That thing that seemed first impossible, then worryingly plausible, then shockingly probable — it’s actually happened.
The stunning vote for Leave hasn’t just cratered financial markets. It also introduces a period of baffling uncertainty that, we suspect, far too many advocates of Remain have been too complacent about ever having to face one day.
But ready or not, it’s here. As far as we can tell, these are the immediate questions raised by the stunning outcome: Read more
Elsewhere on Friday,
- Possible names for EU exits for all members of the EU. We were going to make this a Brexit free zone, but we’re allowing ourselves one.
- Also, ok, this one on why sense will prevail in the EU and the markets.
- Hedge fund still wants its tax-avoidance profits. Read more
Negotiations entail setting new terms of access and legislating to ‘renationalise’ volumes of law rooted in the EU Read more
Updating as this is being called for Leave:
Please don’t consider any of this financial advice, caveat emptor, etc — seriously, I will grow a beard and flee the country if you ask me to cover whatever charges you end up paying because things didn’t work out in the end.
But, with that disclaimer in place, here’s a sort of risk-free way of trading sterling. Read more
Live markets commentary from FT.com
Tesco sales are gaining momentum, the pound has hit a high for the year as voting begins in the UK’s EU referendum. 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
Elsewhere on Thursday,
- Falling in out of love with TARP.
- Beyond meritocracy.
- Sorry, we can’t do much about growth.
- How to smear your enemies and silence your critics, China style.
- Inside Trump’s most valuable tower: Felons, dictators and girl scouts. Read more
Prime Minister David Cameron made his final pitch with a patriotic appeal for a Remain vote Read more
We’ll let the SEC do the talking here, since the news is box fresh and the full name of a UK-based individual called “Idris Dayo Mustapha” doesn’t seem to have an internet history. He’s supposedly been hacking into the accounts of US investors, placing price-moving trades and then profiting via his own trading account. Which is sneaky and advanced hacking.
The SEC statement:
Washington D.C., June 22, 2016 — The Securities and Exchange Commission today announced it has obtained an emergency court order to freeze the assets of a United Kingdom resident charged with intruding into the online brokerage accounts of U.S. investors to make unauthorized stock trades that allowed him to profit on trades in his own account.
Sorry investment banking analyst, you are going to have work this weekend. As the press release explaining the surprising Tesla offer for Solar City says, Tesla is offering not an explicit price for Solar City but between 0.122x and 0.131x of its shares. And that kind of offer is going to create twice as much number-crunching. A dollar of cash offered is worth… a dollar of cash. But how much is a share of Tesla worth? And why should a share of Solar City be entitled to between 0.122x and 0.131x Tesla shares? Read more
For those who thought things couldn’t get any more absurd with respect to the dumb-contract hack on the DAO (a.k.a the decentralised autonomous organisation which sits on the Ethereum blockchain and which was supposed to prove to the world that companies don’t need executives), you’re in for a treat.
On Wednesday an anonymous message posted on Pastebin said simply this:
We are an anonymous collective concerned with the lack of regulation in the cybercurrency sector.
(H/T Buttcoin reddit) Read more
We’d really like to move on now, thanks. Read more
Live markets commentary from FT.com
Andrew O’Hagan’s 35,000 word write up of the Craig Wright Satoshi affair in the London Review of Books has been out and circulating since the weekend.
The market has had time to digest the information and yet it doesn’t look all that much like anyone has found much closure from the account. For now at least, more questions than answers persist.
Some interesting snippets nevertheless included: Read more
Friends, advisors, clients, counterparties: it’s almost over.
By Friday we’ll have emerged from the tyranny of the Brexit campaign into a brave new world where either: a) things will be the same and we’ll still be arguing about it; or b) things will be the same but we’ll be arguing about it in Brussels and maybe there’ll be less immigration, eventually, who knows.
In the meantime, the Civil Service is trying to remember what trade negotiations are like; currency traders are girding their loins for an orgy of volatility; and the FX strategists over at Credit Suisse are looking back to Black Wednesday for clues on just how royally screwed (or Absolutely Fine) we’ll be in the event of a Leave vote and subsequent sterling crash.
Namely, in the event the Bank of England decides to intervene in the currency markets to protect the pound, will it be successful and can it depend on help from the Fed, ECB and BoJ?
First some Black Wednesday history, chartified: Read more
This guest post is by Gudmundur Arnason, Permanent Secretary, Ministry of Finance and Economic Affairs of Iceland, in response to “Iceland’s selective default?”, another guest post, by Arturo Porzecanski.
Allow me to offer a brief comment on Arturo Porzecanski’s Guest Post of June 14 (“Iceland’s selective default?”). Read more
David Cameron has promised a Remain dividend, Elementis has warned on profits. Hornby needs Airfixing. 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
Elsewhere on Wednesday,
- When Moody’s took Trump’s economic plan seriously: “The upshot of Mr. Trump’s economic policy positions under almost any scenario is that the U.S. economy will be more isolated and diminished.”
- Niall Ferguson, Brexit, divorce, WWI, oh my.
- Mark Dow on an EM sweet spot.
- Balding: outflows from China this year have already exceeded last year’s total to November.
- Credit Suisse CEO pulls a Dick Fuld.
Prime minister predicts inward investment surge if Britain votes to stay in EU Read more
Mr. Musk said it is “important that there not be some sort of house of cards that crumbles if one element of the pyramid of Tesla, SolarCity and SpaceX falters.”
He said his loans [backed by Tesla and SolarCity stock] aren’t risky to shareholders because they add up to less than 5% of his total net worth, which exceeds $10 billion. That figure doesn’t include Mr. Musk’s large stake in SpaceX, which is private. He said he could easily put up more SpaceX or Tesla shares as collateral if needed.
“The odds that a margin call cannot be addressed are almost zero,” Mr. Musk said in the interview.
Elon Musk, the corporate financier, to the WSJ in April. Read more
Even people who don’t normally find money markets interesting (we’ve heard such baffling types exist) might pause to consider a number like this: $160 trillion.
That’s the notional outstanding value of US dollar financial products currently indexed to the London Interbank Offering Rate, or Libor — you remember, that
rate survey that was awkwardly riggable. Read more
Earlier on Tuesday we reported that Transferwise CEO Taavet Hinrikus had not yet considered making FX-volatility related Brexit contingencies for June 23 or the day after:
When asked whether Transferwise was making contingencies for Brexit-related volatility or interbank dislocations, Hinrikus said he had not yet considered it and that the company would be providing business as usual.
Courtesy of Nomura’s Sonal Varma:
Live markets commentary from FT.com
Once upon a time (well, 2012) in a realm of falling or flat prices and stalling economic growth, one man had the courage to face reality with only three arrows — of monetary stimulus, fiscal stimulus and structural economic reform — and a popular mandate to his name.
That name was Abe and he…
No. Let’s just cut to Morgan Stanley on the ‘tragedy’ of Abenomics so far, and its potential ‘rebirth’: Read more
The cryptocurrency world has been rocked by a $60m hacking attack on the DAO, a decentralised autonomous organisation which sits atop the Ethereum blockchain and which had raised over $150m in ether funny money with which it was supposed to disrupt the modern corporation by making it leaderless.
A community-wide forensic review of what went wrong is now in process.
Ironically, the thing proving hardest for the community to digest is that the hack was more of an arbitrage than a hack by conventional standards. The flaw it turns out was in the logic of the underlying (not-so) smart-contract rather than the coding per se.
The attacker succeeded in other words mainly because he understood the contract terms and consequences better than its creators. (Who wants to bet he’s probably a lawyer?) Read more
For a company that prides itself on transparent fee structures, Transferwise — the UK-based FX money transmitting unicorn — has a fairly opaque way of delivering attractive exchange rates.
Competitors who have tried to reverse engineer TW’s rates have struggled, not least because pure brokerage models are not supposed to take principal trading risk when they aren’t able to immediately match buyers and sellers in the market.
To the contrary, they pass orders onto the wholesale interbank market through properly licensed institutions who take on the risk of supply/demand imbalances in their place. But this, alas, means brokers have to factor in the cost of wholesale liquidity, which inadvertently puts a floor on how low their own customer fees can go (at least if they plan to break-even). Read more
Hungarians have been having a say on sterling and the UK’s EU referendum, Whitbread sales have been given a Costa coffee boost. 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
Elsewhere on Tuesday,
-Taibbi: “The collapse of the Republican Party and its takeover by the nativist Trump wing poses all sorts of problems, not the least of which being the high likelihood that the Democrats will now get even lazier when it comes to responding to their voters’ interests.”
- Rajan, speaking last night in Mumbai, defending his record on inflation.
- Star Trek as fantasy.
- Kill the old, Venn diagram edition.
- Does Uber want to starve its rivals of capital? Or, is the financing game zero-sum too? Read more