Biography
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(Spending some time as FTAV’s Bombay wallah. Noticeably sweatier but not much else has changed.)

David studied economics, politics and journalism before joining the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012.

In between his degree and masters he wandered into the real world of business where he learnt how to manipulate a spreadsheet and organise meetings where nothing gets decided.

He has spent time in France, learning French, and India, learning how to cross roads, and enjoys nothing less than writing about himself in the third person.

His hobbies include reaching things on top shelves, running long distances at slow speeds, growing beards and trying to live up to a rash claim he made as a twelve-year old that “he had read all of the books”.

If you wish to know more about David please do pick up the phone and call him for a chat in the first person. Be warned though: he tends to talk at pace and in an Irish accent.

Swiss banks rolling down hills gather no bids

Credit Suisse at pixel…

Something to do with it reporting its first annual loss since 2008, perhaps? Read more

Further reading

Elsewhere on Thursday,

- The “leverage attack can be seen in the way banks, the home of leverage, are being attacked and in technology which is leading the way down to the point of Unicornicide.”

- Summers on Gordon: “I wish that I could convincingly rebut his claims.”

- Being late-shamed by Lululemon founder Chip Wilson.

- What Republicans and Sanders get wrong about Wall St, leverage edition.

- “Actually, I think I came in first,” said Trump, obviously. Also. Read more

Japanese banks don’t like something

Macro Man might just be on to that something here…

That green line heading down and away from the rest (which you shall see more easily after some enlarging via clicking) is the performance of Japan’s banks since the BoJ went negative last week.

 Read more

Further reading

Elsewhere on Wednesday,

- Larry Fink, secret clubs of investors, and the buyback debate.

- Goldman: “there are broader questions to be asked about the efficacy of capitalism.”

- The Fed wants to know how banks would handle neg rates.

- “We have two distinct spaces here. Market space and central bank space and they are diverging at the fastest pace I have seen in a while.”

- Muppet investors… literally. Read more

Corporate bond yields and the cold pull of negativity

With a h/t to Tracy Alloway…

Here’s the dark — once implausible, now almost inevitable — future of European corporate yields from Deutsche’s Jim Reid, with our emphasis:

Incentives are a great thing in life and there is starting to be chatter as to what the incentive is to buy Euro corporate bonds at a negative yield if it ever happens. It may well be tested very soon as one consequence of the recent ECB/BoJ hint/action has been the strong rally in global fixed income.

 Read more

Negativity all the way down

Not sure how many more pixels you’ll tolerate us spilling on the BoJ’s move negative, but this from Simon Derrick at Bank of New York Mellon seems worth your time. With our emphasis, and pars broken up for online readability:

Whether or not the BOJ’s decision was a direct reaction to the ECB’s decision to potentially push even further into negative territory doesn’t really matter. Indeed, it doesn’t even really matter whether or not the BOJ was trying to weaken the JPY by their move (in our opinion plausible deniability remains a key tool for central bankers).

What does matter is that four of the eight members of G8 (France, Germany, Italy and Japan) now have an official negative deposit rate while Canada continues to suffer the impact of collapsing oil prices (Russia, which has had its membership suspended, suffers from the same issue of course).

 Read more

Further reading

Elsewhere on Tuesday,

- Interest rates in wonderland.

- Dark pools are murky shocker.

- China’s ‘hidden’ current account deficit.

- Minxin Pei on the myth of China’s competent autocrats.

- Looking slightly less appropriate now but, still, good read on how Trump did itRead more

Er, what lower bound? And $5.5tn worth of negative nuts

ICYMI, and on the back of the BoJ going negative, “the universe of DM government bonds trading with a negative yield rose to a record high of $5.5tr, or 24% of the JPM Global Government Bond Index,” according to JPM.

 Read more

China bezzle watch, 1,200 account books buried deep below ground edition

From the FT’s Tom Mitchell:

Chinese police have arrested more than 20 people associated with “a complete Ponzi scheme” that took in more than Rmb50bn ($7.6bn) from investors, according to the official Xinhua news agency.

It is the biggest scam yet to emerge from China’s unruly and largely unregulated peer-to-peer lending sector, part of the country’s shadow banking sector. Police had to use two excavators to uncover some 1,200 account books that had been buried deep below ground, according to Xinhua.

 Read more

Further reading

Elsewhere on Monday,

- Gavyn Davies on the BoJ’s new found negativity.

- “Central banks that have slipped into negative nominal interest rate territory don’t tend to get any closer to their inflation targets.”

- The anti-Fed two-step.

- India’s women battle to work. “They are powerful,” she said. “They are stronger. They beat us up like dogs.” Read more

How much yen can you fit in a cubic metre?

If the BoJ and Mr Kuroda are thinking about storage costs – after taking interest rates to minus 0.1 per cent and saying they “will cut the interest rate further into negative territory if judged necessary” — this might be useful.

From Oxford Econ’s Gabriel Stein & Ben May:

 Read more

Further reading

Elsewhere on Friday,

- Balancing.

- Why is Martin Shkreli still talking?

- Shocking news: Trader Sarao might not have caused the flash crash.

- Will Hillary rein in Wall St?

- China’s slowdown, not that complicated.

- Why Chinese capital controls aren’t a good idea. Read more

That was then, this is now: BoJ and negative rates edition (UPDATED)

Bank of Japan Governor Haruhiko Kuroda said he is not thinking of adopting a negative interest rate policy now, signalling that any further monetary easing will likely take the form of an expansion of its current massive asset-buying programme.

- Reuters, Jan 21

The Bank of Japan has adopted negative interest rates in their first benchmark rate move in five years, but has also chosen not to expand its quantitative and qualitative easing programme beyond its current level of buying Y80tn assets a year.

The BoJ has adopted a benchmark rate of -0.1 per cent, from a previous level of 0.1 per cent. It is the first time they have moved interest rates since October 2010….

The BoJ also indicated it has not ruled out further imminent easing, saying “it] will cut the interest rate further into negative territory if judged as necessary.”

- Now.

Wait, what? Read more

Stocks fall, and now our China bezzle watch continues

What’s “Only when the tide goes out do you discover who’s been swimming naked” in Chinese?

That’s the Shanghai Comp, and this is from Bloomberg:

China Citic Bank Corp., a unit of the nation’s largest investment conglomerate, uncovered a fraud case at its bill-financing business involving about 1 billion yuan ($152 million) late last year, people familiar with the matter said.

 Read more

Further reading

Elsewhere on Thursday,

- Ackman runs an anti-index fund.

- Robert J Gordon on his own pessimism, part II.

- Trump, FOX News, and Megyn Kelly explained.

- “The Fed of 2008 feared inflation too much and recession too little.”

- Should we rename China ‘Exogenia’? And what a girl wants, FOMC edition.

- “The speech shows that Mr. Xi believes he has vanquished his rivals…” Read more

The Plaza Accord, then and *cough* now?

Which leads us, naturally, to a partial Fed transcript from August 1985: Read more

Further reading

Elsewhere on Wednesday,

- Oil and stocks, correlations that work until they don’t.

- Robert J Gordon on his own pessimism.

- Krugman on Potemkin ideologies and the possibility that the Fed fumbled.

- @munilass on Flint’s poisoned water.

- Soros hurts China’s feelings. Read more

Further reading

Elsewhere on Tuesday,

- Shkreli is taking on Congress and Ghostface Killah. Or “Ghostface (as he is generally known on second reference).

- Unintentionally hilarious Davos quotes.

- Trump “is posing a new question: to what extent should the G.O.P. be the advocates for those struggling in the modern economy?”

- Tyrone, Cowen’s evil twin brother, on why Democrats should vote Trump.

- Is Cruz a jerk? Read more

When Novo Banco came to Davos

Izzy is trying to ban any references to Davos on AV from today but we thought we might try to sneak one in under the wire.

This is from Morgan Stanley’s Huw Van Steenis as part of his “What I learned at Davos” note, with our emphasis:

But whilst I saw some progress on Capital Markets Union under, I was struck how much the teething pains of the Banking Union (notably the apparent policy missteps at Novo Banco but also some of the recent issues in Italy) has materially hit the confidence of international investors in some peripheral investments.

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Further, further Pettis on China’s new “supply-side” reforms

This by Michael Pettis — on Beijing’s belated realisation that it needs to change its definition and reality of reform because the attempts of the last few years look to have failed — is very worth your time this morning.

We still consider Pettis’ framework to be the best way of looking at the Chinese economy and the challenges it faces. Here he runs through the recent shifts in the RMB, the fear that other countries might see that shift as a spur to their own devaluations, the failure of rebalancing so far, what a successful rebalancing must entail and, most importantly, the hope that China’s latest push for “supply-side reforms” will be in the right direction.

It’s pretty thorough. Read more

Further reading

Elsewhere on Monday,

- The “story is not one of political ideology or the corridors of power but of empty bedrooms and broken homes created by Xi’s intensifying assault on anyone his regime deems a threat.”

- The secret history of GM’s China bailout.

- Behind Trump’s attack ads. Spoiler, they’re his work and done “with little research or extensive prep work.”

- Meet Peter Tuchman, the most photographed trader on Wall St.

- Has tech killed the noble bank heist? Read more

Further reading

Elsewhere on Friday,

- “Here’s how to survive the coming crash…”

- The hand gestures of Davos.

- Rebranding the Kochs.

- James Montier’s latest on market myths: Debts, deficits and delusions.

- Still just a few questions left for Draghi to answer. Read more

India’s Sensex, now pre-Modi

This is more art than science but we’re going to mark it anyway.

That’s India’s benchmark Sensex index closing below 24,ooo points – at 23,962.21 to be exact — its lowest close since May 15, 2014 according to Reuters.

Funnily enough, May 16 was when one Narendra Modi got his first official nod to go sit on India’s most ministerial seat. The Sensex closed that day at 24,121.74. Read more

Rub falling, greater dollarisation risked, FX analysts speechless

Bank of Russia Governor Elvira Nabiullina is leaving it to the market to imagine when a ruble collapse will pose a threat to financial stability and force policy makers into action.

So far it hasn’t, and the currency is close to its “fundamental levels,” Nabiullina said in an interview on Wednesday. Other top officials also took the crisis in their stride, with President Vladimir Putin saying that changes in the exchange rate are actually opening up “additional opportunities” for some businesses.

- Bloomberg, Jan 21

- Markets, Jan 21 Read more

Further reading

Elsewhere on Thursday,

- Panic, or a dip-buyer’s lament. (And stock market sell-offs without a recession)

- “Investors need to stop trying to construct a new narrative each day to explain the ongoing selling.”

- How “non-negligible” is the chance Duncan Weldon be dining on leather soon?

- Soros: The US EU is on the verge of collapse.

- The IMF needs less Lagarde. Read more

Further reading

Elsewhere on Wednesday,

- Justices will know insider trading when they see it.

- How an obscure adviser to Pat Buchanan predicted the wild Trump campaign in 1996.

- Weakened at Bernie’s.

- Have the US and the global economies really improved by 200 per cent since 2007, or by 20 per cent since the peak of 2007?

- Goldman calls for oil rally, makes rookie mistake. Read more

Further reading

Elsewhere on Tuesday,

- China: “In year-on-year terms, growth over the past six quarters has been 7.2%, 7.2%, 7%, 7%, 6.9% and 6.8%.”

- Also, you know, capital controls.

- “Does any city have a more stratified sleep economy than wintertime Delhi?”

- “Like young Wall Street traders who ignore bubbles because they’ve only been alive and working during boom times, young people in rich countries have never experienced the deprivation of living in a failed communist economy or a pre-capitalist feudal system. “ Read more

It’s all connected, CNY edition

From Societe Generale’s analysts over the weekend, with our emphasis, on the fallout from the weakening yuan on the European Central Bank, and why that might circle back (and back again):

Global currency markets have taken their cue from China and commodities, and the resulting shifts are causing something of a headache for the major central banks. Since the low of last spring, the euro has bounced back by just over 9% trade-weighted. Similar moves have been observed for the JPY and USD, with the bulk of depreciation coming from EM commodity currencies. Their status as funding currencies has even seen the euro and yen gain against the dollar in recent weeks

 Read more

Giving up

Some bullet points from JP Morgan’s Flows & Liquidity team to start the week.

Signs of capitulation, as they put it, in the face of a slowing China, the CNY and its “depaluation”, the Fed, a liquidity vacuum etc:

 Retail investors were heavy sellers of equity funds for two consecutive weeks on extreme pessimism.

 Read more

Further reading

Elsewhere on Monday,

- Davies on China: “almost the whole of this rebalancing in nominal terms has occurred because of a large drop in the relative price of industrial products compared to services.”

- The grand strategy of rising superpower management.

- What will it take to stabilise capital markets?

- Mexico’s cartels now fight for political power itself.

- Fools and their money, “a shiny, $100 doughnut covered in 24-carat gold” edition. Read more