Banks and investment firms have rebounded fastest since March 2009 lows

Chart of the day: Barclays and Lloyds soar since lows

Kit Chellel

18 Feb 2011

How financial firms in the FTSE100 have performed since the lowest point of the crisis

Two weeks from today is the second anniversary of one of the darkest moments of the financial crisis, when the FTSE 100 fell to a new low and Barclays shares were going for as little as 81p.

On that day, March 3, 2009, the 100 largest companies in the UK were worth less than they were when Tony Blair was elected in 1997.

The FTSE 100 has not hit such depths since, and an equities rally over the past few months has seen the index recover to somewhere near two-year highs.

Figures compiled by Financial News show that banks and investment firms have rebounded fastest, albeit from a lower level.

An investor who bought shares in the 10 financial firms (excluding insurers) currently in the FTSE 100 back in March 2009, would have seen a return of 149% in those two years, based on prices on Thursday morning.

This compares to an average of 73% across the FTSE 100 index.

An investor who backed Barclays would have done even better. The bank, which avoided a government bailout by tapping up Middle Eastern oil money, has risen a staggering 311% in the same period.

Lloyds is up 205% and private equity group 3i 182%.

The worst performer was investment group Alliance Trust whose shares rose 58.8%, which is below the FTSE average.

Second from bottom among the financial firms was Man Group which has been beset by problems since the crash. The listed hedge fund has seen half its assets under management pulled out by investors since the start of the crisis. Despite this, its shares have still gained 92 per cent between March 2008 and now.

The share gains achieved by banks are all the more impressive given that Barclays, HSBC, Lloyds and RBS all carried out multi-billion pound share issues to recapitalise following the crisis, diluting the value of stock.

The FTSE 100 index closed at 6087.38 yesterday, helped by strong performance from Lloyds TSB (up 2.9%) and RBS (up 3.8%). However the index remains some way below the pre-crisis peak of 6721.60 on September 31, 2007.

-- write to kit.chellel@dowjones.com

http://www.efinancialnews.com/story/2011-02-18/barclays-and-lloyd-best-performing-shares-since-crisis-trough?utm_source=twitterfeed&utm_medium=twitter

Does the difference between the age of a country's people and its leader matter?

Does the difference between the age of a country's people and its leader matter?

ONE much-discussed cause of the Jasmine Revolution in the Arab world is the age difference between youthful populations and grizzled leaders. Egypt's median age is 24. President Hosni Mubarak was the fifth-oldest leader in the world before he was toppled aged 82. The countries in the chart below suggest that such a wide gap is more common in autocracies like Saudi Arabia, Yemen, Algeria, Cuba and North Korea (where Kim Jong Il celebrates his 70th birthday on February 16th). Democracies, by contrast, seem to prefer more youthful leaders these days, though India and Italy are exceptions to this trend.

http://www.economist.com/blogs/dailychart/2011/02/daily_chart?fsrc=scn/tw/te/dc/gerontocracy

M2 Grows By $40 Billion In One Week, Hits Fresh All Time High | zero hedge

M2 Grows By $40 Billion In One Week, Hits Fresh All Time High | zero hedge

Just in case someone was confused about the relationship between liquidity, currency devaluation and nominal (not real) asset prices, the St. Louis Fed was kind enough to email us their weekly M2 level. 

And after last week's surprising drop, M2 once again rose, this time by a whopping $40 billion. Oh and before someone says that M3 is still declining, it isn't. Or rather the much more important monetary aggregate, that including all shadow banking liabilities is now increasing as we indicatedduring the last Z.1 spread. In one month, when the next Flow of Funds report is released we are confident we will confirm that in Q4 shadow banking increased by at least half a few hundred billion on an annualized basis. In other words the central bank reliquification is now on in full force, both in America and in every other place that has central banks. Which also explains why central banking hawks are now virtually extinct (cf: Axel Weber)

M2 Grows By $40 Billion In One Week, Hits Fresh All Time High | zero hedge

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World Oil Transit Chokepoints - Suez Canal/SUMED Pipeline

World Oil Transit Chokepoints
Suez Canal/SUMED Pipeline

The Suez Canal is located in Egypt, and connects the Red Sea and Gulf of Suez with the Mediterranean Sea, spanning 120 miles. Year-to-date through November of 2010, petroleum (both crude oil and refined products) as well as liquefied natural gas (LNG) accounted for 13 and 11 percent of Suez cargos, measured by cargo tonnage, respectively. Total petroleum transit volume was close to 2 million bbl/d, or just below five percent of seaborne oil trade in 2010.
Almost 16,500 ships transited the Suez Canal from January through November of 2010, of which about 20 percent were petroleum tankers and 5 percent were LNG tankers. With only 1,000 feet at its narrowest point, the Canal is unable to handle the VLCC (Very Large Crude Carriers) and ULCC (Ultra Large Crude Carriers) class crude oil tankers. The Suez Canal Authority is continuing enhancement and enlargement projects on the canal, and extended the depth to 66 ft in 2010 to allow over 60 percent of all tankers to use the Canal.

http://www.eia.doe.gov/emeu/cabs/World_Oil_Transit_Chokepoints/Suez.html

World Oil Transit Chokepoints - Suez Canal/SUMED Pipeline

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MasterTech: Egypt ProtestsTweets Mapped

MasterTech: Egypt ProtestsTweets Mapped

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Silver - some strange market dynamics

Silver - some strange market dynamics

As highlighted by the FT this morning, Silver has moved into severe backwardation, which is a very unusual (unprecedented?) situation for a precious metal.

Have a look at the chart below - it's quite dramatic

The reason appears to be producer hedging, with miners taking advantage of the massive upswing in silver prices to lock in margins. 

IMPORTANTLY, this is said to be a prevalent strategy among the producers of silver as a by-product, rather than primary producer hedging.

How to take advantage of the situation?  As long-dated contracts recover from the hedging-related pressure, look for silver equities with longer-dated production to re-rate, as higher long-term prices are priced into NAVs.

My top picks, covering the range of early stage and existing producers:

Bear Creek Mining    (BCM CN)

Silver Standard        (SSRI US)

Tahoe Resources    (THO CN)

Hochschild Mining    (HOC LN)

Pan American Silver (PAAS US)

Fresnillo                (FRES LN)

Miners hedge against fall in silver - FT

By Jack Farchy

Published: February 8 2011 22:22 | Last updated: February 8 2011 22:22

Silver mining companies have begun to buy insurance against a sharp drop in prices after years during which hedging fell out of favour.

The move by several large miners to lock in prices comes as gold and silver prices have slipped from recent highs, with investors turning to other assets as economic sentiment improves. Some analysts have begun to warn that the precious metals may soon peak after a decade-long bull run.

Gold is down 5.7 per cent from its record high in December. Silver jumped 75 per cent from August to hit a three-decade high last month, but has since fallen 6 per cent, trading at $29.30 an ounce on Tuesday.

Bankers said at least five miners had hedged a portion of their silver output in recent months, either by selling future production ahead of time at a fixed price or by buying options to protect against falling prices. This has helped push the market into "backwardation" – an unusual condition for silver in which the price for future delivery is lower than for immediate delivery.

The quantity of silver hedged in the latest wave of activity is several times the size of previous outstanding hedges, according to bankers' estimates.

Raymond Key, head of metals trading at Deutsche Bank, estimates that about 100m ounces of silver has been hedged in the past two months. That compares with total outstanding hedges, called the global "hedgebook", of 20m ounces in late 2010 and annual mine production of about 700m ounces, says precious metals consultancy GFMS.

Michael Jansen, metals strategist at JPMorgan, said 2011 was "probably the year of the producer hedge". He added: "This bull market in commodities is maturing to a point where, as much as supply is under pressure, you can say with a bit more certainty that in two to three years it's going to be different."

Bankers and analysts cautioned against expecting a widespread return to gold and silver hedging, noting that silver was not the main product of any of the miners who had executed hedges in recent months.

Mining companies have cut back on hedging – and several gold miners spent billions of dollars buying back their hedges – after protests from shareholders who preferred full exposure to the commodity markets.

Minera Frisco, the Mexican mining company spun out of Carlos Slim's conglomerate, said last month it had hedged 70m ounces of silver production to 2013.

"Gold and silver's slide in January may have spooked some producers," said Edel Tully, precious metals strategist at UBS. "When you put it in the context of silver's massive rise last year it is not surprising some producers are locking in price gains."

Gold Break Out Continues As 50 DMA Gap Is Close To Being Filled | zero hedge

Gold Break Out Continues As 50 DMA Gap Is Close To Being Filled | zero hedge

Gold Break Out Continues As 50 DMA Gap Is Close To Being Filled | zero hedge

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MasterTech: New Worries of 'Splash Crash,' Ultimate Market Meltdown - CNBC

MasterTech: New Worries of 'Splash Crash,' Ultimate Market Meltdown - CNBC

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Chart of the week: Bric M&A boom

Chart of the week: Bric M&A boom

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