Alphachat: Under-appreciated moments in economic history; mid-career switches; “The Age of Stagnation”

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

SOE you think you can default?

Well, maybe some of you can. More than that and it could get tricky for China.

Here’s BofAML’s David Cui:

Since 2015, eight SOE bond issuers have run into repayment problems; four since February.

 Read more

Further reading

Elsewhere on Friday,

- Why haven’t bankers been punished? Just read these insider – Goldman and Abacus related – SEC emails.

- Regulators don’t want bankers to be paid for taking risk.

- How the unicorn financing market just… got… dangerous.  Read more

First FT – Obama speaks out on Brexit, when doves cry and kosher cocktails

Barack Obama says the UK would be less able to deal with economic shocks, terrorism and the migration crisis if it leaves the EU Read more

Buy a ByRD on BABA? NYSE goes the full Las Vegas

Let’s start with the guff.

We’re excited to offer investors these innovative and solutions-driven investing tools

 Read more

Hong Kong floats are going nuts again

On Tuesday last week, a company called Luen Wong Group, joined Hong Kong’s new-ish Growth Enterprise Market at 25 HK cents a share. By Thursday it was trading at 46 times that. Luen Wong is a civil engineering subcontractor. It’s a specialist in roads and footpaths and drainage.

The company has proved to be the most eye-catching of recent Hong Kong IPOs, but there are plenty of other examples of nuttiness.

A day before Luen Wong arrived, Hypebeast, an online fashion store, jumped 20 fold on the GEM. Read more

Imagining life/ the RBI after Raghuram Rajan

Once you’ve had a luddite at the Reserve Bank of India it’s hard to go back…

Amongst other things Rajan stabilised the rupee, brought inflation under some sort of control (with some outside help) which has allowed him to cut rates, overseen institutional changes at the RBI, has started to get a grip on India’s problem loans, and was a big part of convincing Delhi to crack down on willful defaulters and others who used to have avenues of political appeal when their loans were being questioned.

He also managed to thoroughly woo much of Mumbai’s financial community while doing so.

And now he might be off. As in, when his current term ends. Read more

The apparently unstoppable Chinese search for yield

This is what you get when you try to sidle up to some market pricing alongside a giant ball of money.

It’s to be read while keeping an eye on the property market — What’s that? Property prices for Tier 1 and 2 cities are still rocketing and mortgages are up 75 per cent year on year in q1, you say? — and the rise of defaults in the corporate bond market.

 Read more

Markets Live: Thursday, 21st April, 2016

Live markets commentary from 

Digging into Canada’s trade balance

We recently had a chance to chat with a senior Canadian economic policymaker. Among other topics — he estimated fiscal stimulus would boost growth by around half a percentage point in 2016 and by a full percentage point in 2017 — we discussed his belief the depreciation of Canada’s currency could help export growth offset some of the weakness in the oil economy. What follows is an attempt to assess Canada’s progress so far.

For context, the Canadian dollar has lost about 21.5 per cent of its value against the currencies of its trading partners since the most recent peak in mid-2011, although the loonie had dropped as much as 31 per cent before the recent rally in risky assets:

 Read more

FT Opening Quote

Anglo American shareholders are expected to censure the CEO’s pay deal today, Ladbrokes was paying out nonstop at Cheltenham, Sky has raised operating profits 12 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,

- Why the big banks can’t imagine their own deaths.

- Chris Arnade on Brady Bonds, Elon Musk and trading. Read the whole thread.

- “No statues in Silicon Valley salute Bill Campbell. But the story of his life, and of his values, should be widely shared.”

- Sanders, Trump and when discredited policies make sense.

- Trading aphorisms. Read more

Investors pull $15bn from hedge funds, record global temperatures and a well

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Hedge funds have suffered their worst quarter in seven years after more than $15bn was pulled out by investors starting to fight back against the high fees charged across the industry. Read more

It’s a hard knock deposit-less life for online lenders

Consider this headline from the New York Times last year:

Goldman Sachs Plans to Offer Consumer Loans Online, Adopting Start-Ups’ Tactics

Alongside this one from the Wall Street Journal last week:

Prosper Talks With Goldman, Others to Replace Citigroup on Loan Arrangement

That’s Prosper Marketplace, the online lender whose lunch Goldman Sachs is planning to eat with its own consumer loans product, trying to get the very same investment bank to buy-to-securitise Prosper’s personal loans. Read more

An old world tech-ageddon?

Intel provided us with an eye-catching number as it announced, late on Tuesday, “a Restructuring to Speed its Transition to a Company that Powers the Cloud and Billions of Smart, Connected Computing Devices…”

Up to 12,000 Intel people — 11 per cent of the workforce — will lose their jobs.

Trip Chowdhry’s Global Equities Research has extrapolated that news out to the wider old skool US tech world and come up with a rather larger layoff number: 369,000 over the next 12 months. Read more

On HM Treasury’s Brexit analysis…

A guest post by Peter Doyle, economist and former IMF staffer


I very much hope—and expect—that Brexit will be rejected.

But the 200-odd pages of HMT density on trade theory are intended to intimidate, not illuminate. They distract from the key issue; the impact of Brexit on the Euro. Read more

Markets Live: Wednesday, 20th April, 2016

Live markets commentary from 

Strikes don’t have to be impolite, Kuwaiti oil workers edition

Take the end to the protest by oil workers in Kuwait:

 Read more

FT Opening Quote

Arm profits are up 14 per cent, Moneysupermarket’s sales have increased 12 per cent, the FCA is warning fund managers against playing golf with financial advisors. 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,

- Brexit: the trade deficit is not a source of strength.

- Mervyn King, Aston Villa and the limits of marginal productivity theory.

- Of America’s struggling middle class, living paycheck to paycheck.

- The number of publicly traded firms has halved.

- The untold story of Magic Leap, the world’s most secretive startup. Read more

FirstFT – Trump and Clinton win New York primaries, Yahoo on the block and ‘bulk wine’

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With 98 per cent of the ballots counted, Donald Trump had secured 60.5 per cent of the vote in the empire state’s Republican primary election. In the Democratic primary, Hillary Clinton had won 57.9 per cent of the vote to Bernie Sanders’ 42.1 per cent with 98 per cent of the ballots counted. Read more

The clause that wouldn’t die

You won’t find a certain Latin phrase anywhere on it. Still, just for the record, here’s evidence that Argentina did learn at least one thing from the pari passu saga.

Presenting the new pari passu clause, from the prospectus for the gargantuan $16.5bn bond which Argentina is issuing to pay off holdouts and place that saga behind it: Read more

Markets Live: Tuesday, 19th April, 2016

Live markets commentary from 

US HY default rate almost… back at its historical average

Charted by CreditSights last week, with no points for noting the commodity component of the defaults:

They add that “the US HY issuer-­weighted default rate is approaching the historical average of 5.4%” and that “eight new defaults in April 2016 would put US HY default rates at the same level as the historical average. With 18 US HY defaults already taking place during 1Q16 this is entirely possible, although it is more likely that default rates will reach the historical average in May or June 2016.” Read more

FT Opening Quote

ABF’s results have been sweetened by its sugar performance, Rio Tinto has cut iron ore production guidance, Ashmore has increased assets under management by 4 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 Tuesday,

- Brexit and freedom.

- The most telling chart from the Treasury’s Brexit report?

- Even Elizabeth Holmes’ turtleneck has abandoned Elizabeth Holmes.

- A Q&A with Kuroda including the line “No, we have no intention to employ helicopter money, anything like that…”

- Ireland and Spain don’t have governments, and the bond markets don’t care.  Read more

FirstFT – EU prepares for Android crackdown, the splintering war on drugs and China’s genteel future

Regulators have given its strongest signal of its intent to crack down hard on Google’s mobile operating system Read more

If the music’s playing, keep on lending

The behaviour of lenders in the boom part of a credit cycle can be summarised fairly simply.

When times are good, lenders try to maximise the money they make by lending as much as possible. There is only a finite amount of high credit quality borrowers, so the lenders lend to riskier borrowers in order to continue maximising the money they are making. This behaviour has a lot to do with herding and optics. Here is a paper by David Aikman, Andy Haldane and Benjamin Nelson from 2010, discussing this effect in bankingRead more

Markets Live: Monday, 18th April, 2016

Live markets commentary from 

Bond love up, bond supply down

Bond supply goes up, bond supply goes down. Same for demand, really.

Like this (warning, listening for more than 2mins will drive you insane):

This time the two might contrive to create the most favorable bond demand/supply balance since 2009. Read more