Further reading

Elsewhere on Monday,

- Gavyn Davies on the BoJ’s new found negativity.

- “Central banks that have slipped into negative nominal interest rate territory don’t tend to get any closer to their inflation targets.”

- The anti-Fed two-step.

- India’s women battle to work. “They are powerful,” she said. “They are stronger. They beat us up like dogs.” Read more

FirstFT – Hopes rise for EU deal, the world’s best chef dies and why conspiracy theories just don’t add up

David Cameron’s hopes on Brexit deal rise after Donald Tusk meeting Read more

Thought for the weekend

We wanted to create a modern hub for consumers to share social and immersive experiences that were anchored in the exploration of our cola’s artisanal craft and flavor,” shared Seth Kaufman, Chief Marketing Officer, PepsiCo North America Beverages.

From Pepsi Unveils New Hospitality Venture with Launch of Kola House — an NYC “Experiential [sic] Lounge and Event Space” designed in partnership with “Renaissance man and legendary music icon Lenny Kravitz” that will offer “specialty plates inspired by the kola nut”.

 Read more

Novo Banco: Fixing the Bank of Portugal’s mistake

The ECB, we guess, is still getting to grips with its new(ish) role as bank regulator-in-chief across Europe. But in the case of Portugal’s Novo Banco, the phoenix-like entity created out of the collapsed Banco Espirito Santo, there’s no evidence the ECB has any handle whatsoever.

A strange re-resolution of Novo Banco, announced between Christmas and New Year, has been left entirely to the Bank of Portugal, whose bungling plan to protect local retail investors at the expense of foreign bond holders (notably Blackrock and Pimco) now looks to be headed for the courts.

Indeed, as Bloomberg reported this week, Clifford Chance in London and PLMJ in Lisbon have now been hired to sue the Portuguese central bank.

Yet all this could be avoided, if only the Bank of Portugal would lose a little of its bloody-mindedness. Read more

Maputo or bust?

Move over Tchenquiz.

Paul Murphy is going quids in on a grand design in Mozambique.

 Read more

Alphachat: Mauboussin on short-termism; millenials staying put; Perella vs Kramer

Alphachat is available on Acast, iTunes, and Stitcher. Read more

Markets Live: Friday, 29th January, 2016

Live markets commentary from FT.com 

How much yen can you fit in a cubic metre?

If the BoJ and Mr Kuroda are thinking about storage costs – after taking interest rates to minus 0.1 per cent and saying they “will cut the interest rate further into negative territory if judged necessary” — this might be useful.

From Oxford Econ’s Gabriel Stein & Ben May:

 Read more

RTGS, and the story of batches instead of blocks

Here begins a tale of how the Bank of England’s settlement system got broken without anyone really noticing…

On October 20 2014, the BoE suffered an embarrassing collapse of its real-time gross settlements (RTGS) system, forcing it to revert to manual processing for large payments such as CHAPs for about a day.

At the time, Bank personnel, bankers and the market in general passed the incident off as largely a technical issue, like a site falling down or a regular IT fail. Nothing to lose sleep over.

But the incident was arguably much graver than that. A long-standing RTGS collapse would have constituted nothing less than a systemic collapse of the sterling monetary market with potentially catastrophic consequences for the UK economy. Think human sacrifice, dogs and cats living together, mass hysteria. That sort of thing.

Also never pointed out at the time was how the events of 20 October 2014 linked back to the banking crisis of 2008. Read more

Further reading

Elsewhere on Friday,

- Balancing.

- Why is Martin Shkreli still talking?

- Shocking news: Trader Sarao might not have caused the flash crash.

- Will Hillary rein in Wall St?

- China’s slowdown, not that complicated.

- Why Chinese capital controls aren’t a good idea. Read more

FirstFT – Japan adopts negative interest rates, Zika’s ‘explosive’ spread and history’s most audacious scam

The Bank of Japan has slashed interest rates to minus 0.1 per cent, highlighting its concerns about the economic slowdown in China and a rise in the yen Read more

That was then, this is now: BoJ and negative rates edition (UPDATED)

Bank of Japan Governor Haruhiko Kuroda said he is not thinking of adopting a negative interest rate policy now, signalling that any further monetary easing will likely take the form of an expansion of its current massive asset-buying programme.

- Reuters, Jan 21

The Bank of Japan has adopted negative interest rates in their first benchmark rate move in five years, but has also chosen not to expand its quantitative and qualitative easing programme beyond its current level of buying Y80tn assets a year.

The BoJ has adopted a benchmark rate of -0.1 per cent, from a previous level of 0.1 per cent. It is the first time they have moved interest rates since October 2010….

The BoJ also indicated it has not ruled out further imminent easing, saying “it] will cut the interest rate further into negative territory if judged as necessary.”

- Now.

Wait, what? Read more

Don’t bank with us, says fintech bank

It looks like 2016 is going to be a big year for SoFi, the online lender whose march towards bankdom is as inevitable as its protestations that it is not a bank.

As well as abandoning FICO scores, rolling out checking accounts and ramping up its securitisation machine, it is also hitting the big screen by splashing a reported fifth of its annual advertising budget on a Super Bowl advert. Read more

The secret life of online loans

There are generally two ways of drinking: quickly and heavily, with no thought for tomorrow; or in a more measured way, perhaps with sips of water in between beers. The first might bring more near-term fun, but it also leaves you with a heavy hangover the next morning, and so too with loansRead more

Markets Live: Thursday, 28th January, 2016

Live markets commentary from FT.com 

Stocks fall, and now our China bezzle watch continues

What’s “Only when the tide goes out do you discover who’s been swimming naked” in Chinese?

That’s the Shanghai Comp, and this is from Bloomberg:

China Citic Bank Corp., a unit of the nation’s largest investment conglomerate, uncovered a fraud case at its bill-financing business involving about 1 billion yuan ($152 million) late last year, people familiar with the matter said.

 Read more

FT Opening Quote

Diageo is upbeat, despite a writedown for its Brazilian liquor business, Babcock’s CEO is retiring, Jimmy Choo shoe sales are up 7 per cent. 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 Thursday,

- Ackman runs an anti-index fund.

- Robert J Gordon on his own pessimism, part II.

- Trump, FOX News, and Megyn Kelly explained.

- “The Fed of 2008 feared inflation too much and recession too little.”

- Should we rename China ‘Exogenia’? And what a girl wants, FOMC edition.

- “The speech shows that Mr. Xi believes he has vanquished his rivals…” Read more

FirstFT – IMF moves to avert oil-led defaults, China’s communication breakdown and the triumph of the machine

Officials from the IMF and World Bank are headed to Azerbaijan to discuss a possible $4bn emergency loan Read more

Ackman says ICK to ETFs

Like his nemesis Carl Icahn*, Bill Ackman doesn’t like ETFs very much.

In his latest annual letter to investors – where he apologised for losing a lot of their money in 2015 – the head of Pershing Square Capital Management also devoted several sections to blasting the wave towards passive investment strategies. Read more

Why the tables have turned for MLPs

When it comes to the current bonfire of the MLPs, it’s easy to blame the carnage on the end of the commodity cycle, washing one’s hands entirely of the role played by the actual structure and promises of the products themselves.

But that would not be fair. These are and always have been poorly-thought-out high-risk products, with the end of the commodity cycle simply suspending the endless capital inflows which had hitherto disguised the unsustainable nature of the underlying investments in a no-growth environment. Read more

Markets Live: Wednesday, 27th January, 2016

Live markets commentary from FT.com 

The Plaza Accord, then and *cough* now?

Which leads us, naturally, to a partial Fed transcript from August 1985:  Read more

What is Hexagon?

A competition: describe in 20 words or less Hexagon AB, the Swedish listed technology group run by Ola Rollén, which has a market capitalisation of €11bn.

To help, here’s what the start of the 2014 annual report has to say (or click on the image for the whole thing).

MISSION: Hexagon is dedicated to delivering actionable information through information technologies that enable customers to shape smart change across diverse business and industry landscapes.

 Read more

FT Opening Quote

It’s a Scottish lament for investors this morning as Aberdeen Asset Management reports another quarter of major outflows and Royal Bank of Scotland announces bilions in charges. 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 Wednesday,

- Oil and stocks, correlations that work until they don’t.

- Robert J Gordon on his own pessimism.

- Krugman on Potemkin ideologies and the possibility that the Fed fumbled.

- @munilass on Flint’s poisoned water.

- Soros hurts China’s feelings.  Read more

FirstFT – The end of the iPhone growth era, explaining the Zika virus and the restaurant keeping 27,000 people waiting

Apple signalled that its flagship smartphone would suffer its first ever decline in sales in the current quarter Read more

High yield bond bears: flee to the hills

(From Gunshow, click through for full comic)

One stereotype of equity investors is that they stay seated and calm long after bond investors have hit the fire alarm and exited the building. It is perhaps a little unfair today, given that everyone is panicking. But two bearish high yield credit strategy notes this week suggest that evacuating one building may not be enough and that it’s perhaps time to flee the entire city and head for the hills. Read more

“Major AMAZE” and other insights from Metro Bank’s chairman

Metro Bank founder and chairman Vernon Hill

Metro Bank’s Vernon Hill is a man of many talents. As well as bank building, he has turned his skills to writing and in 2012 he imparted the secret behind his success – sans any mention of his regulatory trouble in the US — in a book, “FANS! Not customers”.

 Read more

Markets Live borked (updated)

We have a severe problem with our ML comments system. We can’t restart Tuesday’s session of Markets Live until that has been looked into.

The tech team are on the case, but probably best you go make yourself a cup of tea. Read more