Anyone who has tried to work out the extent of US labour market slack has risked getting lost in a thicket of detailed research.
The most obvious question, and easily the most debated, is whether discouraged workers who have dropped out of the labour force will return in an accelerating recovery — keeping a lid on wage growth and core inflation. James Bullard included a useful summary of the literature on this debate in his speech last week. Read more
Elsewhere on Friday,
- The SEC should really start a hedge fund.
- Ambedkar, Gandhi and the battle against caste.
- “It’s far from clear that the T.P.P. is a good idea.”
- Why are Japanese homes disposable? Read more
Markets: Disappointing economic data from Japan and a further decline in China’s currency had Asian equities falling out of favour on Friday. The renminbi, which is tightly guided by the Chinese central bank, has fallen as much as 0.83 per cent against the US dollar. This is the currency’s ninth day of declines. (FT’s Global Markets Overview and FastFT) Read more
FURTHER FURTHER READING
- What PayPal’s past means for Bitcoin’s future. Read more
How to handle bad news, by public relations guru and propaganda expert Edward Bernays from his book Propaganda (1928):
The counsel on public relations must be in a position to deal effectively with rumours and suspicions, attempting to stop them at their source, counteracting them promptly with correct or more complete information through channels which will be most effective, or best of all establish such relationships of confidence in the concern’s integrity that rumours and suspicions will have no opportunity to take root.
A single factory, potentially capable of supplying a whole continent with its particular product, cannot afford to wait until the public asks for its product; it must maintain constant touch, through advertising and propaganda, with the vast public in order to assure itself the continuous demand which alone will make its costly plant profitable.
Live markets commentary from FT.com
To QE or not to QE remains the question. Comfortingly, just about everybody is united in uncertainty.
Here’s JP Morgan (our emphasis throughout):
Our own expectation is that the ECB will simply stay on hold for a very long time (at least until late 2016). If correct, it would make the coming months and quarters very uncomfortable for the central bank and it may not take much more of a disappointment in the data to trigger a small policy change. We are open-minded about this. But, unless the outlook changes very significantly, we think that any policy change will be a token gesture, rather than something substantive.
BNP Paribas: Read more
Crimea parliament stormed || RBS lost £8.2bn last year || Alliance results hit by Pimco outflows || RSA Rights issue || Lego ahead of peers as toy market shrinks || Blackstone takes Versace stake || Markets: Europe soft Read more
Spotted deep in the bank’s 2013 results. “We will be a more UK focused bank…” — you can say that again. Read more
After six years in the red (the latest an £8.2bn loss for 2013) the only way is up and this bank is on it:
Today RBS is announcing a new plan with the ambition of building a bank that earns its customers’ trust by serving them better than any other bank.
And here is Ross McEwan rallying clearly delighted staff with that message.
Elsewhere on Thursday,
- Now, we enter the world of Bitcoin 2.0.
- Momentum as the only reliable market anomaly.
- Bringing back subprime. Read more
Markets: Stocks in Greater China climbed as China’s central bank allowed the country’s currency to rise slightly, ending a seven-day losing streak. (FT’s Global Markets Overview) Read more
FURTHER FURTHER READING
-”Keynes’ theory, in other words, is just as compatible with small, lean governments as it is with large, powerful ones.” Read more
How exactly do you sell a fridge retailer at ~100 times EBITDA? Click below to find out.
Changes to search engines’ algorithms or terms of services could cause the Group’s websites to be excluded from or ranked lower in natural search results. If the Group is unable to recognise and adapt quickly to such changes, the Group could suffer a significant decrease in traffic to its websites and, in turn, conversion rates and revenue. Read more
A hat tip to rock-star Alphaville alum Tracy Alloway for passing along this chart from The Socionomics Institute, now updated to include last week’s release of the 2008 transcripts (click to enlarge):
Bears, look to your Capes! GMO’s James Montier is staging a fightback.
In the debate around using the popular long term measure of earnings to value the stock market, one fact was taken for granted: that for all its intellectual rationale, the Cyclically Adjusted Price Earnings ratio was useless when it comes to predicting movements in the market on any sort of useful basis. Read more
The UK online white goods retail sensation, ao.com, is the latest hot stock market floatation. Early trading puts its valuation in the region of £1.6bn, so we thought we better try and work out what exactly it does. After all, no one would pay six times sales for a washing machine shop, would they?
From the about us section:
We operate a sleek and well-refined process via our three strands. With over 4.5 million customers, we live and breathe excellence from the very first phone call, to the moment we power up a customer’s brand new appliance in their own home.
Not delivering your brand new appliance to someone else’s home is a start, we guess. But about those strands, the notice of intention to float provides a bit more clarity:
In 2012, AO had a 24 per cent share of the online market for major domestic appliances in the United Kingdom, of which 19 per cent represented AO website sales, and 5 per cent represented third-party branded website sales according to the OC&C Report.
“If you do a Volcker, you kill the supply side, and then you are in a bad situation,” Mr Rajan said during an interview in November. Erm…
If inflation truly is public enemy number one, then Indians at last have someone who may be up to the task. Step forward Raghuram Rajan, a few months into the role of central bank governor and India’s could-be Paul Volcker.
Awkward. But it’s his own fault. Read more
Live markets commentary from FT.com
Dougan defends Credit Suisse against tax evasion claims || China dismisses concern over sudden renminbi fall || George Osborne under pressure to cut UK taxes as rate rise looms || Japan watchdog tightens scrutiny of Mt Gox || Moody’s warns on specialised mortgage servicers || iPhone software security flaws exposed || Tesla’s sudden acceleration recalls dotcom rush || Markets Read more
That uber-growth business, washing machines…
James Montier of GMO is the subject of the latest Welling on Wall Street newsletter, a weekly long-form interview conducted by Kate Welling.
Montier, ever the bear, doesn’t like the negative expected return environment we’re in. He thinks we’ve learnt little from the crisis and that one the biggest risks is that the market isn’t being adequately compensated for the risk it’s being forced to take.
We can’t duplicate too much of the interview here, but consider the following something of a teaser. The questions (in bold) are being posed by Welling: Read more
Quite the week for Tesla Motors, which jumped 14 per cent on Tuesday after Morgan Stanley auto analyst Adam Jonas penned a financial love letter that dreamt of a robot car utopia powered by Tesla battery packs.
The analyst’s target price went to $320, from $153. It comes after Elon Musk told Bloomberg TV that he had conversations with Apple, but another boost to the valuation ahead of any stock based capital raising to fund the battery “Gigafactory” can’t hurt.
Incidentally, who was it who asked about a possible capital raise on Tesla’s conference call last week? Read more
And on the seventh day it fell again, in accordance with the PBoC… which cut the fixing rate.
Pity the RMB carry trade, no matter what the reason. Deliberate carry trade rumbling, trade band widening to allow greater market control of the exchange rate… or maybe, just maybe, that China is kinda thinking that a depreciating yuan ain’t a terrible policy right now. Read more
Elsewhere on Wednesday,
- Ukraine’s militias.
- The bank tax rises from the dead.
- What would FedCoin look like? Read more
Markets: Asian equities were under pressure as investors grappled with uncertainty about Chinese policymakers’ intentions regarding the country’s currency, and following a subdued session on Wall Street. (FT’s Global Markets Overview)
FURTHER FURTHER READING
- Where have all the workers gone? Read more
There’s been a ton of blogospheric analysis about the deal between Netflix and Comcast, and even after reading all of it you might well emerge as we did — completely unsure what to think.
Is the deal good or bad for consumers? Does it violate net neutrality, or have the pipes stayed neutral (and Netflix is simply a volume issue)? Is it any different from other deals already in place between content providers and internet service providers? Does it reflect the growing clout of the ISPs, or was it just smart business of Netflix to start bypassing the middlemen/backbone-providers? Read more
Philosophers and political writers have waxed on about the dawning of a new utopia since the beginning of history. Few, however, have had the guts, the hubris, or simply the fatigue-induced insouciance to stamp a date on it.
Today Morgan Stanley joins that few: Read more
Remember when bashing Tesla was all the fashion? When Elon Musk had to defend himself from shorters and haters on a daily basis? When free-market types cursed the company’s dependence on government subsidies and rent-seeking, and considered it a market abomination? When even the most optimistic analysts couldn’t make the share-price valuation work?
Well, it’s amazing what a year and another Tony Stark movie can do. Read more