“FX is back,” says FX strategist team

Foreign-exchange trading hasn’t been the best way to express macro views this year — in part because of expensive hedging costs — but BofA Merrill Lynch FX strategists say that’s changing, in a note titled “FX is back for good.”

Luckily for the sellside, it’s not just a one-way trade in global currencies, even if views on the pound haven’t looked terribly diverse lately. (Somewhat related: there’s been plenty of talk of barriers getting hit on bearish GBP/USD knockout options because of the crash, so if you’ve actually experienced that, do email us.)

As of yesterday, here’s where the positioning divide was between hedge funds and real money, from BAML: Read more

Thought for the weekend

Markets will go up and down – markets respond to noises

UK chancellor Philip Hammond on Friday’s sterling flash crash

About that Sports Direct rout

While lots of people marvelled at the supposed resilience of Britain’s benchmark stock index on Friday in the wake of the sterling crash, one particular faller stood out. Read more

Why this is more than a flash crash in sterling

This guest post is from Themos Fiotakis, Global Co-Head FX & Rates Strategy, UBS Investment Bank Read more

Week Seven: FT Alphaville Fantasy Football League

Another week, another enforcement action. “Voidarama” — sorry, you’re outta here for failing to adhere to capital requirements.

The league tables are still steady where it matters, with the top two and bottom two spots unchanged. So partly motivated by that — and partly motivated by a desire to find something moving as fast as the pound — we’ve taken a look at some of the big changers last week. Read more

Breakevens and the Great British Peso

While we’re waiting for everyone to flail through the ocean of FX crash causality, this is worth paying attention to….

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Markets Live: Friday, 7th October, 2016

Live markets commentary from FT.com 

Alphachat: Tim Harford on the unheralded virtue of messiness

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

FT Opening Quote: Week ends with currency fireworks

Week ends with currency fireworks, HarbourVest extends SVG bid, Delta Lloyd rejects NN; FT Opening Quote, with commentary by Jennifer Thompson, is your early Square Mile briefing. You can sign up for the full newsletter here.  Read more

Fat fingered algos [updated]

You’ll have woken up to the flash crash in GBP…


You’ll be aware that the flash crash isn’t the only crash in GBP going on: Read more

Further reading


– Explaining away that GBP dive: “some foolish folk will have done a Bloomberg News search for GBP and decided that it is due to the news that fracking had been allowed in North West England. Which is of course rubbish, because we all know that it happened because Diane Abbott was made the shadow Home Secretary.”

– “The good news from the government’s perspective is that if GBP/PLN keeps this up, the immigrant labour issue will sort itself out…..”

– Also, in small mercies, “at least the BOE isn’t killing people in the streets, as happened — albeit accidentally — two centuries ago in London.”

– Aswath Damodaran on Deutsche: A Greek Tragedy at a German Institution?

– And Obama in the Economist on inequality, populism, the need for fiscal stimulus and the state of the US economy. Read more

FirstFT – Pound plunges 6% in 2 minutes, the danger of demagogues and what yawning says about your brain

The British pound fell more than 6 per cent to below $1.20 amid Brexit concerns Read more

Introducing the ‘mutualised database’

Move aside distributed ledger technology and permissioned ledgers. The preferred description du jour: the mutualised database. Read more

Markets Live: Thursday, 6th October, 2016

Live markets commentary from FT.com 

WANdisco: kicking a man when he’s down, and then again when he gets up

September 29th:

The Board of WANdisco (LSE: WAND) today announces that David Richards, Chief Executive Officer, will be stepping down from the Board and his role as CEO of the Company with immediate effect. A search for his replacement has commenced. In the interim period, Paul Walker, Non-Executive Chairman, has assumed the role of Executive Chairman with immediate effect.

Wandisco 1 with arrow

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The pension hole in European corporates

From Barclays’ Christophe Boulanger and Dominik Winnicki on the pension deficit risk building in QE’d Europe:

As evident in the end-June 2016 corporate results, the rise in pension benefit obligations (PBOs) and pension deficits is a broader theme for European corporates. Overall, pension deficits for the more-than 100 companies that we have screened are up 16% since endFY2015 and are likely to increase further in the July to December 2016 period given the continued fall in discount rates on the back of declining long-term yields that are not offset by returns on plan assets.

More importantly, we believe that such a trend is unlikely to improve in 2017 given quantitative easing policies (QE) by the European Central Bank and the Bank of England that will likely keep corporate yields low in the medium term.

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Yes, the early 1990s really were bad

If you remember the early ’90s, other than, I would say, 1928, there was nothing even close. The conditions facing real estate developers in that early ’90 period were almost as bad as the Great Depression of 1929 and far worse than the Great Recession of 2008. Not even close.

— Donald Trump, via Vox

This statement has gotten some (undeserved) criticism. Here’s the Associated Press with a “fact check”: Read more

FT Opening Quote: EasyJet profits sharply lower

EasyJet profits sharply lower, SVG to sell investment portfolio, Misys to float: 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


– Did NYU just leak the Romer Nobel? Or did a precautionary prewrite find its way into the wild? In one scenario we never find out.

– Brexit and the City, a dialogue.

– Cowen vs Tabarrok on the rise of the robots.

– Ray Dalio to the NY Fed on the long-term debt cycle and the limits of central bank powers.

– Duncan Weldon attempts to define May-ism.

– Ryan Avent on the societies to which we owe our prosperity.

– And Josh Barro with a theory of Trump’s taxes. Read more

FirstFT – May slams capitalist elite, UN to choose new chief and why humans won’t live beyond 115 years

UK prime minister Theresa May says the Brexit vote was a cry for a new start Read more

‘Post Truth’ in the Bracken Room (sorry, tickets now gone)

Adam Curtis, the BBC documentary maker who is a bit like marmite (you either love him or hate him), has a new film out on iPlayer on October 16 called HyperNormalisation: Read more

Introducing the ‘temporary bail-in’

Here’s the Lerrick Plan. It looks perfect for Italy’s Banca Monte dei Paschi di Siena. Read more

Taxi for Carney?

We dunno, but if we were the Canadian governor of the Bank of England we’d be getting a touch nervous…

Between the migrant worker bashing and now this from UK prime minister Theresa May:

While monetary policy with super low rates and quantitative easing have provided emergency medicine, we have to acknowledge some of the bad side effects. People with assets have got richer, while people without have not…

A change has got to come, and we are going to deliver it because that’s what a Conservative government can do.

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Markets Live: Wednesday, 5th October, 2016

Live markets commentary from FT.com 

Fessing up to foreign workers

One of the things we pride ourselves on at FTAV is our ability to tell which way the wind is blowing. Some might call it cowardice, we call it survival. Read more

There were some problems with a real Wall Street casino

People who enjoy having opinions about the financial system also tend to enjoy comparing trading — or, um, central banking — to gambling. While we’re sceptical of those types of views, this week’s rundown of legal troubles faced by one broker-dealer-affiliated gaming business almost seemed bankish.

CG Technology — formerly known as Cantor Gaming, and an affiliate of Cantor Fitzgerald — is paying $22.5 million in a non-prosecution agreement, with $16.5 million going to US attorneys’ offices in Brooklyn and Nevada and another $6 million going to the Treasury Department. It wraps up an investigation into the gaming company that’s been going on for years. (The WSJ has a good rundown of the history here and here.) Read more

Your new RBI, not quite like the old RBI?

Raghuram Rajan is out. Pushed perhaps by some in the Indian political establishment who were unhappy with his outspoken views on matters non-monpol –“in the land of the blind, the one-eyed man is king” being a prime example — and by some who thought he wasn’t putting enough emphasis on growth when making his interest rate decisions.

Urjit Patel is in. He was supposed to signal policy continuity, more policy continuity and some more policy continuity. The kind of policy continuity only available if Rajan had *cough* just stayed on *cough* After all, Patel was a deputy governor at the RBI under Rajan and the architect of the RBI’s inflation targeting framework.

But is that prophesied continuity actually showing up? Read more

FT Opening Quote: Tesco’s pension deficit balloons

Tesco’s pension deficit balloons, Topps Tiles sales down, HarbourVest pursues SVG; 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


– Bill Gross, October 2016 before launching into the QE threat to capitalism: “My country club locker room is a fascinating 19thhole observatory where human nature and intelligence often come into conflict.”

– Matt Levine on Morgan Stanley’s little cross-selling scandal.

– How the whole Deutsche mess “points out the inherently political nature of banking, and how the political bargain (in the phrase of Calomaris and Haber in Fragile by Design) has changed.”

– And a GBP signal du jour: “I am convinced that journo-noise trumps fast moves, rulers and pencils as a signal and I am convinced that this morning’s cacophony of Sterlingness is a signal. ”  Read more

FirstFT – IMF lowers growth forecasts, Google unveils smartphone and how art is used for espionage

The International Monetary Fund has lowered its growth forecasts for the US and other advanced economies, warning that the UK’s decision to leave the EU, the US presidential elections and rising protectionism advocated by Donald Trump are dragging on a world economy where politics now presents the biggest risk.

Updating its semi-annual forecasts for the global economy on Tuesday, the IMF sharply lowered its 2016 growth forecast for the US to 1.6 per cent, from the 2.2 per cent it predicted in July, and for advanced economies as a whole to 1.6 per cent. Read more