Biography
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Izabella Kaminska joined FT Alphaville in October 2008, which was of course the best time in the world to become a financial blogger. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP’s internal magazine. She has also worked as a reporter on English language business papers in Poland and Azerbaijan and was a Reuters graduate trainee in 2004.

For one week in 2003, and one week only, she traveled on her own initiative to Kabul to report on Afghanistan’s emerging business and banking industry. She stayed with mercenaries, which was cool. She later sold the piece to a business magazine, which was also cool.

The experience, however, taught her the valuable lesson of risk/return trade-offs.

Today she prefers to report from the mean streets of Geneva, Switzerland — a notorious European risk-aversion zone.

Everything she knows about economics stems from a childhood fascination with ancient economies, specifically the agrarian land reforms of the early Roman republic and the coinage and price stability reforms of late Roman emperors. Her favourite emperor is one Gaius Aurelius Valerius Diocletian.

She studied Ancient History at UCL, and has a masters in Journalism from what was then the London College of Printing.

And yes, she is also a second-generation West London Pole (who likes mushroom picking, bigos and pierogi).

Contact Izabella Kaminska

iPhone 6, the GDP effect

Can just one product deliver a 1 per cent boost to Chinese export growth?

If that product is Apple’s iPhone 6, then potentially yes.

So says BoAML’s China Economist Ting Lu, who presents the iPhone 6 case for Chinese exports as follows (our emphasis):

Though iPhone is an American product, it’s assembled in Mainland China (henceforth China) and all iPhones, except those sold in China, and are counted as China’s exports. The iPhone 6 is also important for Taiwan because the economy provides a significant amount of iPhone components including producing processors.

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The (early) Lunch Wrap

UK manufacturing activity at 14-month low || Factory slowdown heightens concern over China’s economy || Eurozone industrial recovery slows to a standstill || Burgers and BMWs highlight the rise of North Korea’s private economy || Cameron looks to reap dividend from backing Tusk for top EU job || Hong Kong democracy activists vent their anger against Beijing || Citi pays allowances to avoid bonus cap || Markets Read more

Electric cars as a medium for electricity storage and discharge

We promised some more insights from the UBS report on solar, batteries and electric vehicles. So here goes.

First, a chart showing just how quickly solar costs have been falling since 2007:

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Shale is not a ponzi, Part 2

In our last post, we referred to John Kemp’s argument that cash-flows in the shale drilling sector are not a good indicator of shale’s long-term commercial sustainability.

This, he argued, was due to the regular conflation of gas and oil in the metrics, justified by the fact that most companies produce some variety of both. In the last few years, however, producers have shifted their efforts increasingly towards oil production — due to the better margins — improving cash-flows as a result.

And that, in some way, is the great thing about the technology. Switching between carbon fuels is much easier than with conventional upstream projects. (Not to put everything in bitcoin terms, but it’s a bit like switching processing power to mine dogecoin instead of bitcoin whenever the margins are more cost effective.)

Nevertheless, peak oilers still contend shale isn’t long-term sustainable because of the rapid decline rates for wells. These, they claim, are being depleted much more quickly than conventional wells, speaking of the problem in hand. Read more

Shale is not a ponzi

The FT’s Ed Crooks reported this week that fears over the long-term health of America’s shale industry could be put to rest thanks to news that independent oil and gas companies have now substantially improved their financial positions.

From the story:

Cash earned from operations by 25 leading North American exploration and production companies is expected in aggregate to exceed their capital spending next year for the first time since 2008, according to an analysis by Factset for the Financial Times.

As Crooks recounts, the longstanding fear was that the industry was shaping up to be a Ponzi scheme, relying on nothing more than excitement over shale to continuously attract new investment, with every likelihood that things would cave in on themselves once the financing for more drilling ran out.

Thanks to a shift to more profitable oil extraction over less profitable gas, however, it now looks like shale companies’ finances have improved enough to make the business sustainable. Read more

The (early) Lunch Wrap

Nato to hold emergency Ukraine summit || Tesco issues profit warning and slashes dividend by 75% || Japanese economy flounders after sales tax rise || Baidu and Tencent join Dalian Wanda in $814m China ecommerce deal || Eurozone inflation hits fresh five-year low at 0.3% || Markets Read more

The great London horse carriage war of 2014

The following arrived in our inbox this Tuesday from Hailo, the cabby app which allows you to hail a cab using a mobile:

As of 5pm today you’ll find a free £10 credit applied to your Hailo account which expires at midnight tonight.* Make the most of your evening, stay out late or swap your normal commute with a safe, comfortable and cool cab home. Or why not try our new luxury HailoExec service? Just hit Pick Me Up Here and swipe across to select it. It’s a little post Bank Holiday gift from us to help you enjoy a hassle-free summer with Hailo.

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Time to release the Spanish bulls?

We all know about the amazing diminishing Spanish bond yield.

But have you heard the one about the Spanish recovery having totally viable legs?

Spanish consumer prices may have fallen 0.5 per cent in August, year on year — their sharpest drop since 2009 — but the final reading of second quarter GDP confirmed the economy still grew 0.6 per cent q/q versus 0.4 per cent q/q in first quarter of 2014.

As this chart from Marco Protopapa at JP Morgan shows, that makes for quite a turnaround, deflation or no deflation:

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Edwards: “The equity market is now running on fumes”

Ice Age theologian, Albert Edwards of SocGen, is back from holiday with a new missive warning of imminent equity collapse.

(As a reminder the Edwards’ Ice Age thesis, which has been running since the days of the Asia crisis, predicts a world of very low inflation and near deflation, where equities de-rate both absolutely and relative to government bonds, which also re-rate in absolute terms. This long-term valuation bear market doesn’t end until the S&P 500 hits 400 and bond yields are below 2 per cent and there’s been a deep recession and blow-up in China.)

As Edwards notes, sub 1-per cent 10-year bund yields are testament to at least one part of his theory playing out as anticipated. Read more

Do bank analysts dream of electric cars?

Yes, yes they do.

At least the ones from UBS, who are out this week with a huge report on solar, batteries and electric cars and their capacity to re-shape the current electric system in the next few years.

Case in point, these charts:

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When FX wars become negative interest wars

Beat Siegenthaler, FX strategist at UBS, has been wondering about what the Swiss National Bank may do if the ECB’s measures to weaken the euro begin to test its 1.20 EURCHF floor.

He notes, for example, that there has already been a marked divergence between the EURCHF and the USDCHF:

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Money hierarchy, the global perspective

No, this isn’t going to be another FT Alphaville post pontificating over what money is or isn’t. We’ve had plenty of that.

Instead, precisely because nobody can really agree on what money is or isn’t, we’re going to take the basic position that money is an amalgamation of many different things and totally subjective to the holder and acceptor.

Just that somehow, for the purposes of trade and, you know, peace and quiet, we in civil and ordered society carry on the pretence that money represents a common value set amongst us all, and therefore don’t mind when it’s treated in a fungible manner. Read more

The (early) Lunch Wrap

RBS fined £14.5m for poor mortgage records and advice || IMF’s Lagarde placed under formal investigation || Ryanair launches ‘business class’ as it aims for corporate market || Kiev promises ceasefire plan for east Ukraine || Foxtons to pay special dividend as profits jump || Balfour Beatty public-private portfolio valued at more than £1bn || Shale oil and gas producers’ finances lift growth hopes || Markets Read more

The (early) Lunch Wrap

Lockheed Martin seeks to clean up space junk || Pictet in profit as wealth manager reveals results for first time || WPP profits rise despite sales ‘ravaged’ by strong pound || Regus hit by strength of sterling || Amazon buys Twitch to woo gamers || Hackers target gaming companies ||  Read more

When creative destruction becomes creative devastation

John Komlos of the Ludwig-Maximilians University in Munich proposes in a new paper that ‘creative destruction’ has become devastating, not just destructive:

the destructive power associated with Schumpeterian creative destruction has increased markedly relative to their creative component, in contrast to previous epochs. Creative destruction’s gentle winds have mutated into cyclones of destruction.

Thus, our sense of well-being will probably not keep pace with even the slow economic growth being predicted by Gordon, Summers, and Krugman. While the economy will be growing, albeit slowly, we predict that our sense of well-being will be mysteriously lagging well behind.

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The (early) Lunch Wrap

Janet Yellen to see Jackson Hole return to wonky roots || StanChart’s NY anti-money laundering settlement draws UAE ire || Activist Edward Bramson steps up pressure to join Electra board || Co-op Bank slashes first-half losses || Markets Read more

Patent trolls as the new rentier class

According to the Merriam-Webster dictionary, a rentier is a person who lives on income from property or securities.

From the point of view of Marxist rentier capitalist theory, a rentier is also a parasite who adds no value to society, but instead survives solely due to his ability to extract rents (tribute) from productive people. A rentier achieves this through muscle or social norms which defend his exclusive rights over property in such a way that he must be compensated for their use by others.

Today, patent trolls are emerging as the world’s most nefarious rentier types.

The reason they’re so particularly nefarious, we’d argue, is directly linked to the type of property that they’re trying to monopolise. Intellectual property. Read more

Kinder Morgan, the actual tax cost

Matt Levine at Bloomberg has already explained how the $12bn surge in the value of Kinder Morgan Inc. following its self-acquisition is mostly due to the tax savings brought about by the deal:

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The (early) Lunch Wrap

Inflation fall reduces chance of rate rise || Kurdish forces wrested control of Iraq’s Mosul dam from jihadis || Maersk targets first share buyback as it upgrades profit forecast || China’s property slump worsened in July || Chinese President Xi Jinping plans to regulate income distribution in state-owned companies || RBA warns over significant uncertainties on growth || Obama sends attorney-general to Ferguson, Missouri || Rabobank trader pleads guilty to conspiring to manipulate benchmark rates || Rosneft is about to start drilling its first oil well in Norway || Dollar General bids $9.7bn to buy Family Dollar || Appnexus cracks a valuation of over $1bn || Markets  Read more

Kinder Morgan, MLPs and the sell case

The $44bn self-acquisition of Kinder Morgan has been heralded by some as a great deal for shareholders.

But is it? Is it really? At least for the ordinary investors?

We’ve already wondered about the motivation for the deal.

Among our initial thoughts: Kinder Morgan MLP units trading under the KMP ticker had got expensive due to the heavy promotion of MLP structures as a safe-ish and yieldy investment at a time of low interest rates.

But we now think there may be more to it than that. Read more

A Bitcoin flash crash

Bitcoin has been on a sharp course downwards for a few weeks now (chart courtesy of Bitstamp).

But on Monday, the unthinkable happened.

Bitcoin prices on the BTC-e exchange suffered a flash crash that took the price as low as $309 per bitcoin from a day high of $497.79.

Here’s the damage:

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The (early) Lunch Wrap

Fed blow to banks over ‘living wills’ || Smartphone owners’ appetite for new apps wanes || Bovis pre-tax profit surges on robust property market || Chinese banks step up lending to housing || US banks plan ahead for UK exit from EU || Markets Read more

Oil and the prospect of a Chinese shale boom

Russia geopolitical risk? Check. Middle East geopolitical risk? Check.

But commodity prices, and in particular oil prices, are doing nothing: Read more

The (early) Lunch Wrap

US rows back on need for international rescue mission in Iraq || German benchmark bond yield slips below 1% || Bill Ackman plans to raise $4bn by listing new investment vehicle || || Gold loses its shine as Chinese curb jewellery purchases || European companies slam Chinese antitrust probes || Eurozone economy fails to grow in second quarter  Read more

On the art of creating value from nothing

Bitcoin does it. Dogecoin does it. Gold miners do it. And now Kinder Morgan does it too.

What we’re talking about is the amazing ability to create value out of nothing.

The Kinder Morgan self-acquisition deal, which effectively found $12bn of shareholder value from a paperwork reshuffle, is probably the most high-profile example of mining shareholder value from good old fashioned financial ingenuity, even when it involves some finance reverse-engineering. Read more

Welcome to Russia’s Hunger Games

Given that modern-day warfare must at some point involve drones or autonomous vehicles, it makes sense that modern-day propaganda wars should involve Twitter and social media.

The battle for cyber hearts and minds in that regard is now getting really interesting.

One need only do a casual Twitter search for “пустые полки“, the Russian for empty shelves, to see what we mean.

The backstory here is that in retaliation for US and EU sanctions, Russia has decided to ban the importation of large categories of food products from each. Read more

The (early) Lunch Wrap

Russia sends own aid convoy to Ukraine || Sanctions have low impact on Russian oil || UK evolving into self-employment capital of western Europe || Serco pays price for outsourcing scandals as profits tumble || London house prices to slow to 3% next year, says Hamptons || UK retail sales weaken as supermarket price war hits food trade ||Markets Read more

A little case of Russian crude stigma

Russia’s ESPO crude blend determines the key compensation rate for Russian oil production.

As analysts at JBC Energy note on Monday, however, the crude now trades at its weakest differential to Dubai crude — the benchmark it is most commonly compared to — since it became an established blend on the market in 2010.

Whilst the analysts are quick to point out that there are legitimate fundamental reasons for the weakness, it should not go unnoticed that some regular ESPO customers seem to be missing from the market. Read more

Piketty and the randomness of wealth

Gary Jenkins of LNG Capital confesses in a note on Friday that reading Piketty’s Capital in the 21st century was not an easy affair. Here’s the strategy he resorted to in order to get through the 577 pages of the book:

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The (early) Lunch Wrap

Obama authorises Iraq air strikes || Cyber Snake plagues Ukraine networks || Malaysia Airlines to be nationalised || Hampton leads race to be GlaxoSmithKline chairman || Brent crude approaches $107 a barrel || Wanda’s $1.2bn Hollywood dream becomes reality || Co-op unveils corporate governance overhaul || Markets Read more