FirstFT – Russian air strikes raise tensions, the Martian microbes of doom and amnesia reversed

Washington rejects Moscow’s claims that Russian air strikes in Syria were aimed at Isis Read more

Slater & Gordon and some numbers in contrast

Slater & Gordon, the Australian legal group, delivered a fully audited set of results on Wednesday, the deadline to do so. Shares in the company — which have collapsed since it swallowed almost all of UK corporate train wreck Quindell — barely budged on the day, closing up 2 per cent.

So what happened? We suspect the lack of market enthusiasm is related to how many of the numbers reported in August were different to those on which the auditors signed off this week.

We’ll pick out a few below (and offer a quick reminder of why this all matters), but here is what may be the most important: somehow A$12.5m of underlying revenues and A$8.5m of underlying net profit fell out of the accounts in the last month. Read more

It’s not the 1930s so…

Currency wars are either everywhere or nowhere. We know that much.

What we also probably know is that currency devaluations in today’s environment are indeed approaching beggar thy neighbour policy without commitments to be irresponsible and/ or supportive fiscal action.  Read more

How to choose the IMF’s next Managing Director

This guest post is from Peter Doyle, an economist and former IMF staffer.


As the International Monetary Fund readies itself for its Annual Meetings in Lima next week, perhaps the key issue in its governance—the end of Christine Lagarde’s term as Managing Director in mid-2016—remains largely off the radar screen. It deserves prominence now. Read more

China’s economic leadership

Consider these educational stereotypes, all entirely accurate:

The US is led by a Harvard-trained lawyer. Read more

Markets Live: Wednesday, 30th September, 2015

Live markets commentary from 

Further reading

Elsewhere on Wednesday,

- UBS made some suspicious margin loans in Puerto Rico.

- Wealth inequality may be hiding in tax havens.

- And generally likes to hide.

- The future of journalism. Read more

FT Opening Quote – Fnac in £533m Darty bid

Fnac has made a bid for rival retailer Darty and Sainsbury has some good news in its trolley for a change. 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

Why the RBI cut, charted

I don’t know what you want to call me. Santa Claus is what, eh, [journalist x] called me earlier. You want to call me a hawk.. I don’t know. I don’t go by these things. My name is Raghuram Rajan and I do what I do.

- The RBI governor, 29 September

And yes, that’s certainly A reason for why he cut the policy rate 50bps to 6.75 per cent on Tuesday, twice what had been expected.

Here’s another one, via Credit Suisse’s Neelkanth Mishra: Read more

FirstFT – Equities set for worst quarter since 2011, the death of diesel and the Ikea test

US and global equities on course for worst quarter since 2011 Read more

A Fullerton deal, finally, for Eros?

Back in July, Eros International, the Bollywood specialist that came across our radar just a week ago, issued the following muddling statement to the Bombay Stock Exchange:

Clarifies on News item Read more

Where did all the EM FX bonds go?

According to Nomura’s Nordvig and team “the EM [FX] debt bonanza is over”.

Which is nice if you thought it was a measure of building risk…

After three years (2012-2014) of very strong net issuance in emerging markets (around $250bn per year), issuance has dropped to much lower levels during 2015. Chinese entities managed to issue around $50bn in debt, mostly in the early part of the year, but net issuance in other emerging markets has essentially ground to a halt.

 Read more

Student debt’s subprime problem

This may sound familiar:

  1. Conventional wisdom says people who own Asset A do better than people who don’t, and that society as a whole would be better off if more people end up owning Asset A
  2. Asset A is expensive, so many people borrow to buy it
  3. Credit constraints limit how many people can buy Asset A
  4. Then, for some reason, lenders become a lot more willing to fund purchases of Asset A, so demand for Asset A goes up a lot
  5. Supply of Asset A isn’t initially big enough to accommodate the extra demand, so prices go up and lots more gets created
  6. All the extra spending temporarily boosts GDP above what it otherwise would have been
  7. Partly because of 1 and 6, regulators take a light-touch approach, which enables (encourages?) lots of fraud
  8. It turns out there were good reasons why credit had previously been constrained, and the new borrowers can’t repay their debts
  9. Credit conditions, prices, and rates of asset ownership eventually return to where they were before but not until after a lot of people suffer losses from the previous credit expansion

 Read more

Markets Live: Tuesday, 29th September, 2015

Live markets commentary from 

Tick tock, Slater & Gordon…

A brief reminder of the Australian listing rules: companies must deliver an audited set of results within three months of their financial year end.

For Slater & Gordon, the Australian listed law group digesting most of UK peer Quindell, that means Wednesday September 30, lest the shares be suspended come Thursday.

We’ve mentioned before some of the issues likely to be discussed by the company and its auditors, in particular balance sheet values for accumulated work in progress and whether any of the A$1.1bn paid for Quindell in May should be written off. Lets think through the scenarios. Read more

The solution to the question too hard for the pub quiz

If you haven’t taken a crack yet at the finance puzzle we posted on Monday morning, do so now. We’ll wait.

Now that you’re back, see if you solved this the same way we did: Read more

China’s command structure, charted

From Goldman’s latest Top of Mind report:

Do click to enlarge but note that not (fully) pictured are the massed elites that make reform a less than linear process, particularly when objective number one is almost certainly the continuing control of the CCP. Read more

FT Opening Quote – Wolseley gets profits flowing

Plumbers merchant Wolseley has got profits flowing, an Odeon sale rumour has been firmly quashed and the Glencore sell-off may have been overdone. 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

Elsewhere on Tuesday,

- Levine on materiality and how you maybe don’t actually know it when you see it.

- Predictions for the year 2045.

- Bard Finance, LLC: Dirty deeds in the wool trade.

- Carl Icahn eyeing Sundance with 2min trailer for 15min movie. Read more

FirstFT – A Cold War clash over Syria, water on Mars and how the Tube could power London

Putin and Barack Obama exchanged rhetorical barbs not seen at the United Nations since the Cold War Read more

On those diminishing petrodollar flows, Saudi edition

Just in case Glencore’s stock slide and general market volatility have distracted you from fully digesting the significance of this Saudi Arabia funding story from the FT’s Simeon Kerr in Dubai…

We thought we’d reiterate the really important bit about the rate at which the Kingdom is pulling funds from global asset managers:

Nigel Sillitoe, chief executive of financial services market intelligence company Insight Discovery, said fund managers estimate that Sama has pulled out $50bn-$70bn over the past six months.

“The big question is when will they come back, because managers have been really quite reliant on Sama for business in recent years,” he said.

 Read more

SOE you think you can reform? Mixed-ownership edition

The tale of Chinese State Owned Enterprise reform is long and ongoing. So we’re going to break it down via an individual “reform” effort that has more than a passing resemblance to the Sinopec Conjecture…

It also reminds us that however you cut it China isn’t about to let go of control. Bit beyond us why anyone was shocked by this kind of thing:

China’s Communist party must tighten its grip on state-owned enterprises in order to maintain the “socialist direction of their development”, the country’s leadership said, an edict which chafes with reforms aimed at improving efficiency and profitability in the lumbering sector…

This particular tale though, whence wider lessons can be drawn, concerns Jiangxi Salt and comes via Gavekal’s Chen Long (bit chunky but very worthwhile, our emphasis): Read more

A history of leverage and the mining industry, 2010-2015

Or, in chart form via Investec… Read more

Markets Live: Monday, 28th September, 2015

Live markets commentary from 

Zug at 80p

Off some 19 per cent at 78.62 at one stage this morning. UPDATE: Make that 27 per cent, 72p and counting. Now… Read more

The question too hard for our upcoming quiz

While thinking of questions for our New York pub quiz, a friend presented the following puzzle to us. Initially we thought it might be a good question until we realised how long it took us to come up with the answer. (During the actual event you won’t have access to Excel and only about 20 seconds per question.)

Anyhow, see if you can solve it. Read more

Chup raho! You’re a non-performing asset

We don’t mean to keep banging on about it. But the bad loans in India’s banking system are both a significant barrier to a new, and badly needed, investment cycle getting properly underway — and a source of some hilarious numbers.

From Credit Suisse’s Ashish Gupta on the Reserve Bank of India (the regulator here): Read more

FT Opening Quote – Shell abandons Arctic drilling

Shell’s Arctic dreams have melted and Vodafone’s talks with Liberty Global have ended. 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

Elsewhere on Monday,

- Tomorrow’s dystopia comes ever closer.

- The Economist: “it makes sense to look beyond inflation—and to consider targeting nominal GDP (NGDP) instead.”

- Why has deflation returned to Japan?

- What if the Fed is wrong?

- 1099 as antitrust.

- Things I totally agree with: “there’s an internal VW story – or perhaps industry-wide story – here that I’d love to hear.” Read more

FirstFT – Catalan independence boost, ISIS recruitment and why VW is worse than Enron

Catalonia’s independence movement won a historic but incomplete election victory Read more