Latest posts

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

When are monopolies a good thing?

Here’s the proposition. Rule by committee isn’t a good thing.

In the worst-case scenario it leads to the “Lawrence of Arabia” problem, wherein you spend so much time trying to figure out how to rule well, you fail to notice when your sovereignty is being stripped away from you under your nose. Alternatively, it leads to the phenomenon of “settling”, wherein the pressure of arriving at a consensus allows all sorts of sub-optimal scenarios to creep in.

It’s probably not a coincidence, consequently, that great leaps forward tend to be associated with charismatic visionaries who, thanks to a near hypnotic effect on colleagues and associates, end up attracting the sort of approval and following that allows them to sculpt the future as they, not others, see fit.

Once in charge these guys tend to rule absolutely, deploying their wealth and power – often generated by early career triumphs – to implement the change they believe in. A lot of time, their greatest directional successes come as a result of forming monopolies or near monopolies in the areas they operate in. Read more

The (early) Lunch Wrap

Apple eyes return to glory days of $100 share price || US Senate alleges hedge fund and banks avoided $6bn tax bill || Royal Mail struggles to deliver as competition for parcels grows || Credit Suisse quits commodities trading and trims investment bank || Saudi stock market to open to foreigners || Barclays ‘dark pool’ trades dry up after high-frequency suit in US || Markets Read more

The Fed as universal banker

The Federal Reserve’s June minutes are out and as usual offer good insight into the FOMC’s thinking when it comes economic confidence and recovery (more positive) as well as its opinion on rates (still dovish).

But they also reveal a new preoccupation with matters related to exit strategy and financial plumbing.

Here’s the section we’re referring to (H/T David Beckworth)

While generally agreeing that an ON RRP facility could play an important role in the policy normalization process, participants discussed several potential unintended consequences of using such a facility and design features that could help to mitigate these consequences. Most participants expressed concerns that in times of financial stress, the facility’s counterparties could shift investments toward the facility and away from financial and nonfinancial corporations, possibly causing disruptions in funding that could magnify the stress.

 Read more

The cronut-ification of banking

Tracy Alloway hosted a session on the “death of a financial intermediary” at last week’s Camp Alphaville.

The discussion featured Renaud Laplanche, CEO of Lending Club, Cormac Leech, bank analyst at Liberum Capital, Krishan Rattan, founder of Voltaire Capital and Matt Levine, Bloomberg View columnist.

 Read more

Don’t freak out about UST fails (yet)

Everyone in the market is suddenly talking about the spike in repo fails.

But here’s the thing. Repo fails need to be seen in context.

Yes, this chart from BoAML makes the recent June spike look significant:

 Read more

Gone Camping

*Ding – ding – ding*
Good morning Alpha campers!

 Read more

Bitcoin auction, the aftermath

Bitcoin prices rebounded from recent lows overnight as “results” of the US Marshal Silkroad Bitcoin hoard auction came through: (Chart via Bitstamp)

 Read more

Further reading

Elsewhere on Tuesday,

- China is mad for robots. Read more

The 6am London Cut

Camp Alphaville reminder: It’s on Wednesday (Details here) There’s now a comedian on the programme as well.

Markets: Markets across Asia-Pacific were mostly higher as investors digested a slew of new economic data. Japan’s Nikkei 225 led the way, gaining 1.3 per cent after a key survey showed that companies planned to increase their spending in the second half of the year.Sydney’s S&P/ASX 200 was up 0.2 per cent, although the mood was more cautious as investors awaited the Reserve Bank of Australia’s release later today of a policy update. The Shanghai Composite fell 0.1 per cent, while the Hong Kong market was closed to observe Establishment Day. Japanese stocks rallied after the Bank of Japan’s quarterly Tankan survey suggested that the economy could rebound after the April 1 increase in sales tax weighed on sentiment and spending habits. (Financial TimesRead more

The (early) Lunch Wrap

Eurozone inflation unchanged at 0.5% in June || BNP Paribas board approves record $8.9bn settlement || Sex tape adds to murk of GSK China scandal || ‘Euphoric’ capital markets are out of step with reality, warns BIS || Tax windfall boosts Shire shares || Markets Read more

Do private sales affect public prices?

It’s a tricky question for the Bitcoin community this morning, who just can’t decide.

From the Bitcoin reddit: Read more

The (early) Lunch Wrap

Ukraine, Georgia and Moldova agree closer ties with EU || Italy leads calls to slow sanctions against Russia || Merkel to limit Juncker fallout || Berlin drops Verizon over US spying fears || Banks start to drain Barclays dark pool || NYSE has won the coveted listing of Alibaba || The World Bank has issued its first ever catastrophe bond || Wall Street banks create corporate bond trading platform || GoPro Shares Jump 31% in Debut || American Apparel faces loan repayment || Markets Read more

The (early) Lunch Wrap

BoE moves to cool housing boom || Top New York securities regulator sues Barclays over ‘dark pool’ || Google spreads its Android net in digital empire building || Walmart wins China labour dispute || Glencore appoints first woman director || Markets Read more

When commodity collateral shenanigans go wrong

We’ve long reported about China’s amazing commodity collateral shenanigans, featuring almost every commodity or physical good under the sun.

None of which was a problem for the financing side of the equation as long as the deals could be rolled over and for as long as the collateral did not have to be liquidated.

A few bad loans later, however, and suddenly the need to check in on the underlying collateral has exposed a small problem with relying on commodity collateral to de-risk trade finance. So intense was the demand for cash financing in China that it seems the greatest shenanigan of all was rehypothecation — multiple use of the same collateral many times over for many different loans. Read more

The (early) Lunch Wrap

TSB shares jump 10 per cent in trading debut || Diageo poised to take control of India’s United Spirits || Allied Minds prices IPO, valuing intellectual property investor at £398m || Siemens and Mitsubishi raise stakes in Alstom bid battle || Westfield’s A$70bn demerger wins approval || Isis unleashes digital offensive ||  Read more

Newsflash Bitcoin people, we already have a private money system

The following from Paul McCulley, chief economist at Pimco and Zoltan Pozsar, a senior adviser at the US Treasury department, came out earlier this week in the FT, but is worth rehashing in light of this relatively absurd call from the Institute of Economic Affairs for the UK government to privatise the pound and replace it with Bitcoin (capital B).

The central message of the McCulley piece being — one which happens to be echoed by most seasoned central bankers and economists — that we do of course already have a private money system! And that was part of the whole problem!! Read more

**The Great Camp Alphaville Robot LOTTERY!**

*Reminder and notification of an extended deadline!*

Based in New York but desperately want to hear Michael Pettis assess the future of China’s growth model? Read more

A game of mega-city states

Here’s a radical idea to deal with the London house bubble from Rob Perrins, managing director of Berkeley Group, the upmarket housebuilder.

Give London its own interest rate.

Or as he put it:

London is getting self-sustaining now – it doesn’t need the stimulus…It should probably have a higher interest rate than elsewhere in the country.

Which begs the question: are super-city states about to disrupt our current concept of the old fashioned sovereign state? Read more

The (early) Lunch Wrap

World Gold Council to explore gold ‘fix’ reform || Argentina vows to continue fight against ‘vulture funds’ || Ukraine and Russia discuss possible ceasefire || Monetary Policy Committee says outlook on UK rate rise ‘surprising’ || Markets Read more

What the heck is an igloo anyway?

Most of you should know by now that FT Alphaville is staging a finance themed festival on July 2, at the HAC.

But it’s not going to be your average run of the mill conference thing.

No! There will be telepresence robots, courtesy of Awabot. There will be drones. There will be a mystery convict. There will be finance-themed comedy standup. There will be burlesque cabaret. There will be a pub quiz. There will be Paul Murphy in full interactive mode. There were will be a top-rate speaker line-up on the main stage. And last and not least there will be igloos.

So what the heck is an igloo anyway, we hear you ask?

Well, here’s the idea. Read more

The (early) Lunch Wrap

Sterling nears 5-year high after Carney speech || BoE widens lending access to shadow banking sector || Bob Diamond African venture misses $400m investment target || South Africa outlook downgraded by Fitch || Tesla Motors opens door to electric vehicles’ technology secrets || Markets Read more

Blockchains vs stock exchanges

Since we just spent a good while arguing against the idea of blockchain society, we thought we’d quickly follow up with a post explaining why that doesn’t necessarily mean we’re against blockchain innovation itself.

It’s very likely that the blockchain might one day be usefully incorporated into existing services to make them better and fairer. We’re just not convinced this will necessarily democratise the world the way Matthew Sparkes at the Telegraph envisions or make it cheaper to process information. If anything, it’s likely to de-risk markets (the sort that feature real goods and services) through improved information gathering, sharing and transparency — something which limits the need for currencies, not increases it. Read more

I see blockchains

The Telegraph’s Matthew Sparkes, just like Neo in the Matrix, has fallen down the blockchain rabbit hole. Everywhere he looks he sees blockchains.

Blockchains for automated self-driving car-fleet management. Blockchains for money. Blockchains for stock. Blockchains for votes. It’s cybernetic blockchain utopia!

Or as he puts it: Read more

The (early) Lunch Wrap

UK employment rises at record pace || Google buys satellite start-up for $500m || Monte dei Paschi shares tumble amid capital raising || Lufthansa shares fall on warning over profit outlook || Sainsbury underlying sales fall 1.1% as price war takes its toll || Watchdog proposes price comparison website for payday lenders || BP lands breakthrough deal to operate commercial drones in US || Markets
 Read more

Well, what did you expect in a negative rate environment?

Gary Jenkins at LNG Capital brings us news on Wednesday that… yes, peripheral eurozone bond yields are or in some cases are just about to trade through US Treasuries.

But why should we be shocked about this?

Or as he puts it:

There has been a few headlines recently which suggested that we should be shocked that Spanish 10 year government bond yields now trade through treasuries and that the Italian equivalent is just a few basis points away. I think that these Eurozone countries should trade through treasuries. I think Portuguese bonds should do the same. Greece? Not so much… The fact is that since Mario Draghi started acting like a modern day central banker and the leading politicians looked into the abyss of what the default of a major European country like Spain might look like the yields on the so called ‘periphery’ European bonds have been converging with those of the core at a rapid rate.

 Read more

Those who forget the past…

… are doomed to repeat it.

Or you could say, “have we learned nothing from the crisis?!”

That at least is the assessment of HSBC’s Stephen King regarding the current nuttiness of the market. He joins the growing ranks of concerned types who worry that it’s only a matter of time before the house of cards we are building collapses, especially given that we’re now at beyond 2008 levels on almost all fronts (apart from, you know, things like jobs).

Which brings King in his latest note to question the soundness of inflation targeting in and of itself. He claims instead that it’s the stability of inflation targeting which may be causing the instability:

In a similar fashion, the pursuit of price stability more recently appears to have given way to financial instability. Propagandists for the Great Moderation were inadvertently sowing the seeds for its eventual downfall.

 Read more

The (early) Lunch Wrap

Euronext valued at up to €1.75bn in flotation || Imperial Tobacco set to spin off Logista distribution arm || Price rises threaten to stifle China easing || Second China unit accused of cyber crime || GoDaddy ready to go on US IPO || Markets Read more

The Europe-based flow monster is under siege

Bank “trading” is all about flow. And in Europe there has never been a bigger flow monster than Deutsche Bank.

But as has been well reported, FICC flow profits are beginning to wane.

So it is with some interest we note the following charts from Morgan Stanley’s European Banking team: Read more

The ‘other’ great bond mispricing theory

A lot of people are puzzled over why US yields are falling when nothing has changed on the Fed communication side, and QE is supposed to be slowing.

Frances Coppola notes an even stranger phenomenon. When you look at the very big picture you realise that if there is a correlation between QE and rates, it’s actually a very counterintuitive one:

Every time QE is announced, yields rise: when it ends, they fall. And no, this doesn’t just affect the 10-year yield. The same basic shape can be observed on just about any maturity over 1 year (short-term rates are propped up by the positive IOER policy).

 Read more

The (early) Lunch Wrap

Google bows to EU privacy ruling || Big investors replace banks in $4.2tn repo market || Piketty gives detailed response to FT criticism || Drugs and prostitution add £10bn to UK economy || Former Microsoft chief Steve Ballmer bids $2bn for LA Clippers || Elon Musk plans next stage of space travel with reusable rockets || Markets  Read more