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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.

Explaining the BoJ’s reticence

You’ll have noticed that the yen and Nikkei were displeased yesterday. Like throw your toys out of the pram because you didn’t get what you wanted displeased. Like one of the worst one day JPY moves in the past decade displeased.

What they didn’t get, and what prompted that tantrum, was any auld bit of easing from the Bank of Japan.

And here are eight potential reasons why the BoJ disappointed, from SocGen: Read more

Further reading

Elsewhere on Friday,

- Zuckerberg gets to control Facebook a while longer.

- ‘Normal America’ is not a small town of white people.

- “Surely no campaign has ever before had a divisive internal fight over whether the candidate should be presidential or not…”

- When Ted Cruz signed a copy of The Communist Manifesto. Read more

Today in disappointed markets…

UPDATE: JPY through Y108 as Kuroda says helicopter money is illegal. Of course, definitions matter where that is concerned.

 Read more

Further reading

Elsewhere on Thursday,

- “Venezuela, in other words, is now so broke that it may not have enough money to pay for its money.”

- Meanwhile in Israel: “If someone is over 18 and wants alcohol, cigarettes, a knife, a binary option account, it’s his own responsibility.”

- Your annotated Fed statement.

- Ant Financial, now valued at $60bn apparently, is confusing. As is its relationship to Alibaba. Sorry, we mean its relationship to the Cayman registered derivative contract vaguely related to ecommerce in China known as Alibaba. Read more

“What if China lands hard?” they asked in 2013

What is a hard landing? Can you re-land hard if you’ve already landed hard? What about just landing harder? Or what about a long hard landing?

The phrasing here is getting awkward, as is the real point, which is the concern that the hardest Chinese landing is yet to come.

You can see why it’s on people’s minds: Chinese reforms have been less than impressive, there’s a general consensus that its record breaking debt load is bad (for a given definition of bad that normally doesn’t include an immediate crisis), and credit growth is still heading up. Take this from Bernstein’s metals and mining team on Monday for example:

The response to the crisis of 2014/2015 appears to be greater than the response to the financial crisis of 2008/9. Between November 2008 and November 2009 total domestic credit expanded from 36.3Trn RMB to 48.4Trn RMB, a change of 12.1Trn or ~34.4% of 2009 GDP. Between February 2015 and February 2016 domestic credit has grown from 111.2Trn RMB to 139.2Trn, a swing of 27.9Trn, or ~40.4% of GDP.

 Read more

Further reading

Elsewhere on Wednesday,

- The “areas hardest hit by trade shocks were much more likely to move to the far right or the far left politically.”

- “No matter how high the tariffs Mr. Trump wants to raise to encircle the American economy, he will not be able to produce a manufacturing renaissance at home.”

- Debt-equity conversion and NPL securitization in China, some advice from the IMF.

- The resilient Chinese consumer is still resilient.

- Nestlé’s Maggi health scare in India was not handled… perfectly. Read more

Further reading

Elsewhere on Tuesday,

- Paul Singer on the lessons from his bond (pari passu) war.

- Rogue bonds — from CS which would insure it against its own operation/ fraud/ regulatory/ etc risk — how would they work exactly?

- China, Venezuela and how winning friends can get expensive.

- “The chairman of a Chinese e-financing firm suspected of having fled with 1 billion yuan (HK$1.19 billion) of investors’ money has emerged to say he has not absconded but was merely meditating in the Gobi Desert over the firm’s direction.” Read more

Shockingly, loose credit and moral hazard are to blame for something in China

Right, so we’re going to… grudgingly… allow this Game of Thrones reference from David Cui at BofAML.

We will not be this forgiving again.

In the Game of Thrones, before someone declares interest of entering the game, he or she needs to think carefully because the consequences of losing can be extreme. The same could be said about the latest “game” of trading commodity futures on China’s three commodity exchanges, in our view. We believe that loose monetary/credit policies and moral hazards are the main drivers behind the latest sharp rally, rather than improving fundamentals.

 Read more

Further reading

Elsewhere on Monday,

- This is nuts: The BoJ’s ETF “purchases have made it a top 10 shareholder in about 90 percent of the Nikkei 225 Stock Average.”

- Davies: Is there a new Plaza Accord?

- Thieves want liquid assets, stealing soap edition.

- The new gilded age, first class markets in everything. Read more

SOE you think you can default?

Well, maybe some of you can. More than that and it could get tricky for China.

Here’s BofAML’s David Cui:

Since 2015, eight SOE bond issuers have run into repayment problems; four since February.

 Read more

Further reading

Elsewhere on Friday,

- Why haven’t bankers been punished? Just read these insider – Goldman and Abacus related – SEC emails.

- Regulators don’t want bankers to be paid for taking risk.

- How the unicorn financing market just… got… dangerous. Read more

Imagining life/ the RBI after Raghuram Rajan

Once you’ve had a luddite at the Reserve Bank of India it’s hard to go back…

Amongst other things Rajan stabilised the rupee, brought inflation under some sort of control (with some outside help) which has allowed him to cut rates, overseen institutional changes at the RBI, has started to get a grip on India’s problem loans, and was a big part of convincing Delhi to crack down on willful defaulters and others who used to have avenues of political appeal when their loans were being questioned.

He also managed to thoroughly woo much of Mumbai’s financial community while doing so.

And now he might be off. As in, when his current term ends. Read more

The apparently unstoppable Chinese search for yield

This is what you get when you try to sidle up to some market pricing alongside a giant ball of money.

It’s to be read while keeping an eye on the property market — What’s that? Property prices for Tier 1 and 2 cities are still rocketing and mortgages are up 75 per cent year on year in q1, you say? — and the rise of defaults in the corporate bond market.

 Read more

Further reading

Elsewhere on Thursday,

- Why the big banks can’t imagine their own deaths.

- Chris Arnade on Brady Bonds, Elon Musk and trading. Read the whole thread.

- “No statues in Silicon Valley salute Bill Campbell. But the story of his life, and of his values, should be widely shared.”

- Sanders, Trump and when discredited policies make sense.

- Trading aphorisms. Read more

Strikes don’t have to be impolite, Kuwaiti oil workers edition

Take the end to the protest by oil workers in Kuwait:

 Read more

Further reading

Elsewhere on Wednesday,

- Brexit: the trade deficit is not a source of strength.

- Mervyn King, Aston Villa and the limits of marginal productivity theory.

- Of America’s struggling middle class, living paycheck to paycheck.

- The number of publicly traded firms has halved.

- The untold story of Magic Leap, the world’s most secretive startup. Read more

US HY default rate almost… back at its historical average

Charted by CreditSights last week, with no points for noting the commodity component of the defaults:

They add that “the US HY issuer-­weighted default rate is approaching the historical average of 5.4%” and that “eight new defaults in April 2016 would put US HY default rates at the same level as the historical average. With 18 US HY defaults already taking place during 1Q16 this is entirely possible, although it is more likely that default rates will reach the historical average in May or June 2016.” Read more

Further reading

Elsewhere on Tuesday,

- Brexit and freedom.

- The most telling chart from the Treasury’s Brexit report?

- Even Elizabeth Holmes’ turtleneck has abandoned Elizabeth Holmes.

- A Q&A with Kuroda including the line “No, we have no intention to employ helicopter money, anything like that…”

- Ireland and Spain don’t have governments, and the bond markets don’t care. Read more

Bond love up, bond supply down

Bond supply goes up, bond supply goes down. Same for demand, really.

Like this (warning, listening for more than 2mins will drive you insane):

This time the two might contrive to create the most favorable bond demand/supply balance since 2009. Read more

Further reading

Elsewhere on Monday,

- The return of elasticity pessimism.

- On pay issues, anyway, BlackRock’s Fink’s big stick is more like a wet noodle.

- Magical realism and other neoliberal delusions.

- A Brazil impeachment timeline. And what it means for investors. Read more

China’s retro growth push

China is growing at 6.7 per cent and broadly stabilising, “down slightly from the end of last year but comfortably within the government’s targeted range, as housing and infrastructure cushioned a slowdown from financial services.”


Well (and this is taking the GDP figure at face value) not if it’s just being propped up by the same old tools which led everyone to worry about its growth model in the first place.

Which it looks like is what’s happening… Read more

The barriers to helicopter money, charted

Where helicopter money = central bank monetary financing, and the constraints are lower than commonly conceived.

From Deutsche. Click to enlarge:

 Read more

Further reading

Elsewhere on Friday,

- This is nuts, French ’66′s at sub 2 per cent edition.

- We are so s—ed. Econ 1-level edition.

- Duration risk is… risky.

- Krugman: “Was Time purchased by Zero Hedge when I wasn’t looking?” Read more

Jefferies: Japan has a fever and the only prescription is NGDP targeting and zero coupon perpetual bonds

We’re paraphrasing a bit in the headline but Jefferies do think the Japanese authorities are in a corner, painted in by a strengthening yen, tighter monetary conditions and a drop in inflation expectations.

 Read more

Further reading

Elsewhere on Thursday,

- Possibly fake merger filing includes possibly real profits.

- Valeant’s prescription for disaster.

- Bernanke’s four errors, helicopter money edition. Read more

Central bank tightening risk, charted

From BofAML’s FX strategist Athanasios Vamvakidis, do click to enlarge:

 Read more

Further reading

Elsewhere on Wednesday,

- There’s an election to the British parliament that only three people can vote in.

- How Boots went rogue.

- “Some men shoot tigers. Some men love bears. Walter Rothschild, 2nd Baron Rothschild, Major in the Yeomanry, Conservative MP for Aylesbury in Buckinghamshire, heir to one of the greatest banking fortunes in history, and collector of the largest zoological collection ever amassed in private hands, had a specific and incurable addiction to cassowaries.”

- Donald Trump, American preacher. Read more

Did the G20 agree a currency accord and does it matter?

The first question is whether there was a lovely new, but secret, currency accord agreed at the G20 in Shanghai in February.

The answer is: Probably not. Read more

Further reading

Elsewhere on Tuesday,

- The sugar conspiracy.

- The tyranny of the non-compete clause.

- Economics as similar to “ancient Chinese attitudes towards the astral sciences.” And Noahpinion responds.

- Streetwise Prof: “the very absence of Putin’s name in the Panama Papers is exactly what is informative.” Read more

Irony and that JPY-equity correlation

Or, pictorially, what’s up with this?

And we mean apart from the whole “hey, we gave you negative rates why aren’t you giving us weaker yen?” thing as we’ve already spread plenty of pixels on a webpage about that.

It’s more about they strong negative correlation between the yen and equities on show in that chart. Read more