Posts from Tuesday Oct 15 2013

The Closer


– Scott Skyrm on technical default, Treasurys, and repo. Read more


We had refrained from posting this helpful CDS explainer because a deal on the shutdown and debt ceiling appeared close earlier in the week, but now it seems our optimism was premature.

So, via strategists at Barclays: Read more

Reminder: the US isn’t welching on Thursday

Not that we want to discourage the squabbling ninnies in Washington from concluding a deal, of course…

Below is a brief reminder from Capital Economics that the US won’t actually run out of money on Thursday, an explanation of what happens after, and a chart with the Treasury’s spending and auction schedule. Read more

Ireland tax reputation move du jour

And so to the Irish government’s international tax strategy, fresh out on Tuesday and making Ireland “part of the solution to this global tax challenge, not part of the problem” according to Michael Noonan.

Ireland has incidentally guided its 12.5 per cent corporation tax rate through its bailout. It even outlived Sarkozy’s presidencyRead more

Premature dissemination, Bloomberg style

Bloomberg News prides itself on market-moving scoops. Today its reporters excelled themselves, getting Citigroup’s Q3 earnings out a full 29 minutes before they were due.

 Read more

Invesco Perpetual: SELL

From our sister publication, FT Adviser…

Invesco Perpetual’s equity income manager Neil Woodford is set to leave the company in April next year. Read more

India, forced demand, and the caveats

From Morgan Stanley:

Before we delve into the details of the potential rebalancing impact from India’s entry in GBI-EM Global, it is worth clarifying the rules involving index inclusion.

 Read more

One Richard Usher, thrown under the regulator’s PR bus

He’s dead, of course, professionally. Former chief FX dealer for JP Morgan in London, Richard Usher. Bloomberg has the glee:

…wrote instant messages while he was at Royal Bank of Scotland Group Plc (RBS) that U.K. regulators are scrutinizing as part of their investigation of alleged currency manipulation, two people with knowledge of the matter said.

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The curious case of rising Chinese reserves

Chinese inflows are back.

Wei Yao at SocGen notes on Tuesday that China’s FX reserves added $163bn in the third quarter, the biggest quarterly increase since the second quarter of 2011.

As she notes, however, the source of those inflows is not necessarily down to the usual suspects (our emphasis):

China’s FX reserves added USD 163bn in Q3, the biggest quarterly increase since Q2 2011. The FX positions of all financial institutions (including the central bank) increased by only CNY 2.8bn in the first two months of Q3. Hence, inflows probably accelerated significantly in September. We estimate that the impact of the euro appreciation on the valuation of the reserve stock should be no more than USD 40bn during the month. In addition, the trade surplus narrowed significantly to USD 15.2bn in September from USD 28.5bn in August. Even if we assume a 20% increase in FDI, that still leaves us with nearly USD 100bn of unspecified capital inflows.

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These are not the customers you are looking for, Herbalife edition

There is something weird about the way that Herbalife has been responding to questions about its customer base.

Faced with a barrage of scrutiny over the claims from Bill Ackman that it is a pyramid scheme, and as Herbalife has insisted that it is legitimate, it has turned to market research companies to show that it has plenty of real customers. Read more

Markets Live: Tuesday, 15th October, 2013

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York,


A carbon comedy

Some scumbag correspondence from…

Good afternoon,

We hope this email finds you well. It has been brought to our attention that you have been approached by a number of sales companies in the past regarding the purchasing of carbon credits. For example, some of the particular companies in question are: Capital Asset Partnership, Worldwide Commodities, MH Carbon Limited as well as many others.

 Read more

Wealth-taxing, redux

Sign of the times perhaps, though in any case easy to overlook (as we did)…

That’s a box on “one-off capital levies” — or wealth taxes — burrowed away on page 49 of the IMF’s latest Fiscal Monitor. Click to enlarge. Hat-tip to Societe Generale’s rates strategists.

Just in case you thought the Cypriot precedent had been forgotten. Read more

Wait what, the enormous unnoticed collapse in London property prices

So, we may have been a little distracted by the boom in estate agents, dark inventory, and London houses earning more than their occupants to see what was really going on.

In fact, London is in the grip of a terrible and deep housing bust that has only just begun to turn. Greater London house prices, adjusted for inflation, are fully 27 per cent below their peak in the summer of 2007.

 Read more

Further reading

Elsewhere on Tuesday,

H2B: better than you think.

– After the jobs disappear.

– It won’t look silly. Nobody will knowRead more

The 6am London Cut

Markets: Asian markets rose on the prospect that US lawmakers will strike a deal to lift the nation’s borrowing limit and avoid a potential debt default by the world’s largest economy… Markets in Singapore, Indonesia, Malaysia and India were shut for national holidays. (Financial TimesRead more