Quindell in parliament

Hat tip to the FT’s Henry Mance, who point us to a parliamentary question asked on December 1.

From HansardRead more

Herbalife, medical claims and Californian law

In case you wondering, two years after Bill Ackman stood up in New York and announced that his hedge fund, Pershing Square, would pit itself against Herbalife, a Los Angeles based nutritional shake marketing scheme, Bill & co are still very much at work trying to right alleged injustice for fun and profit.

(Try this summary of the story so far if it passed you by).

The latest foray is a video prepared by Pershing on claims for the healing power of Herbalife products by salespeople. We got an exclusive preview, and you can watch it below the jump, but the real target audience is the Food and Drug Administration and California attorney general Kamala Harris. Read more

Transparency for me (MPC), but not for thee (FPC)

Did you know there’s something called the Eijffinger-Geraats central bank transparency index?

There is one. It’s in the Warsh Review. On Thursday, the Bank of England accepted the review’s recommendations in favour of more open central banking. So, it decided to release minutes of meetings alongside policy decisions as they come out, to release transcripts of those meetings eight years later — and to hold fewer meetings a year from 2016 (8 versus 12). Read more

FirstFT (the new Lunch Wrap)

European equities opened slightly firmer after a poor Asian session, with signs the latest bout of risk aversion among investors may be fading as the oil price nudges off five-year lows.

The price falls prompted Norway’s central bank to cut interest rates to a record low, and Russia’s to raise them in a seemingly futile bid to shore up the rouble.

The US dollar gained ground against the “haven” yen, gold lost $2 to $1,224 an ounce and the recent intense volatility in the Chinese stock market abated. (FastFT, FT)

In the news

 Read more

Markets Live: Thursday, 11th December, 2014

Live markets commentary from FT.com 

Aye, there’s the Rub

Take another 100bp puny market!

Oh… Read more

Syriza in the bond market

 Read more

Ireland’s tight-fisted banks

A fascinating chart from Morgan Stanley’s European banking research team caught our eye. See if you can spot the odd one out (click to enlarge):

 Read more

Further reading

Elsewhere on Thursday,

- Jean-Claude Yellen.

- Regulators are finally coming to recognise the unintended consequences of their actions.

- Russian privatisation, the Coase theorem and methodological nationalism.

- Judo pays in Putin’s new, poorer, Russia. Read more

FirstFT (the new Lunch Wrap)

The price of oil fell below $65 a barrel for the first time in five years after Opec lowered forecasts of demand for its crude to a ten-year low. (FT)

The drop put investors on edge and sent them scurrying to haven assets overnight: the S&P 500 closed 1.6 per cent lower, while the yen rose 1.6 per cent. This morning, Tokyo’s Nikkei 225 fell 1 per cent and Hong Kong’s Hang Seng index lost 1.1 per cent. (FT)

In the news

 Read more

The Bank of Canada on the risks of high household debt and overpriced housing

Canada’s housing market could be as much 30 per cent overvalued; the share of new mortgages that are subprime is rising rapidly; and Canadian household are already among the most indebted in the rich world. Other than that, what else is there to worry about?

Quite a bit, according to the Bank of Canada’s latest “Financial System Review,” which was published on Wednesday: market illiquidity, foreign capital flight, hazards involving synthetic ETFs, and cybersecurity breaches are all discussed. For now, however, we want to focus on the vulnerabilities of Canadian households to the frothiness of the housing market in the Great White North. Read more

Insideout at Quindell

Robert Terry, founder of the UK’s first listed golf course cum law firm cum scaffolding and insurance processing technology specialist, has sold more of his stock since stepping down as chairman last month.

The sale was disclosed by the company, which reports: Read more

The Fed and oil: 2014 is not 2011 in reverse

Back in 2011, inflation climbed above the Fed’s 2 per cent target, but the FOMC resisted the impulse to tighten monetary conditions. Long-run inflation expectations hadn’t risen to worrying levels, and Ben Bernanke perceived that a price spike led by oil was likely to be “transitory”.

No surprise there: he wrote the paper on this very topic. And he was proved right. Read more

Dear Unilever, nice profits you have there… Love, Tesco

While attention is focused on the problems at Tesco and how the UK’s biggest grocer might turn round its business after revealing accounting problems, let’s try to think more broadly about the impact of those efforts.

To do that requires assessing the nature of the problem, which points to an answer.

Tesco faces competition from discount chains whose products are cheaper, but this is not the whole story. The point is that the likes of Aldi and Lidl are cheaper because they mostly sell own-brand products. So if we are to look for profits available in the business of grocery shopping, perhaps we should consider the comparatively fat margins for the makers of branded groceries. Read more

Keep beholding the (German) Euroglut

If you don’t you might miss all the capital outflow which, according to Deutsche’s George Saravelos, “not only has depreciatory implications for the euro, but also suggests that the consequences of Euroglut – low global bond yields and a stronger dollar – are here to stay.”

Oh, and blame Germany. Read more

A clusterFCA

It’s a day of flagellation at the British financial regulator…

 Read more

FirstFT (the new Lunch Wrap)

The UN and human rights groups called for US officials involved in brutal CIA interrogations of al-Qaeda suspects to be prosecuted. This followed the release of a US Senate Intelligence committee report, which revealed the barbarism of some of the agency’s interrogation techniques. It said the methods had been ineffective when it came to improving intelligence on al-Qaeda. It also revealed that President George W Bush did not know what was going on and that two psychologists with no experience with al-Qaeda or as interrogators earned $81m from developing the programme. (BBC, NYT $, FT)

Former CIA director Michael Hayden’s testimony was used as evidence that the CIA had not been forthright, but he hit back saying the report’s conclusions were “analytically offensive” and adding: ”I’m the dumb son of a bitch who went down and tried to lay out this programme in great detail to them.” (Politico)

The information has been released at a time when American support for harsh interrogation techniques is at a high and as such may not do much to shift public opinion. (FiveThirtyEight)

In the news

 Read more

Markets Live: Wednesday, 10th December, 2014

Live markets commentary from FT.com 

China’s changing monetary policy, charted

Some cut out and keep from Morgan Stanley:


 Read more

Further reading

Elsewhere on Wednesday,

- Small states, economics and food banks.

- Bhopal: “Time seems half-suspended, the night of the accident preserved in the fashion of some permanently stopped Hiroshima clock.”

- Five economists who deserve Nobels.

- The Goldman touch and Junker’s CDO. Read more

FirstFT (the new 6am Cut)

The US Senate Intelligence committee released its report on the CIA’s use of torture , which revealed the barbarism of the agency’s interrogation techniques. It said the CIA had been more brutal than it had disclosed and its methods had been ineffective when it came to improving intelligence on al-Qaeda.

The report also revealed that President George W Bush did not know what was going on and $81m was made by two psychologists who had no experience with al-Qaeda or as interrogators but were contracted to develop the interrogation programme. (NYT $, FT)

Former CIA director Michael Hayden’s testimony has been used as evidence that the agency has not been forthright but he hit back saying, “I think the conclusions they drew were analytically offensive . . . I’m thedumb son of a bitch who went down and tried to lay out this programme in great detail to them.” (Politico)

The information has been released at a time when American support for harsh interrogation techniques is at a high and as such may not do much to shift public opinion. (FiveThirtyEight)

In the news

 Read more

Disaggregating high-yield returns by sector

Junk bonds, or to be more polite, “high-yield” bonds, have had a glorious bull run since the start of 2009. The Barclays index of total returns more than tripled in five years:

 Read more

What would BoE rate hikes do to UK households?

The Bank of England’s latest quarterly bulletin, released on Monday, contains an interesting article on “the potential impact of higher interest rates on the household sector.”

A few interesting tidbits:

–Raising rates by 2 percentage points would redistribute income “from higher-income to lower-income households”

–But would probably lead to a reduction in spending, since 60 per cent of borrowers would spend less and only 10 per cent of savers would spend more. The BoE estimates that the net effect of a 1 percentage point increase in the Bank Rate would be a reduction “aggregate spending by around 0.5 per cent via a redistribution of income from borrowers to savers.” A 2 percentage point increase would lower spending by 1 per cent. (The total impact on spending could be a bit different, however, since monetary policy works in other ways besides redistributing income from net savers to net borrowers.)

–On the whole, though, UK households are (slightly) less sensitive to increases in interest rates than they were a few years ago Read more

What’s “catch a falling knife” in Greek?

A snap presidential election — and the chances of Syriza coming into power if the government fails to win enough support to push its candidate through — are all it took to push the ASE down over 10 per cent on Tuesday.

Which makes it a 27 per cent drop for the Athens bourse this year. Only the Portuguese, Nigerian, Russian (in US dollars), and Ukrainian stock markets have done worse in 2014. Read more

FirstFT (the new Lunch Wrap)

A wave of risk aversion is sweeping markets as a tumble in the oil price to a fresh five-year low is viewed as a warning signal for the global economy.

The long rally in Chinese stocks has snapped spectacularly, with the Shanghai Composite slumping 5.4 per cent; the yen has rediscovered its haven status; and benchmark Bund yields are flirting with record lows as investors seek the safety of highly rated sovereign debt. (FT) Read more

Markets Live: Tuesday, 9th December, 2014

Live markets commentary from FT.com 

China’s “new 4 trillion stimulus” and its collateralised weight

Biggest fall in five years that, even if it’s still up 35 per cent this year. Might be time to talk about the potential consequences of all this, no? Read more

Extending the Tesco Value range

An unscheduled update from the UK’s largest grocer on Tuesday, and group trading profit will not exceed £1.4bn this year.

The market says…

So, time to buy? Read more

Australia’s collapsing yield curve

We haven’t seen any commentary on this yet but the Australian yield curve has been flattening like a pancake this year:

 Read more

Further reading

Elsewhere on Tuesday,

- DeLong on Krugman on Shinzo and the invisibles.

- Policy penance.

- Is Russia 2015 Venezuela 1983? Read more