Further reading

Elsewhere on Wednesday,

- Pettis: If we don’t understand both sides of China’s balance sheet, we understand neither.

- Why Balding doesn’t believe Chinese GDP, redux.

- “If I don’t come back, look after my wife,” and other tales from China’s investment community.

- “You can be a pessimist about the Chinese recession now without being a) a pessimist about China in the longer run, or b) a pessimist about Chinese political stability.”

- Blockchain for banks probably can’t hurt. Read more

FirstFT- Uber lawsuit gets go-ahead, Google unveils new logo and the trick to staying sharp

A California judge has given the go-ahead to a class-action lawsuit against Uber Read more

In search of China’s local gov debt gap… oh, sorry, we meant cap

Yes, this is the news that China has recently put in place a RMB 16tn cap on its, dangerously expanded, local government debt. Per Xinhua, and via the WSJ:

The Standing Committee of China’s National People’s Congress imposed a 600 billion yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday. That would be on top of 15.4 trillion yuan on debt owed by local governments as of the end of 2014, Xinhua said. The moves are the result of a new law requiring the government to limit local debt, it said.

It’s also the news that this is less than expected and, importantly, doesn’t include indirect liabilities . Hence…

 Read more

Dispatches from the #UBSthoughtleadership away-day

UBS + Away-day in a fancy high-tech facility at a not too secret location due to tweeting oversight = !!!Future shock!!!

We’ve been live at the scene of the new UBS ‘refresh’ on Monday — and it seems what the rebranded Swiss bank wants to discuss is EVERYTHING TO DO WITH THE FUTURE. Read more

Of pampered Indian unicorns

Is this unique?

We rather doubt it.

From JP Morgan on India’s private sector start-up darlings and their publicly listed, markedly less-loved, counterparts (emphasis, theirs, ours and yours if you ask nicely): Read more

Markets Live: Tuesday, 1st September, 2015

Live markets commentary from FT.com 

Eurodollars, FX reserve managers and the offshore RRP issue

Previously of the NY Fed markets team and now at Credit Suisse, nobody knows repos and shadow banking like Zoltan Pozsar. In his latest co-authored piece with James Sweeney he takes a closer look at how an eventual Fed rate liftoff may play out technically on the ground.

As has been widely reported, the Fed is expected to utilise Reverse Repo (RRPs) facilities with non-bank money market funds as part of its unwind procedure. This is unprecedented to a degree, for it represents the effective expansion of the Fed’s balance sheet beyond the official bank sector.

By offering deposit services to non-banks at positive rates, the Fed will be pulling liquidity from the system by way of transforming excess reserves currently sitting on the books of the formal banking sector into non-bank reserve assets. While the overall amount of liquidity in the system will technically remain the same, what will change is who owns the liabilities. Read more

“Is Father Christmas real?” and other musings by UBS

Oldham, Lancs, in the case of this correspondent. Read more

FT Opening Quote – bwin studies cards as 888 revises bid

Bwin is playing its cards close to its chest as it announces a revised bid from 888 this morning. FT Opening Quote, with commentary by Matthew Vincent, deputy Companies editor, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Tuesday,

- Was the Greek bailout a huge mistake, and if so, who made it?

- How to draw a cartoon of Xi Jinping in bed with another man.

- China’s fiscal stimulus memory black hole and the need for a consumption-orentated attempt.

- The V.C.s of B.C.  Read more

FirstFT – Oil prices surge, US targets hackers and how to stop procrastinating

Oil prices have rocketed more than 25 per cent in three trading sessions Read more

Will Treasury yields soar if China sells?

China, you may have noticed, has switched rather abruptly from being a massive buyer of foreign currencies to a major seller. Some people — including some relatively influential policymakers — are worried that this switch from suck to blow, as it were, could cause Treasury yields to spike. That fear may be animating some of those who think the Fed should adjust its schedule of rate hikes, or even engage in additional large-scale asset purchases.

We’re sceptical. Read more

FirstFT – China scraps large-scale stock buying, ‘supergiant’ gas field found and author reveals spy links

China’s government says it will instead intensify efforts to find and punish those ‘destabilising the market’ Read more

The peer-to-peer scaling, matching and pricing fallacy

Everyone loves peer-to-peer systems these days, right?

Peer-to-peer means nasty old intermediaries, who might otherwise overcharge or front-run you, are entirely eliminated from the transaction equation. Instead you, the little guy, get to operate on your own terms and only with those counterparties you want to.

And how is this magic achieved? With the power of all-encompassing algorithms. Naturally.

Except, none of that is really true. Peer-to-peer doesn’t really eliminate the intermediary, it just substitutes him temporarily for a seemingly benign (though, still commercially incentivised) entity, branded as a digital platform or social network. That such a platform appears benign is only because it charges you less than the competition currently does. Read more

Slater & Gordon: complicated, indebted and yet to be audited

Slater & Gordon, the Australian listed law group, on Friday released a complex set of accounts full of restatements, unusual accounting policies and changes to the way the figures are prepared and presented.

The company under investigation by the Australian Securities and Investment Commission, but these are preliminary figures — and so not audited yet. Andrew Grech, managing director, signed a statement saying “The financial report is in the process of being audited and is not likely to be subject to audit dispute or qualification.” The accounting firm doing the work has not been named.

Slater & Gordon recently purchased almost all of the scandal hit UK group Quindell for A$1.3bn. More details from the results below, but first some highlights: the Australian group has significantly more debt than expected, the numbers don’t match the pro forma set presented at the time of the acquisition, and in a month of operation the businesses acquired managed to lose A$5m. Read more

Markets Live: Friday, 28th August, 2015

Live markets commentary from FT.com 

Some Fed thoughts: QE4 and all that

After a considerable period of boredom, trying to figure out America’s central bank has gotten interesting again.

For months, the mid-September meeting of the Federal Open Market Committee was being telegraphed as the most likely start date of the “normalisation” process. Or, to use another bit of central banker-ese, the day when short-term interest rates would begin “liftoff” from the current range of zero to 25 basis points. Read more

Guest post: Trying to throw our arms around the (sick) Chinese economy

By Christopher Balding, Professor of Economics at Peking University, HSBC Business School, and blogger at Balding’s World.

Throughout the Chinese stock market run up and subsequent collapse, the most fundamental question revolved around the robustness of the overall economy. Read more

FT Opening Quote – Jimmy Choo’s Cinderella shoe sales

Jimmy Choo is not going to the ball with its shoe sales, despite the success of its Cinderella slipper. FT Opening Quote, with commentary by City editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

China’s ongoing FX trilemma and its possible consequences

From UBS’s Tao Wang on what, post China’s surprise revaluation, is now an oft used phrase, the impossible trinity — AKA the corner China finds itself in:

The impossible trinity says that a country cannot simultaneously have an open capital account, independent monetary policy, and stable tightly managed exchange rate. Some academics (such as Hélène Rey) argue that since capital controls are no longer as effective in the current day world, complete monetary policy independence is still not possible without some degree of exchange rate flexibility, even without a fully open capital account – or impossibly duality.

Regardless of whether it is an impossible trinity or duality, the fact is that in recent years, as a result of substantial capital controls relaxation, China has found it increasingly difficult to manage independent monetary policy while simultaneously maintaining a fixed exchange rate.

 Read more

Further reading

Elsewhere on Friday,

- “To Merkel”, defined.

- “The people who knew the most about the company, because they were running it, told themselves one story about Dole’s future, and told the special committee another story.”

- Now the BoE is worried about bond market liquidity.

- “So is this the hour of China’s crisis? Highly unlikely.”

- Some of the people, some of the time. Read more

FirstFT – Oil jumps most since 2008, Google comes out fighting and the meaning of Merkel

Brent crude jumped $4.42 a barrel trading to settle at $47.56 Read more

Barclays Boys Club now admitting girls

Amazingly, Barclays does have some female clients who play golf. A year ago, we detailed the golf outing that occurs ahead of the Barclays PGA Tour event in New Jersey where the bank’s most senior professionals invite their best clients to tee it with tour pros the day before the official competition begins. Among the participants were well-known bankers, hedge fund and private equity investors, and C-level executives. Yet, remarkably not a single woman made the cut.

It may seem frivolous to study who got invited to an ultra-elite golf outing. But as we noted last year, social networking is often key to career advancement. And we also detailed golf’s particular legacy of exclusion. We spoke both with Ms. Winston and Ms. Junega after they completed their rounds.

Equities soar. Have some Albert

One of the many lessons from equity investing during Japan’s Lost Decade is that in a secular bear market hope is a killer. In a secular bear market hope should only be flirted with briefly during cyclical upturns, but it must be ruthlessly rejected as the cycle turns. In a secular bear market being wedded to hope destroys portfolios as the bear slashes to ribbons the hard-fought gains of the previous bull market. Gains that have taken years to accumulate are gone in months. One key measure we monitor informs us conclusively: we are now in a bear market.

The ‘key measure’ SocGen strategist Albert Edwards is referring to here is one of six models developed by his quant-ist colleague, Andrew Lapthorne. And, in chart form, it looks like this: Read more

Imagineering markets in our quantum computing future

A company called Cambridge Quantum Computing, which is developing qubit algos for commercial applications, has just received £50m worth of investment from private equity firm Grupo Arcano, a.k.a this man:

 Read more


All those San Francisco meetings paid off.

Franklin Templeton and other private creditors will agree to swallow a writedown on their Ukrainian bonds. Cutting a fifth off bond principal, it’s much less than many expected. Bond prices were rallying hard at pixel time.

Then there is the issue of Moscow. Since Russia’s said no about restructuring its own Ukrainian bond. Read more

Markets Live: Thursday, 27th August, 2015

Live markets commentary from FT.com 

Fancy some $$$$ raw? Best follow Markets Live at 11am

No hints in advance. We’re still doing the checking calls.

But we are pretty sure we will have details of a rather sizeable US takeover during FT Alphaville’s regular Markets Live session on Thursday. Read more

FT Opening Quote – CRH cements $1.3bn windows deal

CRH is behaving like a legendary Irish giant, while the law is behaving like an ass. FT Opening Quote, with commentary by City editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Thursday,

- A tale of two liquidities.

- Liquidity needs the return of the heroes.

- Dalio: The dangerous long bias and the end of the supercycle.

- So you think you can… time the stock market?

- Hold on, now we’re talking negative Chinese growth? Hmmm. Read more