If Apple were a country…

Apple just reported the biggest quarter of net income earned by any public company ever, at least in nominal terms. It remains the world’s most valuable publicly traded company by a large margin. So naturally there are people who want to put these statistics into perspective by comparing a corporation to a country. Unfortunately, most of those efforts miss the mark because they generally don’t compare apples to apples.

The most common way to measure the size of an economy is to look at how much stuff is produced in it each year. (This is GDP.) You might think that is equivalent to corporate revenues, except that a lot of those inflows are offset by outflows to suppliers. In other words, you’d be looking at a company’s GDP without subtracting the imports that represent foreign production. That’s double counting. Read more

“Bloomberg Launches Its Flagship Digital Destination”

Click the image for the full out-of-this-Bloomberg experience…

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Markets Live: Wednesday, 28th January, 2015

Live markets commentary from FT.com 

China’s currency war problem won’t just go away

Pretty obviously — with ECB QE, a presumed resultant euro funded carry trade, and all sorts of central banks rushing to cut rates — there’s some sort of renewed currency war movement going on.

And while we’re all ears for arguments about positive-sum outcomes (in a deflationary world), it’s worth remembering those who might struggle to get involved. Read more

The Fed, the statement and the Nairu

Today’s FOMC statement should be about as shocking as the ending of The Sixth Sense.

Wait, you were genuinely surprised that Bruce Willis was dead the whole time? Fine, about as shocking as the final scene of The Usual Suspects then. Read more

Why did the Swiss franc spike? Blame the locals

There is a straightforward answer to the question in the headline: more money has been trying to get into Switzerland than get out, which didn’t affect the exchange rate as long as the Swiss National Bank bought foreign currency. As soon as they stopped, the exchange rate adjusted to balance the new set of flows. But a detailed look at the gross flows in and out of the country provides a more nuanced and interesting picture.

In the heady days of 2010-2012, when it seemed as if the European Project was always one secret weekend meeting away from exploding in a fireball of poisonous politics and innumerate economics, Switzerland looked like a nice place to put your money. It was especially attractive if you were a resident of a stressed euro area country worried about wealth taxes, bank failures, currency re-denomination, or all of the above. Read more

Further reading

Elsewhere on Wednesday,

- Yahoo would rather not pay taxes on its Alibaba shares.

- “You have to get Weidmann, Draghi and and Tsipras across a river. You are the only one who can row the small boat with room only for you and one other. How would you do it?”

- Post recession lessons.

- “Pretense of knowledge + Math = Economics”  Read more

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Apple sold 74.5m iPhones to report the largest profit in history in the three months to December. Its net profit grew 37 per cent to $18bn and beat ExxonMobil’s previous quarterly record of $15.9bn in 2012. (FT) Read more

Bank of Canada rate cut necessary as pre-emptive strike

In this guest post, Alex Bellefleur, global macro strategist at Pavilion Global Markets, writes that the Bank of Canada was prudent to loosen monetary policy in response to the decline in oil prices.

Last week the Bank of Canada (BOC) surprised markets by cutting interest rates 25 basis points, leaving them at 0.75%. While some argue this move was unnecessary, we are of the view that the cut is needed as a pre-emptive manoeuvre to counter private sector deleveraging. Read more

Petrodollars, Adam Curtis edition

Adam Curtis, the controversial end of the BBC documentary making department, is back with a straight-to-iPlayer special, called Bitter Lake. His topic du jour: Saudi Arabia, Afghanistan and the petrodollars that turned financiers dizzy.

For those unfamiliar with Curtis’ work, think archive footage, mood music, dramatic pauses, voiceovers of the “…but it was all a fantasy” variety and grand themes linking multiple strands into a single overarching narrative.

Love him or loathe him, a particularly cool piece of stock footage unearthed in his latest offering comes about 45 minutes into the documentary, and it is definitely worth your attention: Read more

This is nuts. (But maybe someone’s noticed)

Box Inc, just another cloud storage company out of Silicon Valley, looked to be just another SV mania company hitting Wall St when it priced it’s IPO last week. Against an allegedly cautious pricing at $14 a share (one dollar above the indicative range, natch) the market price surged to a day one high of $24.73. But look at the price chart since then…

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Igor, how do these ETFs work?

On May 21 2013, an unnamed “Russian state-owned news organization” wanted to question more about the NYSE.

Where to get some good questions from, though?

Well local Russian economic spies Evgeny and Igor, obviously. Read more

Markets Live: Tuesday, 27th January, 2015

Live markets commentary from FT.com 

Contrarian gauntlet thrown

From BofAML’s Hartnett:

Nothing is more contrarian than long Russian ruble, short Swiss franc right now…

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Further reading

Elsewhere on Tuesday,

- “Internal devaluation” via falling wages is incredibly costly — but Greece has been paying incredible costs.

- In Greece, think flows, not stocks.

- Did credit really replace wage growth in the mid-2000s?

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Many US states have declared a state of emergency and transport systems are shuttered as a crippling winter storm sweeps into the northeast. (FT)

Still, the country’s largest stock exchanges and treasuries market intend to plough on and trade today, undeterred by the incoming snowstorm and yesterday’s thinner trading volumes. Read more

Will the US soon have a budget surplus?

The Congressional Budget Office has just come out with its latest ten-year projections on spending, revenue, and debt. As has been the case for a while, the boffins estimate that the deficit will continue to shrink for a few years and then gradually widen, eventually raising the government debt to GDP ratio.

The actual arguments in the body of the report contradict elements of this forecast, however. It’s quite possible that, for at least a few years before the next recession, the combination of strong growth and previous austerity measures will combine to produce a budget surplus and an associated scarcity of safe assets. Read more

Fake disinflation?

The fact that inflation is low is not, by itself, bad; with low inflation, you can buy more stuff.

– Mario Draghi, June 6, 2013 Read more

The phoney property portal war

In the UK, Monday saw the launch of Onthemarket.com, a supposed attempt to break the online property portal duopoly in Britain, currently consisting of Rightmove and Zoopla.

The new challenge has come from Agents’ Mutual, a sizeable consortium of estate agents who want to regain control of the homebuyer audience. About 25 per cent of agents have signed up on the condition they stop advertising properties on the two incumbent sites, opting instead to fix monthly listing fees for five years – and escape the escalating monthly charges levied by Rightmove and Zoopla. Read more

The trading magicians of Plus500

Plus500 is an unusual member of the retail foreign exchange trading world. The London-listed group offers contracts for difference on currencies, as well as stocks, indices, exchange traded funds, and commodities, but it is unusual in the way it is structured, the way it operates and, above all, the way it is spectacularly profitable.

More on all that below, but to begin let’s focus on the recent move in the Swiss Franc versus the Euro. The decision by the Swiss central bank to remove the cap on the value of the franc prompted very large moves for the currency, blowing up some currency trading platforms and prompting unexpected losses throughout the financial system.

Plus500, however, suffered “no material impact on the Company’s financial and trading position”, an incredible result. Read more

FirstFT – Syriza victory, the first US licensed Bitcoin exchange and James Bond’s body language

“The Greek people have given a clear, indisputable mandate for Greece to leave behind austerity,” said Alexis Tsipras in his victory speech.

His leftwing anti-austerity party Syriza started coalition talks with potential partners after narrowly failing to win an outright majority. It had also clinched a coalition deal with a small rightwing party similarly opposed to Europe’s economic policy, giving it a clear majority. The result pushed the euro to an 11-year low. (WSJ, Reuters)

Although Syriza’s triumph has created uncertainty across Europe, if the example of late prime minister Andreas Papandreou is anything to go by a more pragmatic government may follow. Either way Athens will soon have to lock horns with international creditors over its mountain of public debt – 175 per cent of GDP. Ferdinando Giugliano examines Greece’s debt burden. (FT)

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Markets Live: Monday, 26th January, 2015

Live markets commentary from FT.com 

Greek austerity after Syriza

A brief collection of reaction to Sunday’s election in Greece follows. Before we hear from the professional financial crowd, however, a word from Eric LeCompte, executive director of Jubilee USA…

This election was a referendum on austerity and debt policies. The people of Greece voted and said no to austerity and yes to renegotiating Greece’s debt.

Austerity programs can be likened to trying to help a patient on life support by punching them.

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It’s not the euro that’s getting cheaper; it’s the dollar that’s getting more expensive

You may have noticed that a US dollar goes a lot further in much of Europe than it used to. In fact, it goes about 25 per cent further. From our colleagues at FastFT:

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ICYMI, China’s credit buildup was pretty damn fast

Like 97th percentile fast.

From Goldman, do click to enlarge: Read more

Further reading

Elsewhere on Monday,

- Greek games and scenarios.

- Greece’s fragile primary budget surplus is not much of a bargaining chip.

- The Swiss franc appreciation and the sorry saga of FX lending.

- An ECB QEsplainer.  Read more

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“The Greek people have given a clear, indisputable mandate for Greece to leave behind austerity,” said Alexis Tsipras in his victory speech. Read more

The Bank of Canada’s Rate Cutting Folly

The Canadian central bank surprised markets this week by cutting its base rate by 25 basis points. Jon Hartley, co-founder of Real Time Macroeconomics, argues that the Canadian central bank’s decision to cut interest rates will exacerbate the Canadian housing bubble and wasn’t needed to offset the fall in the oil price.

Early this week, the Bank of Canada unexpectedly announced a change in its key benchmark interest rate for the first time in four years. However, rather than raising its benchmark interest rate as Fed has said it intends to do later this year, Canada’s central bank has lowered its overnight interest rate by 25 basis points to 0.75%. Read more

A touch of peer-to-peer mania?

Seven months have ticked by since hedge fund Marshall Wace spun out P2P Global, an investment trust focused on lending through peer-to-peer lending platforms. About £200m was raised at flotation and, by November, with about three quarters of those initial funds deployed, P2P said it was actively considering a fresh stock offer.

Two weeks ago it said it was issuing 10m “C” shares at £10 apiece. But demand from investors immediately topped 20m, so the issue has been increased to 25m shares — raising £250m. Read more

FirstFT (late lunch wrap)

Death of Saudi king, art’s shady money, Greece to decide
Saudi Arabia’s King Abdullah has died at the age of 91, after years of poor health, elevating Crown Prince Salman to be ruler of the world’s largest oil exporter and a key US ally.

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