Brexit and Britain’s dutch disease

The pound is up on the back of Theresa May agreeing to opposition demands for “a full and transparent” Brexit debate in parliament before activating Article 50.

But even if it wasn’t, would it really be that bad for the British economy? Let’s pause for some perspective maybe? Read more

Markets Live: Wednesday, 12th October, 2016

Live markets commentary from 

Virtual training for real life bankers


That’s an actual non-virtual press release from actual non-virtual part-government owned UK bank Lloyds, put out earlier this week. The otherwise unfeasible situations candidates will be placed into aren’t specified, but judging from these pictures provided to Wired UK, they include ‘pointing while in an empty room’, ‘looking at space ships and skyscrapers’ and ‘hunting for gold bricks in Ancient Rome’: Read more

The RMB and potential Brexit camouflage

Here’s A repeated theory: Brexit-shenanigans has caused GBP to go nuts. Crashes have flashed, journalists have frenzied, the FX and political worlds have been transfixed. And during this period, China has cynically decided to weaken its currency versus the US dollar while everyone was distracted.

As we said, it’s just A theory but here’s what an accompanying chart might look like, courtesy of CreditSights:

Screen Shot 2016-10-12 at 11.57.28 Read more

In search of China’s hidden credit

What is the true size of China’s debt load, and how fast is it growing? The answer has significant implications for the global economy. Global watchdogs including the International Monetary Fund and the Bank for International Settlements (not to mention this blog) have become increasingly shrill in their warnings that China’s rising debt load poses global risks.

Estimates of Chinese debt based on official figures are frightening enough — an FT analysis put the figure at 237 per cent of GDP at the end of March — but an increasing number of analysts now believe that the true figure may be higher. Read more

Procrastination as a strategy in the global reach for yield

New US money-market fund regulations go into effect on Friday, in case you happened to miss Libor’s climb and the reams of press coverage in the two years since the rules were introduced.

Because the topic has been widely covered, we thought there would be a pretty smooth transition into October. Why would someone put off making that kind of change until right before a big deadline? Read more

FT Opening Quote: Sterling stages slight recovery

Sterling stages slight recovery, investment for Monarch, slowdown at Domino’s. 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


– Crash: how computers are setting us up for disaster.

– A note on smart contracts and crypto currencies: ” Eventually, there will have to be a legal and political settlement about what code the global financial markets should run on. Ultimately, the code runs on people, not the other way around.”

– Relatedly, inside safe assets with Anna Gelpern.

– Ryan Avent on the pound and the fury.

– Soft Brexit, it’s not that hard?

– And Paul Mason on postcapitalism and the city. Also, on the flip-side dangers of some sort of neo-feudalism emerging. Read more

FirstFT – Trump unshackled, Cambridge university issues first bond and why millennials are switching off social media

Republican nominee reverts to bare-knuckled campaigning Read more

Is Ve Interactive really a unicorn?


In 2013, YuMe floated at $9. It’s now worth less than half that. Marin Software. Same year. Floated at $14, today it trades at $2.35. Tremor Video. 2013 again. Sold at ten bucks a share. Worth just $1.73 today. And Rocket Fuel. The “most successful-ad-tech IPO of 2013“. Investors paid $29! It’s now worth just $2.55. Read more

On the ongoing demise of globalisation

According to strategists Bhanu Baweja, Manik Narain and Maximillian Lin the elasticity of trade to GDP — a measure of wealth creating globalisation — rose to as high as 2.2. in the so-called third wave of globalisation which began in the 1980s. This compared to an average of 1.5 since the 1950s. In the post-crisis era, however, the elasticity of trade has fallen to 1.1, not far from the weak average of the 1970s and early 1980s but well below the second and third waves of globalisation.  Read more

Markets Live: Tuesday, 11th October, 2016

Live markets commentary from 

China’s property market keeps everyone guessing

The Chinese government knows it has to do something about the run-away house price inflation in its major (Tier 1 and 2) cities. And it is.

As SocGen’s Wei Yao says, since late September, “20-strong cities have either reintroduced or stepped up tightening on the housing sector.”

It’s far less than the peak of 46 Yao says we saw in the previous cycle but it’s not bad going and the cities involved cover “more than 20% of national sales and new starts volume, more than 40% of national sales value, and more than 30% of national property investment” according to RBS. Read more

FT Opening Quote: Brexit soft landing for PageGroup

Brexit soft landing for PageGroup, Ted Baker profits up, PureGym to pull IPO; FT Opening Quote, with commentary by deputy companies editor Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.  Read more

Bengt Holmstrom’s presentation on money markets and opacity

We recommend the newly adorned Nobel winner’s hour-long presentation at this year’s AEA conference in January here.

The presentation was based on this paper, from which the abstract: Read more

Further reading


– Fish and (micro)chips: Why the BoE’s John Lewis is still relatively relaxed about robots.

– Buffett responds to/ slaps Trump on taxes.

– John Hempton on why Twitter “should be and probably will be bought by an aggressive financial buyer. And Jack will be fired.”

– How the “weak” fix on Sunday evening actually represented a strengthening of the CNY against its CFETS basket.

– And a Neil Woodford encomium from Bloomberg. Read more

FirstFT – Samsung woes, the declining prestige of democracy and what nobody tells you about becoming the boss

Smartphone maker investigating why some models are still catching fire Read more

A message to blockchainers from the Nobel committee

It seems appropriate that in the current hysterical blockchain climate — a climate epitomized by the notion that everyone from bankers and lawyers will soon be dis-intermediated because of smart-contracts on blockchains — the Royal Swedish Academy of Sciences has awarded its latest prize to Oliver Hart from Harvard University and Bengt Holmström from MIT for their work on contracting. Read more

Markets Live: Monday, 10th October, 2016

Live markets commentary from 

GBP, inflation and the BoE, choose your own adventure edition

GBP is falling.

Breakevens are rising.

And Credit Suisse is charting… Read more

FT Opening Quote: “Prickly peer” to step down at Mitie

“Prickly peer” to step down at Mitie, Randgold’s Mali tax dispute and William Hill merger talks. 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

Sorry, but the FX market can simply be gappy too

Remember the flash crash?

Screen Shot 2016-10-09 at 10.35.18

Well, it (as opposed to the overall Brexit-inspired fall in GBP) was very probably also a market structure thing. Read more

Further reading


– Leaked files reveal RBS systematically crushed British business for profit.

– Consider the economics of a trailer park…

– “In 1740, the first commercial British bottled water was launched in Harrogate” And the marketing of water has only gotten more absurd from there, helped in part by Orson Welles it turns out.

– Very Serious People and the deficit. Read more

FirstFT – Trump regains footing in bitter debate, the benefits of a disorderly desk and the body language of leaders

Republican candidate threatens Mrs Clinton with prison if he becomes president Read more

“FX is back,” says FX strategist team

Foreign-exchange trading hasn’t been the best way to express macro views this year — in part because of expensive hedging costs — but BofA Merrill Lynch FX strategists say that’s changing, in a note titled “FX is back for good.”

Luckily for the sellside, it’s not just a one-way trade in global currencies, even if views on the pound haven’t looked terribly diverse lately. (Somewhat related: there’s been plenty of talk of barriers getting hit on bearish GBP/USD knockout options because of the crash, so if you’ve actually experienced that, do email us.)

As of yesterday, here’s where the positioning divide was between hedge funds and real money, from BAML: Read more

Thought for the weekend

Markets will go up and down – markets respond to noises

UK chancellor Philip Hammond on Friday’s sterling flash crash

About that Sports Direct rout

While lots of people marvelled at the supposed resilience of Britain’s benchmark stock index on Friday in the wake of the sterling crash, one particular faller stood out. Read more

Why this is more than a flash crash in sterling

This guest post is from Themos Fiotakis, Global Co-Head FX & Rates Strategy, UBS Investment Bank Read more

Week Seven: FT Alphaville Fantasy Football League

Another week, another enforcement action. “Voidarama” — sorry, you’re outta here for failing to adhere to capital requirements.

The league tables are still steady where it matters, with the top two and bottom two spots unchanged. So partly motivated by that — and partly motivated by a desire to find something moving as fast as the pound — we’ve taken a look at some of the big changers last week. Read more

Breakevens and the Great British Peso

While we’re waiting for everyone to flail through the ocean of FX crash causality, this is worth paying attention to….

 Read more