The trouble with market-based financing… in China

The thing about market-based financing is that market-based financing isn’t always available the way you want it.

Which is why it’s big news in China on Friday, as the FT reports, that several Chinese provincial governments have been forced to postpone bond auctions as banks balk at the low yields on offer. The news comes by way of state media.

Now, the reason this is interesting is because last month when China’s finance ministry revealed its plan for provincial governments to refinance RMB1tn in debt, analysts were super cheery about its chances of lowering debt-servicing costs and extending maturities for provincial authorities. Read more

FirstFT (the 6am Cut)

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A US drone strike killed two western hostages in an al-Qaeda compound in the Pakistan-Afghanistan border region, the White House has confirmed.

Warren Weinstein, an American held by al-Qaeda since 2011, and Giovanni Lo Porto, an Italian national who had been hostage since 2012, were killed accidentally in the counter-terrorism operation in January. The disclosure that two hostages were killed in a US strike will raise fresh questions about the limits of such operations, and whether imperfect intelligence unnecessarily risks civilian lives. (FT and NYT$)

In the news Read more

FirstFT (the new 6am Cut)

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A British futures trader who was arrested for allegedly contributing to the 2010 “flash crash” began his fight against extradition on Wednesday. Navinder Singh Sarao, a 36-year old British citizen who was operating through a company based at his parents’ house in a London suburb, was arrested at the request of US authorities and is accused of contributing to the crash. (FT)

He has been charged in Chicago with wire fraud, commodities fraud, commodities manipulation and “spoofing”, and will face trial if he is extradited. He was granted bail of £5m. (FT)


In the news Read more

The CFTC’s alleged flash crasher

Though note the causal chain in the CFTC’s press release for its complaint against trader Navinder Singh Sarao — of the Hounslow suburb, Heston…

The CFTC Complaint Alleges that Defendants’ Manipulative Conduct Contributed to the Market Conditions that Led to the May 6, 2010 Flash Crash Read more

Of free floats and nutty markets in China

Today in sentences about China you might want to pay attention to, from Macquarie:

In our view, the real level of margin finance leverage in China’s markets is actually already much higher than all the historical examples that we can find (ie, for which the data is available to us).

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A disturbance in the financial force

This is the one thing we didn’t want to happen…

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Markets Live returns at 11am

The Markets Live server hamster is back from Spring Break, refreshed and ready to roll.

ML server

Join Bryce and Murphy at 11am BST for a stroll around Chinese trade data, big oil, phantom Irish corrugated packaging M&A and all the usual nonsense. For newcomers, here’s the explainerRead more

Guest post: Getting Ukraine’s bondholders from B to A

The English-law bonds in Ukraine’s debt restructuring are a bit more local-law than bondholders might realise. How can Ukraine use that to get a deal? Here’s an interesting idea… Read more

A simpler JPMorgan

We have meaningfully simplified the company…

– Jamie Dimon’s 38-page letter to JPMorgan shareholders, April 8 2015 Read more

China short goes long

By Jennifer Hughes in Hong Kong

Watchers of the Hong Kong market might have classified a China short seller going long as a pigs-might-fly situation. But Shenguan Holdings, a maker of sausage casings, is flying (well, up 7 per cent at pixel) after Anonymous Analytics published a positive report on the stock on Wednesday.

Anonymous, which claims links to the shadowy hacker collective, says it is not actually a short seller. True enough. But it is still the first time a group best-known for putting out damning reports has published detailed research praising a company that has already come under attack from other short sellers.

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Want your own marquee at Camp Alphaville?

Serious opportunity this.

If you attended Camp Alphaville at the Honourable Artillery Company grounds last summer, you’ll know we had a lovely outside area with food vans, beer, frozen yoghurt, dancers, comedians and drones….

Well this year — on July 1, again at the HAC — we have lots more space. In fact we have up to half a cricket pitch of extra space. Read more

Video: FOMC analysis

Cardiff and Matt discuss Wednesday’s Fed action:

Macro Live, FOMC presser edition

Live markets commentary from 

FOMC statement for 18 March 2015

Some quick highlights, and don’t forget we’ve got Markets Live coming at 2:25pm ST:

– “Patient” has been removed, as expected. Read more

Man vs chimp, demographics edition

Some early morning preconception bashing courtesy of Hans Rosling, including the fact that “the number of children in the world has stopped increasing”:

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Bund cookies

In its implementation of the PSPP, the Eurosystem intends to conduct purchases in a gradual and broad-based manner, aiming to achieve market neutrality in order to avoid interfering with the market price formation mechanism…

‘Implementation aspects of the public sector purchase programme’, European Central Bank Read more

This is nuts (uh, you missed the crash)

Via TVLine:

Chase Crawford of Gossip Girl has been tapped to lead ABC’s Boom, in which one of the largest oil discoveries in American history leads to an economic explosion in a North Dakota town, our sister site Deadline reports. Read more

Is that a kleptocrat in your balance of payments?

This is a Russian bomber — no doubt with its transponder off, about to sneak into the airspace of some Nato country or other.

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Bring you joyful living and/or cents on the dollar

And so to the restructuring proposal sent to offshore bondholders this weekend by Kaisa — the Shenzhen property developer with frozen assets, a political purge problem, and a RMB 65bn ($10.3bn) pile of debt which has more than doubled in six months…

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Apple joins dumb index at No 6

The good people at Dow Jones indices are busy dragging themselves into the current century, and good for them. But while they are replacing AT&T — which originally stood for “American Telephone and Telegraph” — with Apple in the world’s most storied benchmark, the Dow Jones Industrial Index, maybe they should consider another futuristic leap and acknowledge that price does not equal value.

Apple’s arrival in Charles Dow’s creation was accompanied by the observation that it will sit at number six – behind Visa, Goldman Sachs, 3M, IBM and Boeing. It’s share price, $129 or so at pixel, is a smaller number than, say, Visa at $274. Read more

Ammunition, then and later

If we’re unsatisfied with the situation and we think the federal funds rate ought to be minus 4 percent, why aren’t we doing even more? Here again, I don’t think we should rule that out, but I feel some sympathy to what President Evans said, which is that, given all the uncertainties we have and the issues about our balance sheet and exit and our uncertainties about the effects of these programs, it’s not obvious that we do have a lot of ammunition left even on this unconventional dimension. Having said that, I think we should obviously keep this possibility alive if the situation warrants it, but it’s not clear to me at this point we should be doing more either.

– Ben Bernanke, September 2009 (from the newly released FOMC meeting transcripts) Read more

Yellen’s bleak outlook in March 2009

At the January 2009 FOMC meeting, Janet Yellen was cautiously hopeful that fiscal stimulus would lead the economy out of recession before the end of the year, but she worried that the economy would remain mired in a period of high slack and low inflation for many years.

This mood was reinforced by her comments at the March meeting, which included this bit: Read more

The fog of financial crises, FOMC transcripts edition

Given how tense and chaotic was the last half of 2008, Ben Bernanke had to make a number of decisions quickly and without the guidance of any well-established protocol.

In at least a couple of the 2009 transcripts, Ben Bernanke regrets that he bypassed either an FOMC vote or a wider consultation with others at the Fed. Read more

Fed releases 2009 meeting transcripts

Opening one of the transcripts at random, the January 27-28 meeting starts with a casual laugh as Ben Bernanke observes the small number of sitting governors on the FOMC during one of the the most consequential years in monetary policymaking history:

CHAIRMAN BERNANKE. As you know, Governor Kroszner resigned in anticipation of the appointment of the new Governor, Dan Tarullo. But Dan has not yet cleared the Senate, so obviously he won’t be attending the meeting, which leaves the Governors here as an embattled few, [laughter] and I think the lowest number of sitting Governors probably in a very long time. Read more

Greek funny money: no thanks

Does money have value because the state says it’s money, or because the population trusts that it’s money?

It’s a great, perennial question. It’s also really not one Greece wants to find the answer to right now.

The question comes up reading yet another proposal for Greece to use a parallel currency so it can fight with its creditors without leaving the euro. So, coming fresh after Wolfgang Munchau’s appeal for Greek IOU issuance last week, Paul Mason has resuscitated “future tax coin”Read more

FirstFT (the new Cut)

Athens’ chances of finding itself without an EU financial backstop in one week will come down to a bitter face-off in Brussels today between the Greek and German finance ministers, after Berlin rejected Greece’s request to extend its €172bn rescue by six months.

The German rebuff came just hours after Yanis Varoufakis, the Greek finance minister, reversed his government’s long-held promise to kill the current bailout in a letter to his fellow ministers. But the letter, obtained by the Financial Times, had clauses that Berlin told counterparts amounted to “a Trojan horse” designed by Athens to change the conditions it must meet to receive €7.2bn in aid available for finishing the bailout. (FT)

In the news Read more

Fed up, caption competition

But, for a change, you’ll have to supply the image.

Retiring Federal Reserve Bank of Dallas President Richard Fisher supplies the caption:

Having proven themselves unable to cobble together with colleagues a working fiscal policy or to construct a regulatory regime that incentivizes rather than discourages investment and job creation — in other words, failed at their own job — they simply find it convenient to create a bogeyman out of an entity that does its job efficiently.

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Igor, how do these ETFs work?

On May 21 2013, an unnamed “Russian state-owned news organization” wanted to question more about the NYSE.

Where to get some good questions from, though?

Well local Russian economic spies Evgeny and Igor, obviously. Read more

This is nuts. When’s the revolution?

Over in Russia:

This is illegal interference with my personal life, with my information,” Yakunin told state television. “We are a natural monopoly, we live according to decisions taken by the state, so we make as much as the state allows us to make. Read more

This is nuts. When’s the crash?

This is an urgent Alphaville appeal: kill this trend now.

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