Goldman vs China’s statisticians

Goldman’s updated activity indicator sees Chinese growth at roughly 5 per cent, way off the official figure of 6.9 per cent. Awkward.

 Read more

Further reading

Elsewhere on Wednesday,

- The incredible shrinking gig economy.

- The attacks in Paris reveal the strategic limits of ISIS.

- Whistleblowers for innovation.

- LA’s love-hate relationship with traffic app Waze. Read more

FirstFT – Paris manhunt widens, Jonah Lomu dies and Raqqa in the crosshairs

Second man sought as hunt for Paris attackers goes Europe-wide Read more

Where’s my liability, dude?

Something doesn’t add up in the world.

And when things don’t add up, you can only really blame the accountants.

Here’s the problem.

As per Gabriel Zucman’s book, The Hidden Wealth of Nations, the world’s financial liabilities are worth about $7.6 trillion more than the world’s financial assets. Roughly $6.1 trillion of these extra liabilities take the form of equity and long-term debt, with the other $1.5 trillion held in low-yielding deposits and money-market funds. Read more

Markets Live: Tuesday, 17th November, 2015

Live markets commentary from 

A COP21 disturbance in the force

In two weeks time, 195 delegations at COP21 will gather in Paris in an attempt to tackle climate change.

The goal of the 2015 UN climate change talks? A deal to keep global warming below 2 degrees Celsius. But it’s unclear exactly what will come out of Paris.

Beyond any overarching agreement or policy, attendees would do well to remember the actual people who would be working in the changing energy landscape.

With the difficulties of transitioning from a high carbon to low carbon environment, plus the potential disruption of automation and robots, going green is filled with many potential landmines for the workforce.

Just last week, BoE chief economist Andy Haldane sounded the alarm about the threat of robot labour to the tune of 15m UK jobs. And the most at-risk occupations from automation — involving administrative, clerical and production tasks — typically are the lowest paid. Plus, moving toward a low carbon economy will likely require trillions of dollars in investments just over the next 15 years. What will happen to employment as the energy sector and governments make moves to go green? Read more

FT Opening Quote – easyJet profits soar 18%

Low-cost airlines continue to thrive, British Land’s land and property have risen 7.5 per cent in value. 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

If you can be short dollar when all men doubt you

You’ll certainly be… something.

According to BofAML’s monthly asking questions of global fund managers extravaganza anyway. Its conclusion is the new “pain trade” is “short dollar”:

 Read more

Further reading

Elsewhere on Tuesday,

- Should monetary policy respond to financial conditions?

- Uber is not the future of work.

- Both Saudi Arabia and Bahrain are planning debt issues.

- How is development economics taught in developing countries? Read more

FirstFT – Hollande seeks sweeping powers, China’s expat experiment and the world’s longest half-marathon

François Hollande is calling on the US and Russia to join a global coalition to destroy extremists Read more

SDR inclusion doth not a reserve currency make

As has been well reported, the IMF has recommended that China’s renminbi should join the basket of currencies used to value its own de facto currency.

There’s been lots of talk, as a consequence, of China now being in a position to properly disrupt the US dollar’s global reserve currency status.

Except, SDR inclusion doesn’t imply anything of the sort.

Furthermore, we’ve very much been here before*. Read more

Facebook’s new responsibilities after Paris

Facebook’s “Safety Check” feature is probably the most humane way the company has leveraged its global reach and userbase. In the last 14 months it has helped the people affected by natural disasters in Afghanistan, Chile, Nepal, the Philippines and the south Pacific let their friends and family know they are safe.

This week, the company decided to activate it during the terrible attack on Paris that left at least 132 people dead and many more injured. It has also encouraged users to put the French flag on their profile pictures as an act of solidarity with France.

Both decisions have brought comfort to those directly and indirectly affected by the atrocity – they also raise questions about the people Facebook hasn’t assisted or commemorated.

 Read more

London, house builders, marketing suites

From the FT’s Kate Allen this weekend:

Data published last week showed that new housing construction has surged by 19 per cent in the past year to 155,080 new homes. That figure is a quarter higher than previously reported government statistics, which suggested that only 124,520 new homes had been built during the period. The figures for London, where the housing shortage is biting the hardest, show the greatest difference. Last week’s data showed that over 24,000 new homes were created in 2014-15, whereas the communities department’s quarterly statistics show only 18,270.

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Markets Live: Monday, 16th November, 2015

Live markets commentary from 

FT Opening Quote – BT boss in fast move to Nationwide

BT’s broadband boss is making a fast move to Nationwide as chief executive, while there’s a flight to safe havens as equity markets slump following the Paris attacks. 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

China’s government played stock market and won (?)

Stabilise the A-shares? Benefit the people?

We dunno but we DO have another estimate of how much RMB the Chinese government spent propping up its stock market in Q3 AND the good news is the CCP is back in the black. Or the red, depending on where you are. Either way: up on its investment (from the most limited of perspectives).

From BoFAML’s David Cui, with our emphasis.

Largely based on top-10 shareholder information disclosed by A-share companies, we estimate that the government likely spent at least Rmb1.5tr in Q3 to support the market (Table 1). Given the potential damage to the PBoC’s and RMB’s reputation, economic growth and long-term financial system stability, we think it unlikely that the government has the resolve to keep buying if heavy selling pressure in the A-share market resumes at certain point.

 Read more

Further reading

Elsewhere on Monday,

- Is China the new Japan, maybe unless they devalue edition.

- A look at France’s fragile economy.

- The market’s response to crisis.

- What is the message from falling commodity pricesRead more

FirstFT – France launches air strikes on Isis stronghold, Caterpillar’s China concerns and why men are ditching dress shoes

Pentagon seeks to verify whether Isis extremist has been killed Read more

One way the euro has become a lot more like the dollar

When Nixon’s treasury secretary told his European counterparts the dollar was “our currency, but it’s your problem”, he was referring to the tendency of foreigners to borrow and lend to each other using American money. The importance of these so-called eurodollars in other countries’ financial systems inadvertently gave American policymakers significant influence over credit flows outside their borders.

(This is still true: a rising dollar tightens financial conditions abroad, while a falling dollar encourages foreigners to lever up.)

Some Europeans wrongly thought this was deliberate and determined to rectify the situation by creating a competitor currency capable of functioning as a “global reserve”. A few even dreamed the euro would supplant the dollar. Read more

Interest rate hikes are bad news for cultural rent seekers

A funny thing happened this decade.

The fairly logical-minded world of computer science stumbled into the world of alchemical cult value by way of the cryptocurrency phenomenon, and didn’t even realise they’d taken leave of their senses. And still don’t.

For some, the discovery has been something akin to a religious experience. Question ‘Satoshi’ and the kingdom of the eternal blockchain, and well, just see this.

Artists, of course, have been at this game for a whole lot longer. And been way more efficient about it.

No fancy computer servers needed for their money-printing operations, just some palette knives, some canvases and some oils. Even talent — which used to be the difficulty factor that kept their store-of-value unit scarce — has long been abandoned. Read more

Markets Live: Friday, 13th November, 2015

Live markets commentary from 

Alphachat: The power of talk and mythical startup valuations

Sherry Turkle wants you to put down your phone and talk to someone

The MIT professor and clinical psychologist stops by to discuss her new book, Reclaiming Conversation: the Power of Talk in a Digital Age. We talk about how always-on digital connections are making it harder for people to have conversations, whether with family, friends, romantic partners, classmates or co-workers, and why you keep your smartphone out of your bedroom at night. Read more

Our chat with Esther Duflo

Further reading

Elsewhere on Friday,

- Six strange things that have been happening in financial markets.

- What Republicans get wrong about the gold standard.

- Do people want to be fooled?

- BoE chief economist Andy Haldane says robots are coming for your job. Read more

Fintech and banking risk; cognitive dissonance de semaine

Chancellor George Osborne, speaking on Wednesday at a Bank of England Open Forum event, once again declared his desire to turn the UK into the “fintech capital” of the world.

Which is weird, because the comment followed directly on from remarks praising regulatory efforts to de-risk and capitalise banks, as well as remarks acknowledging the role challenger banks played in risking-up the system in the first place. Read more

Markets Live: Thursday, 12th November, 2015

Live markets commentary from 

Towards global hyper fungibility

The euro may have been pointless, but it might have been a whole lot less pointless if there’d been political union from the onset. So implied Mario Draghi, ECB President, at the BoE Open Forum on Wednesday.

For the laissez faire radicals out there, here’s how he went on to define the nature of “truly free” markets in that context (our emphasis):

Consider the case of markets that are truly open – by which I mean, as open as the Single Market of the European Union, where internal frontiers have been abolished entirely, where passporting of services across the entire EU is a right, not a privilege.

In this situation, national governments, or national courts of law, cannot alone provide full protection to their citizens against abuse of property rights or any form of unfair competition that may arise from abroad. Nor can they alone protect the rights of their citizens to carry out business abroad unimpeded by protectionist restrictions. For the market to be truly free, there needs to exist a judiciary power that can enforce the Rule of Law on all, everywhere. It has to have jurisdiction across the entire market.

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The way we work now

The way we work now is changing rapidly: Self-employment is up, workers are putting their own money into what once would have been company purchases, and there’s endless chatter about the future of robot labour transforming the landscape.

On the first big shift, the Office for National Statistics data released Wednesday shows that self-employed people in the UK increased by 30,000 to 4.55m for July to September compared to the same period a year ago.

From ONS: Read more

Rupee do: what is Wirecard buying?

Wirecard, the German listed payments company, is to pay as much as €330m for a business which was barely involved in payments two years ago, according to Indian corporate filings.

Accounts for the largest subsidiary of the group to be acquired show qualified audit opinions due to concerns about revenue recognition and an inability to verify key financial totals, and recent resignations of directors and auditors.

Sales and profits claimed by Wirecard for the businesses it intends to buy also imply a dramatic transformation in financial performance during the last 18 months.

The question for shareholders, from whom Wirecard has raised €0.5bn in recent years to fund such dealmaking, is what exactly has it agreed to buy? Read more

FT Opening Quote – Rolls-Royce hit by spluttering demand

Rolls-Royce says the outlook for next year is negative, sending its shares down 22 per cent this morning. 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