Biography
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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.

Chinese equities… and fat pipes of wealth extraction

Right, so today the Shanghai Composite is up 5.6 per cent, Shenzhen is up 4.8 per cent and ChiNext has gained 6.3 per cent. And we have no idea what’s going to happen tomorrow

Over the past few days we got a clear government push to keep this thing up — including pushing something like an extra RMB1tn into the system via RRR and benchmark rate cuts over the weekend and, today, fund managers being told to help out — but it’s unclear how long that can keep things contained following near 20 per cent falls in these markets since their (admittedly v impressive) peaks in early June.

As of yesterday it was: not much at all as markets tumbled. As of today it’s: a bit more than that as they don’t.

To help clear things up, here’s Anne Stevenson-Yang of JCap Research with her most recent note: Read more

5,000 years of dread, charted

At a Parliamentary Committee hearing a few years ago I asserted, boldly, that global interest rates were at their lowest-ever levels. A wise colleague challenged me afterwards: “How do you know they weren’t lower in Babylonian times?” Several exhausted research assistants later I can report that, luckily, I was on safe ground. Interest rates appear to be lower than at any time in the past 5000 years…

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How’s that Zhou put working out for ya?

We’ll tear ourselves away from Greece to point out that Chinese markets are totally normal.

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We know what the euro is doing to Greece…

But, as the foreign press corp does its best to hurry some much needed euro into the Greek economy, we should also look at what Greece is doing to the euro.

Here’s Nomura’s head of FX, Jens Nordvig, on what to watch where the single, now more parlous, currency is concerned: Read more

Capital outflows, then and now

From Deutsche on capital outflow (lots of very crucial capital outflow) from Greece vs the periphery, 2012 vs now:

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Calling a top in China

Title wise, That was nuts. Is this the crash? was already taken. In this exact context. Last week.

So… this time the Shanghai Comp has just closed down 7.4 per cent (with some 70 per cent of stocks hitting downward limits), Shenzhen fell 7.9 per cent while ChiNext dropped 8.9 per cent. Read more

Further reading

Elsewhere on Friday,

- Glastonbury vs Camp AV.

- Choice, American politics edition.

- Sponsoring China’s PMI is a risky business.

- “The rivalry between “actual business,” … and compliance may have started when Leviticus warned against using dishonest weights and scales and withholding a worker’s wages overnight.” Read more

Learn to trade China’s A-shares like a pro or your money back*

Want to avoid market whiplash being driven by a whiplash president and crack the price-to-whatever ratio?

Come join our China panel at Camp Alphaville to find out how to make money up Shibor Creek! Read more

It’s 11.01 in Brussels [updated]

And we don’t know what that means… Updated with:

And from earlier this morning:

Greece is down to its final hours for negotiations over its soon-to-expire bailout, with creditors giving Alexis Tsipras, the Greek prime minister, until 11am Brussels time to come up with a workable compromise economic reform plan to release €7.2b in desperately needed rescue aid…

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In which red lines meet red ink

From Spiegel and crew in Brussels, the creditors’ counterproposal to Athens featuring lots of red ink. Click through for the full thing:

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Cognitive dissonance and still rising margin positions in China

Still rising until September based on broker capital, if you believe Macquarie.

And here is the bank, with our emphasis, after last week’s Chinese equity dive amid stories of broker crackdowns:

Last week’s sharp A-Share correction creates an opportunity for us to update our margin database and charts. It seems that hardly a day has gone by in recent weeks without some discussion of media reports about broker “crackdowns” on Chinese margin lending. But it may be more instructive to observe what brokers and their customers actually do rather than simply observing what the media reports they are doing. This is because the aggregate data on margin lending tells a very different tale from the “tightening” narrative.

Margin positions have continued to spike, climbing 16% MoM and 123% YTD to reach a new high of RMB2.3 trillion as of 18 June. This is 4.6x higher than a year ago. It brings the ratio of margin positions to market cap up to 3.4%, which is still below peak levels achieved in Taiwan in the 1990s. However, as noted previously, margin positions to free float – our preferred metric for considering the possible share overhang – is now 8.5%. Admittedly these numbers become less shocking with time, and cross-country comparisons are fraught with apples to-oranges risks, but we’ll say it one more time – this level of margins to free float is higher than any historical example that we can find.

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A Goldman proxy for (stumbling) Chinese growth

Quite obviously, not many people take China’s own statistics at face value.

Also quite obviously, China is a hard economy to accurately measure anyway. It’s really quite big and its pace of change has made grasping any bit of it for very long more than difficult. Read more

Further reading

Elsewhere on Wednesday,

- Greece fact of the day

- There is no tech bubble

- Cowboys, aliens and stimulus

- Chimpanzee cookery class Read more

Your half year report

Do click to enlarge:

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Further reading

Elsewhere on Tuesday,

- Why yes, booms might cause busts.

- Oh, and yes, small booms might cause big busts.

- Will the China century end in 2019?

- Cato vs Piketty.

- Free houses, Sicily edition.

- Bernanke versus Andrew Jackson. Read more

Grexit complacency, charted

From Barc as, per the FT, hopes fade ” that Greece and its creditors would strike a definitive deal on Monday to unlock €7.2bn of desperately needed bailout funds and save the country from default.”

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Your updated Greek bank… Jog? Stumble? Whimper?

It really is crunch time folks. Or at least, it’s a crunch time. We’re sure another could be arranged. Related question: how many ‘extraordinary meetings’ would it take to make the phrase redundant?

From JPM’s always excellent Flows & Liquidity team…

Purchases of offshore money market funds by Greek citizens, our proxy of Greek bank deposit outflows [the purchases of offshore money market funds by Greek citizens shown in Fig 1], points to a large €6bn deposit outflow this [being, last] week, bringing the cumulative deposit outflow since last December to €44bn.

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Further reading

Elsewhere on Monday,

- Krugman on economists and beards. Finally.

- The weed funding bubble.

- The “nine schoolgirls challenge”.

- Grexicographers note the approaching Gredge.

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That was nuts. Is this the crash?

Chinese stocks recorded their worst week since 2008…

More bullish observers say short-term factors are to blame for the 13.3 per cent fall in the benchmark Shanghai Composite Index this week, exacerbated by a 6.4 per cent fall on Friday…

The Shenzhen Composite was down 12.7 per cent for the week in late Friday trading — its worst since week since October 2008…

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Consensus bubble in China?

From Morgan Stanley’s China Pulse survey first (via @jjeswani):

In June, more than half of the investors believed Shanghai A-shares were already in a bubble vs. only 12% holding this view in January.

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Liquidity (lack of) and predictability (lots of)

A truth from Barclay’s Jeffrey Meli…

When short-term assets are scarce, non-traditional alternatives emerge to meet the need…

A truth which should be read alongside Robin Wiggleworth’s latest summary of liquidity fear and the emergence of mutual funds and ETFs as its newest proof. Read more

This is nuts, what could possibly go wrong?

Seriously, it’s foolproof and definitely not something we’ve seen before in other bouts of market mania.

From the WSJ:

Chinese companies are turning to an unlikely source for profits in the soft economy: the country’s red-hot stock markets.

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Your brave euro

As SocGen’s Kit Juckes says, the main topic in currency markets may be the resilience of the euro in the face of the ongoing Greek tragedy (ed – no, sorry) comedy (ed- really now, no) thing.

I wouldn’t know. I’ve been on holidays.

But in case that’s true, here’s Nomura’s Jens Nordvig on why it might be holding up. Read more

This is nuts, find me a greater fool please

From Bocom’s Hao Hong, he of the “price to whatever ratio”, we get today’s China nuttiness fact du jour*:

When calculated on a free-float adjusted basis, Chinese market’s average holding period is about one week – a hallmark of intense speculative trades in the market. Everyone is busy looking for the greater fool. Note that at the height of the Taiwanese bubble in 1989, every available share on the exchange changed hands close to twenty times per annum. That is, the free-float shares on Taiwanese exchange changed hands every 15 days on average.

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Valuing the Acropolis (and the arguments for NWFs)

Suggestion for a new series: things Buiter said a while ago that we need to talk about again.

This time… the search for a nation state’s “comprehensive balance sheet”. Which is exactly what it sounds like: a plea to establish a realistic balance sheet full of contingent liabilities and properly valued assets.

The new thing this time is that we’re talking about this balance sheet alongside the idea that “governments across the world are either ignorant of the true value (or indeed the existence) of some of their most important assets – they often have actively tried to hide these assets and have been highly successful in doing so.” Read more

India: A billion shareholders now

There are lots of people in India. Nobody argues about that.

What’s also true is not many of them care about equities.

Of course, there are exceptions. In absolute terms, rather large exceptions. The Bombay Stock Exchange (founded in 1875 as the “The Native Share & Stock Brokers Association”) is Asia’s oldest and ever since Reliance founder Dhirubhai Ambani — the ‘guru of the equity cult’ as Hamish McDonald put it — tapped into India’s small investor to fund his company, they have been in the mix. Read more

Further reading

Elsewhere on Wednesday,

- “A sufficiently large market predicting an individual’s death is also, necessarily, an assassination market, and similarly other “prediction” markets are also act markets, changing incentives to act outside that market to bring about the predicted events.”

- The geek heretic.

- “The highest form of derivatives artistry is achieved when a bank sells derivatives on its derivatives to itself, and this trade comes alarmingly close to that.”

- UK monetary policy is too complacent.

- Chicago, where, “five years later, however, many municipal market participants remain locked in an unproductive dialogue with an irrelevant personality.” Read more

Of mangled markets and the Chatham House Rule*

Some of you may remember how the ECB fecked up last week, when “an internal procedural error” meant an eventually market moving speech given by one Benoît Coeuré on Monday to, amongst others, a load of hedgies wasn’t made public until Tuesday morning.

The speech — apart from starting a debate about Chatham House rules, priviliged information and knee jerk responses by the ECB — was about ECB plans to front-load their bond purchases in May and June.

And as Citi’s credit specialist Matt King said: “If the ECB had wanted to test the extent to which traders were hanging on their every word, they could hardly have come up with a better experiment than to promise to boost the pace of QE purchases today, only to cut it back during the summer.” Read more

Further reading

Elsewhere on Tuesday,

- Dear buy side? Worried about liquidity? How about you pay for it?

- Technology, inflation and the Fed.

- The big Meh.

- Grexit: the real risk to the euro is not that Greece will fail but that it will succeed.

- Yanis, redux: Austerity is the only deal-breaker.

- Who owns Witanhurst, London’s most expensive mansion? Read more

China: staggered reform on one side, equities on the other

From SocGen’s Wei Yao, a chart we’re very tempted to plonk beside one of China’s equity markets:

Actually… Read more