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.
Elsewhere on Thursday,
- In search of that targeted lending scheme in Europe.
- Cells as living calculators.
Deutsche Bank’s Stuart Parkinson and Rineesh Bansal kick off their tale of RoRo on a controversial subject: where did the phrase risk-on/ risk-off originate. We’ve had some outlandish claims sent our way in the past.
A colleague who shall remain nameless once claimed he had invented RoRo (and the question mark) but we feel there is a ring of truth to the suggestion that a company called Riskmetrics, originally a JP Morgan project born to gauge the level of risk being run by the firm, actually has the dubious honour. Read more
Nikkei 15,000 comes courtesy of a weak yen and increasing earnings expectations which carry some potentially elevated valuations with them. If you need any evidence of how sensitive the Nikkei has become to the yen’s rise, here’s a chart to ease your suffering:
But there are other things at work here. Read more
An upgrade in this environment is apparently stupidly effective. Here’s Greece’s 10-year bond yield tumbling a full one per cent the day after Fitch upgraded it to to B- from CCC, and said the outlook was stable:
This Fobor based paragraph is from a Bank of America Merrill Lynch note published earlier in the month which the FT’s Robin Wigglesworth brought to our attention:
In a world of zero rates, where $19.4 trillion of government bonds (that’s 48% of the total market) is trading below 1%, it’s little wonder the “lust for yield” is as strong as it is.
Japanese government bonds have kept stumbling. Small beer anywhere else in the world, but considering the policy experiment ongoing over there it’s worth keeping an eye on.
We’re not too excited yet but here’s a chart of five and ten year yields and some speculation anyway…
Some charts from Pew’s latest survey of 8,000 people across eight EU countries, most of whom are increasingly *insert euphemism* with Europe:
That’s the gist of Sony’s response to billionaire activist investor Daniel Loeb’s suggestion, made via hand-delivered letter, that Sony should break itself up. It stems from an NYT Andrew Ross Sorkin exclusive.
Loeb’s idea is basically: partially spin out Sony’s entertainment division via an IPO which Loeb’s Third Point fund would happily sign up to. He’d also gladly accept a seat on Sony’s board. As the NYT noted, Loeb is known for ousting Yahoo’s former chief executive and poaching Marissa Mayer from Google to run the company. His hedge fund has quietly amassed a stake of about 6.5 per cent in Sony, making it one of the biggest shareholders.
From Loeb’s letter to Sony’s president and CEO Kazuo Hirai: Read more
Consider this chart from JP Morgan’s Flows & Liquidity team. It shows the evolution of non-performing loan ratios (as percentages of total loans) across three different Euro area blocks: Germany, core and periphery.
The definition of a non-performing loan (NPL) differs across countries but the picture is definitely not pretty. Read more
Dual-track Libor replacement lined up || Top hedge funds bet on Greek banks || Schäuble warns EU bank rescue agency needs treaty changes || U.S. companies are on track to raise the most money through IPOs since before the financial crisis || G7 reaffirms commitment on currency depreciation || Mittal urges EU to protect itself against China imports || Bischoff to take his leave from Lloyds || Esure hit by fallout over ex-HBOS director || Markets roundup || FTAV’s latest Read more
Header credit goes to UBS’s Paul Donovan, the source of the piece of Japanese skepticism that follows. He takes us first to Sherlock Holmes’ “Silver Blaze”:
Gregory: “Is there any other point to which you would wish to draw my attention?”
Holmes: “To the curious incident of the dog in the night-time.”
Gregory: “The dog did nothing in the night-time.”
Holmes: “That was the curious incident.”
A strong opening gambit, as yen tales go. Read more
Behold — an illustrative chart from Morgan Stanley’s global economics team (click to enlarge):
Here’s Deutsche’s Jim Reid on junk bonds — where both defaults and yields are now far lower than they were in the 1980s — in Thursday’s Authur’s note:
We’re going to need a new name for junk bonds. They’re yielding less than 5 per cent for the first time ever (h/t to our own Tracy Alloway):
The 5% yield barrier has proved no match for this Federal Reserve-fueled junk-bond market, which last night reached yet another all-time record-low average yield-to-worst of 4.97%, according to the Barclays US High Yield Index. It marked a new level of market capitulation to central-bank forces as it’s the first time the index has dipped below 5% in its 30-year history (before January the market had never even fallen below 6%). The average price of 107.31 cents on the dollar also marks a record high.
A surging stock market, increased corporate earnings (check out Toyota) and frothy domestic consumer spending are lending some real optimism to Japan’s Abenomics but the main avenue through which hope flows might be narrower than originally thought.
Consider this chart from Citi’s Steven Englander:
From Reuters:
LONDON, May 3 (Reuters) 13.04 – The euro pared gains while German Bund futures edged up on Friday after European Central Bank policymaker Ewald Nowotny said the central bank was open-minded about taking deposit rates into negative territory.
Nowotny said he was “astonished” by the market’s reaction to his comments earlier in the day, when he said negative deposit rates were not relevant in the near term.
(With some header credit due to Mark Dow)
He came, he cut, he stuck a load of fingers in the air…
The tl;dr version of May’s Draghi presser involved the ECB chief mentioning a heap of possible actions — from getting the “dead” ABS market going to help SMEs, through to negative interest rates, while giving a little bit of forward guidance on policy — but without committing to anything concrete. Read more
A telling chart (which you can click to enlarge) from BNP Paribas’ Ricardo Santos and Michelle Lam. As they note — after a break particularly in the second half of 2012, there’s recently been a marked increase in banks’ holdings of sovereign debt… especially in Italy, France, Portugal and Spain. Read more
Just as your risk of a dodgy bailout is determined by your size so too, perchance, is your risk of an odd ratings action. On Tuesday Slovenia’s credit rating was junked by Moody’s, forcing it to call off a planned US dollar debt sale.
Those we have talked to are pretty baffled by this one. Not only does the timing seem strange but the critiques leveled are questionable (more on that below) particularly when you take into account the depth of the cut from Baa2 to Ba1. Read more
Markets: Global equities hit fresh cyclical highs but commodity prices and the dollar fell back as weak US and eurozone economic data fueled concerns over the outlook for global growth. The FTSE All-World equity index climbed 0.5 per cent to its highest since June 2008, while the S&P 500 rose 0.3 per cent to a fresh record closing and intra-day peak. However, the FTSE Eurofirst 300 eased back 0.2 per cent even as eurozone inflation and labour market figures heightened expectations that the European Central Bank would cut interest rates this week. Consumer price inflation in the region fell to a 38-month low in April while the unemployment rate rose to a record 12.1 per cent in March says the FT’s Global Markets Overview. Read more
Liquidity and credit are not always best friends — Funding for Lending in the UK and the LTROs spring to mind. However, blaming liquidity alone for the lack of credit out there is obviously [expletives removed].
For one, banks can’t lend if they can’t find borrowers — although it might be unfair to blame borrowers who are seeing unappealing terms — and for two, central banks have poured a fair amount of liquidity out there with more available on tap.
(Or ‘goldilocks syndrome’ if you’d prefer)
An existential cry has been sounded once again in the world of FX which has suddenly been reduced to trading short term signals in a fickle market. Shocking. Gone are the days of simple carry, Risk on-Risk off and easy reifying market stories. And it seems they are missed, almost as much as they were once bemoaned…
From HSBC’s ever excellent FX team: Read more
Eurozone M3 data are out…
That’s the annual growth rate of the euro-zone broad money supply (M3) falling from 3.1 per cent to a well below expectations 2.6 per cent in March and allowing a quick segue into a good news/ bad news post ahead of next week’s ECB meeting and increasingly probable cut. Read more
(Chart from El Pais with thanks… though please label the axes in the future. It drove us a little crazy.) Read more
Elsewhere on Wednesday,
- What is KrugTron’s Blazing Sword? Japan.
- The real problem for Scotland is that it will be dealing with a government that thinks like Germany.
- How does inflation matter? Read more
Bond yields in the eurozone are hitting new lows not seen since 2010…
Depressing eurozone and German prints below. The eurozone composite was bleakly steady at 46.5 while the German comp hit 48.8 from 50.6 in March — its worst level in six months. The only real good news is that this might increase the chances of an ECB refi cut in the near future.
But since France came out first…. Read more
The US economy will officially become 3% bigger in July || Italian president Giorgio Napolitano was re-elected on Saturday || Banks pull back from risky regions || BaFin puts Reits in turmoil || U.S. box office heroes proving mortal in China || China’s slower Q1 growth is a ‘normal’ effect of structural reforms || Three more executives leave ENRC || G4S to quit key Israel contracts amid protests || Audit regulator calls for end to anonymity || ABB, the Swiss engineering conglomerate, is to buy US renewable energy company Power-One for $1.03bn in cash || Betfair rejects £910m CVC approach || Markets roundup || FTAV’s latest Read more
