Questions from last night’s New York pub quiz

Thanks so much to everyone who attended last night’s pub quiz at Ainsworth Park in New York. Below we post all the questions we used. The winning team, which styled itself Lower Expectations, scored 45/60 in the first three rounds, and then 7/10 in the tie-breaker.

See if you can beat them! The questions without the answers are first, followed by both the questions with the answers further down. Read more

Roble unmasked (along with Fest, Blau and Fresco)

The Financial Times can reveal that Roble is one of a clutch of shell companies based in the Cayman Islands created by Tiger Global, one of the world’s largest but lowest profile hedge funds. Tiger Global used a series of these structures to bet against at least a dozen European companies, including Quindell.

Terrific gumshoe work by the FT’s Miles Johnson, who has identified Tiger Global as the big US investment company using Cayman-registered special purpose vehicles to short European stocks without attracting attention.

One of them is the Spanish-sounding but Cayman-registered Roble SL, which held the biggest short position in Quindell this year as the controversial law firm and technology company’s stock collapsed. Read more

Fed of mystery and supplementary normalisation tools

If analyst comments in our inbox are anything to go by, the latest FOMC minutes, released on Wednesday, provided nothing much to write home about. Everything revealed was pretty much as expected.

One thing did prompt our eyebrows to raise, however. More on that below, but first here’s some of the reaction. Stephen Lewis at Monument Securities wrote:

The minutes of the FOMC meeting on 28-29 October sprang few surprises. Compared with earlier meetings, FOMC members gave more prominence to the risks stemming from worsening conditions elsewhere in the world but ‘many participants’ expected the impact of foreign developments on US growth to be limited.

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Markets Live: Thursday, 20th November, 2014

Live markets commentary from 

ECB QE and the prospect of gold purchases

One of the problems with ECB QE, as we all know, is the lack of a collective eurobond or sovereign-neutral asset to target, which would make asset purchasing less, you know, subjective vis-a-vis the assets you choose to support and those you don’t.

It is for this reason that analysts are divided about the type of assets Draghi may or may not be inclined to target.

There is, after all, a delicate balance between targeting ETFs or real-estate trusts neutrally and buying corporate stock or housing, which can evoke the start of quasi nationalisation of the economic system, if not government favouritsation of specific sectors, corporations or industries. Read more

You are not experienced

Statistically speaking.

Pieria has some stats from Citywire on the tenure of fund managers in its database of 17,000 funds, judged to be one of the important factors that financial advisors say they consider when choosing funds for their clients.

The advisors averaged about two decades worth of experience. The fund managers, not so much. Read more

Further Reading

Elsewhere on Thursday,

- The effect of oil price declines on consumer prices.

- The macroeconomics of the Death Star, redux.

- Objects can lie about their identity too. Read more

On the pluses and minuses of paying employees in non-cash instruments

On Monday Mark Carney, Bank of England governor, injected fear into the hearts of highly paid bankers everywhere by stating…

Standards may need to be developed to put non-bonus or fixed pay at risk. That could potentially be achieved through payment in instruments other than cash. Bill Dudley’s recent proposal for certain staff to be paid partly in ‘performance bonds’ is worthy of investigation as a potentially elegant solution. Senior manager accountability and new compensation structures will help to rebuild trust in financial institutions. In a diverse financial system, trust must also be rebuilt in markets.

His comments came on the back of growing regulatory concerns that banks avoid bonus caps by boosting fixed salaries and so offer less variable pay, weakening the link between performance and compensation. Read more

Markets Live: Wednesday, 19th November, 2014

Live markets commentary from 

The sun also sets

… That proved to be correct, if you will, and that was my last moment, really. I have to say when I look back in the last three years it feels as if the sun only rose each day to humiliate me after that point.

Hugh Hendry, manager of the Eclectica hedge fund there, talking about his investment decisions back in 2010-11 in the first of a three part interview in Money Week.

The no-doubt galling part is that he was right, to a degree, identifying deflation as the central risk while many of his peers worried about the opposite — central bank measures sparking inflation. Hendry had also been a celebrated contrarian who made a ton of money in the disaster year of 2008.

Still, he too felt the pull of the siren song:

I luxuriated in the polemics of Marc Faber and James Grant and Nassim Taleb, in our own country, Albert Edwards, et al. I luxuriated as they ranted and it was fine for them to rant. But I am charged with the responsibility of making money… *

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The costs of offshore tax avoidance, part 2

In our previous post, we looked at the ways that global corporations minimise their tax burdens by routing income through offshore tax havens and transfer pricing. The ultimate beneficiaries of these shenanigans, of course, are actual people rather than legal entities. Many of these people also take advantage of offshore tax havens to avoid reporting capital income to local authorities. In this second post, we will look at how Gabriel Zucman tracks this hidden wealth and his suggestions for governments to capture missing revenue.

According to Zucman, at least 8 per cent of global household financial assets — a figure that doesn’t include bullion, art, real estate, jewelry, and other physical stores of value — are held in tax havens, although he suspects that this is a lower bound. Switzerland alone is home to about $2.5 of non-resident holdings, while Luxembourg has about $370 billion attributable to foreign households and another $350 billion held by “family offices and other intermediaries.” (More on the exact methodology can be found here.) Read more

The costs of offshore tax avoidance, part 1

Nobody likes paying taxes. The rich, however, can reduce the burden more easily than others because capital is more mobile than labour.

A clever new paper in the Journal of Economic Perspectives by Gabriel Zucman attempts to measure how much government revenue is lost because of the careful re-routing of capital income into tax havens. He also suggests ways that governments can crack down on tax minimisation strategies, even in the absence of international coordination. Read more

Further Reading

Elsewhere on Wednesday:

- The lonely, eccentric life of bond villains

- All the earth orbiting sattellites

- Just you wait till that exam is over, professor. Read more

FirstFT, the email briefing formerly known as The (early) Lunch Wrap

This is FirstFT, the FT’s new email briefing written by Amie Tsang in Hong Kong which is replacing the Lunch Wrap and the Cut. All Cut subscribers should now be receiving it in their inboxes. If that isn’t happening do please email or

If anyone reading this is not yet subscribed do please click here. Read more

More on Nigeria’s fuel problems

A quick follow-up to our Nigerian fuel scarcity story from Monday, which highlighted the country’s growing exposure to potential fuel shortages if and when oil prices continue to descend, and as the national currency weakens.

As already noted, Nigeria may be a net oil exporter, but the country remains dependent on product imports to keep its economy ticking over. Those products are imported by local companies from international oil trading intermediaries, and distributed at prices which are further subsidised by the government. Read more

Markets Live: Tuesday, 18th November, 2014

Live markets commentary from 

Dear SRA: will you be ready if a large law firm fails?

Much of our coverage of the controversial Quindell has focused on its transformation into one of the UK’s largest law firms. This rise has not received the wider attention it might, perhaps because Quindell was listed on Aim, London’s junior market, and until recently described itself in the garbled jargon of a technology company.

We suspect that could change. A stock market valuation of more than £2.7bn earlier this year has collapsed to less than a tenth of that total, posing a problem for a group that has funded both breakneck expansion and day-to-day expenses by issuing shares. Robert Terry, the company’s founder, recently sold stock during a period that he had promised would show Quindell’s ability to stop burning through cash, and has resigned as chairman.

Which prompts a question for the legal industry in general and the Solicitors Regulation Authority in particular: what would happen if a law firm managing 100,000-plus claims were to fail? Read more

Further Reading

Elsewhere on Tuesday:

- Uber as the lion and the wolf

- What if China entered the currency wars?

- Yay, mega mergersRead more

Japan’s “debt problem” in perspective

The best way to get less of something is to tax it, so nobody should have been surprised when Japanese GDP cratered after the sales tax was raised from 5 per cent to 8 per cent in April.

What the government didn’t expect, and what is encouraging Prime Minister Abe to delay (if not renege on) the plan to raise the tax rate to 10 per cent, was the economy’s failure to snap back. For example, the latest data show that real household consumption, excluding imputed rent, plunged by 3.5 per cent over the past 12 months to its lowest level since the Tohoku earthquake hit in 2011:

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Object 2014-28E — the possible Russian killersat — track it here, NOW!

Dunno what we’re talking about?

Read the otherworldly (and exclusive) story from Sam Jones: Object 2014-28E – Space junk or satellite killer? Russian ‘UFO’ intrigues astronomersRead more

Ever naira a fuel scarcity issue for Nigeria

Nigeria’s fiscal exposure to falling oil prices is amongst the most acute within the Opec group.

But as Standard Bank analysts note on Monday, whilst the country’s central bank has shown it is prepared to defend the currency ahead of all-important national elections in February, its ability to do so diminishes with every dollar that the Brent crude price loses:

The CBN is clearly struggling to balance constraining upside USD/NGN pressure with limiting the depletion of FX reserves. At present, the CBN is intervening in the interbank market just below the prevailing rate rather than protecting a line in the sand.

The CBN has also recently shifted the RDAS rate higher and we suspect may move it to the upper end of 155 +3% band in coming weeks.

Our core scenario remains that there will not be an official shift in the RDAS central rate until after the elections in Feb 15. The ability of the CBN to achieve such an outcome clearly diminishes, the lower the oil price goes.

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MoneySupply: Why the BoE is talking nonsense

Nonsense is a rude word. But there isn’t a milder way of describing the Bank of England’s estimates of UK labour market slack.

For three inflation reports in a row, the BoE has published a chart (below) showing its model of labour market slack with accompanying text highlighting its great importance in the monetary policy decision. “One of the key determinants of inflationary pressures in the economy is spare capacity or slack – that is the balance between demand and supply,” the November inflation report states. Read more

From Russia with bonds

Ukraine will probably end this year with public debts over two-thirds the size of its economy. We won’t know the exact figure until March when official statistics come out, nor if those statistics will be able to count the GDP of the separatist east.

But it is not looking good. We thought this rated a reminder.

Because the President of Russia certainly hasn’t forgotten about it — or the unusual clause inserted into the language of a $3bn bond Ukraine owes to his government: Read more

Markets Live: Monday, 17th November, 2014

Live markets commentary from 

Announced today: Quindell’s broker resigned a month ago

Here is a selected chronology of recent events at Quindell, one of the UK’s largest law firms, whose share price has collapsed in the last month.

October 13 – A third-quarter trading statement says the company’s preferred measure of cash flow is ahead of expectations. (Share price 143p).

October 21 – Quindell announces what it calls a major contract win. Also, Canaccord Genuity gives notice of resignation as joint broker and financial advisor, which is not announced. (Share price 161p). Read more

Honour roll, Japan GDP edition


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This too shall pass

Charts. Do stop us if you’ve heard this one before.

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Further reading

Elsewhere on Monday,

- “Japan’s present predicament is a more extreme version of the choice faced by the UK in 2011…”

- Japan through the looking glass.

- Can we have our instrument back?  Read more

FirstFT, the emailing briefing formerly known as the 6am Cut

This is FirstFT, the FT’s new email briefing written by Amie Tsang in Hong Kong which is replacing the Lunch Wrap and the Cut. All Cut subscribers should now be receiving it in their inboxes. If that isn’t happening do please email or

If anyone reading this is not yet subscribed do please click here.  Read more

Why Shinzo Abe could nix tax hike two

For clues as to why Japan’s prime minister seems very keen to avoid another consumption tax increase so soon after the last, you could look at a whole host of economic indicators – third-quarter GDP, consumer confidence surveys, industrial production or housing starts.

Or you could just examine charts put together by Tsutomu Watanabe, a Tokyo University professor who has spent much of the past six years poring over point-of-sales data from supermarkets.

A glance at his UTokyo Daily Price Indices suggests that the April 2014 tax hike – from 5 per cent to 8 per cent – has had just as chilling an effect on consumer demand as the last one, in April 1997. Read more