Biography
Latest posts

(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.

Further reading

Elsewhere on Friday,

- So you wanna be a professional Russian troll? Well, the quota is 135 comments per 12-hour shift.

- Munilass on how Chicago has used financial engineering to paper over its massive budget gap.

- How poor are the poor?

- Bitcoin might be an idiotic investment, but it’s not as bad as penny stocks.

- The war for sand. Read more

Of Chinese exceptionalism and price-to-whatever ratios

A Chinese rendering of jusqu’ici tout va bien courtesy of Bloomberg:

The chief China strategist at Bocom International Holdings Co. points to soaring price-to-earnings ratios, the shrinking yield advantage that stocks offer over bonds and the fact that mainland-listed equities now trade at a 34 percent premium over nearly identical shares in Hong Kong.

So what’s Hong’s advice to investors?

Keep buying, of course.

 Read more

Further reading

Elsewhere on Thursday,

- Silicon Valley’s bullshit empire is impervious to critique.

- “Maybe the deal is a money saver, maybe it isn’t, but in the 27 minutes since it was announced, I simply don’t know.”

- Keeping Indonesia supplied with cash isn’t easy.

- The changing politics of China’s smog. Read more

This is still nuts, Chinese equities edition

Sentences to remind us of the nuttiness of Chinese equities over the past few months from BNP Paribas’ Richard Iley (and yeah, the Shanghai Comp fell 0.8 per cent today we have to admit, but that just broke “a 10-session winning streak — the longest in 23 years, according to Bloomberg data — that had taken the index to its highest since May 2008″):

Against all odds, the best performing asset class on the planet over the last nine months or so has been Chinese equities. After languishing for the first seven months of 2014, Chinese stocks have since been on an incredible tear, ending 2014 up a remarkable 49% in USD terms, even outstripping the c.28% annual return posted by Bunds (Chart1). And the strong gains have continued so far in early 2015. Up almost 12% in USD year-to-date at time of writing, Chinese equities continue to sit atop the heap of global asset returns. All told, the Shanghai and Shenzhen markets have surged almost 80% in local currency terms since mid-2014 (Chart 2).

Yes, yes… “必有牛市” – “There must be a (dynastic) bull market”Read more

Further reading

Elsewhere on Wednesday,

- Banning cash — an idea so impractical that ideology must be to blame?

- Where are they now? Wall St execs from 2008 edition.

- Don’t throw the word “bubble” about so casually, redux.

- Yellen isn’t Yellin’ anymore. Embrace it. Read more

Yup, do blame the locals for that Swiss franc spike

Always nice when data confirms a thesis. Especially when that thesis is the Swiss shouldn’t look far from home in search of someone to blame for the removal of their Swiss franc floor.

 Read more

Further reading

Elsewhere on Tuesday,

- How secular stagnation came to Smurf Village.

- A policy-driven bond bubble?

- Air conditioning never gets the credit it deserves, economic growth edition.

- Of restaurant trickery.

- Britain, where “all around the hollowing centre are multiple populisms, rubbing their hands.” Read more

The credit clock tolls for (some of) thee

From RBS’s Alberto Gallo and team:

Gallo is, selectively, very bearish (not on India though, natch) for the obvious reasons: Read more

Further reading

Elsewhere on Monday,

- Currency wars rebound on the Fed.

- The Iron Throne is facing a debt crisis.

- The myopia epidemic.

- O rly? “In New York, teens and preteens are becoming savvy connoisseurs of real estate.”

- Marx madness and the socialist sixteen. Read more

Further reading

Elsewhere on Friday,

- Greece — still playing chicken games?

- “Organizers say it will almost certainly be the first paper at the prestigious Brookings Papers on Economic Activity that was commissioned based on a blog comment.”

- Fantasy macro.

- If economists were right, you’d have a raise by now. Read more

Further reading

Elsewhere on Thursday,

- “For today at least, score this one in favour of the monetary heroin addicts.”

- The puny fiscal effects of European QE.

- Modern and postmodern recessions.

- “The rent hypothesis has a lot to say about our economic world.” Read more

The zombification of corporate France?

He walked into my office and threw the manuscript on my desk with a thud.

“It’s called Thankful For Zombies. A zombie story where…”

“Nope,” I said.

His face deflated like a balloon. “But I didn’t even…”

“Zombies are overdone,” I said.

“But this is a zombie story with a twist!”

“Zombie stories with twists are super overdone.”

- Scott Alexander, Dec 7

And he has a point. BUT he didn’t mention the French corporate sector. A large mistake exposed by BofAML’s Gilles Moec, who revels in the narrative freedom that mistake implies. Read more

Weak euro, meet the ECB’s inflation forecasts

From JPM’s Raphael Brun-Aguerre

And from the same source (with our emphasis): Read more

Further reading

Elsewhere on Wednesday,

- Riksbank Deputy Governor Jansson “again tries to defend the indefensible.

- Radical macro lessons from the Great Recession.

- “The fuzzy, insane math that’s creating so many billion-dollar tech companies”.

- Hungary without two thirds. Read more

China wants to get off its fiscal slide

We don’t have too much to add to the Shambaugh-generated “is the Chinese Communist Party cracking up” debate. Apart from suggesting that…

1. It seems that the debate itself is noteworthy and wouldn’t have happened even one year ago. As JCap’s Anne Stevenson-Yang said, this “may represent the first time in three decades that a prominent foreign expert on China has been willing to so thoroughly blow his entrée in Beijing by publishing an incendiary piece, and only two months after the China Foreign Affairs University had ranked Shambaugh No. 2 among the top 20 international scholars who are best informed about China! That will not be happening anymore. Shambaugh’s boldness, or recklessness, in itself may be the most potent sign yet that China’s soft power has waned.”

2. The trouble the CCP is apparently finding itself in seems an almost inevitable reaction to the economic pressures China is facing. Read more

Further reading

Elsewhere on Tuesday,

- Penguins have lost the ability to taste fish, hedge-fund managers who look trustworthy attract more clients than managers who look undependable, but the latter generate larger returns… etc.

- The Fed approaches ‘lift off’: not when, but how fast?

- David Shambaugh defends his argument that the “endgame of Chinese communist rule has now begun”.

- No Greek funny money, redux.

- DeLong is a teeny bit miffed with David K. Levine. Read more

There’s no right to parity

Is this nuts?

…the speed of the Euro depreciation is starting to look very fast. We are in the 99th percentile (at least) of 3M, 6M, 9M, and 12M moves since initiation in 1999.

- Nordvig, Nomura

Over the last eight months the USD has appreciated faster on a trade-weighted basis than at any time in the last 40 years and probably over a longer, much longer duration.

- Englander, Citi

Which, again, looks like this: Read more

Further reading

Elsewhere on Monday,

- Market efficiency and an infinite regress of dumb.

- John and Maynard’s excellent adventure.

- Krugman vs the Riksbank.

- How to rescue Petrobras.

- Europe’s straightjacket, as told through a Michael Jackson concert in Singapore. Read more

Your updated sovereign-bank loop

Last week we got a Draghi-backed report by the ESRB which challenged the risk-free treatment of sovereigns by banks.

It included such insights as “the evidence presented in the report illustrates, however, that sovereign risk is not a novel concept” and “If sovereign exposures are in fact subject to default risk, consistency with a risk-focused approach to prudential regulation and supervision requires that this default risk is taken into account”. Which, you know, makes sense.

Thing is though, it doesn’t seem like the bank-sovereign nexus is going anywhere fast. As Gary Jenkins put it:

The tone suggests that the ESRB would like to see a change in the regulatory regime although it is clearly a case of ‘Give me chastity, just not yet,’ as this is also the week that the ECB began its QE programme without differentiating on risk between 3 year or 30 year bonds. They have set a yield of -0.2% as where they are prepared to buy anything. Thus technically holders of 30 year bunds could say that is the level they are prepared to sell at.

 Read more

Debt, charted

From Goldman’s economics team, a half-century of debt buildups and Japanese domination:

Basically, a chart to launch a thousand arguments (comparing Italy, Greece and Japan being a good starting point) which you should definitely click and enlarge. Read more

Further reading

Elsewhere on Friday,

- Cassandra on QE and all those blind to the benefits wrought by munificence of The People.

- The power of financial markets.

- Capital confusion at the FOMC.

- The biggest Fed basher of them all… Bernanke. Read more

Further reading

Elsewhere on Thursday,

- “Seems like the brute force theory of QE is still doing pretty well.”

- Jack Bogle doesn’t think there’ll be another Jack Bogle.

- You may be completely happy with your really expensive, underperforming mutual fund.

- Exporting Europe’s stagnation. Read more

Further reading

Elsewhere on Wednesday,

- Unsolicited advice from Dan Davies for the new Credit Suisse CEO.

- Sorry, you don’t know what’s going to happen in China.

- Now, more than ever, London needs a “death pyramid”. Read more

This is nuts. But so what?

As long as the music’s playing…

Citi’s credit strategist Hans Lorenzen adds to our euro-nuttiness questions of yesterday. He’s in a more… pragmatic frame of mind. Which doesn’t preclude the use of “frenzied”, but there you go. With our emphasis and his puns throughout:

Is it a bubble? With clear signs of overvaluation, inflows concentrated on return-sensitive investors, spreads largely desensitized to external shocks and fundamentals moving in the opposite direction, the recent and expected further tightening certainly has all the typical hallmarks of one.

But that’s almost beside the point, as we think it will last longer than most people’s investment horizons, leaving them with little choice but to participate. As we see it, the time to exit is the day that the market starts to doubt the ECB’s commitment to buying more.

 Read more

Further reading

Elsewhere on Wednesday,

- The resistible rise of Putin.

- Coppola vs Hausmann on Greek myths and legends.

- When US rates rise…

- The East India Company as the original corporate raiders.

- “In the end, you can sum it up like this: microfinance is a useful little product.” Read more

This is nuts, where have all the bonds gone?

“It’s official, there are no more sellers of bonds.” An investor told us yesterday, and he’s not alone. Bond buying on ECB QE, the Greek loan extension and recent growth data in the periphery has transformed itself into bond hoarding.

- RBS’ Alberto Gallo and team Read more

Who me? Oh, I’m just your average insider trader nabbed by the SEC

I’m a man, 43 years old, pretty successful work wise. I invest about $200,000 and earn about $72,000 per tip. Mergers are my trade of choice.

I’m probably richer than you and I have friends and family who like me enough to get illegal alongside — 23 per cent of those who who tip me or get tipped are family members, 35 per cent are friends, and 35 per cent are business associates. Mostly they live pretty close, like 26 miles close. Which is nice. Read more

Further reading

Elsewhere on Tuesday,

- Walmart’s visible hand.

- Deflation to inflation in one paragraph.

- Day traders: “The chances they’ll end up a winner is less than the parts in a warehouse spontaneously assembling themselves into a beautiful girl.”

- Versus your extreme buy and hold scenario. Read more

Prudence and the PBoC

If you wanna know why China cut policy rates again over the weekend this chart from UBS’s Wang Tao goes a fair distance towards explaining it:

The cut was earlier than expected, but the reasoning is pretty simple. As Tao says (with our emphasis): Read more