Posts from Wednesday Jun 4 2014

The Closer


– Why did economic growth stop alleviating povertyRead more

Routinous, ruinous

The chart comes via this recent note from the Dallas Fed, and the theme will be familiar to those who have read the earlier work of Frank Levy, Richard Murname, and David Autor.

Although the share of routine jobs in the labour force has been declining since the 1970s, the dramatic permanent losses started after the recession of the early 1990s. A similar trend can be observed in the manufacturing sector, which obviously would have hosted many of these jobs. Read more

Raters’ sovereign bias, a new rebuke

Another salvo arrives in the intellectual spat over whether or not credit rating agency opinions have been subject to country bias, possibly influencing Europe’s debt crisis.

After we featured a strongly worded piece by the Unicredit economist team in March, IPE magazine asked them to turn it into an article.

IPE asked for responses from the three big agencies. Fitch again declined, S&P replied along the lines of the one given to us, while Moody’s decided to comment specifically on the Unicredit paper.

We’ll sample the arguments below, but in preview Erik Nielsen is not impressed and has dared the rating agencies to meet in front of regulators and or academic specialists to compare notes. Watch this space. Read more

Markets Live: Wednesday, 4th June, 2014

Live markets commentary from 

Oxygen of publicity, S&P and the World Cup test case

In the S&P Dow Jones Indices ‘equity World Cup’, fixtures were decided by 12 month equity market returns rather than sporting prowess – and the traditional footballing powerhouses of the Mediterranean dominated thanks to their rebounding economies. Spain beat Greece and Portugal into second and third place respectively, while 7 of the 8 quarter finalists were European in a strong showing from the region.


How many more weeks of this to go? Read more

The (early) lunch Wrap

Tesco sales fall || Abe clears path for tax cut || Eurozone activity expanding, but pace slows || Dao-ichi Life confirms Protective Life purchase || Albania onto EU waiting list || Kashkari to face Brown in California || EU approves shipping alliance || Europe stocks weaker Read more

Litigation risk, charted

Given the repeated hints from across the pond that BNP Paribas is going to get clobbered with a $10bn fine by the US authorities for alleged sanction busting, etc, we should not be too surprised that the European banks team at Credit Suisse has almost doubled its estimate of continent-wide litigation costs. The CS base case has been hiked from the $58bn guessed at in February last year to $104bn now.

To put that number in context, $104bn is roughly half the losses registered during the subprime crisis. And CS reckons some $39bn has yet to be provided for, so litigation risk is inevitably going to be a drag on growth and capital return for the foreseeable…

We’ll share the CS charts below, but first a quick glance at the main areas of potential pain: Read more

“Primarily” and pyramids [Update]

When it comes to assessing pyramid schemes, the word primarily comes up a lot. As in, the rewards must primarily come from recruitment to deem a multl-level marketing company a pyramid.

The word was there again in the 9th Circuit Court decision on BurnLounge — one we have already looked at in what may be far too much detail — and the judgement referenced a paper written in 2002 which gets into that question of the dividing line between legitimacy and criminality in more depth. Read more

Pregnant women past 1st trimester may not gaze

A possible addition to the Camp Alphaville line-up? Maybe. Maybe.

 Read more

Further reading

Elsewhere on Wednesday,

– A company just appointed an algorithm to its board.

– The taming of Cohen.

House prices and class struggle.

– Why did movements against economic inequality flourish in the past, but not now?

Might be nice if we all agreed on what income is. Read more

The 6am London Cut

Camp Alphaville reminder: Tickets to nerdstock available here.

Markets: Asia-Pacific equities fell back from Tuesday’s six-month highs as investors adopted a cautious stance ahead of a key meeting by Europe’s central bank on Thursday and influential jobs data from the US. Wall Street’s session overnight added to the subdued tone. The S&P 500 was flat, after striking new record highs in each of the three prior sessions, as signs of rally fatigue emerged. The CBOE Vix volatility index – Wall Street’s “fear gauge” – was up 2.4 per cent in late trade, but still at a historically low level. (FT’s Global Markets OverviewRead more