Calling CDS users, Citi would like your opinion

OK, yes, online surveys are mostly of dubious use. Still, as we might be interested to know what the world thinks about single name Credit Default Swap liquidity, and Matt King & co at Citi are only asking three questions, follow this link to take part.

If you would like to know the questions first, they are: Read more

Markets Live: Thursday, 28th May, 2015

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Stranded assets and climate stimulus

It was Climate Finance Day in Paris last week, a conference convened under the auspices of UNEP and the UNPRI to address the specific challenges and issues of redirecting capital towards a resilient low-carbon global economy ahead of the United Nations Climate Change Conference also to be held in Paris, in December.

The big takeaway was consensus is shifting, especially among asset managers and real money investors who no longer view environmental sustainability as a fringe theme. Climate is a bona fide risk for beneficiaries which professional investors must guard against to fulfil their fiduciary duties. To do nothing, essentially, is to encourage a disorderly capital transition and, potentially, a financial panic.

As example, Axa’s chief executive pledged the insurer would divest €500m of coal assets between now and the end of the year. Read more

Further reading

Elsewhere on Thursday,

- Is anyone other than me rattled by the FIFA arrests?

- The human toll of FIFA’s corruption.

- Borrowing to replenish depleted pensions.

- When bots collude. Read more

FT Opening Quote – IAG’s ‘final’ Aer Lingus price

Has IAG chief Willie Walsh shot Ryanair boss Michael O’Leary’s fox? Tate & Lyle profits have soured, Japanese shares have soared and UK first-quarter GDP may edge higher. FT Opening Quote with commentary by City Editor Jonathan Guthrie is your early City briefing. You can sign up for the full email here. Read more

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Allegations of “rampant, systemic and deep-rooted” corruption andbribes worth over $150m emerged after yesterday’s dramatic dawn raid and the arrest of seven Fifa officials. Fifa delegates are trying toput on a brave face but the organisation is looking at the worst crisis in its history and American authorities are adamant that they are not finished yet. While “US law enforcers and courts reaching overseas to get their men and women often irritates”, John Gapper reckons America is the perfect referee for Fifa’s many fouls. Read more

Goldman goes astray on Grand Theft Auto and productivity

There’s always a danger, when you question official statistics, that you come off sounding like a nutter.

But some forms of scepticism are more respectable than others. At one end of the spectrum, we’ve previously indulged the possibility that seasonal adjustment algorithms inadvertently distorted the GDP and employment figures. At the other, you have people who add fixed constants to the reported growth rate of consumer prices because they disagree with methodological changes from the 1980s and 1990s, but speak as if they are uncovering a conspiracy. Read more

Summers and Swiss bitcoin hoards

The FT’s Richard Waters reports that Larry Summers, former US treasury secretary and secular stagnation theorist, is to form part of the advisory board at Xapo, a Silicon Valley Bitcoin start-up specialising in deep cold storage of bitcoins in Swiss vaults and the issuance of bitcoin debit cards.

Worth noting in this context, of course, is that Larry Summers is also the man arguing that bubbles are a bit of an inevitability in a secular stagnated world. Or as he explained in the Financial Times back in December 2014: Read more

The Great Camp Alphaville Quiz — call for entries

Think you are smart and know stuff? Do you have two or three friends or colleagues who are similarly gifted?

Prove it.

Enter our fab quiz at 6pm on July 1 at Camp Alphaville, under canvas on the grounds of the Honourable Artillery Company, London. Read more

Guest post: The pitfalls of internal corporate investigations

Anil Rajani, Partner at law firm Fladgate, reckons the SFO should take a leaf out of the FCA’s book when it comes to the “self reporting” of wrong-doing within companies.

_______ Read more

Markets Live: Wednesday, 27th May, 2015

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Short Qatar stocks, long paper shredders

And so to the US Department of Justice’s indictment on Wednesday of nine Fifa officials, alleging a RICO conspiracy, wire fraud, money laundering, etc…

The indictment alleges that, between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery and money laundering. Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks. All told, the soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments. Read more

India: A billion shareholders now

There are lots of people in India. Nobody argues about that.

What’s also true is not many of them care about equities.

Of course, there are exceptions. In absolute terms, rather large exceptions. The Bombay Stock Exchange (founded in 1875 as the “The Native Share & Stock Brokers Association”) is Asia’s oldest and ever since Reliance founder Dhirubhai Ambani — the ‘guru of the equity cult’ as Hamish McDonald put it — tapped into India’s small investor to fund his company, they have been in the mix. Read more

The crowd has money, but few rights

Fans of buzzy peer finance and sourcing money from crowds should read a great piece in the FT about Crowdcube, an equity funding site, by Murad Ahmed.

We’ve looked at individual opportunities for crowds to lose money, but this considers more structural problems for small investors tempted to bet on tiny, risky companies in return for a precarious stake in a start-up.

All crowdfunding groups make it clear to investors that they are likely to lose money as the vast majority of start-ups will fail. But the UK’s Financial Conduct Authority recently rebuked the five-year-old industry, saying that many groups give a “misleading or unrealistically optimistic impression of the investment”.

 Read more

Further reading

Elsewhere on Wednesday,

- “A sufficiently large market predicting an individual’s death is also, necessarily, an assassination market, and similarly other “prediction” markets are also act markets, changing incentives to act outside that market to bring about the predicted events.”

- The geek heretic.

- “The highest form of derivatives artistry is achieved when a bank sells derivatives on its derivatives to itself, and this trade comes alarmingly close to that.”

- UK monetary policy is too complacent.

- Chicago, where, “five years later, however, many municipal market participants remain locked in an unproductive dialogue with an irrelevant personality.” Read more

FT Opening Quote – Brexit bill heads Queen’s Speech

The Brexit bill will be the highlight of this morning’s Queen’s Speech, Fifa officials have been arrested in dawn raids in Europe and what will Ryanair do with its Aer Lingus stake now IAG has published its offer? FT Opening Quote with commentary by City Editor Jonathan Guthrie is your early City briefing. You can sign up for the email here. Read more

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China’s currency has received a vote of confidence from the International Monetary Fund, which declared that it was ‘no longer undervalued’. The IMF has shifted its stance after more than a decade of criticising Beijing’s tight management of the renminbi.

The fund’s position puts it at odds with its biggest shareholder. The US insists, along with many economists, that China still gets an unfair trade advantage from an undervalued renminbi. (FT) Read more

The mysterious decline in the number of US public companies

A new paper from Craig Doidge, G Andrew Karolyi, and René M Stulz investigates the reasons why the number of publicly listed US companies peaked in 1996, even as the number of publicly listed foreign firms climbed.

From the study:

The number of U.S. listings fell from 8,025 in 1996 to 4,101 in 2012, whereas non-U.S. listings increased from 30,734 to 39,427.

(Click to enlarge, and careful with the dual Y-axes.) Read more

Central banking: just when you understand it, it changes

Ask most monetary policymakers how they think about their job and the conversation generally goes like this:

  1. There is “an equilibrium interest rate” that somehow balances out the desires of savers and borrowers
  2. This “equilibrium rate” can be estimated roughly in real time
  3. The role of the central bank is to ensure that actual interest rates align with this theoretical ideal

We don’t really buy any of these points, especially 2) — see our earlier post discussing research by BAML’s Ethan Harris and Goldman’s Jan Hatzius, among others, on the difficulty of determining the “equilibrium” rate at any point in time — so naturally we want to highlight some new papers that reinforce our monetary policy nihilism. Read more

Wirecard Gibraltar and an asset rich wind-up

Gibraltar places few obligations on companies to report. Filings can be sparse and, in practice, lodged years after the financial events they record. Yet even limited information may be useful: in the case of Wirecard Gibraltar, it shines a light on a subsidiary subject to a long liquidation.

The entity, which appears to have contained around €50m in retained earnings and a larger amount of intangible assets, remains in the wind-up process more than two years after being placed in a solvent liquidation by Wirecard, the German listed electronic payment provider valued at €4.6bn.

Documents filed in the British Overseas Territory contain different figures from those in accounts filed in Germany, variations the company says are due to differences in accounting standards. Read more

Markets Live: Tuesday, 26th May, 2015

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Of mangled markets and the Chatham House Rule*

Some of you may remember how the ECB fecked up last week, when “an internal procedural error” meant an eventually market moving speech given by one Benoît Coeuré on Monday to, amongst others, a load of hedgies wasn’t made public until Tuesday morning.

The speech — apart from starting a debate about Chatham House rules, priviliged information and knee jerk responses by the ECB — was about ECB plans to front-load their bond purchases in May and June.

And as Citi’s credit specialist Matt King said: “If the ECB had wanted to test the extent to which traders were hanging on their every word, they could hardly have come up with a better experiment than to promise to boost the pace of QE purchases today, only to cut it back during the summer.” Read more

Further reading

Elsewhere on Tuesday,

- Dear buy side? Worried about liquidity? How about you pay for it?

- Technology, inflation and the Fed.

- The big Meh.

- Grexit: the real risk to the euro is not that Greece will fail but that it will succeed.

- Yanis, redux: Austerity is the only deal-breaker.

- Who owns Witanhurst, London’s most expensive mansion? Read more

FT Opening Quote – Ryanair profits propelled 66% higher

Ryanair playing nice with passengers has boosted profits 66 per cent, Cineworld is looking forward to some summer blockbusters and we’re close to a $55bn Charter-Time Warner Cable deal. FT Opening Quote with commentary by City Editor Jonathan Guthrie is your early City briefing. You can sign up for the email here. Read more

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Feeling unproductive today? You won’t be the only one – it’s a problem all over the world. Worker output grew last year at itsslowest rate since the millennium. The slowdown across almost all regions is ringing alarm bells for central bankers from Janet Yellen to Mark Carney.

Average labour productivity growth in mature economies slowed to 0.6 per cent last year from 0.8 per cent in 2013, causing angst for economists who see low productivity as one of the greatest threatsto improved living standards. Read more

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The cash crunch continues for Greece, which has again threatened to default on International Monetary Fund repayments. Nikos Voutsis, interior minister, says the country cannot meet June pension and wage bills while reimbursing the EUR1.6bn it owes the IMF without a bailout deal.

Although eurozone officials have been braced for default since March, the repeated warnings of imminent bankruptcy mean some have begun to disregard such threats, believing Athens is using them as a negotiating tactic. Wolfgang Munchau thinks that if Greece’s creditors offer Alexis Tsipras a reasonable deal, he should accept. What constitutes a reasonable deal? One that doesn’t ask for a ludicrously high primary surplus. (FT) Read more

The line-up for Camp Alphaville 2015

Yes, 80 speakers and panelists will be presenting at our annual finance festival in London on July 1. Click the image for full details.

 Read more

Plus500 and the FCA

So, what should we make of Plus500′s “Further statement and clarification” issued on Friday, after the Aim market authorities suspended shares in the Israel-based but London-listed Contract for Difference broker?

Lets give it a Fisking, and try to think about what happens next, in light of the notice published by the Financial Conduct Authority on Friday, which indicates Plus500′s marketing methods are part of the regulatory conversation. First, here’s the company:

Plus500, a leading online service provider for retail customers to trade CFDs internationally, is today issuing the following statement to respond to recent speculation regarding the current status of Plus500UK’s dialogue with the FCA, in particular in relation to the fact that Plus500UK has “in recent weeks been implementing certain enhanced client on boarding and Anti-Money Laundering processes”.

In response to recent speculation? Read more

“Power blogger”

From the people who brought you ‘Vanity Capital’

 Read more

Markets Live: Friday, 22nd May, 2015

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