portion held by pension funds and insurance companies, is likely to be long-term debt rather than paper maturing in 2012-13. The remainder is likely to be divided among traditional investment funds and private investors, who are unlikely to be incentivized to roll over their holdings at levels that are economically viable for Greece or in the event of a default action being declared by a ratings agency. We will examine this conundrum in more detail later in this article, but we consequently see little potential for a significant roll-over from this group of investors.
JM

Foreign banks will struggle to justify rolling existing holdings unless the rate at which they can do so is economically viable; this is the same conundrum that faces other non-bank investors outside Greece. Unfortunately the current market forwards, while potentially attractive to investors, are not sustainable for Greece and would, if locked in, lead very quickly to insolvency, in our view. However, to roll at off-market levels that would be sustainable for Greece risks triggering a default event in the eyes of the ratings agencies and/or the CDS determination panel … We think it highly unlikely that a significant proportion of non-Greek banks would take up a voluntary roll-over offer without significant coercion (which itself could trigger a default event).
JM

So, we’ve got Italy braced for another Friday of downgrades
JM

Greece keeps saying there have been “agreements”
JM

But that doesn’t matter a jot
JM

Until Wed
CG

and investors aren’t feeling this rollover nonsense
JM

Or Thurs
JM

Or Sun
JM

Or, H/T paver,
JM

Tues
JM

And then, um, there’s the execution business
JM

Not literally
JM

But you get what I mean
JM

I’ve been hiding back in Europe for a month now
CG

Europe, jaysus
JM

And I want to get back to the sanity of the debt ceiling debate
CG

and you guys wonder we we yanks can’t keep up
CG

ah yes
JM

(That’s concluded, right?)
CG

yeah, no
JM

Anything to say?
CG

@Old, one more scene in this madhouse play
CG

yeah
CG

what i’ve said all along
CG

this will come down to the wire, and the business of Cantor et al
CG

pulling out is just one more part of it
JM

sorry
CG

but neither side can budge now, it’s too early
JM

i’ve just realised i don’t care until jukly
JM

*july
CG

and politicially they’ll be accused of not getting the best deal
CG

debt ceiling debates of this kidn always come down to the end
CG

and here’s the thing
CG

all the risks skew negative
CG

and as you wrote earlier this week
CG

even getting too close to that deadline has risks
JM

i think we should swap Cantor for Papa
CG

best we can hope for is status quo
CG

and barcap said soemthing interesting at a panel yesterday
CG

@Thud, cantor and the republicans pulled out of debate with biden’s group yesterday
CG

barcap stretegists expect the ceiling
JM

@Thud: yellow
CG

(oh, i see)
CG

anyways, that the ceiling would be raised only enough to take us to early next year
CG

in other words, you think this is bad?
CG

get ready for the 2012 debt ceiling debate variety — election time
CG

whole thing disgusts me
JM

yay
CG

to be honest
JM

so Europe on the brink
JM

US on the brink of being on the brink
JM

shall we move on to something more cheery?
CG

yes, only in the US it’s so much more avoidable
CG

is there something?
JM

SIno-Forest
JM

Emoticon
JM

Emoticon
JM

Emoticon
JM

Emoticon
JM

Emoticon
CG

SiNOOOOOOO
JM

sorry — Muddy Waters just took over my keyboard
CG

you’ve been all over this — what’s the latest here?
JM

Well, not sure what Thud calls a rally
JM

but it’s still in the tank
CG

(Hi @Ming)
CG

in the tank, with Paulson and others bailing
JM

what you’re seeing, IMO, is short sellers facing recall pressure
JM

it’s at C$3 or thereabouts
JM

2.86 -0.05 (-1.72%)
CG

oy. And we have to wait how long for this independent report to be finished? 3 months? should i put scare quotes around that — “independent”?
JM

2-3 months
CG

okay
JM

and yes, sort of
JM

pwc doing the auditing
CG

snap
JM

but the report’s committee is led by those previously on the committee that was supposed to provide ind oversight
JM

anyway, couple of bits of comment
JM

that caught the eye
JM

A Reader has one of them
JM

over on the ROTR
JM

but first John Hempton
JM

of Bronte Capital
CG

ah yes, poor guy was so hard on himself earlier
JM

he was worried
JM

about the intermediaries
JM

that sino says it uses
JM

but can’t reveal for competition reasons
JM

he’s gone back to past press releases where sino did name the inters
JM

some quotes
JM

What is interesting is that they were quite happy to name their business partners then. (This is in contrast to their current stated position.) Secondly Sino Forest were buying timber for Shanghai Jin Xiang (and earning commissions), not the reverse. This is a reversal of the current intermediary business model.
JM

Given that Shanghai Jin Xiang Timber was majority owned by the Ministry of Forestry I wondered where it might be now. The only modern reference to it on the internet is here (click link). It gives two phone numbers. I have rung them in business hours and both ring out. The link also gives an internet address. No surprises for guessing that it is http://www.sinoforest.com. I guess it must be a majority owned subsidiary now (in which case they purchased it from the Ministry of Forestry and they no longer have a marketing business in Shanghai.)I could go on and on. The old press releases of Sino Forest are intriguing. They are not particularly consistent with the current story. However time has elapsed and business conditions change over time just as surely as the waist-lines of us gray-haired stock pickers. I will let you (dear readers) decide how much weight you put on those inconsistencies.

JM

full post
JM

ugh
JM

sorry for url
JM

another report plopped into my inbox
JM

wed
CG

seems like a big inconsistency
JM

not sure about these guys’ rep but on skim
JM

it seems like a decent job
JM

Our overall conclusion based on our review is that Sino-Forest is probably a legitimate company with a significant economic presence in the forestry and timber sectors in China. In our opinion, however, the company does not deserve anywhere near its pre-Muddy Waters valuation due to at least three critical unresolved issues that we have identified during our review. The first of these issues will be discussed herein as Part 1 of our review and consists of three components dealing with related business risks arising from the company’s forest management operations in southern China. The other two critical issues relate to potential tax and accounting risks and will be addressed in Part 2 along with a line-by-line analysis of the litany of allegations made by Muddy Waters. For now we would summarize Mr. Block’s accusations as predominantly speculative with only two or three specific items deserving serious management and stakeholder attention, which we’ve noted and incorporated into our review.
JM

other words: “It’s dodgy but it’s not that dodgy”
JM

Thud: Moody’s upgrades Oracle to A1
CG

like you said earlier, JM
JM

USML impact, right there
JM

Back to TRE for a sec
CG

not all of Muddy Waters’ points are valid, but they’re raising questions that Sino can’t seem to answer. fair assessment?
JM

More from Metal Augmentor
JM

In a worst-case scenario one or more of the critical issues could result in an eventual delisting of Sino-Forest shares from the Toronto Stock Exchange. The company might also collapse due to a complete loss of investor confidence. While there is no definitive proof at this point of a Ponzi scheme or fraud so massive that a Sino-Forest bankruptcy is a foregone conclusion, we must always consider the possibility and obviously more so in this case than most others.On the other hand, if everything that Muddy Waters characterizes as outright fraud turns out to have a legitimate-if-troubling explanation, Sino-Forest will probably survive this ordeal and the market valuation may eventually return to at least net book value. It is our belief that the odds favor such an outcome based on our review. On a conservative basis, we come up with a modified net book value of $6.40 per share as described in our disclaimer below, which appears to represent a significant opportunity for speculative returns under the circumstances.

CG

(hearing rumblings that we’re about to be joined by Izzy to talk oil)
JM

C$6.40
IK

Hello
CG

there she is!
JM

hey Iz
JM

one last bit
JM

and then i’ll grab a selzer from the mini bar
JM

and let you at it
JM

(*am neither near selzer nor a mini bar)
JM

The three critical issues we have identified thus far include:(1) Business Risk to Plantation Operations

i) Potential for abusive practices by Sino-Forest’s purchasing agents who acquire forestland from farmers on behalf of the company;

ii) Potential for failure under master agreements or otherwise to acquire suitable timber and forestland to meet Sino-Forest’s stated plantation growth plans;

iii) Potential for valuation risk to timber assets and unreasonable market expectations of future earnings resulting from selective disclosures and timing of timber asset sales;

(2) Tax and Related Legal Risk – to be discussed in Part 2 of our review

i) Potential for civil penalties, criminal liability, cease-trade orders and eventual business dissolution resulting from unreported transactions or unpaid taxes arising from the use of sales agents; and

(3) Accounting Risk – to be discussed in Part 2 of our review

i) Potential for improper accounting treatment or revenue recognition resulting from irregularities in timber and forestland transactions involving purchasing and sales agents.

JM

So
JM

I’d expect SF to rally a little
JM

Unless MW comes back
JM

Or more LoC pulled
JM

etc
JM

Right
JM

Iz
JM

what’s up?
CG

yeah, open-ended, huge day yesterday, what’s the latest?
CG

tech issues, bear with us everyone
JM

PE firms KKR + Silver Lake Partners nearing a deal to buy GoDaddy Group for more than $2 billion
JM

WSJ quoting “sources”
JM

Keep going Iz
IK

Soo
IK

Shoudl we do a quick commodity mkt update?
CG

sure
IK

Energy is clearly the focus point
CG

WTI crude for august at 90.7, brent at 106.1
IK

Mkt seems relatively flatish…
IK

compared to yesterday
IK

Seems like it’s trying to consolidate the new IEA info
IK

Trade has been described as “choppy”
CG

what’s your take on that, btw — do you expect this to have a meaningful, lasting impact?
IK

Well, technically it should
CG

@Lorcan, you got here just in time to turn the lights out
IK

The most important impact has been on Brent time-spreads
IK

Brent is back in contango (at least last time i checked)
IK

Which is significant given the WTI-Brent shenanigans we’ve been seeing
IK

And there’s also the QEasing role of the whole move
CG

QE2 ends, IEA1 begins
CG

was the headline of a JPM note today
IK

Not everyone is convinced about that, but it is in my opinon no coincidence that Bernanke has been commenting mroe about oil and gasoilne than ever before and then this happens
IK

Really.. that’s interesting
IK

Of course, it’s not really that much of a shock
IK

Governments have used their influence on oil makrets forever
IK

And to be honest, there’s an argument to be made that the SPR is more useful for this sort of price intervention, than it is for emergency use
JM

(Berlusconi has commented on the Italian banks, btw)
CG

Iz, from that JPM note
CG

The broader economic impact of this policy action is potentially significant. If
our projections are realized, the IEA release provides the equivalent of a
$140 bn stimulus to consumers (albeit with offsetting impacts on flows to
producing countries) based on the change in crude prices from 2Q2011.
Relative to the $130/bbl we had been expecting for 3Q2011, the benefit is
closer to double that amount. The release will prove stimulatory to the global
economy, particularly for Emerging Markets and the US. As such, if other
economic headwinds can be overcome, it will have the effect of bolstering not
just the world economy, but oil demand. This could create additional upside
pressures on prices in 2012, particularly if, against our assumptions, Libyan
output remains offline. For the time being, our 2012 forecast remains
unchanged, but will be reviewed in the next Oil Market Monthly.
IK

ah nice, to see they’ve put a figure on it
CG

Izzy’s computer frozen in mid-sentence, hold tight
IK

interestingly $140bn is similar to the value some clever folks have given the Bernanke put
CG

aaaaand she’s back
IK

By quantifying the difference between volatility on bank indices, vs basket of bank stocks
CG

obvs a coincidence, but surely he’d be happy for a one-to-one tradeoff
IK

Of course in other commodity news..
IK

the ETS market has had a nasty fright
IK

From Platts
IK

it happened yesterdya, but still plaguing the mkt
IK

European Union carbon dioxide allowance prices crashed to a one-year low Thursday morning, hit by a large-scale loss of confidence as utilities stayed firmly on the sidelines, traders said.December 2011 EU Allowance futures contracts collapsed under the weight of selling pressure on Thursday, falling as low as Eur13.25/mt ($18.90/mt) on London’s ICE Futures Europe Exchange, down from Eur14.78/mt at the close Wednesday.

It is the lowest intra-day price since April 1, 2010, ICE data showed.

EUAs have sunk 20.6% in the past eight trading days, falling from Eur16.69/mt on June 13.

IK

EUAs RIP
CG

yep
IK

Down another 11% today
CG

well everyone, it’s 11:10
IK

Let that be a lesson to the money and oil mkts, eh?
IK

REuters says
CG

a frightening one at that
IK

The losses are blamed on an expected widening over-supply of European Union allowances, as well as the eurozone woes.
IK

Elementary supply and demand
JM

Carbon Bitcoin
IK

well exactly
IK

Which is why some people have been advocating a Carbon Central bank
IK

I guess now we have the Fed Oil Central Bank…
JM

My grandad used to call them coal mines
JM

Anyway, we’re drifting
CG

yes
IK

(@mutant – glad you liked SPQR)
JM

Into undergraduate-level banter (not you Iz)
JM

So let’s close it up
CG

speaking of which, thought i’d close with an AV-insidery true story
CG

Rabble, John and I have a ritual
CG

we go outside to smoke a cig after the end of each Friday markets live
JM

(mum — this never happened)
CG

he’s now in London, but after last week’s session i thought i’d keep up the ritual
CG

and as i walked out into the street, and reached into my pocket to fetch my pack, a bird promptly shat directly on my head
CG

translation: Markets Live is good luck, or blessed, or whatever
JM

(um, not sure you can say___)
CG

anyways, have a laugh at my expense, because we gotta go
JM

(apologies for the swearing)
CG

yes, self-imposed yellow
CG

anyways, shall we?
JM

yes, ps — i’ve quit
IK

Bye everyone
JM

bye everyone
CG

bye all
CG

see you next week

This entry was posted by Cardiff Garcia on Friday, June 24th, 2011 at 15:01 and is filed under Uncategorized.

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