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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.

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

Further reading

Elsewhere on Monday,

- “As a sophisticated serial acquirer of businesses, Warren would much prefer to deal with wet behind the ears families lacking professional representation…”

- And how one of Buffett’s tricks is to be rigorous while seeming sentimental.

- Reasons to worry about US equities.

- The strange urge to raise rates. Read more

Further reading

Elsewhere on Thursday,

- Pettis: When do we decide that Europe must restructure much of its debt?

- Lessons for Greece from Iceland’s banks.

- Scarcity.

- RU, a pain in my Bund?

- Russia: You can always know what’s going to happen slightly in advance by following the financial dealings of insiders. Read more

In the long run we’re all charted

These came out yesterday courtesy of BofAML’s 2015 look at looong term trends in financial markets by Harnett and Leung…

The obvious place to start:

And the obvious place to continue, asset prices: Read more

Further reading

Elsewhere on Wednesday,

- Eurosystem QE may indeed be close enough to a free lunch.

- Stagnation and intergenerational justice.

- Pocket money in Toby’s house: “So the ledger looks a bit more like an unregulated Defined Contribution pension scheme with a lot of concentrated counterparty risk than a bank.”

- Inflation = corruption? Xi = Volcker? Read more

Dear Eurogroup

From the pen of Yanis Varoufakis, do click through for the full thing.

 Read more

Asia’s FX vulnerabilities, charted

From Morgan Stanley’s Asia Pacific team (do click to enlarge):

The bigger the bubble the bigger the debt, but more on that near the bottom. Read more

Further reading

Elsewhere on Tuesday,

- In defence of can kicking.

- Greece, a less simple macroeconomic guide.

- “It would be weird if the White House put out a fact sheet called “Strengthening Retirement Security by Cracking Down on Active Investing.” And obviously that’s not quite what it’s going for with this paper. But it’s close.”

- How patient is Yellen? Read more

SOE you think you can reform, even larger state entity creation edition

A rumour started floating around last week that a CNPC-Sinopec merger might, just might, be on the cards with the FT suggesting China’s national planners were “openly discussing the idea of mergers in a number of state-dominated industries, following the $26bn marriage of high-speed rail companies China CNR and CSR Corp at the end of last year to create a more formidable competitor in international tenders.”

Fair enough and we’re not saying this definitely won’t happen, stranger things etc, but there’s something really very funny about the idea. Read more

Further reading

Elsewhere on Monday,

- Old India meets new via the bouncer caste of Delhi.

- Moar human capital: people aren’t androids and how calling anything “capital” at all requires a simplification and abstraction... demonstrated by arm-attached chainsaws, naturally.

- Greece: a simple macroeconomic guide and how the deal was maybe about trust.

- Silk Road a petty version of the very governments it is fleeing. Read more

No, the Fed is not joining the currency war

Fair enough if you want to talk about QE and devaluation but the recently released FOMC minutes really don’t seem to be the place to start building your argument for a Fed jumping into the currency wars.

Bringing us the opposite view, here’s some Bloomberg: Read more

Further reading

Elsewhere on Friday,

- Greece and educating economists.

- These are not the (modeling assumptions about) droids you are looking for.

- 1870 and the iron-hulled ocean-going coal-fired steamship as the true inflection point for trade and transport.

- Good deflation/ bad deflation. Read more

Yes, yes, we know. It’s time to talk about capital controls again

So on Wednesday, we got this from the ECB as the Battle of the Drafts between the Eurogroup and Greece rumbles on — it’s in the FT’s words (we still can’t find a press release):

On Wednesday evening ECB policy makers approved a €3.3bn increase in ELA to the Greek banking system. Lenders will now have access to up to €68.3bn of emergency loans from the Bank of Greece, after members of the ECB’s governing council sanctioned the increase, from €65bn, at its regular fortnightly meeting.

The Bank of Greece had asked for more emergency funding, according to a person familiar with the matter. The approval is for a two-week period.

And this… Read more

Further reading

Elsewhere on Thursday,

- On the binariness of the euro, or lack of it.

- “Maybe the magic of derivatives was actually a dark necromancy. Maybe it was used to animate a horrible zombie that then roamed the countryside laying waste to assets that properly belonged to RadioShack’s unsecured creditors.”

- Why is “human capital” such a disastrous turn of phrase?

- Greece and the battle of the drafts. Read more

The mutating nature of trust in China

China’s richest man has been loading up on high interest shadow banking loans — and selling off a private jet — to fuel the rapid growth of the most valuable solar company in the world.

A Financial Times investigation has found that Hanergy Group, run by founder Li Hejun, has borrowed billions of renminbi from high-interest Chinese “trust products” marketed to wealthy individuals, and loans secured through pledging shares in its Hong Kong-listed subsidiary.

Yup, you’re never short of a lede when your subject is China. A little more, still courtesy of the FT: Read more

Further reading

Elsewhere on Wednesday,

- Haldane: Growing, fast and slow.

- Spain’s “good” deflation?

- BI’s most important charts in the world fest.

- Snapchat in more of a race against the clock than people think. Read more

Your updated Greek calendar

From Deutsche (click to enlarge):

As Deutsche say, beyond the preferences of the Eurogroup and how/ whether Greece chooses to extend the current program or apply for a new one, the binding dates for Greece have become more apparent: Read more

So you still yuan out?

Charts from Nomura showing, on the left, China’s largest cumulative two-month decline in FX purchase positions on record occurring despite a record trade surplus over the same period and, on the right, the probable hoarding of foreign currency as reflected in a sharp monthly rise in foreign-currency deposits in January.

Or to paraphrase a bit further: more signs of capital flight and depreciation pressure in China. Read more

Further reading

Elsewhere on Tuesday,

- A Dan Davies duo on Greece: “What to look out for on the downside would be if Syriza actually starts creating facts on the ground” and how “focusing the language on debt sustainability… is the graceful way for the hardliners on the Eurogroup to climb down.”

- Either way, let’s all just keep nice and calm.

- And why game theory means Varoufakis can’t act like a game theorist.

- Jesse Livermore: The greatest trader who ever lived.

- What ISIS really wants. Read more

Of Greek deposits and quiet weekends

This from Dan Davies is worth a bit of your time — supposedly four minutes of your time according to Medium’s time-thingy.

It makes the very good point that the lack of Greece-dominated headlines over the weekend is most probably good news. As Dan says, we haven’t had stories of deposit flight and bank runs, there haven’t been anymore leaked documents, the ECB hasn’t piled on any more pressure and there has been no grandstanding of note — from Greek or German politicians.

From Davies: Read more

Further reading

Elsewhere on Monday,

- “Nobody wants to bring Mother Theresa to a knife fight” and other reasons Goldman doesn’t care about most of your opinions.

- Weimar and Greece, continued.

- Greece — all the news we didn’t get over the weekend.

- An answer to the question “why are all the good guys taken” through a dynamic model of romantic search.

- Er… Sechin’s ringing call for greater transparency in the energy industry. Read more

Further reading

Elsewhere on Friday,

- Scamming in the 1800s. Simpler times.

- The austerity con: Simon Wren-Lewis long read.

- Why 500 year old business are going under in Japan.

- Twitter and the shame of public shaming. Read more


A chart, from Deutsche, of the global pool of funds in 2014:

It’s from their annual Random Walk through the world’s financial markets. The top line: Read more

Further reading

Elsewhere on Thursday,

- What we know about recessions might be wrong.

- We seem to be heading full speed back to the late nineteenth century.

- The Daily Mash guide to the eurozone crisis.

- How a zip’s tiny tab is the difference between full automation and a human having to join millions of sliders and pullers together. Read more

The shuttering of China?

This is gonna be speculative, so bear with us.

It’s the idea that China will — as more and more capital threatens to flow out of the country — start to shut its doors and look inwards once again. Read more

Further reading

Elsewhere on Wednesday,

- How a lone hacker shredded the myth of crowdsourcing.

- A lesson from the ibanker on the importance of break fees.

- Of “death derivatives”.

- Dani Rodrik on premature deindustrialization. Read more

Further reading

Elsewhere on Tuesday,

- There will be no consolation prizes for Greek leaders who fail conventionally.

- And… if the euro does fail, here’s what should be written on its tombstone: “Died of a bad analogy.”

- The fixer: poverty, corruption and aspiration in rural India.

- Banks will charge extra for not manipulating FX.

- How Calpers lost its standing in municipal bankruptcies… Read more

Currency wars and central bank credibility

Fool me once… with a surprise easing move somewhat forced upon you due to a somehow ‘unspoken’ currency war… shame on, er, you. Obviously.

The argument being that whatever liberties central banks take now with surprise monetary policy, moves will be paid for with a lack of credibility in the future. Read more

Further reading

Elsewhere on Monday,

- Gavyn Davies global growth report card: Eurozone and Japan recovering.

- Greece: looking on the bright side…

- Beware of Greeks bearing small-denomination zero-coupon bearer bonds.

- Piketty: Reflections on Capital in the Twenty-First Century. Read more

China depreciation risk: You do the math

With an unspoken currency war supposedly upon us and a cry for China to join in — according to BofAML the market is pricing about a 30 per cent probability of a 10 per cent devaluation of the CNY this year while insistent market forces push the yuan down anyway — we thought a lopsided CNY depreciation pro and con list from Nomura might be helpful:


1. Makes exports more competitive, helping to boost growth.

2. Raises the cost of imports, helping to reduce the risk of CPI deflation.


 Read more