Shane's Feed
Aug 7, 2014
via Counterparties

Draghing on

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The EU mess slogs on. The European Central Bank met today and left interest rates unchanged, as the economic situation in Europe (well, France and Italy) looks to be worsening. ECB president Mario Draghi said during the press conference today, “the recovery remains weak, fragile and uneven.” The big news from the euro zone earlier this week, of course, was that Italy has unexpectedly fallen into a triple-dip recession. Ambrose Evans-Pritchard writes that Germany’s economy is also weakening, and certainly isn’t strong enough to make up for its southern neighbors.

Inflation in Europe is almost non-existent — it was just 0.4 percent in July, far below the central bank’s 2 percent target, though core inflation, less food and energy, is at a somewhat higher 0.8 percent. “Policy makers seems to be in denial that falling prices are a threat,” writes Mark Gilbert. Draghi today blamed low inflation on energy prices, and said he expects it to rise in the next year or two.

Aug 7, 2014
via Equals

The importance of men leaning out

Earlier this week, Max Schireson, the CEO of New York-based tech company MongoDB, wrote a post about stepping down from the top position at the company. He’s quitting, he says, to spend more time with his family. “Friends and colleagues often ask my wife how she balances her job and motherhood. Somehow, the same people don’t ask me,” he writes.

In some ways, this move isn’t terribly novel: just one guy writing briefly about his decision to become a (not-quite-so) stay-at-home dad. And perhaps there’s a bigger backstory that no one is talking about. But in this case, that’s neither here nor there. Culturally, it’s an incredibly important step. Gender equality is a balance. Sure, there’s room for a small amount of economic growth, but broadly, leadership positions are nearly zero-sum. Sure, women can slave away, clawing their way to the top, but the gender imbalances aren’t going to change broadly unless men let them in. In some instances this means hiring and promoting women, but in others it means leaning out of their careers a bit.

Aug 6, 2014
via Data Dive

The spacecraft on track to catch a comet

The European spacecraft Rosetta is about to catch up with a comet. Ten years after launching, Rosetta will meet up with  67P/Churyumov-Gerasimenko soon, take a trip with it around the sun, and, in November, hopefully land a probe on its surface.

Reuters reports that as the spacecraft has gotten closer, scientists have realized that the comet isn’t shaped like a rugby or American football, but more like a duck, with a long neck connecting two parts. They hope to learn more in November. The probe should allow scientists “to peek into a kind of astronomical time capsule that has preserved for millions of years clues about what the world looked like when our solar system was born.”

Aug 5, 2014
via Counterparties

Inside the Allergan trade

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Not too long ago, Canada’s Valeant Pharmaceuticals teamed up with Bill Ackman to launch a hostile takeover effort for Allergan, the maker of Botox. The tag team effort was novel, but the story was pretty Ackman-esque: he announced he owned 9.7 percent of Allergan; the company adopted a poison pill to keep him from gaining control over any more. Throughout the summer, the fight continued to get uglier. Last week, Allergan filed a lawsuit in California alleging insider trading between Ackman and Valeant. It is, as Matt Levine says, “very clever and great fun, if you’re into this sort of thing.”

Basically, the lawsuit alleges that Ackman bought a ton of Allergan stock while Valeant was preparing a tender offer — and by being in on the game together, this was insider trading. Technically, Ackman didn’t buy anything, a shell company called PS Fund 1 did (if you’re interested in the technicalities, PS Fund 1 is mostly owned by Ackman’s hedge fund, Pershing Square and 3 percent owned by Valeant. It also technically didn’t buy shares in Allergan, but zero-strike call options).

Aug 4, 2014
via Data Dive

China’s quake death toll expected to rise

Photo

A 6.3 magnitude earthquake hit Yunnan province in southwestern China over the weekend, killing hundreds of people. The death toll at last count was 398 people, but with thousands of buildings collapsed and recovery efforts continuing, it’s likely to rise.

In all, more than 55 million people were affected. Here’s a map of the enormous area where shaking was felt:

Aug 1, 2014
via Counterparties

Sanctioning Russia

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The war in Ukraine has not done great things for the Russian economy. The Economistcalls the latest sanctions, announced on July 29 in the wake of the downing of Malaysian Airlines flight MH17 in eastern Ukraine, the “end a 25-year-long quest to make Moscow a partner of the West.” The financial embargoes, which target Russia’slargest banks, are not by themselves enough to cripple the country’s finances, but they are still going to be a big blow to an already faltering economy.

The FT Alphaville team writes that part of the quarter-century attempt to bring Russia into the western fold included “efforts to connect Russia to the plumbing which developed markets take for granted,” like adding its domestic sovereign debt to international clearing systems. Those connections are still in place, but a lot of funds are moving toward ignoring Russian markets entirely. MSCI, which provides a number of investment indexes, announced today that it is creating new emerging markets indexes that exclude Russia for investors who want to avoid exposure to the country.

Aug 1, 2014
via Data Dive

July jobs report: Stagnant wages

It’s Jobs Friday! This morning, the Bureau of Labor Statistics released data for non-farm payrolls for the month of July. The economy created 209,000 jobs last month and the unemployment rate ticked up to 6.2%. The headline number came in a bit under consensus (a Reuters poll of economists expected growth of 233,000), but was overall not a terrible number. The data today really preserves the status quo.

The Reuters Graphics team has recently debuted some really great jobs-related interactive charts. Here are some highlights:

Jul 31, 2014
via Counterparties

The bad banks of Europe

It was a day of record losses for European banks. Both France’s BNP Paribas and Portugal’s Banco Espirito Santo have just reported second-quarter earnings — somewhat unsurprisingly for those following the news in the last few months, both banks lost billions.

BES disclosed a €3.6 billion ($4.8 billion) net loss in the first half of the year. The Bank of Portugal is requiring BES to raise capital after it set aside money to cover the losses, and it may end up needing state aid. Paul Murphy writes, “the losses appear to have taken the bank’s equity tier 1 capital ratio down to circa 5 per cent – that’s the wrong side of an absolute regulatory floor of 7 per cent.” Additionally, Reuters reports, “BES’s top risk management, compliance, supervision and audit officials had been suspended over suspected ‘harmful management’ that may have contributed to the bank’s massive losses.” The New York Times quotes analyst Antonio Barroso saying the moves by the Portuguese central bank are effectively a back door nationalization of BES.

Jul 30, 2014
via Counterparties

Argentina’s default: Here’s what’s happening

Argentine economy minister Axel Kicillof

Welcome to #GrieFault day. That’s twitter’s hashtag for the Argentine technical default, caused largely by a series of court rulings by U.S. federal court judge Thomas Griesa, which was triggered this afternoon. That is to say that the ratings agency S&P cut the country’s credit rating to selective default. The country’s representatives are still negotiating with bondholders in Manhattan as of this writing. This was the story yesterday:

After missing an interest payment on its bonds on June 30 (previous coverage in the saga here and here), the country had a 30 day grace period to reach a settlement with its holdout creditors — mostly the hedge fund Elliott Management — in order to avoid default. That grace period is up Wednesday.

Jul 30, 2014
via Data Dive

GDP rebounds in the second quarter

Good news: the economy bounced back last quarter. In fact, after a terrible first quarter in which the economy contracted at a 2.1 percent rate, GDP rebounded to grow at a 4 percent annual rate between April and June.

The news was a beat — expectations were only for 3 percent growth. However, the average growth rate of the economy over the last few years still hovers around 2%, as you can see in this chart: