FirstFT (the new 6am Cut)

You can sign up to receive the email here.

Wall Street is trying to build up “single-name” credit default swaps - derivatives contracts that track the risk of default by a company that sells bonds. The derivative was widely blamed for fanning the financial crisis and has since seen a large decline in volumes traded.

Less liquid debt markets have made it difficult for large money managers to buy a particular bond but a credit derivative contract provides an alternative method for gaining exposure to a particular company without having to own the bond.

Regulators had sought to clamp down on the credit derivatives market after the crisis but banks and large investors are looking to revive it in an effort to limit bond-market volatility when interest rates rise.(FT) Read more

Moratorium on Moscow?

On May 28, Ukraine will pay $88m in interest on its $2.25bn bond due 2022.

On June 20, it will also pay a $75m coupon on that $3bn bond owed to Russia.

Well, we say ‘will.’

This might get in the way first: Read more

Where are Plus500′s customers?

Plus500 appears to have a problem — and it goes beyond the application of anti-money laundering rules which have required the London-listed contract for difference broker to freeze more than half of UK customer accounts, until the identity of each client is verified.

On Monday, following a one-third drop in the share price, the Israel-based group put out an announcement which said, “currently c.50% of Plus500′s revenue is derived from Plus500UK”.

Consideration of the accounts for the UK regulated entity, Plus500UK Ltd, makes it hard to see the basis for that statement.  Read more

21 Inc and the plan to kill the free internet

Details of the hottest, most secretive bitcoin start-up in Silicon Valley have finally been revealed by chairman and soon-to-be CEO Balaji Srinivasan of 21 Inc in a post on Medium. They are, by and large, exactly what FT Alphaville reported them to be. Cold sharp summary: Bitcoin mining devices in toasters.

Calling this a simple internet of things play, however, would be lazy. To really put the audacity of Srinivasan’s vision into perspective one first has to go back in time to the days of the early internet. Read more

Scenes from the 21 Inc pitch book

Some people may have had difficulty understanding what the hell Balaji S. Srinivasan, chairman-cum-ceo of secretive Silicon Valley start-up 21 Inc, is up to after reading his Medium “open for business” post.

The following slides, shared by potential investors in 21 Inc, may or may not help. But they certainly highlight the conceit on show here. Click to enlarge.

 Read more

Markets Live: Tuesday, 19th May, 2015

Live markets commentary from FT.com 

Is Calpers missing the forest for the trees?

The California Public Employees’ Retirement System, which manages more than $300bn on behalf of current and future retirees, is thinking about selling much of its timber assets, according to the Wall Street Journal.

Specifically, it has offered to sell about 300,000 acres in Louisiana — about 16 per cent of its total forestry holdings — and if this goes well, Calpers could then sell another 1,000,000 or so acres in east Texas, which would cut the total portfolio by around 80 per cent. Read more

FT Opening Quote – Vodafone sales rise 10%

Vodafone hits expectations with a 10 per cent sales rise, the battle for Bwin heats up and we’re zeroing in on inflation numbers in the UK and eurozone this morning. FT Opening Quote with commentary by City Editor Jonathan Guthrie is your early City briefing. You can sign up for the email here. Read more

Further reading

Elsewhere on Tuesday,

- In which Matt Levine builds a (very complicated) calculator that will tell you how much Carl Icahn thinks Apple is worth in real time.

- The robots are winning.

- Pettis: What multiple should we give China’s GDP growth?

- Rejoice, Wall St is basically back.

- And why banking shouldn’t be “boring”.  Read more

FirstFT (the 6am Cut)

You can sign up to receive the email here.

The oil price plunge will curb output for years to come – global energy groups have slashed or postponed more than $100bn of spending on new projects.

At least 26 projects across 13 countries have been affected as companies including Royal Dutch Shell, BP and Statoil try to curtail capital spending. Industry-wide retrenchment has already seen thousands lose their jobs and slowed down the US shale boom. (FT) Read more

And then there were four, Ukraine bonds edition

Back in April, five leading owners of Ukrainian bonds formed a committee to negotiate a restructuring with their debtor – and avoid losing money on their approximately $10bn principal in the process.

Now count the names in this release on Monday… Read more

Plus500: the big freeze

Plus500, the Israel-based and London-listed contract for difference provider, has suspended the trading accounts for more than half the customers of its UK business until they prove their identity, a key requirement of anti-money laundering regulations.

Shares in the group, an aggressive user of online marketing methods to acquire customers, dropped by a third on Monday following reports of trading suspensions for clients which began the previous week. The stock plunged further following a statement regarding what Plus500 called “recent speculation”.

The collapse draws attention to a fast-growing corner of the financial world, where retail customers are able to make leveraged bets on movements in currencies, stocks and indices using complex financial derivatives, executed through a simple online interface or smartphone app. Read more

Plus500 requests your patience – Update 2

Plus500, the Israel based but London junior market-listed contract for difference group, has suspended some UK accounts pending customer verification measures related to money laundering regulations.

We hear some customers have received notifications of the account freeze, and there is an announcement on the UK homepage, more text of which below.

At pixel, the shares were down 15 per cent, to 638p. 29 per cent to 531p. 33 per cent to 500p. Statement below. Read more

India’s re-re-Modified markets

One really has to begin any talk of India’s stumbling stock market with a bucketload of context. After all, the Sensex is well up from Modi’s election almost exactly a year ago and the recent fall is from a record peak of just under 30,000 points in January.

Google Finance

As to why Indian markets are struggling this year, down 7 per cent from that peak… Read more

Markets Live: Monday, 18th May, 2015

Live markets commentary from FT.com 

Does China already have the highest level of margins vs free float in market history?

A Macquarie update, on their previous free floats and nutty Chinese markets work, has landed. With our emphasis:

Margin positions in the Chinese equities market have continued to rise in the past month, since we wrote our first Twilight Zone note on April 20. Since then, margin positions have risen by 9.2% MoM to RMB1.9 trillion, or an unprecedented 8.9% of the market capitalization of the combined free float of Shanghai-Shenzhen stock markets. This could already be the highest level of margins vs free float in market history…

 Read more

FT Opening Quote – 888 gambles on Bwin bid

888 is having a punt on Bwin – it confirmed a bid for its online gambing rival this morning. Thorntons’ chief is stepping down and Inmarsat has suffered a rocket failure. FT Opening Quote with commentary by City Editor Jonathan Guthrie is your early City briefing. You can sign up for the email here. Read more

Further reading

Elsewhere on Monday,

- The tardy product, when practice gets ahead and theory catches up.

- I was an undercover Uber driver.

- Stereotypes in everything, rich women of NY’s Upper East Side (and their, er, wife bonuses) edition.

- How Musk’s space dream almost killed Tesla.

- Why China is hard to figure out. Read more

FirstFT (the new 6am Cut)

You can sign up to receive the email here.

Arun Jaitley is feeling confident – he tells the FT India is on course toovertake China with growth of more than 8 per cent. The finance minister takes on critics who complain of a lack of “big bang” reforms, saying he plans a huge public investment programme and strategic privatisations, while also pledging to resolve tax disputes with investors.

Narendra Modi may have presided over a rebound in economic growth in his first year in office but business remains anxious at the pace of reform and critics charge that he has inflamed communal tensions. (FT) Read more

Charting the secular stagnation bubble hypothesis

Attempting to identify a bubble is considered a fool’s errand because, as the saying goes, they’re only obvious once they’ve popped.

None of that, however, has stopped Citi’s equity strategist team from attempting to identify the current bubble risk stalking the economy.

According to Robert Buckland and team bubbles are usually formed by four key forces: 1) A new paradigm story supported by convincing fundamentals, 2) surplus liquidity, 3) a demand/supply imbalance, 4) business/benchmark risk amongst asset managers. Read more

Of directors deals and other things

Over in the shallow puddles where tiny Aim stocks trade, shares in the small restaurant chain Richoux were up about a fifth on Friday morning, following publication of final results.

The stock is still worth a mere £20m, so we point to it only as reminder to pay attention to two types of announcement: directors dealings and oddly timed regulatory news (RNS).

 Read more

Markets Live: Friday, 15th May, 2015

Live markets commentary from FT.com 

VaR-shock, a term often abused. But…

In this short note, we describe the characteristic of a VaR-shock, an often abused expression for a rapid and significant market correction

- Alessandro Tentori, Citi, May 13

And, yeah, “VaR-shock” comes just after “an Uber for x”, “breakout move”, “confidence level”, “flight to safety”, “liquidity”, “money; dumb, smart, hot”, “more buyers than sellers”, “oversold”, “profit taking”, “range bound”, “relief rally”, “safe haven”, “sentiment”, “shadow banking”, “short squeeze” and “technical correction” in the latest edition of the markets abuse dictionary.*

But Tentori, with no obvious sign of tongue in cheek, also says the recent Bund “tantrum” (add it to the list — ed) can be defined as a VaR-shock.

Useful since we already went there a few times. Read more

FT Opening Quote – Coca-Cola HBC’s Greek warning

It’s not bottling it, but Coca-Cola HBC is certainly cautious on Greece, SABMiller is downing Greenwich’s Meantime craft beer business and South Africa’s Brait has a New Look. FT Opening Quote with commentary by City Editor Jonathan Guthrie is your early City briefing. You can sign up for the email here. Read more

Further reading

Elsewhere on Friday,

- Time for a delivery of Eurofudge.

- “Do we want to encourage people to work, or do we want to facilitate non-work?”

- “But what really puts this civil and criminal insider trading case over the top is that those coded e-mail messages were in golf code”

- SWFs, cure or curse?

- “Neoliberalisms”, left and right. Read more

FirstFT (the new 6am Cut)

You can sign up to receive the email here.

Beware the success of quantitative easing . Mario Draghi warned that policy makers should not allow aggressive monetary policy to blind them to the risks of financial instability. Central banks around the world have faced criticism that their response to the financial crisis has stoked asset-price bubbles and increased inequality.

The comments came as Greek finance minister Yanis Varoufakis lashed out against Draghi, saying the ECB chief’s soul was “filled with fear” at the thought of giving Greece a break on its debts because of the reaction from hardliners in Germany. (FT, NYT) Read more

Are our central bankers learning?

Compare and contrast:

Some observers have been arguing that our patience should be wearing thin sooner rather than later. One argument is that policy is very accommodative by historical standards and that many of the reasons for adopting such an accommodative policy no longer pertain. Demand has strengthened substantially, and the threat of pernicious deflation has receded. A second concern is that policy accommodation—and the expectation that it will persist—is distorting asset prices. Most of this distortion is deliberate and a desirable effect of the stance of policy. We have attempted to lower interest rates below long-term equilibrium rates and to boost asset prices in order to stimulate demand… Read more

Markets Live: Thursday, 14th May, 2015

Live markets commentary from FT.com 

Mum may be off the hook at New World, the board less so

Two more announcements land from New World Oil & Gas, the tiny oil and gas exploration company at the center of a possible short squeeze on London’s junior market, which may also become the subject of a bid by a Malvern bed & breakfast proprietor.

Or not. Judith Williams, mother of son Chris who is actually the investor responsible, has sold some stock, notifying the company that her (his) holding has fallen from 49 per cent of the company, to 36 per cent.

This is where it gets a bit complicated. Read more

FT Opening Quote – British Land profits beat forecasts

British Land gets a boost from its commercial property, ITV posts double-digit revenue growth, Man Utd results kick off at noon. FT Opening Quote provides your early City briefing. You can sign up for the email here. Read more