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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.

This is Ludacris. When’s the crash?

From TechCrunch:

Roadie, the Atlanta-based shipping marketplace that’s angling to tap drivers already on the road to deliver packages, is adding some star wattage to its team with the announcement that music star Ludacris (aka Chris Bridges) is partnering with the company…

“I am intrigued by new technology and I love seeing the Atlanta tech scene on the rise so I partnered with Roadie to help spread the word about this brand new, completely unique app created in Atlanta. In a world where I feel we need a lot more people helping each other out, Friendshipping is the future, ” Bridges said in a statement.

Friendshipping… Read more

Further reading

Elsewhere on Thursday,

- Gross, context available upon click: “But now let’s go small: ants, snails, worms. Feelin’ good now?”

- The shortest Greece post ever.

- “The history of economics has been, among other things, a story of learning to care less about land.”

- The paradox of no market response.

- Corbyn, QE and financial interests. Read more

Fair and repeated warning: Humans, your purpose is at risk

To nick an opening from Climateer… at some point the labour-capital pendulum may not swing back.

Not sure we’re there yet but an automated restaurant in San Francisco is surely a signpost on the road to some sort of hell, albeit potentially just one made up of shoddy dining experiences.

Hell is… soylent served to you by an automaton in a room of people pretending they’re having a good time.

Anyway. That aside, we may as well keep an eye on that pendulum. Read more

CLSA degrees of separation

And there we were innocently scanning our inboxes over lunch. Well played CLSA comms team, well played. Read more

Further reading

Elsewhere on Wednesday,

- Pettis: If we don’t understand both sides of China’s balance sheet, we understand neither.

- Why Balding doesn’t believe Chinese GDP, redux.

- “If I don’t come back, look after my wife,” and other tales from China’s investment community.

- “You can be a pessimist about the Chinese recession now without being a) a pessimist about China in the longer run, or b) a pessimist about Chinese political stability.”

- Blockchain for banks probably can’t hurt. Read more

In search of China’s local gov debt gap… oh, sorry, we meant cap

Yes, this is the news that China has recently put in place a RMB 16tn cap on its, dangerously expanded, local government debt. Per Xinhua, and via the WSJ:

The Standing Committee of China’s National People’s Congress imposed a 600 billion yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday. That would be on top of 15.4 trillion yuan on debt owed by local governments as of the end of 2014, Xinhua said. The moves are the result of a new law requiring the government to limit local debt, it said.

It’s also the news that this is less than expected and, importantly, doesn’t include indirect liabilities . Hence…

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Of pampered Indian unicorns

Is this unique?

We rather doubt it.

From JP Morgan on India’s private sector start-up darlings and their publicly listed, markedly less-loved, counterparts (emphasis, theirs, ours and yours if you ask nicely): Read more

Further reading

Elsewhere on Tuesday,

- Was the Greek bailout a huge mistake, and if so, who made it?

- How to draw a cartoon of Xi Jinping in bed with another man.

- China’s fiscal stimulus memory black hole and the need for a consumption-orentated attempt.

- The V.C.s of B.C. Read more

China’s ongoing FX trilemma and its possible consequences

From UBS’s Tao Wang on what, post China’s surprise revaluation, is now an oft used phrase, the impossible trinity — AKA the corner China finds itself in:

The impossible trinity says that a country cannot simultaneously have an open capital account, independent monetary policy, and stable tightly managed exchange rate. Some academics (such as Hélène Rey) argue that since capital controls are no longer as effective in the current day world, complete monetary policy independence is still not possible without some degree of exchange rate flexibility, even without a fully open capital account – or impossibly duality.

Regardless of whether it is an impossible trinity or duality, the fact is that in recent years, as a result of substantial capital controls relaxation, China has found it increasingly difficult to manage independent monetary policy while simultaneously maintaining a fixed exchange rate.

 Read more

Further reading

Elsewhere on Friday,

- “To Merkel”, defined.

- “The people who knew the most about the company, because they were running it, told themselves one story about Dole’s future, and told the special committee another story.”

- Now the BoE is worried about bond market liquidity.

- “So is this the hour of China’s crisis? Highly unlikely.”

- Some of the people, some of the time. Read more

Further reading

Elsewhere on Thursday,

- A tale of two liquidities.

- Liquidity needs the return of the heroes.

- Dalio: The dangerous long bias and the end of the supercycle.

- So you think you can… time the stock market?

- Hold on, now we’re talking negative Chinese growth? Hmmm. Read more

Making China’s FX reserves feel inadequate

Things that are not infinite include… China’s FX reserves. Even at $3.7trn.

It’s an obvious point, but maybe the point is worth remaking.

From Soc Gen’s Wei Yao: Read more

China’s ‘major correction’, charted and extrapolated

It’s indeed a major correction, say Goldman, surprising precisely nobody:

 Read more

Further reading

Elsewhere on Wednesday,

- It’s getting tighter.

- Nathan Rosenberg and the innovation system.

- Balding on China contagion and that rate cut.

- A 21st-century migrant’s essentials: Food, shelter, smartphone. Read more

Putting China’s cuts in some context

As you’ve surely just seen, China has cut its reserve requirement ratio, by 50bps with effect from Sept 6, and its 1yr lending rate by 25bps to 4.6 per cent with immediate effect.

Markets will like this. And the timing suggests that the ongoing stock market puke did have something to do with the decision.

But there’s also certainly a broader rationale to these moves. Read more

China, so…. what now?

China, walloped again — Shanghai is off another 7.6 per cent and below 3000 points — even if the rest of Asia the world doesn’t seem to care quite as much as it did on Monday.

Have a compulsory longer term, context heavy, chart which shows that the index is still well up over 1yr but down 8 per cent YTD and 42 per cent since June:

The obvious question now is, what’s next? For the stock market and for the economy. The actions taken with regard to the former will contain a non-zero amount of information about the latter — which, to be extra obvious, is the important bit. After all, for EM at least, China matter thiiiiiis much according to BofAML Read more

Further reading

Elsewhere on Tuesday,

- Some good things about crashes.

- Official Russian cheese attacks, an attempted historical perspective.

- How Google could … COULD … rig the US election.

- I knew Black Monday. Black Monday was a friend of mine. This was no Black Monday. Read more

Bloodbath, charted

From on high, via Alberto Gallo and RBS:

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China’s Black Monday… and the Fed

Xinhua’s words, so it’s official:

 Read more

Further reading

Elsewhere on Monday,

- The future under Corbyn — totally barmy, not to be taken seriously, Mad-Max-like, prophecy edition.

- Questioning China’s reserves with Charlene Chu.

- On the internal turmoil at the top of the CCP.

- People are worried about EM bond liquidty.

- Bansky’s Dismaland, where Cinderalla dies and no one gives a toss. Read more

Of China’s “dirty peg” and spreading EM pain

Jim Reid at Deutsche assesses the damage so far. As he says, this has something of a taper tantrum feel to it but seperating out China from Fed fear is a tough job even if given “that the odds of a September hike are fading again (32% this morning, down 16% over the last 48 hours)” it seems “China and the impact on EM is the overriding driver”.

With our emphasis:

One of the big problems with China’s FX move is that although they’ve ‘only’ seen a 3% currency fall (in the onshore Yuan) since their announcement last week, others have subsequently followed suit either deliberately or via market [and oil based] pressure. The following countries have seen their currency depreciate at least 4% since last Monday (and using last night’s closing prices): Kazakhstan (leading the way with a huge 26% devaluation following the removal of the trading band), Russia, Ghana, Guinea, Colombia, Belarus, Turkey, Malaysia and Algeria. In fact, if we extended the analysis to include those that have seen at least a 3% depreciation then the number of countries hits 17 and unsurprisingly all sit in the EM bracket.

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July 8… now why does that sound significant? [updated with a China victory... of sorts]

Oh yes, that was when the Shanghai index hit its “nadir of 3,507 points” and “when the government announced measures to prop up a market that had collapsed more than 30 per cent in less than a month.”

And oh look. We’re back there again. Well, a bit lower actually: Read more

Further reading

Elsewhere on Friday,

- Musings on Thomas Malthus, the Hellenistic Age, the loyal-spirit great kings of Iran 550-330 BCE, and other topics.

- Are hedge funds fake?

- Finland considering a basic income.

- China’s dodgy credit guarantee firms are very US 2008.

- Dear early stage tech stocks, think you can get to profitability on your final round? Read more

Summer thunder [now with answers]

It’s August. Less quiet that usual but still August. Have a quiz.

Courtesy of BofAML’s Michael Hartnett, of the Thundering Word: Read more

Kazakhstan and keeping up with Russians

An unspecified number of tenge (not excluding zero) to those who can spot when Kazakhstan decided to let go of its currency band:

 Read more

Further reading

Elsewhere on Thursday,

- The creative apocalypse that wasn’t.

- Russia vs the cheese mob.

- Levine line du jour: “I suppose because diversification is not at all bae.”

- China’s building a huge canal in Nicaragua, but we couldn’t find itRead more

Approaching the acceptance phase of liquidity’s repricing

Do remember that, generally, many people are worried about people being worried about bond market liquidity.

This time we shall kick off with a very good note from Jim Croft at Standard Bank.

First, on why what’s changed is really just the cost of getting your trades done — which is going to anger those coddled folk used to abundant liquidity just being shoveled into their paths — with our emphasis:

In our world it’s the ability to swap a series of highly uncertain future cash flows for a payment two or three days later of hard cash. It’s a pretty cool service when you think about it (and not guaranteed by any bond prospectus that I have read.) But like any service that is provided, it has an associated price. So in my thinking what people really mean when liquidity has got “worse”, is that the price of liquidity has gone up. You can still get most trades done if you are willing to pay the new price.

 Read more

Further reading

Elsewhere on Wednesday,

- Pettis on the RMB and why market exchange rates don’t always reflect fundamentals.

- On the quantity and quality of Chinese GDP.

- BNY Mellon had some v special interns.

- Amazon and a reminder that there is no right to an upper middle class lifestyle.

- London’s black cabs vs the (uber) tide. Read more

Dear China, we can think of at least one job that needs filling

Wanted: A go-getting, self starter with no appetite for tautology and with a mandate to fully count unemployment in the world’s second largest economy. Must leak to press if not allowed to report findings.


Remember Xi who must keep you employed? The idea that social stability, rather then employment per se, is what the Party really cares about. Remember also how the unemployment stats we and, very possibly, they are working with are a bit rubbish? And that it’s possible the Party will be reacting to problems rather than preempting them?

Well, an attempt by Shuaizhang Feng, Yingyao Hu and Robert Moffitt to add some clarity to China’s dodgy unemployment numbers raises some fresh questions about the Party’s control of the economy. Read more

There really isn’t such thing as a policy independent exchange rate anyway

Sensible sentences from Citi’s Buiter et al on China’s valuation shock (with our emphasis):

This decision by the PBOC is a significant event, even if its implications and motivations are not yet fully clear. It appears that the Chinese government has moved from operating a pretty stable peg to something closer to a managed float, raising questions about how strongly it will manage it. As liberalization proceeds, (sterilized) foreign exchange market intervention will effectively only work through signaling and announcement effects. However, ‘domestic’ interest rate policies, credit and other financial and/or fiscal policies are likely to gain strength as well as they affect the ‘market-determined’ exchange rates. As such, monetary policy and exchange rates will work in tandem as there is no such thing as a policy independent exchange rate, regardless of how freely it floats…

 Read more