An “asset return tree” (really), from Credit Suisse:
© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
(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.
From the SNB, click through for the full thing:
Timing is a bit odd no? Worried about all them roubles perhaps? Read more
Elsewhere on Thursday,
- When the gold standard was really a dollar standard.
- “As much as you think of the possibility that the hike is delayed, think also of the possibility of 1994.”
- The Cuba that was, 1963 edition.
- Putin’s “aides assured him Russia was rich enough to withstand the financial repercussions from a possible incursion into Ukraine”. Read more
Do click through for the full thing — the Co-Op is the loser of the bunch and was told to hand in a new capital plan that “envisages a reduction in its risk-weighted assets of £5.5bn by the end of 2018, notably by selling some subprime mortgages.”. RBS and Lloyds were near misses:
From the report:
The stress scenario featured an initial shock to productivity, which led to an abrupt reassessment of the prospects for the UK economy.
For those of you who, like me, slept through the CBR’s attempt to sledgehammer the cumbling rouble back into some sort of shape by hiking 10.5 per cent to 17 per cent…
What you think of the new one will probably depend on what you thought of the old one. For many people “not much” seems inadequate.
From Capital Economics’ Mark Williams on the likely Tuesday announcement of an upward boost of up to 10 per cent to the Chinese government’s estimate of the size of its economy (our emphasis): Read more
You’ve read about the scope for a dynastic bull market in the Economist… now read the report. If you can read Mandarin, like P/E ratios and have a good feel for Chinese imperial history that is.
Do click through the below for the pdf from Cinda. Joseph Cotterill, our resident Mandarin translator, assures us that it’s a chart of the last two millennia of order and chaos in China… which is nice: Read more
It’s a variant on the ubiquitous “long dollar” that has passed through consensus into some region of near zen-like certainty, we grant you, but at least this is approaching the more outrageous corner of 2015 FX guesses. It’s entitled “How extreme USD strength can destroy the world” after all.
In two charts from HSBC:
If you don’t you might miss all the capital outflow which, according to Deutsche’s George Saravelos, “not only has depreciatory implications for the euro, but also suggests that the consequences of Euroglut – low global bond yields and a stronger dollar – are here to stay.”
Oh, and blame Germany. Read more
Updated with final figures: Shanghai Composite fell 5.4% today; turnover was 8bn, about 7x the 2014 average. pic.twitter.com/yw9jxOTBU7
— Patrick McGee (@PatrickMcGee_) December 9, 2014
Nice from Simon Rabinovitch at the Economist:
One middle-aged man, Mr Xu, had come to meet a manager to inquire about how to subscribe to initial public offerings; their average first-day gain has been about 40% this year. He said he had taken the afternoon off work for the meeting and could hardly conceal his glee. “I’ve been trading since 1992 (just two years after the Shanghai Stock Exchange was established) and I guarantee you this bull market will last,” he said. He confessed to getting badly bruised by the last big one – his portfolio of 500,000 yuan had swollen to 3 million yuan by 2007 at the peak of the market, before falling back to its original level.
At the other end of the spectrum in terms of experience was Ms Zhou, 25, an interior designer with dyed-blonde hair. Like many other young professionals, she had previously put a big chunk of her savings in an online investment fund marketed by Alibaba, an e-commerce company. The fall in interest rates has reduced the return on that fund, pushing her to look for alternatives. “I had been thinking for a while about buying stocks but I had to travel for work and missed the best opportunity,” she sighed. “I will be conservative at first. Just one or two thousand yuan. Or maybe ten thousand.”
Which says a lot about the mechanical nature of this “super-bull” run. There’s simply quite a bit of money in China and a limited number of places for it to go. Once one is found… Read more
* Suggest Citi, kinda.
Still, it’s AN argument (with our emphasis):
After the debating – A favourite year-end discussion point for investors and brokers is do you back current winners or play reversion to the mean. Instead of looking at share price performance alone we ran a screen based on 1 year forward Price/Book today versus their past 5 year median. Our sample was Citi’s global coverage universe of bank stocks with a market capitalisation of over $10 billion (121 stocks). The “winner” in terms of largest de-rating is Standard Chartered with a 45% discount vs its 5yr median:
Shanghai + Shenzhen turnover over 1 trillion yuan today.. markets not even closed yet
— Jacky Wong (@jackycwong) December 5, 2014
And in the Shanghai Composite, from Fast, “as of 2:34pm in Hong Kong, turnover today is already $91.4bn, a record high according to Bloomberg data going back to 2005.”
Blame retail, blame leverage but don’t, as already mentioned, put too much weight on the Shanghai-Hong Kong Stock Connect scheme — uptake has been light and the timing is off. It’s up to you how much weight you put on that rate cut in late November. YEAH the equity rally got off the ground well before the rate cut with the Shanghai Composite up by 23 per cent between the start of June and 21st November, more than any other major equity market. BUT shares have also gone up 17.5 per cent since the rate cut so it’s obviously part of the story.
But to get back to the more important retail, leverage stuff…. Read more
Elsewhere on Friday,
- Davies: the US Fed and the ECB view the consequences of the oil shock entirely differently.
- Maths and morals, economics and greed.
- If you are not allowed to set the price… make it yourself.
The Chancellor of the Exchequer, George Osborne is today (Wednesday 3 December) announcing that the government will repay all the nation’s First World War debt.
The Chancellor also announced that the government will adopt a strategy to remove the other remaining undated gilts in the portfolio, some of which have origins going back to the eighteenth century, where it is deemed value for money to do so.
The Treasury will redeem the outstanding £1.9 billion of debt from 3½% War Loan on Monday 9 March 2015.