Further reading

Elsewhere on Wednesday,

- Modi rules by fear,” he said, “and Jaitley by favour.”

- Rich hedge fund managers are still rich.

- The Flash Crash, five years on.

- The temping economy.

- Veg-O-Matic Egonomics, Taylor vs Bernanke edition. Read more

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Oil topped $68 a barrel after falling to a five-year low near $45 in January. Saudi Arabia raised its selling prices in response to stronger demand and traders are looking beyond the currently well-supplied market to growing consumption and a slowdown in US oil output. (FT)

Saudi Arabia has shown little inclination to curb its production, which has risen above 10m barrels a day, as it moves to expand its market share. It also said that it remained committed to infrastructure and development projects but admitted it would need to “rationalise” spending in light of low oil prices. (FT)

The rebound in prices boosted inflation expectations and set prices tumbling across major government bond markets, pushing yields to levels not seen since the ECB began QE earlier this year. (FT) Read more

Camp Alphaville — a line-up teaser…

You should have the date in your diary already: Alphaville’s annual festival of finance, Camp Alphaville, July 1, Honourable Artillery Company, London EC1. But you’ll also want to know something about what’s promised on the day.

We’ll have about 60 speakers and panelists, spread across the main stage and a series of specialist ‘tents,’ so you can get up close and personal with those debating the ideas and issues.

Here’s just a taste of our eclectic line-up: Read more

Markets Live: Tuesday, 5th May, 2015

Live markets commentary from FT.com 

The strange case of Ashazi: Wirecard in Bahrain, via Singapore

Ashazi Services, a Bahrain-based electronic payments company, moved from place to place in the Gulf Kingdom. For a time it was based in managed office space in one of the gleaming towers of Manama’s prestigious diplomatic area, but also small apartments far from the centre.

In early 2011, however, Ashazi’s address was the office of its lawyer, Kumail Al Alawi, found above a side alley tucked between an outpost of Kentucky Fried Chicken and a car rental office.

So what sort of company was it? The question matters because in 2011 the Bahrain start-up was responsible for €4m per year of licence fee revenues reported by Wirecard, the German listed payments company. Ashazi Services Co WLL is one of the dormant companies leading back to E-Credit Plus Singapore, the first business purchased in Wirecard’s long Asian acquisition spree.

 Read more

China and a friendly reminder to keep watching those capital outflows

If you want something done right, do it yourself

- The People’s Bank of China, recently… (probably).

With that in mind, here’s Michael Pettis’s on the PBoC’s renewed distrust in the banking system’s ability to allocate credit — which spawned the flawed comparisons to ECB LTROs made as China tried to help out local governments yearning for a debt swap:

Because it cannot ease credit conditions without encouraging a continuation of the worst kind of lending, the PBoC is trying to direct lending by targeting the types of lending it will support. To the extent that this lending flows into small and medium enterprises, agriculture, services, or other parts of the Chinese economy that are using capital efficiently, this is a good thing, but if capital continues to flow into large infrastructure projects, especially into the poorer provinces, it seems to me that this only leaves the country with a worse debt burden.

 Read more

Further reading

Elsewhere on Tuesday,

- UK election: it was mediamacro wot won it.

- Test driving… a petrol car.

- Sustainable parking and the tragedy of the commons.

- The Clintons and brand architecture. Yes, brand architecture.

- Bill Gross on the dying of the light.  Read more

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The International Monetary Fund has warned Greece’s eurozone creditors that it is so far off course on its $172bn bailout programme that it risks losing vital IMF support unless lenders write off significant amounts of sovereign debt. (FT)

The warning raises the prospect of the fund withholding some of the EUR7.2bn of bailout aid that Greece is desperately attempting to secure to avoid bankruptcy.

Yanis Varoufakis is in Paris today trying to make amends with Michel Sapin, the French finance minister who was one of Greece’s last remaining supporters but has recently joined the criticismdirected at his Greek counterpart. (FT) Read more

AIM and a New World problem

Shares in a tiny oil and gas exploration company may soon present the regulators of Aim, London’s junior market, with a problem, highlighting issues around forward selling shares of companies raising money via stock placements, and potentially handing loses to anyone caught on the wrong side of the trade.

New World Oil & Gas announced it would issue four new shares for every one outstanding last week, and comparative heavy trading took place in the days which followed. However the placing must be approved at an extraordinary general meeting held May 19 in Jersey.

Independent individual shareholders, who held 18.6 per cent of the company as of 4.30pm on Friday, have indicated they intend to block the capital raising, we understand. If successful, the move would present a problem for anyone who has sold New World stock in the expectation of satisfying the sale with new shares to be issued in the placing. Read more

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Carl Icahn can’t stop buying into Apple. The activist investor described Apple as the sort of company that only comes along twice in a century and said he wished he had bought even more shares in it. Nor has he sold any Apple stock even though the value of his initial stake, made in August 2013, had almost doubled.

“I feel so secure with Apple that if it goes down, I just buy more, I don’t worry.” Read more

The great Saudi cash burn

There were those who said it would never happen. Then there were those who said it wouldn’t matter even if it did happen. And there were those who recognised Saudi Arabia was probably panicking about the prospect of a destabilising cash burn situation as soon as the term Saudi America became a thing.

But, as the FT reports on Friday, Saudi cash burn is now not only a big thing, it’s an accelerating big thing: Read more

Markets Live: Friday, 1st May, 2015

Live markets commentary from FT.com 

That was nuts. Is this the crash?

We asked the same question in April last year, when US tech went through what, with hindsight, was a small correction before greater enthusiasm returned.

Of course, there have been several mini corrections since, making the last year merely a bumpier ride upwards than that which preceded it.

What may be different this time are downward moves for some of the larger tech stocks prompted by disappointment around earnings, indicating genuine reassessment of the potential for these companies to take over the world. Read more

Srsly. This is nuts. When’s the crash?

Consider the chart to the right. Beijing Baofeng Technology, an online video group, listed in Shenzen just over a month ago.

To begin with, we thought there had to be something fishy going on. Surely the staircase can’t be the product of humans trading with each other.

But then James Mackintosh discovered the answer. The stock has just traded limit-up every single day. Read more

Sweden’s inflation record is less interesting than you think

Inflation indices that include interest payments are dangerous things, especially in countries where most debts have floating rates. An attempt to tighten temporarily causes headline inflation to accelerate, while rate cuts make it look as if inflation has slowed, irrespective of what else is going on in the economy. (This is separate from the intriguing Neo-Fisherian idea pondered by Professor Cochrane.)

These price indices are useful for measuring changes in real spending power, and arguably form a better basis for wage negotiations than ones that exclude debt service costs. But if you want to evaluate the performance of a central bank, or you work at one, you need to make sure you’re using a price index that doesn’t incorporate these swings. Read more

Further reading

Elsewhere on Friday,

- Bernanke vs the WSJ

- “How’s California, my man? Still sunny?” and other questions Pimco’d Bernanke shouldn’t answer.

- Altruistic punishment in Baltimore.

- “The judge listened in what looked like bemused silence as Adelson shifted to the high cost of flying executives’ families around the world.”

- SEC investigates Bank of America for doing nothing.  Read more

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LinkedIn is the third social media company this week to lose as much as a quarter of its valuation after reporting a weaker outlook. Some $7bn was wiped off its market cap in after-hours trading on the warning that sales in the current quarter would be $45m below Wall Street forecasts of $670-675m – partly because of currency fluctuations. (FT)

This comes after Twitter shares dropped as much as 26 per cent on missed revenue expectations and lower forecasts and Yelp closed 23 per cent lower yesterday after missing revenue and earnings forecasts. Read more

Squashing Afren shareholders in five easy steps…

Click to enlarge…

 Read more

Meet the company that wants to put a bitcoin miner in your toaster

The company in question is called 21 Inc. Its business plan has hitherto been a closely guarded Silicon Valley secret. But we can now reveal how it plans to monetise the future of money. Welcome to the world claiming to exist beyond the Internet of Things…

 Read more

Markets Live: Thursday, 30th April, 2015

Live markets commentary from FT.com 

Further reading

Elsewhere on Thursday,

- Unsolicited advise for Deutsche Bank from Dan Davies.

- Krugman long read: The austerity delusion.

- Simon-Wren Lewis sums up his mediamacro series.

- Elizabeth Warren is not impressed with your diamond-encrusted ring.

- It’s always Miller time somewhereRead more

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The US economy has lost momentum and that means it’s unlikely the Federal Reserve will tighten monetary policy any time soon. The central bank started the year in a bullish mood, with hiring and household spending strong. But growth has spluttered in recent months due to a toxic mix of a strong dollar and tumbling oil-related investment. Read more

Another winter of discontent?

At first glance, America’s latest growth figures don’t look so good. We generally refrain from commenting on quarterly GDP data because, among other reasons, the numbers are naturally noisy and they’re often revised by large amounts. (Or as the Fed says, “transitory factors,” although probably not the weather.) Those caveats out of the way, there are a few interesting points in this report that are worth noting.

Let’s start with a theoretical exercise. Imagine it were one year ago today, and someone told you that, between then and the end of this past March, the price of oil would fall by about half and that the real, trade-weighted dollar would appreciate by more than 10 per cent. A reasonable person would expect two things: big cutbacks in domestic oil investment that wouldn’t initially have been offset by higher investment elsewhere, and a hit to net exports.

None of this would have told you anything about would happen to total spending, but it would have provided guidance on how the composition of spending would change. Read more

Calling all muppets! Bitcoin miner has some Bitcoin ETNs to sell

On Wednesday FT Alphaville received a press release from a company called XBT Provider proudly announcing the launch of the “world’s first bitcoin traded note on Nasdaq Stockholm”.

The tracker product being offering, the press release claimed, would make bitcoin accessible to institutional investors by providing them with a liquid exchange-traded note.

Or as the marketing spiel put it, the product was set “to provide investors with convenient access to the returns of the underlying asset, US dollar per bitcoin, less investor fees.” Read more

No alternative, you say…

OK, we’ll bite. The Telegraph’s Jeremy Warner has a column with a headline which tends towards alarmist:

Negative interest rates put world on course for biggest mass default in history

The text actually says nothing of the sort. Jeremy notes the extent of widespread negative yields for sovereign debt in Europe, and rehearses how this came to be in terms of secular stagnation and a lack of demand. Where some might find fault is the final line:

Both Keynsian and monetary economics seem to be in some kind of end game. What comes next is anyone’s guess.

 Read more

Markets Live: Wednesday, 29th April, 2015

Live markets commentary from FT.com 

In which the Shanghai Composite lords it over the rest (and allows for some handy listings)

Since it’s that time of the year again, here’s the state of play so far, courtesy of Deutsche (do click to enlarge):

On the standout star performer — Chinese equities — we’d recommend checking in on Matt’s recent piece on the potential upsides of China’s bull run — the question being, can it strengthen the real economy? And we’d add to Matt’s thoughts, quickly, that allowing broke companies to change out their unpayable debt into equity shouldn’t be underestimated as a reason for this rally, rather than as a byproduct. Read more

This is nuts, but could it be helpful?

The current economic woes, brought on by the collapse of the so-called “housing bubble,” are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent.

[...] Read more

Further reading

Elsewhere on Wednesday,

- Bernanke vs the Taylor Rule, and why he doesn’t “think we’ll be replacing the FOMC with robots anytime soon.”

- Face, anti-face and the future of surveillance.

- Wang Jianlin, a billionaire at the intersection of business and power in China.

- Markets in everything, rent-a-foreigner in China edition. Read more

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Twitter fell victim to its own speedy communications when its results were leaked and tweeted, showing it had missed revenue expectations and lowered its forecasts. Its stock plunged as much as 26 per cent, wiping $6.1bn off its market capitalisation, before closing down 18 per cent at $42.27. (FT)

The earnings report was posted on Twitter’s investor relations sites by Nasdaq’s Shareholder.com service before Selerity, an independent data gathering company, found them and tweeted out the figures with the hashtag ‘BREAKING’. This is the second high-profile earnings leak for Shareholder.com after JPMorgan’s results were released hours early in October and could prove damaging for Nasdaq. Read more