Are bank reserves meaningless?

Is the central bank in the business of lending bank reserves for final and absolute settlement purposes, or is it now in the business of lending safe assets like Tbills for final and absolute settlement purposes?  Read more

Alphachat: Tina Fordham on pricing in the risk of Trump vs Clinton

Our guest this week was Tina Fordham, chief global political analyst for Citi and lead author of papers on geopolitical risk and women in the global economyRead more

Brexit, then and now

One of the challenges of understanding the consequences of Brexit is the apparent lack of precedent for such an event. But this pre-supposes that only the recent past is relevant. If instead we use the full sweep of history, then we can find the obvious precedent of the English Reformation that started in 1534.

… the “Brexit” of 1534 was far from straightforward, and nor did it stop conflict within the country. As for the economic consequences, GDP per capita barely changed for one hundred years after before falling sharply during the Civil War. It took colonial expansion, notably to India, and later in the industrial revolution in the 1700s for growth to really pick up in England.

– That’s from Nomura’s Bilal Hafeez, with a bonus chart too. Read more

Fintech’s data problem

The landmark securitisation of UK “peer-to-peer” consumer loans highlights a structural advantage banks have against their fintech rivals Read more

Markets Live: Friday, 23rd September, 2016

Live markets commentary from FT.com 

Hanjin could be “the 100­year flood in the container industry”

Admiralty law is old, fun and messy.

From CreditSights:

The order of claim seniority is cargo, crew, supplier, mortgage holder. What is unique is a claim against a company or vessel can be enforced against a different asset or bank account. This allows creditors greater scope but also can generate a blizzard of litigation.

In a typical but very simplified case: 1) a mortgage holder receives a judgment in local court for non payment; 2) checks to see where any debtor vessels are steaming; 3) goes to that port with a lawyer and replacement crew; 4) court accepts the judgment; 5) port sheriff, lawyer, and replacement crew “physically” arrest the vessel, pay off the existing crew, cover supplier claims, and deliver the cargo if the vessel is not empty. Problem is the mortgage holder now owns a ship, and that costs cash money every day. If the vessel is not marketable, there usually is an “as is” auction under port sheriff supervision.

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FT Opening Quote: Sports Direct CEO quits

Sports Direct CEO quits, New CFO at Fortescue Metals, Carney likely to stay on. FT Opening Quote, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Friday,

– How Hampton Creek sold Silicon Valley on a fake-mayo miracle.

– Boy meets girl, boy gives girl inside information, SEC says.

Of Leon Cooperman: “The question is not only whether he can prevail against the SEC but also whether he can calm anxious investors.”

Today in disruption and cow dung economics: “In the past, people only used urine and dung, and you needed to know somebody in a gaushaala (cow shelter), to get them. But who has the time these days, especially in the cities? So what we have done is just made it more accessible, in a more variety of products, in these busy cities.” Read more

FirstFT – The world’s biggest data breach, Apple eyes Samsung’s turf and the strangest research of the year

A ‘state-sponsored actor’ steals information from more than 500m Yahoo users Read more

Banks have a dubious business model and markets have noticed

The tendency toward restriction that runs through the tone of the presentation seems to me to be quite problematic. It seems to me to support a wide variety of misguided policy impulses.

–Larry Summers, Jackson Hole 2005

You might think Summers had changed his mind in the eleven years since he called Raghuram Rajan a “Luddite” for daring to suggest the financial system had gotten riskier since the 1970s thanks to competition and the rise of performance-based pay. After all, in a new paper, Summers and graduate student Natasha Sarin not only cited Rajan’s work approvingly, they concluded lenders are still too vulnerable to panics. You would, however, be wrong. Read more

Breaking insurance models with big data

In the brave new world of machine learning, big data and artificial intelligence, no good deed will go unnoticed and no bad deed will go unpunished. Or so at least the dream goes.
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Markets Live: Thursday, 22nd September, 2016

Live markets commentary from FT.com 

Brace yourself, Peckham

Today in online urban culture dispatches Bloomberg flashes:

HSBC SAID TO SEEK FINTECH HUB IN LONDON’S HIPSTER NEIGHBORHOODS

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“How do I become a whistleblower[?]”

Anyone who hasn’t read the Securities and Exchange Commission’s complaint against Leon Cooperman and his hedge funds should do so ASAP, because it is a heckuva story.

Here’s a quick summary of the allegations, which Cooperman and his funds categorically deny: Read more

Has the BoJ signalled the end of QE as we know it?

That is, by diluting if not outright abandoning the quantitative/ balance sheet expansion aspect of its policy with a move to QQE with yield control has the BoJ admitted that the current stage of central bank action is nearing its limits?

Citi’s Buiter et al seem to think so: Read more

FT Opening Quote: Lloyd’s profits up

Profits up at Lloyds,Daintith heads to Rolls-Royce, Randgold soars: FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here.  Read more

Further reading

Including…

– Bernanke and Beckworth on the BoJ’s new yield control policy.

– Branko Milanovic on how income inequality is cyclical.

– Lorcan on Target2, redux.

– Tony Yates burning through RSI to Tweet-critique Romer.

– How to hide it, back inside the offshore wealth management world.

– And persuasion in a post truth world. Read more

FirstFT – Stage set for US rate rise, the secret world of wealth managers and the problem with being declared dead

Dissenting central bank trio votes for an immediate lift Read more

Doubling up on Mars

A cryptic Tweet from Iron-Man Elon Musk stating “Turns out MCT can go well beyond Mars, so will need a new name…” delighted the tech/science internet community when it was posted on Sept 17. Read more

Tech unicorn director in tax fraud trial

If you picked up the papers this morning you might have seen an interesting story about “a renowned conservationist” and an alleged £60m tax fraud. Here’s part of The Times’ take on it:

A renowned conservationist took part in a £60 million tax fraud marketed as a means of tackling climate change, a court was told yesterday. Read more

Macro Live, Yellen presser edition starting at 1:55pm EST

The Fed is expected not to raise rates at the conclusion of Wednesday’s meeting, but that doesn’t mean the FOMC statement or the subsequent presser will be uneventful.

On the table are a change in the trajectory of future rate hikes, a signal that the next hike is very likely in November or December of this year, and changes to the Fed’s estimates for US growth. Read more

Markets Live: Wednesday, 21st September, 2016

Live markets commentary from FT.com 

Millions cheated by binary reporting scam

Like the movement of a currency in 30 seconds time, The Mail’s editorial stance on binary-option trading is impossible to predict. Read more

Japanese banks apparently like a policy aimed at helping them out

Shocking, we know.

Screen Shot 2016-09-21 at 11.18.55 AM Read more

FT Opening Quote: Diageo growth on target

Diageo growth on target, Smiles at Shepherd Neame, Indian summer blues at Bonmarché. FT Opening Quote is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Including…

– Kuroda’s conundrum

– The BoE on the unintended consequences of higher capital requirements

– Tyler Cowen on Dodd-Frank

– And Tim Duy on how the dots outlived their usefulness when they signaled a pace of policy tightening that never happened  Read more

FirstFT – Wells Fargo chief under fire, the art of mirroring in business and the pitfalls of activity trackers

Elizabeth Warren tells John Stumpf he should be ‘criminally investigated’ over phantom accounts Read more

Guest post: Small-cap trading revamp is no more than a costly distraction

The US equity market is about to start a two-year programme testing changes for small-cap equity trading. This guest post from Richard Johnson, a market-structure and technology strategist with Greenwich Associates, argues that the costs of the programme may outweigh the benefits.

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Your comprehensive guide to the all new ‘Upstairs Downstairs’ London property market

Three months down the line, enough time has passed to properly assess the impact of Brexit on the London property market. Read more

Markets Live: Tuesday, 20th September, 2016

Live markets commentary from FT.com