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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.

You show me your inflationary impulse and I’ll show you mine

You may consider the below as a series of questions that need answering in the face of recent hopes (that’s the right word, yeah?) for a return of inflation — that’s healthy inflation as opposed to stagflation or this being another false alarm, or dawn if we were to go for continuity, which we’re clearly not. Read more

Further reading


– “Expansions don’t die of old age. They die because something specific killed them.”

– Ryan Avent: The only thing we have to fear is fear of inflation.

– Tyler Cowen with some more (sceptical) thoughts about basic income.

– And the charts that scare Wall St.  Read more

“I was shocked beyond words at the happenings at the board meeting of October 24, 2016…” – C Mistry

Here’s the full email from Cyrus Mistry to the board of Tata Sons after he was ousted on Monday.

The headline from it is the “1.18 trillion rupees ($18 billion) in writedowns because of five unprofitable businesses he inherited” but there is much more here that sheds light on why this all blew up so suddenly, leaving Ratan Tata back in temporary charge.

Some choice lines before the actual thing, with our emphasis: Read more

Breakups can be messy, Tata edition

You’ll remember Cyrus Mistry was unceremoniously removed from the top job at Tata on Monday.

Well on Tuesday he shot off an email to the holding company’s board…

From Bloomberg: Read more

Finger still in the air, Goldman forecasting GBP edition

You’re a currency analyst. You have models. Your models give you comfort and a safe place from where you can play The Forex. They give you stability and a lens through which the world appears manageable.

Then Brexit happens.

From Goldman’s FX team as they try to work out a fair value for sterling: Read more

Further reading


– How many things can a bank CEO get wrong in nine sentences?

– Banca Montei dei Paschi and perspective.

– Prewrites, US election results edition.

– The Council of Economic Advisors on labour market monopsony.

– A Piketty moment.

– And… “baby bonds” to tackle inequality? Read more

What next for Tata Steel?

But first, courtesy of CLSA, let’s take a moment to appreciate the structure of the Tata group:

Screen Shot 2016-10-25 at 16.14.31 Read more

That was then, this is now, Tata edition

Courtesy of India’s Economic Times from Nov 24 2011:

Screen Shot 2016-10-25 at 14.13.45

And today: Read more

Further reading


– DeLong on why Keynes wrote “In the Long Run We Are All Dead”

– A WSJ series on passive vs active investing.

– John Cassidy on HRC’s plans to squeeze the ultra-rich.

– And somewhat awkwardly on how Democrats killed their populist soul.  Read more

The rise of the angry voter, charted

It’s a bigly trend with enormous consequences for fiscal and monetary policy. But the rise of voter rage in advanced democracies is a hard narrative to chart, what with the lack of data and the abundance of anecdote. However, this seems a pretty decent attempt:

Screen Shot 2016-10-24 at 13.03.20 Read more

Further reading


– Gavyn Davies: It’s the demography, stupid!

– Meanwhile in China: “Best known as the country’s anticorruption agency, the commission has lately assumed a growing role as political inquisitor, investigating the loyalty and commitment of cadres to Mr. Xi and his agenda, while cementing the commission’s role as his chief political enforcer.”

– An Elon Musk AMA.

– Bengt Holmström and the black box of the firm.

– And Cliff Asness: Hedge funds search for their real killers. Read more

“Mr Ambani, I’d just like to compliment your capex… sorry, I meant, smile”

It has been suggested before that there “are only two Indians for whom Mumbai’s great and good will turn up en masse and on time. One is whoever is the sitting prime minister. The other is Mukesh Ambani.”

And earlier this week at a talk in south Mumbai this blogger was part of an effort to prove that true. Well, the “on time” bit at least, we’re still working on the “great and good” thing.

It was quite the spectacle. Read more

Further reading


– The (coy?) reemergence of Steve Cohen continues.

– Theranos, it’s the case the SEC has been waiting for in Silicon Valley.

– Explaining Hillary-hatred.

– Sebastian Mallaby on the cult of the expert, and how it collapsed.

– And QE: the story so far. Read more

About China’s confusing debt-for-equity swaps

Corporate debt in China is a well-known problem and part of the solution is, apparently, a new round of debt-for-equity swaps.

Of course, there will always be sceptics. Read more

Further reading


– One (Gold)man’s market marking worth $100m is another man’s prop trading.

– Relatedly, Wall St is doing just fine with fewer workers.

– Broken indicators mean it’s harder to spot trouble in the market.

– What does Nevada’s $35bn fund manager do all day? Nothing.

– And, Bernanke and Olson ask if Americans are better off than they were a decade or two ago? Read more

The minutes of your (more dovish) RBI, charted

More dovish, we should add, for reasons already discussed — like the acceptance of a higher inflation threshold, the lowering of the real rate target, and the fact that the cut of 25bps in early October was on the back of a unanimous vote from the newly formed MPC under its new governor, Urjit Patel.

But more on that below the break.

First, that chart from Goldman based on the (now ex-Rajan) Reserve Bank of India’s recently released minutes: Read more

Further reading


– Spread ’em, or “to paraphrase Inigo Montoya, I do not think these rates mean what you think they mean.”

– DeLong on CAPE, future expected equity returns, the equity premium, and market timing.

– Monetary science fiction.

– Mark Zuckerberg’s long march to China.

– And how “tech firms spent $49 million on Washington lobbyists last year, while the five largest banks shelled out $19.7 million…” Read more

Further reading


– Steve Randy Waldman: “If it becomes the mainstream view that Trump voters are simply racists, it leaves those who are already committed, those who are unwilling to abandon Trump or to stomach Clinton, little choice but to own what they’ve been accused of.”

– Relatedly: First on the limits of data journalism when explaining Trump’s support, and second on Appalachia as a mythic “Trump Country”.

– And, is Bill Ackman toast?
 Read more

Defensive credit creation and vicious circles in China

Today in Chinese circularity: “low profit leads to more credit required to fund investment, but given low investment efficiency the investment made may only generate sluggish profits in the future, which could then take us back to the difficult situation of more credit being needed to sustain investment.” Read more

Beware randomly falling markets

Evergreen advice here from Citi:

Beware of unexpected outcomes to expected events.

But it’s the accompanying chart that’s worth the click: Read more

Further reading


– Matt Taibbi pulls no punches: “The only thing that could get in the way of real change – if not now, then surely very soon – was a rebellion so maladroit, ill-conceived and irresponsible that even the severest critics of the system would become zealots for the status quo.”

– Matt Levine: Goldman’s Libya derivatives were fine.

– Gavyn Davies: Will Brexit cause a sterling crisis? The increased cost of stuff after Brexit.

– Relatedly from Frances Coppola: “Brexit will determine the behaviour of every UK metric for the foreseeable future.”

– And why distrust data? Claudia Sahm on the disturbing idea that “48% of Trump supporters ‘completely distrust the economic data reported by the federal government’ including unemployment, spending, jobs.” Read more

Aswath Damodaran doesn’t *quite* agree with Bernstein’s bashing of DCF models under zero rates

After reading through Bernstein’s thoughts on the problems with Discounted Cash Flow modelling in a world of zero rates — namely that “if it is not possible to put a ‘price on time’ then there is a genuinely intellectually painful environment where model structure is called into question” — we decided to ask Aswath Damodaran, Professor of Finance at the Stern School of Business at NYU, what he thought.

In summary… he was not impressed. Read more

China’s property bubble, land reform edition

One of these lines is not like the other…

Screen Shot 2016-10-14 at 14.59.55 Read more

Further reading


– The Streetwise Prof with a pitch perfect illustration of Blockchain hype.

– Brexit: Some lessons for Greece.

– And, the City exodus is already happening, it just doesn’t look like you expect it to.

– Chris Arnade continues to report on America’s class divide.

– The BoE asking how closely related are the UK’s ‘twin’ deficits and should we be concerned?

– And, did the BoE cause Brexit?  Read more

Bernstein questions foundation of finance. Again.

Bernstein, having tried to slap down passive investing as the road to serfdom, has now set itself against DCF models in a zero rate world. Read more

Further reading


– Admati et al on the leverage ratchet effect.

– In defence of active management, and an attempted smackdown of Sharpe, from AQR.

– Frances Coppola on the effects of a falling GBP.

– Dan Davies “‘splaining a few points which currently appear to be sustaining a delusion that there is a back door into the Single Market for financial services in London after Brexit.”

– John Hempton doubles down on Twitter: “The conclusion is inescapable. Jack Dorsey – the Twitter CEO – should be fired.”

– Elon Musk’s wild ride.

– And Obama talks to MIT’s Joi Ito about AI, morality and redesigning the social compact. Read more

The RMB and potential Brexit camouflage

Here’s A repeated theory: Brexit-shenanigans has caused GBP to go nuts. Crashes have flashed, journalists have frenzied, the FX and political worlds have been transfixed. And during this period, China has cynically decided to weaken its currency versus the US dollar while everyone was distracted.

As we said, it’s just A theory but here’s what an accompanying chart might look like, courtesy of CreditSights:

Screen Shot 2016-10-12 at 11.57.28 Read more

Further reading


– Crash: how computers are setting us up for disaster.

– A note on smart contracts and crypto currencies: ” Eventually, there will have to be a legal and political settlement about what code the global financial markets should run on. Ultimately, the code runs on people, not the other way around.”

– Relatedly, inside safe assets with Anna Gelpern.

– Ryan Avent on the pound and the fury.

– Soft Brexit, it’s not that hard?

– And Paul Mason on postcapitalism and the city. Also, on the flip-side dangers of some sort of neo-feudalism emerging. Read more

China’s property market keeps everyone guessing

The Chinese government knows it has to do something about the run-away house price inflation in its major (Tier 1 and 2) cities. And it is.

As SocGen’s Wei Yao says, since late September, “20-strong cities have either reintroduced or stepped up tightening on the housing sector.”

It’s far less than the peak of 46 Yao says we saw in the previous cycle but it’s not bad going and the cities involved cover “more than 20% of national sales and new starts volume, more than 40% of national sales value, and more than 30% of national property investment” according to RBS. Read more

Further reading


– Fish and (micro)chips: Why the BoE’s John Lewis is still relatively relaxed about robots.

– Buffett responds to/ slaps Trump on taxes.

– John Hempton on why Twitter “should be and probably will be bought by an aggressive financial buyer. And Jack will be fired.”

– How the “weak” fix on Sunday evening actually represented a strengthening of the CNY against its CFETS basket.

– And a Neil Woodford encomium from Bloomberg. Read more