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.

India: A billion shareholders now

There are lots of people in India. Nobody argues about that.

What’s also true is not many of them care about equities.

Of course, there are exceptions. In absolute terms, rather large exceptions. The Bombay Stock Exchange (founded in 1875 as the “The Native Share & Stock Brokers Association”) is Asia’s oldest and ever since Reliance founder Dhirubhai Ambani — the ‘guru of the equity cult’ as Hamish McDonald put it — tapped into India’s small investor to fund his company, they have been in the mix. Read more

Further reading

Elsewhere on Wednesday,

- “A sufficiently large market predicting an individual’s death is also, necessarily, an assassination market, and similarly other “prediction” markets are also act markets, changing incentives to act outside that market to bring about the predicted events.”

- The geek heretic.

- “The highest form of derivatives artistry is achieved when a bank sells derivatives on its derivatives to itself, and this trade comes alarmingly close to that.”

- UK monetary policy is too complacent.

- Chicago, where, “five years later, however, many municipal market participants remain locked in an unproductive dialogue with an irrelevant personality.” Read more

Of mangled markets and the Chatham House Rule*

Some of you may remember how the ECB fecked up last week, when “an internal procedural error” meant an eventually market moving speech given by one Benoît Coeuré on Monday to, amongst others, a load of hedgies wasn’t made public until Tuesday morning.

The speech — apart from starting a debate about Chatham House rules, priviliged information and knee jerk responses by the ECB — was about ECB plans to front-load their bond purchases in May and June.

And as Citi’s credit specialist Matt King said: “If the ECB had wanted to test the extent to which traders were hanging on their every word, they could hardly have come up with a better experiment than to promise to boost the pace of QE purchases today, only to cut it back during the summer.” Read more

Further reading

Elsewhere on Tuesday,

- Dear buy side? Worried about liquidity? How about you pay for it?

- Technology, inflation and the Fed.

- The big Meh.

- Grexit: the real risk to the euro is not that Greece will fail but that it will succeed.

- Yanis, redux: Austerity is the only deal-breaker.

- Who owns Witanhurst, London’s most expensive mansion? Read more

China: staggered reform on one side, equities on the other

From SocGen’s Wei Yao, a chart we’re very tempted to plonk beside one of China’s equity markets:

Actually… Read more

Further reading

Elsewhere on Friday,

- Banks will keep doing FX stuff that got them in trouble.

- A good ‘mathiness’ fight summary.

- Stanley Fischer on the Monnet vision of European progress (and the need for an expansionary fiscal policy).

- Finance behemoths don’t like volatility and want to regulate it away.

- Bubble indicator x: this VC raised $123,456,789 in its first funding round. Because “we just wanted to have a little fun with it.” Read more

An impossible secular stagnation trinity, charted

A very large compare and contrast chart from Morgan Stanley’s global economics team below the break.

But first, this on the HansenSummers, Rogoff, Gordon debate, for context and stuff. With our emphasis:

The HansenSummers secular stagnation thesis argues that an excess of savings implies there is no attainable interest rate that brings the economy back to full employment for many years. However, Gordon’s ‘headwinds’ thesis argues against much slack in the economy, given that it is potential output growth that is falling, while Rogoff’s ‘debt supercycle’ view argues that weak growth persists only as long as downside from deleveraging remains in place. Together, they suggest that the US, UK and even Japan may have fewer headwinds than the euro area, China and Korea. All three views, however, cannot be right at the same time – an ‘impossible secular trinity’.

 Read more

Worse than Hanergy? Goldin, you should be ashamed [Updated with more solitaire]

UPDATING at the top because… well, you’ll see why. From a great Bloomberg piece just out (do read the full thing):

So what is Goldin Financial really worth? In his capacious Hong Kong office, furnished with generous touches of faux Louis XV marble and gold, Pan pauses from a game of solitaire and explains…

Dealing himself another hand of cards, he said he still might take the company private so he doesn’t have to contend with pressure from minority shareholders.

“I am selling performance, not stock price,” he said.

And the wealth ranking? Well, that’s just paper.

“A genuinely wealthy person would not count his wealth every day,” Pan says. “It’s better if you just leave me off the list.”

Easy come, easy go.

That’s Goldin Financial and Goldin Properties erasing just some of the 926 per cent and 606 per cent they gained in the past 12 months. And by “some” we mean they have lost more than $25bn from their market capitalisations in under two days. Read more

Further reading

Elsewhere on Thursday,

- Really big bank fines: we’re past the point that anyone cares about the details.

- Bad information is bad for the economy, ROE edition.

- Silicon Valley is a big fat lie.

- Krugman responds to Montier.

– “Had George III and his ministers not adopted austerity measures in the 1760s and 1770s… America’s founders might not have needed to declare their independence at all.“ Read more

What bond rout?

*ahem*

 Read more

China — all part of the plan?

This assumes China has a plan. Maybe it doesn’t. Or, if it does, maybe it’s not primarily aimed at reducing its debt burden while avoiding a hard landing.

But, for the purpose of narrative sanity, we’ll assume for a bit that it does and it is.

So, with that in mind, what to make of this? Read more

Further reading

Elsewhere on Wednesday,

- Yahoo may not get rid of Alibaba so easily.

- Benoit Coeure, the euro and speeches that just smell wrong.

- London’s hipster economy.

- Crowdfunding basic income.

- Montier on the idolatry of interest rates (part I). Read more

Further reading

Elsewhere on Tuesday,

- In which Matt Levine builds a (very complicated) calculator that will tell you how much Carl Icahn thinks Apple is worth in real time.

- The robots are winning.

- Pettis: What multiple should we give China’s GDP growth?

- Rejoice, Wall St is basically back.

- And why banking shouldn’t be “boring”. Read more

India’s re-re-Modified markets

One really has to begin any talk of India’s stumbling stock market with a bucketload of context. After all, the Sensex is well up from Modi’s election almost exactly a year ago and the recent fall is from a record peak of just under 30,000 points in January.

Google Finance

As to why Indian markets are struggling this year, down 7 per cent from that peak… Read more

Does China already have the highest level of margins vs free float in market history?

A Macquarie update, on their previous free floats and nutty Chinese markets work, has landed. With our emphasis:

Margin positions in the Chinese equities market have continued to rise in the past month, since we wrote our first Twilight Zone note on April 20. Since then, margin positions have risen by 9.2% MoM to RMB1.9 trillion, or an unprecedented 8.9% of the market capitalization of the combined free float of Shanghai-Shenzhen stock markets. This could already be the highest level of margins vs free float in market history…

 Read more

Further reading

Elsewhere on Monday,

- The tardy product, when practice gets ahead and theory catches up.

- I was an undercover Uber driver.

- Stereotypes in everything, rich women of NY’s Upper East Side (and their, er, wife bonuses) edition.

- How Musk’s space dream almost killed Tesla.

- Why China is hard to figure out. Read more

VaR-shock, a term often abused. But…

In this short note, we describe the characteristic of a VaR-shock, an often abused expression for a rapid and significant market correction

- Alessandro Tentori, Citi, May 13

And, yeah, “VaR-shock” comes just after “an Uber for x”, “breakout move”, “confidence level”, “flight to safety”, “liquidity”, “money; dumb, smart, hot”, “more buyers than sellers”, “oversold”, “profit taking”, “range bound”, “relief rally”, “safe haven”, “sentiment”, “shadow banking”, “short squeeze” and “technical correction” in the latest edition of the markets abuse dictionary.*

But Tentori, with no obvious sign of tongue in cheek, also says the recent Bund “tantrum” (add it to the list — ed) can be defined as a VaR-shock.

Useful since we already went there a few times. Read more

Further reading

Elsewhere on Friday,

- Time for a delivery of Eurofudge.

- “Do we want to encourage people to work, or do we want to facilitate non-work?”

- “But what really puts this civil and criminal insider trading case over the top is that those coded e-mail messages were in golf code”

- SWFs, cure or curse?

- “Neoliberalisms”, left and right. Read more

Further reading

Elsewhere on Thursday,

- Choose your heterodoxy: Farmer vs. Krugman.

- Behavioural econ: it’s about all people being smart some of the time and dumb at other times.

- What caused capitalism?

- Dear Lord… Verizon codename for AOL deal was “Project Hanks”.

- Greece, don’t blame austerity when stagnant exports are the real problemRead more

Bankz in glass houses

From the latest edition of Konzept, Deutsche’s spiffy new monthly magazine:

Much bank reporting has now become so complex it has spiralled out of all control and meaning. Last year’s annual report and accounts for UBS, for example, ran to 868 pages. That is more than a threefold increase on the Swiss bank’s 2006 annual report. What is more, the calculations behind many bank disclosures these days are opaque and mostly useless to an outsider because they are deeply technical. Even professional equity analysts struggle to understand disclosures running across the whole range of banking businesses, from traditional asset and liability management to trading book and operational risk, including different methodologies for valuation, provisioning and so on.

The length of Deutsche’s 2014 annual report? 610 pages.

 Read more

China, when a hot money outflow threatens to become a torrent

I mean, if this is right…

From BNP Paribas’ Richard Iley (with our emphasis):

The release of preliminary data on China’s Q1 balance of payments, while incomplete, nonetheless furnishes us with the hardest evidence yet of the alarming scale of hot money outflows from the mainland.

 Read more

Further reading

Elsewhere on Wednesday,

- Nomura and RBS told a few mortgage fibs.

- Don’t ask what lost, ask what won.

- US lotteries took in $70.1 billion in sales in the 2014 fiscal year — more than was spent on books, video games, and tickets for movies and sporting events combined.

- Why is libertarianism such a target?

- Jobs the robots WILL do: Art expert. Read more

This is €1trn less nuts

It took 102 trading days for 10-year Bund yields to rally from 68bp to their all-time low of 7bp on April 20th.

It took just 15 days after that to jump back to 68bp again.

That fact, and many more on our favourite nutty asset, European sovereign debt, via Bank of America’s credit strategists (with our emphasis):

In the volatility of the last week, the backdrop of negative yielding assets in Europe has changed significantly. Higher yields mean fewer negative yields. Chart 5 shows that the peak of negative yielding Eurozone government debt was just over €2.8tr at the end of March. But this has now declined to €2tr. In other words, Europe has “lost” almost €1tr of negative yielding assets in the last month.

 Read more

Of negative rates and reserve managers

Might have to pop this at the top, it’s a chart with lots of negative yield stuff on it after all:

Now, as we have said before… friends don’t let friends extrapolate too wildly from the IMF’s COFER data. Read more

Further reading

Elsewhere on Tuesday,

- Folks, interest rates are still very low.

- Felix defends Felix against Barry Ritholtz.

- “Had dissent been allowed, a speech detailing the allegations of corruption during Blatter’s 17-year reign may simply have taken too long.”

- Hersh: Did Obama lie about Osama?

- “Andreessen grinned, appreciating the paradox: the more they paid for Mixpanel—according to Thiel, anyway—the better a deal they’d be getting.” Read more

Der Bundschock, revisited

With the 10-year Bund yield just past 0.6 per cent at pixel time (it was just above 0.06 per cent on April 20th)…

Gavyn Davies calls last week’s moves a “Bund tantrum” — recalling the “super taper tantrum” the IMF’s been worrying about in bonds, and which has been foreshadowed perhaps in the April 2013 JGB sell-off. (There’s also the October 2014 flash rally in US Treasuries.)

The theme throughout is sudden breakdowns in liquidity. Niko Panigirtzoglou and team at JPMorgan have attempted to actually put some numbers on the Bund liquidity drain we saw last week. Read more

Further reading

Elsewhere on Monday,

- “The bund tantrum has been only a minor event so far, but it could be a warning of the shape of things to come, and on a much larger scale.”

- A poignant reminder.

- FAO Paul Murphy.

- Josh Brown, notes from SF.

- “When productivity is flat, “aspiration” is a zero sum game.” Read more

Further reading

Elsewhere on Friday,

- The price of nails. “I am worth less than a shoe,” she said.

- “Labour today is waking up to something much worse than a failure to win.

- Bill Gross wasn’t short enough German bonds.

- Want to make big money? Engineer a little addiction into your product.

- In which Greece apparently shows “the soul of the Berkeley pedestrian.” Read more

A circuit breaker for the Wunderbund?

What will save the Wunderbund* (and related QE trades)?

 Read more