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Tuesday, December 21, 2010
Scrooge Cashes Out
Readers wondering why popular narratives manage to be so persistent might take a look at Nouriel Roubini's new East Village triplex - recently purchased by Dr. Doom for 5.5 million dollars.
Despite the evident risk of losing his shirt as he disseminates good cheer during the snarly season, the writer regardless wishes his readers a Merry Christmas.
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Ibex Salad regularly updated features...
Despite the evident risk of losing his shirt as he disseminates good cheer during the snarly season, the writer regardless wishes his readers a Merry Christmas.
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Ibex Salad regularly updated features...
Saturday, December 18, 2010
Wednesday, December 15, 2010
Moody's Threatens to Downgrade Spain!
The ratings agency, Moody's, has a reputation for showing up late to the party. But we're starting to wonder if their main reason for existence - with the lap dog compliance of the press-ecoblog cartel - is to occasionally test if there's any money still to be made from the repetition of a stale meme*.From Bloomberg, today's Spain 10-year yield in the wake of this morning's warning. Yield up 10 bps from yesterday's close in first hour. Currently, 17 below highs.
*In our darker moments, this theory has them assisting parties in getting cleanly out of profitable positions.
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Tuesday, December 14, 2010
Buy Now, Pay Later
The positively dismal INE home sale statistics for the month of November (mostly reflecting purchases made in September and October) offer an object lesson in the costs associated with temporary political interference in market activities. Following July's 1 percent increase in the value added tax applied to new home sales, transactions - of both new and used - have tanked to lows for the entire price series. The effect of the tax change, intended as a negative incentive to reel purchases in from the future, has been to remove organic demand from the housing market. Readers might expect this to last into late winter with trailing 12-month sales falling closer 400,000 in the process.
In itself, this is no great emergency. But it comes at a very inopportune moment. With it being generally thought that the current high interest rate demanded by purchasers of Spanish government debt is a result of potential liabilities with respect to the country's banking sector - themselves (especially the cajas) under intense pressure to be more transparent about the value of real estate assets on their books as a prerequisite to seeking private capitalization - a notable drop in prices for lack of demand would be less than welcome.----------------------------
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Tuesday, December 07, 2010
September Mortgages
A little late with this (umm, we forgot), September mortgage issuance stats for Spain have been released by the INE. Same old same old. Numbers of mortgages continue to bump along at minima of 50+ thousand, while the average amount loaned shows no signs of ending its uptrend.
The steep and mysterious decline in the ratio of mortgages granted to actual home sales, mentioned last month, seems to have corrected itself.----------------------------
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Sunday, December 05, 2010
Workers of the World, Unite
Thursday, December 02, 2010
Timing is Everything
Pure coincidence, but yesterday Bloomberg published a fairly long - and positive - background article on Rodrigo Rato, the ex-Spanish finance minister and managing director of the IMF, and the challenges facing him as he presides over Banco Júpiter.
With some degree of certainty we might say that this is the beginning of the marketing ramp leading to a share issue mooted in Wednesday's post.
Readers should note that we incorrectly reported asset figures for Banco Júpiter in yesterday's piece. They've been corrected to read 339 billion. The derived calculations have also been adjusted.
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With some degree of certainty we might say that this is the beginning of the marketing ramp leading to a share issue mooted in Wednesday's post.
Readers should note that we incorrectly reported asset figures for Banco Júpiter in yesterday's piece. They've been corrected to read 339 billion. The derived calculations have also been adjusted.
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Ibex Salad regularly updated features...
Wednesday, December 01, 2010
The Din
A couple of indications from yesterday that the racket has finally reached a fever pitch...1). They've since conveniently re-edited the piece at the other end of this link (even changing writers and the time stamp) to make it a little more convincing, but the original - emanating from South Korea at 3:39 am - provided as evidence that gold was reacting to the eurozone debt crisis its previous day's 0.2% increase. Zero-point-two-percent!;
2). Looking over yesterday evening's front page of the Spain feed from news aggregator, NewsNow, no less than 28 of the 51 items present dealt in one way or another with Spain's presumed vulnerability;
3). The term 'PIIGS' was sighted on a couple of occasions.
Worth mentioning is that it was a perfect mediatic day for Banco Santander to tag 7.11€ - one cent below June's low - paying that buyer an 8.4 percent dividend, to which can be tacked on the 7.7 percent capital gain made by the moment of this writing. Apparently, we weren't alone in our thinking. Yesterday's volume was twice the three-month average.
But even more interesting might be a look at what might be incomplete about the picture being painted of coming Spanish debt difficulties.
The general consensus seems to be that the Spanish banking system may run into difficulties rolling over its maturing debt in 2011, and that the country's government will be in no position to help out. Central to the argument is the precarious state of many cajas de ahorros. But aren't we forgetting something?
The weakest members of that sector, which comprises about one half of the nation's banking assets, are currently being reconstituted (albeit slowly as the principals fight over the division of power, surely) as banks, either directly or under the IPS superstructure, allowing them to tap the previously forbidden equity markets rather than being restricted to debt and deposit funding.
Proceeding on the basis of the assumption that La Caixa, representing 21 percent of all cajas assets would not have rollover problems were it not for reputational contagion, and that another 8 percent suffer the same fate, we can make the argument that the refunding problem is confined to about 70 percent of these institutions. Enter Banco Júpiter.
This IPS, composed of six foundering to one degree or another savings banks, owns - primarily due to the participation of Caja Madrid and Bancaja - 29 percent of the sector's activos. That's the Spanish word for assets and they total in this case, placing it firmly behind BBVA as Spain's third-largest bank, 337 billion euros. We can now try to imagine the effect of an IPO of this domestic giant on the financial sector's debt landscape.
Thinking that Júpiter might have to roll over (just fishing here) 12 billion euros of debt and that they might be able to dream of a market value of 20 billion euros and that they might possibly float 30 percent to ensure themselves a spot on the Ibex 35 with all the institutional demand that creates and, bingo, their renewal requirements are cut in half. The end result, without including sure IPO's from smaller entities, is that - with contagion no longer an issue - 60 percent of the caja universe, including all those systemically important, has dodged the rollover bullet.
Readers will want to do their own homework before making a decision, but if the issue behind the recent spike in Spanish government debt yields is in fact the financial state of the cajas, then today's 5.4 percent being paid to buyers of the 10-year looks almost as big a gift as the Santander dividend.
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