Posts from Monday Mar 3 2014

Magic: the undercapitalised gathering online

Tech billionaire and bitcoin investor Marc Andreessen says Mt Gox is to bitcoin what MF Global is to the dollar.

We disagree.

But before we get to that, we’d like to explore revelations that it may not have been a malleability issue, a.k.a. a transaction doppelganging problem, which brought down the world’s premier bitcoin exchange but the much more common scenario of “under-capitalisation”. It’s a common problem for banks and ponzi schemes everywhere. Read more

Carry on conduits

After the deluge comes … erm … the deluge.

Commercial Mortgage Alert reports that 37 shops are now in the business of actively originating commercial mortgage-backed securities (CMBS). That’s up from 27 such CMBS “conduits” in existence a year ago, and just shy of a peak of 38 originators tallied in 2007 and 2008. That’s pretty impressive work for a market that all but collapsed after the crisis. Read more

Buffett Derivatives: back in black

The Berkshire Hathaway annual report released on Saturday is full of information for Buffett watchers, but for those fascinated by the very large put options sold by the great Sage of Omaha, turn straight to page 47.

As of the end of 2013, and as predicted by our good friend Pablo Triana at the Esade Business School, fair value for the put liabilities of $4.7bn is now less than the $4.9bn of premium Berkshire received for writing the options.

Broadly, what that means is Warren could offer to buy back the puts at a small profit. We think it’s unlikely, but it illustrates the underlying reason for writing them in the first place – the use of billions of dollars of capital for several years. Read more

Stratospheric property (seriously)

Late last year we speculated that if anything was going to disrupt the London property bull market it was going to be a grand exodus, motivated by the economically viable population realising that they could nowadays live and work quite happily outside of city perimeters. You know, the internet and all that.

Silly us.

Knight Frank’s latest wealth report, to be released on Wednesday, has decided that the greatest disruption to established property wealth centres may come from extra-terrestrial advances instead. Read more

Markets Live: Monday, 3rd March, 2014

Live markets commentary from 

The (early) Lunch Wrap

Bank Rossii raises Russian rates || Russia has massed armored vehicles at border, says Ukraine || Gas Explosion at Sinopec site || Eurozone manufacturing activity up || UK mortgage approvals at 6 year high || Thorntons profits up || Stocks down, haven assets up Read more

Does Pimco know something we don’t?

On Sunday Pimco issued an intriguing tweet from Bill Gross, the undisputed King of the bond mountain.

 Read more

Jobs of the future and the gender-norm challenge

Women hold about 60 per cent of the total jobs in the thirty occupations projected by the US Bureau of Labor Statistics to have the most net job growth in the decade through 2022.

That figure was calculated* recently by the National Women’s Law Center, which adds that eighteen of those thirty occupations are “female dominated, with workforces that are 60 per cent or more female”. Read more

Further reading

Elsewhere on Monday,

– TED gently points out the problems with Hamilton Nolan’s hedgie polemic.

– The economic future of Americans – some arithmetic.

– RBC ain’t dead!

– Russia thinks the West is now all about the moneyRead more

The economic consequences of geopolitics

Clear enough where Russian assets are concerned at least… the CBR has gone to war just hiked by 1.5 percentage points to put a stop to the rouble’s tumble.

From Reuters:

The central bank did not mention Ukraine in its statement, but said the decision to raise rates was aimed at preventing “risks to inflation and financial stability associated with the recently increased level of volatility in the financial markets”…

 Read more

The 6am London Cut

Markets: Escalating geopolitical tensions in the Ukraine has weighed on equities, lifting commodities and motivating investors to seek shelter in havens. S&P 500 futures were pointing to a 1 per cent drop at the open of trading in New York, after the benchmark US index finished last month at a record high. In Asia, equity losses were sharp. (FT’s Global Markets OverviewRead more