A statistical analysis of the #FTPubQuiz

Having gone through the score sheets from Wednesday’s trivia night, we can now provide every participant and spectator with what they really want: charts.

First, the distribution of scores across the 25 teams:

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The diminishing petrodollar float and the global risk asset boat

Distracted as we were by liquidity events featuring quiz questions and former Federal Reserve chairmen, we missed this note from Citi earlier this week on the escalating effects of — one of our favourite subjects right now — petrodollar liquidity removal from the oil producing sovereign complex.

From Citi (our emphasis):

One topic we have been focused on recently is the pressure coming from the withdrawal of liquidity by Middle Eastern entities. By funding source, 60% of the AUM in the SWF (Sovereign Wealth Fund) community comes from oil/gas economies. In the other 40%, there is also a great deal of commodity content. So, the acute terms-of-trade shock EM economies are now experiencing will probably continue to impact the ability of SWFs to support new investment flows in Emerging Markets bonds and stocks. According to our estimates the AUM at the top 10 SWFs in the world is now at USD 5.4 trillion. EM allocations, in many cases, are not properly disclosed, but the disclosed EM fixed income exposure at these funds is now running at 2.5-5.0% of AUM. That corresponds to USD 135-270bn, a sizeable portion of the current ~USD1 trillion worth of EM debt held by foreign investors.

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Markets Live: Friday, 9th October, 2015

Live markets commentary from FT.com 


A little more on China’s rumoured plan to one-up the only somewhat dystopian plans of Peeple by putting in place an invasive credit rating system.

Yelp for people, meet Yelp for citizens — may you both choke on the outrage you generate. Assuming the outrage is well founded, of course.

And we wonder if, where China is concerned, the outrage is accurately targeted. And whether this says more about where the world is heading generally, and less about China’s nefariousness in particular (this time around).

From the FT’s Lucy Hornby:  Read more

Alphachat: Vox-pop from the #FTPubQuiz, Jack Dorsey’s return to Twitter, and Martin Wolf on secular stagnation

Your weekly instalment of Alphachat is now live:

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A wonky chat with Martin Wolf (plus the transcript)

Episode 2 of Alphachatterbox is a 90-minute conversation, split into two parts, with the FT’s chief economics commentator Martin Wolf.

We cover a lot of ground with Martin, who recently finished a new afterword (not yet published) to his 2014 book, The Shifts and the Shocks.  Read more

All of the questions (and answers!) from our New York #FTPubQuiz

We hosted our New York Pub Quiz on Wednesday night. Congrats to the winning team, Lower Expectations, who defended their title from last year’s event by answering 53 out of 70 questions correctly, eking out a win over the team Paul Volcker Rules, William Miller Drools by just a single answer.

We had a blast producing the event and were honoured to have been joined by former Fed chair Paul Volcker, who co-hosted the economics and history section of the quiz and even submitted a few questions of his own.

For more on the night’s activity, you can scroll down through the #FTPubQuiz hashtag on Twitter, and be sure to listen to the vox-pop segment of this week’s Alphachat, in which producer Aimee Keane asked attendees for their views on the Fed and the likelihood of a China crash.

First up are the questions alone (for those who want to test themselves), and halfway down begins the same set of questions with the answers provided.



Of QE and the need for counterfactuals, charted

From BofAML:

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Further reading

Elsewhere on Friday,

- “There are Wall Street winners and Wall Street losers to all sorts of Wall Street regulation, and a pure quantity theory of toughness elides those differences.”

- The case against the Galactic Senate.

- Fanya Metal Exchange, it promised so much….

- Pay attention to China’s bond markets.

- Peeple, but for Chinese citizens.  Read more

FirstFT – Inflation risks cloud Fed debate, a tech titan gets testy and vegetarians’ dirty little secret

Fed policy makers largely stuck to their guns on a rate hike later this year, but doubts remain Read more

That Bill Gross law suit in full

A suit against his former employer, Pimco. Jury trial demanded (fingers crossed).

Click the doc to read the whole thing. May the best man/bond juggernaught win. Read more

China’s A-shares, what goes down must…

Go up, down, or stay flat. Dunno

What we do know is that China’s markets opened again today. Which is nice.

As FastFT said: “Trading for the first time in a week, China’s Shanghai Composite closed 3 per cent higher, while the Shenzhen Composite gained 4 per cent —the best one-day performance for both indices since September 16 …”

And it may be that there is a legitimate reason to suspect that a real floor of sorts is now in place under China’s A-shares. Or at least, that’s the tale is Goldman is telling. Read more

Markets Live: Thursday, 8th October, 2015

Live markets commentary from FT.com 

Some of the questions from last night’s #FTPubQuiz

Thanks so much to everyone who attended last night’s New York Pub Quiz. You can hear from the attendees themselves during the vox-pop segment of this week’s Alphachat, which will be released Friday, and scroll back through the #FTPubQuiz hashtag on Twitter.

We’ll soon publish the entire roster of 70 questions (and the answers), but here are fifteen of the multiple-choice variety we used if you’d like a quick flavour of what it was like. Read more

China jumps off its own fiscal slide

Noted China bear Zhiwei Zhang, once of Nomura and now at Deutsche, is talking up China’s near-term economic prospects.

The reason? He thinks its fiscal slide — predicated on falling land sales which accounted for 22 per cent of general government revenues in 2014 — has come to an end.

You may remember this, from Zhang, in January:

This year, China will likely face the worst fiscal challenge since 1981. We believe this is the most important risk to the economy and one that is not well recognized in the market…

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FT Opening Quote – Hays makes hay with higher hiring fees

Hays is seeing a recruitment pickup, Tate & Lyle has a sweetener for investors and it’s sofa so good for recently floated DFS Furniture. FT Opening Quote, with commentary by deputy Companies Editor Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Thursday,

- Did the Fed save the world?

- “The country can’t afford”, you say?

- Blackstone, the SEC and “a story of changing norms for private equity.”

- How M&A stories get broken.

- Why Donald Trump will always be a “short-fingered vulgarian”.  Read more

FirstFT – Deutsche Bank flags €6bn loss, nuclear weapons traffickers and plans to prevent armageddon

Deutsche Bank may pay no dividend at all this year after reporting exceptional costs of €7.6bn in the third quarter Read more

How to watch tonight’s New York Pub Quiz

In case you haven’t heard, Alphaville’s New York contingent will be hosting a pub quiz. TWENTY-SEVEN teams will compete for prizes including, but not limited to, everlasting glory and a copy of the Volcker Rule signed by Paul Volcker.

You can follow along on Twitter with the #FTPubQuiz hashtag. We’ll also have a live stream of the video, which you will be able to watch by clicking the button below — the event starts at about 7:10pm EST: Read more

On the actual reality of no more petrodollars

About a year ago — a few days before Opec spooked the world with its decision to wage war on shale producers with an oil production race to the bottom, but following a few months of steady oil declines post the Fed’s decision to start signalling an upcoming tightening path — we speculated regarding a what if scenario based on the hypothetical eventuality of no petrodollars :

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Markets Live: Wednesday, 7th October, 2015

Live markets commentary from FT.com 

A straitened new world for commodity traders

Right, so Glencore most probably isn’t the next Lehman.

But that doesn’t mean it can’t also herald a rather large change. Take this from BofAML:

With increased regulatory scrutiny on bank commodity exposure, we think that “business as usual” won’t be an option. While we don’t see an imminent liquidity crisis, we note that bank credit may inevitably tighten, albeit over time. Also, business models may need to be reengineered to be less dependent on cheap and easy access to financial leverage.

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Here’s relooking at Chinese FX reserves

Not so bad this month, particularly when you take into account expectations and the headline $94bn fall we saw in August.

From Nomura:

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Further reading

Elsewhere on Wednesday,

- A Chinese town being buried under the coal that made it.

- “I’ve come to their tax-haven sex mansion to hear their improbable story—how two sons of an ultrareligious Jewish neighborhood in Brooklyn witnessed the birth of a new kind of lending, made a fortune, and then saw it all come to an end.”

- Data as a waste product.

- The NY Fed is still talking about bond market liquidity. No. ReallyRead more

FirstFT – Global growth slumps, a month to forget for hedge funds and Facebook vigilantes

The IMF said global growth this year would fall to its slowest pace since the financial crisis Read more

Here’s looking at Chinese FX reserves releases

Chinese GDP or employment data, meh.

These days the only data that really matters are Chinese FX reserve statistics. The latest month’s position is due to be released overnight, and Daniel Tenengauzer of RBC Capital Markets expects we could be in for another episode of declining coffers:

We believe China will continue to post outflows for two reasons. First, interest rate differentials against the US declined by 200-250bp since January 2014. Even assuming no imminent lift-off in the Unites States any time soon, the flows will likely pull USD/CNY higher. We believe there is about USD400-500bn of pipeline demand in short-term international claims just to reverse some of the flows observed since 2010.

We estimate that in August there were about USD100bn of outflows. As global FX reserves accumulation turns around, the same things FX reserve managers aimed to buy in the past ten years or so will also turn around as well; this includes a variety of short duration fixed income products and alternative currencies to diversify trade weighted index baskets.

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Light, where there was once dark – Glencore funding edition

Glencore has put out a funding fact sheet on Wednesday in a bid to settle nerves over the scale and scope of its market-dependent leverage.

You can find the statement here.

The notable points are:

Terms and conditions, related to committed, unsecured facilities
No financial covenants, no rating events of default or rating prepayment events, no material adverse change events of default or material adverse change prepayment events.

Everything, essentially, is at the goodwill of the market. But there’s also a section worth reading about how the funding of Glencore’s “readily marketable inventories” (RMI) works: Read more

Guest post: What Chinese rebalancing? Cash flow edition

By Christopher Balding, Professor of Economics at Peking University, HSBC Business School, and blogger at Balding’s World. The TL;DR of this post might be that rebalancing the Chinese economy without a hard landing will be… difficult. Read more

Markets Live: Tuesday, 6th October, 2015

Live markets commentary from FT.com 

What is cybercrime really?

From a speech by Cyril Roux, deputy governor of the Central Bank of Ireland on Sept 30 (our emphasis):

The risk/reward trade-off for cybercrime is very attractive. Cybercriminals know there is a low likelihood of being detected, caught or prosecuted and many attack strategies can be executed cheaply. This has led to a substantial broadening of the attacker base. Due to the proliferation of the cybercrime-as-a-service business model, the cybercrime industry is no longer just the domain of highly skilled IT people.

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