© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Tech billionaire and bitcoin investor Marc Andreessen says Mt Gox is to bitcoin what MF Global is to the dollar.
But before we get to that, we’d like to explore revelations that it may not have been a malleability issue, a.k.a. a transaction doppelganging problem, that brought down the world’s premier bitcoin exchange but the much more common problem of “under-capitalisation”. It’s a common problem of banks and ponzi schemes everywhere. Read more
After the deluge comes … erm … the deluge.
Commercial Mortgage Alert reports that 37 shops are now in the business of actively originating commercial mortgage-backed securities (CMBS). That’s up from 27 such CMBS “conduits” in existence a year ago, and just shy of a peak of 38 originators tallied in 2007 and 2008. That’s pretty impressive work for a market that all but collapsed after the crisis. Read more
Late last year we speculated that if anything was going to disrupt the London property bull market it was going to be a grand exodus, motivated by the economically viable population realising that they could nowadays live and work quite happily outside of city perimeters. You know, the internet and all that.
Knight Frank’s latest wealth report, to be released on Wednesday, has decided that the greatest disruption to established property wealth centres may come from extra-terrestrial advances instead. Read more
Live markets commentary from FT.com
Bank Rossii raises Russian rates || Russia has massed armored vehicles at border, says Ukraine || Gas Explosion at Sinopec site || Eurozone manufacturing activity up || UK mortgage approvals at 6 year high || Thorntons profits up || Stocks down, haven assets up Read more
On Sunday Pimco issued an intriguing tweet from Bill Gross, the undisputed King of the bond mountain.
Women hold about 60 per cent of the total jobs in the thirty occupations projected by the US Bureau of Labor Statistics to have the most net job growth in the decade through 2022.
That figure was calculated* recently by the National Women’s Law Center, which adds that eighteen of those thirty occupations are “female dominated, with workforces that are 60 per cent or more female”. Read more
Clear enough where Russian assets are concerned at least… the CBR has
gone to war just hiked by 1.5 percentage points to put a stop to the rouble’s tumble.
The central bank did not mention Ukraine in its statement, but said the decision to raise rates was aimed at preventing “risks to inflation and financial stability associated with the recently increased level of volatility in the financial markets”…
Markets: Escalating geopolitical tensions in the Ukraine has weighed on equities, lifting commodities and motivating investors to seek shelter in havens. S&P 500 futures were pointing to a 1 per cent drop at the open of trading in New York, after the benchmark US index finished last month at a record high. In Asia, equity losses were sharp. (FT’s Global Markets Overview) Read more
The annual letter from Warren Buffett is out. We’ve picked out some excerpts below, or click to read the annual report in full, the chairman’s message starts on page 3.
One thing jumps out straight away though, the mea culpa for underperforming over five years was last year’s news. Five years, yes, but six… Read more
Something to catch in New York before it closes this weekend – a view of the times will live in by Mexican artist GT Pellizzi, exhibiting at the Mary Boone Gallery, close by Bergdorf Goodman on 5th Ave…
David Adler, a New York-based economic analyst and artist in his own right, offers a last minute review and discusses the belated rise of a movement focused on finance as an artistic inspiration and subject of critical commentary. Read more
After a day of digestion, the new RBS strategic plan still leaves a lot of questions unanswered. Indeed, the most pressing one we have heard from investors is whether the bank is an outright short or simply one to avoid, given the limited free float.
A lot of focus, also on whether the management of the bank — which soon won’t include departing chief financial officer Nathan Bostock — will be able to see through the strategic plan they have sketched out on the back of an envelope in the few months since Ross McEwan took over.
But another leaps to mind. The plan is to shrink the international, cross border, bit of the business to end up as a sort of UK-focused Lloyds Plus. But once you start letting the air out, how do you stop the balloon becoming a whoopee cushion? Read more
Live markets commentary from FT.com
It was referenced in the 2008 Fed transcripts, and now it’s becoming a reality.
Either via IOER or fixed rate full allotment reverse repos (what we like to call Farps) the Fed can, if it wishes, steer interest rate policy with a floor system rather than Fed funds per se.
In other words, if it needs to raise rates, it can do so not by lending at a certain rate, but by borrowing from the market at the rate it needs to absorb liquidity instead. As noted before, the only possible risk for the Fed is that it ends up paying out more than it receives from its balance sheet instead.
It’s a different type of central bank force, and one which ultimately reflects the fact that there is greater demand for safe assets in the system than funds to borrow. Read more
Crimea’s parliament calls for referendum on region’s future || BofA fights attempt to raise ‘hustle’ fine || Standard Life warns on Scots ‘Yes’ vote || Pearson profits set to miss forecasts as US enrolments fall || AO buyers disappointed || Norway’s oil fund to debate fossil fuel investments || Renminbi caps biggest weekly fall in years || RWE expected to declare €3bn net loss || Tesla Motors raised $2bn from the largest US convertible bond sale in more than two years || Dan Loeb will try to force his way on to the board of Sotheby’s || The Spanish government is selling 7.5 per cent of Banki || Ireland’s unemployment rate fell to 12.1 per cent || Markets Read more
Nine days in and it’s still falling…
Some analysts had thought Beijing was ready to let the renminbi stabilise, but a sharp sell-off on Friday – at one point it declined 0.9 per cent, its biggest daily fall since the new currency system was introduced in 2005 – showed that the central bank was still determined to push it further.
“We’re still seeing PBoC intervention”, said a trader with a bank in Beijing. “This is beyond our expectations.”
From Joy Rajiv, who formerly worked in the Foreign Exchange trading divisions at both Morgan Stanley and Deutsche Bank. He left the industry in early 2013 for personal reasons unrelated to the current regulatory probe into the FX industry, and writes in a private capacity here drawing on his experience in the industry.
As someone who has worked in FX trading for three years at Morgan Stanley and Deutsche Bank from 2010 to 2013, I have been dismayed and discouraged by the recent coverage of alleged manipulation by FX traders at major banks. Traders have been fired, lawsuits have been filed and comparisons to Libor have been thrown around without much concern for detail. Media reports have focused their attention on abuse of a daily benchmark, called the WM/R (World Markets/Reuters) fix. Read more
The transition to a new normal monetary policy, by David Miles, Monetary Policy Committee member, click to read in full
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
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
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