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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

Larry Summers on forwarding the Doozer economy

Larry Summers was interviewed by Chrystia Freeland at the INET conference in Toronto last week, in a conversation that very usefully expanded upon his thoughts about secular stagnation. (H/T Interfluidity)

It’s a reassuring interview for us because so many of the statements he made echo what we (and other bloggers such as Steve Randy Waldman) have been saying for some time. Namely, that there’s something more significant going on in the industrialised global economy than the effects of a banking crisis per se, and that that *something* is probably related to technological abundance. More so, that this phenomenon is having strange macro effects on capitalist incentives.

There was also a nod to the point we’ve made for a long time, that the financial intermediation industry loses its raison d’etre in such an environment, and worse than that, potentially becomes a malignant rather than constructive force on development and growth. In short, that negative rates are hardly the solution. Read more

The (early) Lunch Wrap

IBM hit by costs of restructuring || Google shares dip as earnings disappoint || Yahoo brings co-founder and Schwab on board ||
Diageo, the maker of Johnnie Walker scotch and Smirnoff vodka, on Thursday posted a sales drop of almost a fifth in Asia-Pacific in the third quarter, pushing the company to an overall 1.3 per cent decline in organic net sales || China’s Weibo raises a less than planned $285m in US IPO || Yellen warns inflation may lag recovery || American Funds warns on ‘Heartbleed’ bug || Markets Read more

China in gold collateral financing shock

This Reuters story about China having up to 1,000 tonnes of gold tied up in financing deals is doing the rounds, courtesy of information out of the WGC.

But it’s hardly a revelation.

We’ve known that China has been using gold (and almost everything else under the sun) for financing purposes for ages.

Goldman even blessed us with a more recent update about the shenanigans in March: Read more

China’s FX grip is not what it seems

The influence of the ‘China factor’ on currency markets is waning.

That at least is the view of HSBC’s FX strategy team, headed by David Bloom. Read more

The linguistic verdict: Dorian is probably not Satoshi

Everyone has a linguistic signature (apparently).

Luckily for Bitcoin sleuths trying to determine the real identity of Satoshi Nakamoto the existence of *that* Bitcoin white paper provides everyone with some valuable clues. Read more

The (early) Lunch Wrap

Ukraine raises rates as west discusses more sanctions || Diageo offers $1.9bn for greater stake in United Spirits || Google swoops on dronemaker Titan || AngelList sees $25m investor fund || ‘Heartbleed’ steals social security and mums’ messages || Hong Kong regulators move to safeguard bank liquidity || Copper miners look past present pain to future gain || UK inflation falls to 1.6% || Markets Read more


We referenced the obvious similarities between the oil market and the Bitcoin market — specifically with regards to cost of production and capital intensity preventing a competitive threat to Opec — in our previous post.

In a fortunate coincidence, John Kemp at Reuters today directs his readers to the myth-busting 2004 work of former MIT professor Morris Adelman, who compellingly argued against the “oil is running out, prices can only go up” thesis. Read more

Let them eat Bitcoin mining rigs

Bitcoin prices are in retreat, seeming to suffer from the triple whammy of a Chinese crackdown, ongoing repercussions of the MT.Gox implosion as well as the IRS deciding that miners will not be immune to tax in the US.

If you view Bitcoin as a high-risk tech investment, the price might also be reflecting wider tech rot as well. Read more

The (early) Lunch Wrap

Europe’s top central banks push for high-risk loan return || IMF ‘proved wrong’ by UK recovery, says George Osborne || Finland risks losing triple A rating || China court rejects appeal by anti-corruption activist Xu Zhiyong || Business leaders hit back at London airport closure proposal || General Motors recall crisis widens with second faulty part || Europe supply in jeopardy as Putin warns of Ukraine gas cut || Markets Read more

Doozer finance

UK chancellor George Osborne announced on Monday that the Bank of England will initiate a scheme to help support export finance for UK exporters.

This, as the BoE explains on its website, will see the Bank accept UK Export Finance-guaranteed debt capital market notes as collateral for liquidity operations, encouraging (it is hoped) banks to make export-finance related loans to industry. So, similar to funding for lending, but on this occasion specifically lending to export businesses. Read more

The (early) Lunch Wrap

Toyota suffers fresh reputational blow with 6.4m vehicle recall || Biggest US banks forced to hold $68bn in extra capital || Walmart plans big wholesale store push into India || Facebook passes 100m users in India || Copper output surge adds to price pressure || WH Group eyes IPO valuation of up to $21bn || Markets Read more

This is nuts. When’s the crash?

Okay, maybe it’s because this particular FT Alphaville blogger has been safely quarantined in Geneva, Switzerland for the last two years where everything is frozen in time, and it’s all down to “London shock”, but it really does feel like you can’t walk three foot in the capital these days without bumping into a crane panorama that would make the Doozers of Fraggle Rock proud.

Case in point, the current view from outside FT Towers at One Southwark Bridge:

 Read more

Who really benefits from EM export feedback loops?

We all know the role played by the vendor financing feedback loop of hell in dotcom bubble mark 1.

Quickly summarised, tech equipment suppliers became overly dependent on sales to internet startups funded through vendor financing, a situation which saw them lending money to companies with dubious track-records for the purpose of buying equipment directly back from them. It didn’t end well.

Nevertheless, it’s still a model replicated on a consumer level in the west, whether it’s through car company lending money to customers so that they can buy their cars or sofa company loans for purchases of sofas. Read more

Come with me if you want to trade

The fallout (or wholesome debate, depending on which side you’re on) from Michael Lewis’ new book “Flash Boyscontinues.

We’ve not read the book, so we shan’t be commenting about its relative merits or weaknesses specifically, but we shall propose that the relentless march of technology into finance is unlikely to be slowed or reversed any time soon. Read more

The (early) Lunch Wrap

UK car sales hit decade high as demand zooms higher || Erdogan pushes for Turkey central bank to cut interest rates || Tesco’s finance director to leave || Anadarko to pay $5.15bn in pollution case || M Stanley hits back over Flash Boys row || BofA in talks to pay $800m in credit card case || Markets Read more

Deblocking Cushing

A quick little follow up to our previous “crude wall” post.

It’s worth stressing that since the beginning of the year crude stocks in Cushing, the delivery point for WTI crude futures, have staged a remarkable reversal. Read more

The ‘Crude Wall’ cometh

These two charts come from Citi’s commodities research team:

They’re important. The reason being…well, we may have become used to talking about Saudi America, but we haven’t yet figured out the longer term consequences of America’s oil production resurgence. Read more

The (early) Lunch Wrap

Pressure rises on Gross as Pimco fund plummets down rankings || China bulls urged on by stimulus hopes || Steve Jobs promised ‘holy war’ on Google, court hears || China’s Cofco cements agribusiness ambitions with $1.5bn Noble deal || Russian threat to retaliate over JPMorgan block || Virtu Financial delays IPO amid Flash Boys furore || Chile rocked by massive earthquake Read more

The (early) Lunch Wrap

FCA rules could force quarter of payday lenders out of business || Hollande fires prime minister in bid to relaunch presidency || Bob Diamond re-enters world of banking || Corporate America’s overseas cash pile rises to $947bn || Growth in UK manufacturing activity slows || Factory output points to stabilisation in Chinese economy || BHP weighs asset spin-off to focus on core business || Former Citigroup co-chief John Reed warns of ‘managerial turmoil’ || Markets  Read more

A dangerous or ingenious musical precedent?

The Wu-Tang Clan are releasing just one copy of their latest “secret” album in the hope of sparking a shift in the way music is funded and distributed.

The general premise is that the art of music has been devalued by cheap modern distribution techniques and it makes sense to revive the…

“400 year old Renaissance-style approach to music, offering it as a commissioned commodity and allowing it to take a similar trajectory from creation to exhibition to sale, as any other contemporary art piece, we hope to inspire and intensify urgent debates about the future of music…”

The Wu Tang Clan appear to be miffed, basically, that music isn’t being treated the same way high value art is. Read more

The (early) Lunch Wrap

Facebook works on drones and lasers || Fed feels backlash over stress tests || Turkey blocks access to YouTube || FCA plans probe of UK insurers over 30m longstanding policies || Markets Read more

The unscaling myth

Unscaling is made possible by the number of Internet-based platforms and cloud-based services and tools now available to startups and small businesses in general. New companies can now be launched without a massive investment in personnel and IT infrastructure. They can quickly get to market, and compete effectively with far larger companies. Mobile Internet platforms, in particular, make it easier and cheaper to experiment in the marketplace. While most such experiments will likely fail, some, like Airbnb, will succeed and can then quickly scale up their capabilities as their businesses grow.

That’s from the blog of former IBMer Irving Wladawsky-Berge, who is riffing on the back of a Newsweek piece by Kevin Maney on the “end of mass production”. Read more

Don’t LME me, bro

There’s big news in the world of commodity inventory. Rusal reports via a press release on Thursday that it has won its case against the LME regarding the exchange’s new load-out rules, which Rusal had argued were unlawful:

UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, Moscow Exchange: RUALR/RUALRS), a leading, global aluminium producer, announces that following a claimant case brought by RUSAL against the London Metal Exchange at the High Court of Justice, the presiding judge, Mr Justice Phillips found in favor of RUSAL. Read more

The (early) Lunch Wrap

IMF pledges $14bn-$18bn rescue package for Ukraine || Ofgem orders probe into UK energy market || Fed rejects Citi’s 2014 dividend and stock buyback plans || UBS suspends six more forex traders || Fed stress test results to hit RBS’s Citizens division hardest || Markets  Read more

Internalisation as the last great collateral financing unknown

We’ve been harping on about the rise and importance of the central execution desk and internalisation practices more generally for a long while.

But we haven’t touched the topic recently because, well, banks and concerned parties tend not to enjoy discussing it very much. Read more

The (early) Lunch Wrap

Inflation falls to lowest level in four years || EasyJet shares climb as mild weather helps cut airline’s losses || Bord Gáis Funds cut Russian holdings after sanctions || Energy sold to Centrica-led consortium for €1.1bn || Royal Mail union warns of industrial action after 1,300 job cuts || Co-op Bank review finds yet more skeletons || The US is losing its edge as an employment powerhouse || Walt Disney Co to buy Maker Studios || Markets
 Read more

The (early) Lunch Wrap

French spurt keeps eurozone recovery on track || Ukraine evacuates its forces from Crimea || Co-operative Bank seeks to raise further £400m || Top JPMorgan China banker resigns amid hiring probe || Visa and Mastercard restart processing payment transactions for SMP Bank || UK energy industry to head off competition inquiry || NHS needs an extra £2bn || Debt investors abandon normal creditor protection on European leveraged buyout loans || China’s top refining company to cut capital spending this year || Apple in talks with Comcast over streaming-television service || US hedge fund to bet $100m on Iran court judgment || Markets  Read more

Standing on the shoulders of cryptocurrency giants

Dorian Satoshi Nakamoto, the LA-based man that Newsweek alleged on Thursday was the probable creator of the Bitcoin protocol, denied all involved in an AP interview — but the plot continues to thicken.

As the International Business Times reports on Friday, an online chat account associated with the email featured in the original Bitcoin white paper has become active again.

Surprise, surprise — the user is claiming that the man featured in the Newsweek article is not Satoshi Nakamoto.

At this stage, one has to ask what’s really preventing the real Satoshi from revealing his true identity and claiming his fortune? (And there are reports that the bitcoins associated with Satoshi are already on the move on Friday.) Read more

The Krypto$ theory

This is Kryptos:

It’s an encrypted sculpture by Jim Sanborn which stands outside the offices of the Central Intelligence Agency in Langley, Virginia. It was placed there in 1990. Read more

Why the new shoeshine boy trade is shorting volatility

Crowded trade alert.

Chris Cole, of volatility fund Artemis Capital, has an insightful piece in the latest edition of the CFA Institute Conference Proceedings Quarterly warning about one of the most popular trades of recent times: the shorting of volatility via Vix ETPs.

The speculative shorts on Vix futures as a percentage of open interest, for example, are already running at an all-time high. In Cole’s mind this now equates to the shoeshine boy trade of the modern era.

One of the ironies, he also notes, is that the trade simply synthesizes a much less efficient version of a 3-4 times leveraged position on the S&P 500. Read more

I spoke to the researchers and they said that the Britishisms can be accounted possibly by "red herring" theory, (i.e. Szabo threw them in to confuse people specifically), or because they were inputted by a proof reader. They also said it was possibly due to the fact that the paper was actually co-authored. The quantitative linguistic techniques were not used because the sample sets were at odds and would have produced skewed results. What I want to know is how come Szabo hasn't been posting since he was outed as possibly being Satoshi last November?

Comment on: The linguistic verdict: Dorian is probably not Satoshi

@kris - there are many different types of capital. Investment capital, infrastructure capital, equity capital and wealth generally = capital. Money is just a redemption right against existing capital whether it's infrastructure, IP, labour whatever. Money flows consequently count as capital flows.

Comment on: Who really benefits from EM export feedback loops?

The governor - well put. Yes it's about the rules and whether colluding with the guy who manages the table is fair or not. But in a world of for profit businesses that's what u get! All human systems are gamed. I don't see what's wrong with striking deals with exchanges. It's business. If I want to strike a deal with any supplier to get preferential treatment for good business I can. As if there aren't similarly cushy arrangements in property transactions where key developers get a first look at inventory before retail or loads of other industries. This is business. Business is negotiation. U just have to watch the apprentice to know that. Retail has always been disadvantaged by presuming prices are fixed and deals can't be struck. The only difference here is we are not fighting over oranges, we are fighting over flow (I.e. Business itself) and the ability to process that flow better than others.

As for the reservations the analogy is pretty simple. Why should some customers get preferential access to the restaurant just because they "reserved" their seats first? Why isn't it just a fair fight to get in as and when the restaurant opens? People who get to reserve get a head start and the restaurant provides them with that option because they have an interest in being able to manage their flow efficiently as well.

You can even go down the easyjet road and have the restaurant charge for reservations. That's within their rights because it's business.

I mean if this speaks for market rigging then being able to get a better seat on the plane because u preserved it is tantamount to the same sort of rigging. Of course the key point that's forgotten is that pre-allocating seats allows for much more ordered and efficient boarding experience and better allocation of resources more generally.

Comment on: Come with me if you want to trade

I know there is a difference between also and HFT! I've been reporting on algo since 2004!! But within HFT there's a multitude of strategies as well, flashing, co-location and exchange deals (rebates) are just some of them. The fundamental thing hfts have in common is that they act quicker and smarter than others. But there hfts at big institutional dealer banks as much as at independent princip trading shops. The independent guys are very different to the big bank guys, who use HFT strategies for internalization and inventory/funding maximization. ETFs are the spawn of HFT and algo trading, and used as silos of off grid flow that can be deployed as and when needed. To suggest all HFT is the same or bad is totally naive. HFT brings advantages with the disadvantages and the prevailing of this post is that we need to be mindful of how we regulate. You can't turn back the clock on algo trading and if u suppress the independent guys u end up killing liquidity and arguably making the market less efficient at pricing large unseen order flow.

Comment on: Come with me if you want to trade

The post is actually about obsolescence of old school human trading skills so as to introduce the Lin paper. It is not about Michael Lewis' book as is clearly stated. I have not read it. If I was to comment on it I would have read. Opinions about HFT pre-exist the book. The paying exchanges stuff is fair game as far as I'm concerned: like paying to reserve seats at a restaurants. You had the foresight to anticipate the demand. You get to benefit from that foresighted. In this case u had the foresight to do a deal with the exchanges in the name of arbitraging a fragmented market and keeping it tied.
Most of the flash stuff had been overturned anyway.

As for nanex I've spoken to Eric plenty of times and you know what, I was originally sympathetic and extremely critical of HFT as a result (see the archive) but you know what the Nanex case is weak. And I'm increasingly of the opinion that it's the hidden order flow that's the problem not the market makers. And btw institutional guys use Algos of their own to bury and disguise their trades all the time. Being able to anticipate a big order and not get rinsed by it because it's cleverly snipped is the skill of the HFT guys. Gasparino has it best. It's alien against predator. This isn't about some good guys vs some bad guys.

Comment on: Come with me if you want to trade

@madridlam - the pay for preferential view of order flow stuff has been amended. Flash trading is totally different to teasing out ice berg orders. I will read the book though before I say anymore.

Comment on: Come with me if you want to trade

@electric ray - only because the artists are dead. Same applies to long dead authors. No-one owns copyright to longstanding folk songs where the creator is uncertain. Tho I may be making this up but I think someone does own the copyright to happy birthday?

Comment on: A dangerous or ingenious musical precedent?

@justin - yes good point.

Comment on: A dangerous or ingenious musical precedent?

His dudeness - tend to agree.

Comment on: A dangerous or ingenious musical precedent?

@marginalEfforts - irregular labour is a product of the age of abundance. If we were still in an age of scarcity there would be plenty of work on offer.

Comment on: The unscaling myth