It really is very quiet

We mean, for poor Macro Man “there have been only five prior days in his lifetime where the 30 day historical volatility of the SPX has been lower” — January 3-6, 1994 and September 12, 1995.

And consider this series of charts from Citi. Read more

Further reading

Elsewhere on Friday,

- ‘It took on a life of its own’: how one rogue tweet led Syrians to Germany.

- Teenage hedge fund manager Jacob Wohl — nicknamed “Wohl of Wall Street” — had his first run-in with a regulator.

- Why do we talk about helicopter money?

- The US Treasury just declared tax war on Europe.  Read more

FirstFT – ‘Fed up’ activism, China’s football foray and the sinister side of cash

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Test your knowledge with our week in news quiz.  Read more

Richard Koo’s chart to explain the past 200 years

It may take a few minutes to wrap your head around it, but this chart from Richard Koo, borrowing heavily from the insights of W. Arthur Lewis, is a pretty good framework for understanding the history of the world since the start of the industrial revolution:

For most of human history, technological progress was achingly slow, especially when it came to agricultural productivity. Unable to boost yields, populations couldn’t expand unless additional farmland were brought under cultivation. There were about as many people alive on Earth in the age of Caesar as there were more than a thousand years later. When that finally changed, farmers moved to urban factories and joined the proletariat. Read more

Fun with peer-to-peer accounting. (Yes, actual fun)

Imagine you lent a friend £2000 for three years at a 25 per cent yearly interest rate. That would be a nice little earner for you and, sure, it’s not a cheap loan as far your friend is concerned. But he’s not that good of a friend anyway and rent-seeking is easier than working.

The first nine months pass and your friend pays up every month, right on time. But then he misses a payment. When you call his mobile, you get his answering machine and when you ask around, people shuffle their feet and mumble stuff like “I dunno maybe he’s like at the gym or something”. Read more

DLTs and the “can’t we all just get along?” barrier

Another day, another blockchain distributed ledger technology (DLT) report*. Today’s comes from the World Federation of Exchanges, which provides us with a survey of what financial market infrastructure types are thinking about DLT. And, interestingly enough, the bulk of the survey is dedicated to unknown, unknowns.

Since DLT hype is exclusive to all other media outlets on the internet, we won’t feel bad about highlighting some of the real concerns being raised by market practitioners in the space with respect to DLT rollout. Read more

Markets Live: Thursday, 25th August, 2016

Live markets commentary from 

Are traders allowed to front-run customer orders in the Treasury market?

The Securities and Exchange Commission wants to know.

In a letter to the Financial Industry Regulatory Authority, the SEC’s markets division draws attention to a handful of trading rules that either don’t apply to Treasuries, or aren’t clear about whether they do. The group requested that Finra review its rulebook, and then either justify or remove any exemptions for US government debt.

See, if you’re a logical person who doesn’t know much about Treasuries, you’d assume the exemptions and unclear rules would be about minor stuff. But what’s truly bewildering is how serious the rules on that list are.  Read more

Further reading

Elsewhere on Thursday,

- Superman and stocks: It’s not the Cape (CAPE), it’s the Kryptonite (cash flow)!

- China’s ever more mysterious tourism numbers: “China’s increased [and still pretty inexplicable] spending on tourism is getting close to equaling its decreased spending on commodities.”

- How much control does the central government really have in China?.

- Whom do the Fed bank boards serve? Also, the Fed welcomes protestors.

- Levine takes on the Bernstein ‘passive investing may be worse than communism’ thing. Read more

FirstFT – Transatlantic tax tensions, how Facebook labels you and Japan’s ‘handsome weeping boys’

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The US has launched a stinging attack on the European Commission in a last-ditch bid to dissuade Brussels from hitting Apple with a demand for billions of euros in underpaid taxes. Read more

We already have a utility settlement coin: it’s called the euro

Four banks have stolen loads of column inches on Wednesday with news that they are developing “a new form of digital cash that they believe will become an industry standard to clear and settle financial trades over blockchain, the technology underpinning bitcoin”.

In the fanfare, however, lots of common sense has been abandoned.

The big idea here (allegedly) is that banks will use a “utility settlement coin” to bypass the need for costly and inefficient fiat liquidity from the cbank.

The utility settlement coin, based on a solution developed by Clearmatics Technologies, aims to let financial institutions pay for securities, such as bonds and equities, without waiting for traditional money transfers to be completed. Instead they would use digital coins that are directly convertible into cash at central banks, cutting the time and cost of post-trade settlement and clearing.

 Read more

Markets Live: Wednesday, 24th August, 2016

Live markets commentary from 

As an investment strategy grows more popular, the probability of a comparison involving Marxism apparently approaches 1

Is there a Godwin’s Law equivalent for Marxism? Do we need one since the Law basically means that the longer an argument goes on the more likely we are to reach for extreme examples while in attack or in defence? So, you know, this kind of thing is already covered?

 Read more

A would-be disruptor hits a Treasury-market-shaped wall

To those who don’t follow Treasury markets, Direct Match might sound like a ruthlessly efficient dating website. Go on one date with a partner meticulously chosen by high-powered algorithms, and end up married within a week.

In reality, Direct Match was a trading platform attempting to upend the way investors buy and sell U.S. government securities.

It also appears to be closing down, according to a Business Insider post from Jim Greco, the company’s founder. Read more

Further reading

Elsewhere on Wednesday,

- Apollo paid itself some fees and gave itself some loans.

- Bernstein: “The Silent Road to Serfdom: Why Passive Investing is Worse Than Marxism.”

- DeLong vs Matt King on safe assets and the search for yield.

- DeLong vs Stan Fischer on inflation targets and the Fed.

- The folly of prudence, IMF edition.  Read more

FirstFT – Italy struck by quake, the benefits of a 4am start and how London might have looked

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A magnitude 6.1 earthquake at the very shallow depth of 10km has struck central Italy, collapsing buildings and leaving people trapped under rubble. Reports of casualties are currently unconfirmed, but the mayor of one town said: “The roads in and out of town are cut off. Half the town is gone”. Read more

It’s going to be one heck of an election year, folks

Exhibit one: The new Facebook page of the Board of Governors of the Federal Reserve. It looks like an attempt to explain Fed structure and governance to the layman: check out recent posts on Janet Yellen and the Fed’s mandate.

It hasn’t exactly become a Facebook-user favourite. For starters, as pictured below, it uses the phrase “open market operations” in the second sentence of an explanation of what the FOMC does, failing the low-jargon test for mom-and-pop explanations. Many of the comments on its posts aren’t worth the server space it would take to reproduce them. Read more

Markets Live: Tuesday, 23rd August, 2016

Live markets commentary from 

Further reading

Elsewhere on Tuesday,

- DeLong with a tentative macroeconomic reform agenda.

- Down the (Jackson) hole.

- Stanley Fischer rewrites Fed inflation target, prepares to throw people out of work.

- bows out/ it was murdered.

- Taleb on employment as a risk management strategy (also autocrats): “In short, every organization wants a certain number of people associated with it to be deprived of a certain share of their freedom. How do you own these people?” Read more

FirstFT – Renault emissions probe, Deutsche Bank’s $10bn scandal and the crisis in Anglo-American democracy

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A French government report omitted significant details of how Renault’s diesel cars were able to emit fewer deadly gases when subject to official emissions testing, members of the state inquiry have told the Financial Times. Read more

DoubleLine’s Bonnie Baha passes away

Bonnie Baha, a portfolio manager at DoubleLine Capital with an exceptional investment record and a reputation for unusual candor, passed away on Sunday. She was 57.

Among her peers in trading and money management Bonnie was known as a great boss with a good nose for risk. She was either manager or co-manager of six DoubleLine funds, advised on more, and was instrumental in growing DoubleLine’s assets to more than $100bn. She was widely admired except perhaps by over-indebted corporate issuers, whose dubious rationalizations she interrogated relentlessly. Read more

There’s no yield, and Citi isn’t going to take it anymore

Citi’s Matt King has some harsh words for central bankers ahead of this week’s gathering in Jackson Hole, Wyoming: he says they’ve broken the market.

King echoes a group of fund managers who say central banks’ stimulus efforts are distorting the way global markets function. The problem is this: with negative yields on $13 trillion of safe assets, investment managers are crowding into the shrinking group of investments with yield — or into securities they may be able to sell to central banks. Read more

Of Sherpas and Chairs — welcome to the EFSCAC

On occasions, when confidential documents drop into the FTAV inbox, we’re minded just to share them, without much additional comment. So here goes…click to read… Read more

Continuity at the RBI

You know, we may be wrong, but there seems to be a consensus building around the appointment of Urjit Patel to replace (the potentially ousted) Raghuram Rajan at the head of the Reserve Bank of India in September…

See if you can spot it.

Spoiler: it’s in bold. Read more

Markets Live: Monday, 22nd August, 2016

Live markets commentary from 

Did Dan Loeb actually watch Game of Thrones?

Sorry, we’re *so* late to this, but some things are too important to ignore.

Here’s a snippet of wisdom from the second quarter letter of hedge fund manager Dan Loeb, sent to his Third Point investors at the end of July (ht to our FT colleague Robin Wigglesworth, who flagged it in his newsletter): Read more

Of Chinese bank bailouts, SOE pay scales and credit cycles

First, have a look at these from UBS’s Asia team earlier in the month:

 Read more

Further reading

Elsewhere on Monday,

- Is it too hard for cities to get denser? Featuring Walt Disney and the holdout problem.

- The Japanese zoning system.

- Brexit, economists and journalists, oh my.

- Virtu profiled. Hasenstab profiled.

- Hedge fund manager profited from death arb.  Read more

FirstFT – Big project spending slumps, the great British Olympic triumph and why we fear narcissism

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Infrastructure spending in Britain has declined sharply since the vote to leave the EU, putting pressure on Theresa May to press ahead with pledges for new road, rail, energy, broadband and flood defence projects. Read more

Podcast: Alphachat’s inaugural film review tackles Tron and Tron Legacy

Alphachat is available on Acast, iTunes and Stitcher. Read more