Markets Live: Wednesday, 24th August, 2016

Live markets commentary from 

As an investment strategy grows more popular, the probability of a comparison involving Marxism apparently approaches 1

Is there a Godwin’s Law equivalent for Marxism? Do we need one since the Law basically means that the longer an argument goes on the more likely we are to reach for extreme examples while in attack or in defence? So, you know, this kind of thing is already covered?

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A would-be disruptor hits a Treasury-market-shaped wall

To those who don’t follow Treasury markets, Direct Match might sound like a ruthlessly efficient dating website. Go on one date with a partner meticulously chosen by high-powered algorithms, and end up married within a week.

In reality, Direct Match was a trading platform attempting to upend the way investors buy and sell U.S. government securities.

It also appears to be closing down, according to a Business Insider post from Jim Greco, the company’s founder. Read more

Further reading

Elsewhere on Wednesday,

- Apollo paid itself some fees and gave itself some loans.

- Bernstein: “The Silent Road to Serfdom: Why Passive Investing is Worse Than Marxism.”

- DeLong vs Matt King on safe assets and the search for yield.

- DeLong vs Stan Fischer on inflation targets and the Fed.

- The folly of prudence, IMF edition.  Read more

FirstFT – Italy struck by quake, the benefits of a 4am start and how London might have looked

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A magnitude 6.1 earthquake at the very shallow depth of 10km has struck central Italy, collapsing buildings and leaving people trapped under rubble. Reports of casualties are currently unconfirmed, but the mayor of one town said: “The roads in and out of town are cut off. Half the town is gone”. Read more

It’s going to be one heck of an election year, folks

Exhibit one: The new Facebook page of the Board of Governors of the Federal Reserve. It looks like an attempt to explain Fed structure and governance to the layman: check out recent posts on Janet Yellen and the Fed’s mandate.

It hasn’t exactly become a Facebook-user favourite. For starters, as pictured below, it uses the phrase “open market operations” in the second sentence of an explanation of what the FOMC does, failing the low-jargon test for mom-and-pop explanations. Many of the comments on its posts aren’t worth the server space it would take to reproduce them. Read more

Markets Live: Tuesday, 23rd August, 2016

Live markets commentary from 

Further reading

Elsewhere on Tuesday,

- DeLong with a tentative macroeconomic reform agenda.

- Down the (Jackson) hole.

- Stanley Fischer rewrites Fed inflation target, prepares to throw people out of work.

- bows out/ it was murdered.

- Taleb on employment as a risk management strategy (also autocrats): “In short, every organization wants a certain number of people associated with it to be deprived of a certain share of their freedom. How do you own these people?” Read more

FirstFT – Renault emissions probe, Deutsche Bank’s $10bn scandal and the crisis in Anglo-American democracy

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A French government report omitted significant details of how Renault’s diesel cars were able to emit fewer deadly gases when subject to official emissions testing, members of the state inquiry have told the Financial Times. Read more

DoubleLine’s Bonnie Baha passes away

Bonnie Baha, a portfolio manager at DoubleLine Capital with an exceptional investment record and a reputation for unusual candor, passed away on Sunday. She was 57.

Among her peers in trading and money management Bonnie was known as a great boss with a good nose for risk. She was either manager or co-manager of six DoubleLine funds, advised on more, and was instrumental in growing DoubleLine’s assets to more than $100bn. She was widely admired except perhaps by over-indebted corporate issuers, whose dubious rationalizations she interrogated relentlessly. Read more

There’s no yield, and Citi isn’t going to take it anymore

Citi’s Matt King has some harsh words for central bankers ahead of this week’s gathering in Jackson Hole, Wyoming: he says they’ve broken the market.

King echoes a group of fund managers who say central banks’ stimulus efforts are distorting the way global markets function. The problem is this: with negative yields on $13 trillion of safe assets, investment managers are crowding into the shrinking group of investments with yield — or into securities they may be able to sell to central banks. Read more

Of Sherpas and Chairs — welcome to the EFSCAC

On occasions, when confidential documents drop into the FTAV inbox, we’re minded just to share them, without much additional comment. So here goes…click to read… Read more

Continuity at the RBI

You know, we may be wrong, but there seems to be a consensus building around the appointment of Urjit Patel to replace (the potentially ousted) Raghuram Rajan at the head of the Reserve Bank of India in September…

See if you can spot it.

Spoiler: it’s in bold. Read more

Markets Live: Monday, 22nd August, 2016

Live markets commentary from 

Did Dan Loeb actually watch Game of Thrones?

Sorry, we’re *so* late to this, but some things are too important to ignore.

Here’s a snippet of wisdom from the second quarter letter of hedge fund manager Dan Loeb, sent to his Third Point investors at the end of July (ht to our FT colleague Robin Wigglesworth, who flagged it in his newsletter): Read more

Of Chinese bank bailouts, SOE pay scales and credit cycles

First, have a look at these from UBS’s Asia team earlier in the month:

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Further reading

Elsewhere on Monday,

- Is it too hard for cities to get denser? Featuring Walt Disney and the holdout problem.

- The Japanese zoning system.

- Brexit, economists and journalists, oh my.

- Virtu profiled. Hasenstab profiled.

- Hedge fund manager profited from death arb.  Read more

FirstFT – Big project spending slumps, the great British Olympic triumph and why we fear narcissism

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Infrastructure spending in Britain has declined sharply since the vote to leave the EU, putting pressure on Theresa May to press ahead with pledges for new road, rail, energy, broadband and flood defence projects. Read more

Podcast: Alphachat’s inaugural film review tackles Tron and Tron Legacy

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

Week One: FT Alphaville Fantasy Football League

One of the jobs financial regulators have is to ensure the stable and proper functioning of the markets and the financial sector more generally. If there are signs of abuse or unsafe practices, they are supposed to step in and sort things out. In a perfect world, they would create rules and regulations that minimised problems in the first place.

But! Writing good regulation is hard and unintended consequences have a way of unintentionally appearing. Some people will always try to game the system, in other words.

Which is why, as the regulator of the FT Alphaville Fantasy Football League, we are quite interested in the activities of three teams who managed to score a perfect zero last weekend, a good start for anyone hoping to win our coveted gold-plated rose by coming dead last. Read more

Opening Quote: Swiss solution

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Teams across the City and Whitehall have been working over the summer to draw up a plan for Britain’s exit from the EURead more

FirstFT – Whistleblower spurns payout, the best of the bad Olympic losers and a night out in North Korea

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Test your knowledge with our week in news quiz.  Read more

Juicing the numbers is OK if you’re in Silicon Valley, apparently

Bloomberg Businessweek is out with a fun new story on Lending Club that suggests, among other things, there are big problems with the loans the online lender has been writing.

The story quotes a retail investor, Brian Sims, who has been sifting through the company’s data in search of loans that appeared to be made to different borrowers — but were actually taken out by the same person. It’s no easy task. Almost no online lenders provide unique borrower IDs in their lending data — we were able to do a similar analysis of British online lender Ratesetter in March only because it’s the sole major online lender that does so.

Here’s a taste of Bloomberg’s feature, but do head over and read the whole thing, which includes Lending Club’s side of the story: Read more

Opening Quote: Final Premier Farnell offer

By Jonathan Guthrie

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Swiss electronics group Datwyler has signalled it will take its £615m bid for Premier Farnell, distributor of the Raspberry Pi, no higher. The company has defined its offer as “final”, which means shareholders can take it or leave it. They are likely to leave it, since US rival Avnet has bid £691m. Read more

FirstFT – Fed splits over rates, Goldman Sachs aims for the 99% and the capture of ‘the ghost’

Policymakers want more evidence of rebound’s durability before pulling the trigger on a second rise Read more

FT Opening Quote: Admiral continuity, Cobham change and tax clampdown

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Admiral’s half year results are a terrible disappointment. It isn’t the numbers – group profit before tax is up 4 per cent to £193m – so much as the absence of bon mots from founder Henry Engelhardt, who stepped down as chief executive of the motor insurance group earlier this year. He likened prior results to “a snowball running like an express train” and his career to hot buttered toast.

 Read more

FirstFT – Banks look to stockpile cash, gold medals roll in for Britain and why the world isn’t falling apart

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Master thieves take note. European banks are considering locking up piles of cash in high-security vaults as interest rates sink below zero across much of the continent. Read more

FirstFT – Activist hedge fund takes $1bn stake in Morgan Stanley, the tragic fall of an internet star and anti-hangover tea

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The activist hedge fund ValueAct has disclosed a $1.1bn investment in Morgan Stanley, giving it a powerful voice at a bank still trying to come to terms with the radically changed regulatory landscape. Read more

FT Opening Quote – RIT reduces equities exposure

By Jonathan Guthrie: Lord Rothschild is pulling in his horns. The veteran investor has reduced the equities exposure of RIT Capital Partners, his family’s £2.5bn London-quoted vehicle, from 55 to 44 per cent. He has cut sterling-denominated positions to 25 per cent and raised outlay on gold and precious metals to 8 per cent. Read more

FirstFT – Bolt blasts to third gold, US exceptionalism and why parents shouldn’t try too hard

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Usain Bolt won the 100-metre final on Sunday night to become the first man to win the Olympic title three timesRead more