Diary of a Financier

Top Newsstuffs (February 4-10)

In Bookshelf on Sun 10 Feb 2013 at 07:08

Blizzard Nemo weekend in the Northeast–over/under was 3 feet…

The ECB’s shrinking balance sheet | The McClellan Report
The ECB’s $26T balance sheet started shrinking in 4q12, but QE4 has offset the retrenchment with 6.7% growth in the Fed’s $3T balance sheet.
[Eurocrisis faintly reemerged this week as Italy heads toward elections (Feb 24-25), and former PM Silvio Berlusconi gains ground on incumbent Mario Monti.]

The island dispute between China & Japan | Triple Crisis
Full background and counterfactual regarding the Chinese v. Japanese political/military/diplomatic conflict regarding sovereignty over Diaoyu & Senkaku islands.

Rail traffic weekly: Modest w/w improvement, but weak start to the year remains | Association of American Railroads (AAR)
Carloads -6.3% and Intermodal +5.3 (cumulative ytd volume y/y); -3.4% and +7.2 respectively (vs. this week last year).
8 of 20 carload groups posted gains: Petroleum products +52.3%, lumber +26.5 & farm products +18.7; metallic ores -22.4%, grain -15.7 & minerals -12.1.
[Modest improvement from last week, but still a poor start to the year–even considering calendar effects.]

Student loan bubble forces Yale, Penn & GW to sue their own students | Zero Hedge
Perkins loans for low-income students are federally subsidized but allow schools to negotiate restructurings directly with students (as opposed to Stafford loans, which payments are income-based and settled in bankruptcy court). After $964mm in 2012 defaults (+20% y/y), schools are litigating because the next generation’s loans are financed by return on the current capital pool.
Regardless, Obama plans on raising funding from $1B/year to $8.5B.

Scientists print 3D object using stem cells | Business Insider
Using special valve-based 3D printers with “bio ink,” scientists fashion human tissue, which Human Embryonic Stem Cells (hESCs) indefinitely replicate.
[Related: Print your own medicine | Lee Cronin]

Argentina freezes supermarket prices to stop soaring inflation | Zero Hedge
“First capital controls (2/2012), then a currency crisis (6/2012), [then an IMF censure for false inflation reporting,] then expectations of sovereign default (11/2012), then military tensions, and now price controls.”
Freeze will last until April 1, trying to halt 30% inflation forecast. 360% stock rally since 1993 is -9% adjusted for FX.
$USDARS $WMT #PaulSinger

Senior loan officer survey (January 2013): Credit demand increased & lending standards relaxed | Federal Reserve (Fed)
In 4q12, net demand for loans increased (specifically business loans/prime residential mortgages/auto loans) & banks relaxed lending standards (especially consumer credit/auto loans/prime residential).

Japan’s Government Pension Investment Fund considers reallocating government bonds | Bloomberg
Public GPIF ($1.2T AUM) considering cutting its 67% strategic allocation to JGBs as BOJ & PM Shinzo Abe have pledged higher inflation; would reallocate to emerging market equities & alternatives.
Discussions begin April/May, changes go into effect end of FY14.
#Cause&Effect

–Romeo

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  1. […] So far this year, credit demand has finally started increasing, and banks are finally starting to relax lending standards.  All of the liquidity that the Fed […]

  2. Update on Japanese GPIF…

    Japan’s Pension Fund Cutting Local Bonds to Buy Equities | Bloomberg
    Allocation to domestic bonds cut fm 67% to 60, domestic stock raised fm 10 to 11, foreign bonds up fm 8 to 11, foreign stock fm 9 to 12.

    http://www.bloomberg.com/news/2013-06-07/japan-s-pension-fund-cutting-local-bonds-to-buy-equities.html

  3. […] least right now, I don’t feel like managing the geopolitical risk surrounding the Argentinian bank BMA, which also appeared on this […]

  4. […] course, BMA is fundamentally cheap too, mostly due to macro concerns around inflation and the Argentinian sovereign government’s battles with legacy defaults (see: Paul […]

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