Queen plays Berlin – offering an obvious caption comp…

Two fab, access-all-areas tickets to Camp Alphaville on Wednesday available to the winner here.

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Cognitive dissonance and still rising margin positions in China

Still rising until September based on broker capital, if you believe Macquarie.

And here is the bank, with our emphasis, after last week’s Chinese equity dive amid stories of broker crackdowns:

Last week’s sharp A-Share correction creates an opportunity for us to update our margin database and charts. It seems that hardly a day has gone by in recent weeks without some discussion of media reports about broker “crackdowns” on Chinese margin lending. But it may be more instructive to observe what brokers and their customers actually do rather than simply observing what the media reports they are doing. This is because the aggregate data on margin lending tells a very different tale from the “tightening” narrative.

Margin positions have continued to spike, climbing 16% MoM and 123% YTD to reach a new high of RMB2.3 trillion as of 18 June. This is 4.6x higher than a year ago. It brings the ratio of margin positions to market cap up to 3.4%, which is still below peak levels achieved in Taiwan in the 1990s. However, as noted previously, margin positions to free float – our preferred metric for considering the possible share overhang – is now 8.5%. Admittedly these numbers become less shocking with time, and cross-country comparisons are fraught with apples to-oranges risks, but we’ll say it one more time – this level of margins to free float is higher than any historical example that we can find.

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Dear Mme Lagarde

She’s a little busy with Greece at the moment. But just under two weeks after Christine Lagarde read the IMF equivalent of the riot act to Ukraine’s biggest bondholders over its debt restructuring…

They’ve responded. See below for the full open letter from Ukraine’s creditor committee on Wednesday: Read more

Calling all finance nerds!

Think you know the difference between a CDO and a CDS? Or the day of the week Mario Draghi got flashed by a protestor?!

Then turn your attention to…

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Slater & Gordon and the ASIC

The Australia listed law group Slater & Gordon held an investor day on Wednesday to talk about its purchase of almost all of Quindell, the UK listed jumble of legal, technology and insurance businesses.

Ahead of that, the Australian Financial Review reported the group had attracted the attention of the Australian Securities and Investment Commission, related to the ability of Slater & Gordon’s existing audit firm, Melbourne outfit Pitcher Partners, to scrutinise the enlarge UK operations.

What followed were two statements from Slater & Gordon with somewhat different responses to the story. Read more

Markets Live: Wednesday, 24th June, 2015

Live markets commentary from FT.com 

A Goldman proxy for (stumbling) Chinese growth

Quite obviously, not many people take China’s own statistics at face value.

Also quite obviously, China is a hard economy to accurately measure anyway. It’s really quite big and its pace of change has made grasping any bit of it for very long more than difficult. Read more

Quindell and the FCA

Shares in what is left of Quindell — the former technology, garage, solar panel installation, law firm and physiotherapy conglomerate — were suspended on Wednesday morning, as the company announced an investigation…

on 23 June 2015, the Financial Conduct Authority informed the Company that it has commenced an investigation under the Financial Services and Markets Act 2000 in relation to public statements made regarding the financial accounts of the Company during 2013 and 2014. The Company will co-operate fully with the investigation.

The company also provided an update on the review of its accounting practices, and promised further detail on some related party transactions: Read more

Further reading

Elsewhere on Wednesday,

- Greece fact of the day

- There is no tech bubble

- Cowboys, aliens and stimulus

- Chimpanzee cookery class  Read more

FT Opening Quote – Stagecoach drives 10% divvy rise

Stagecoach shareholders are riding in comfort with a 10.5 per cent dividend rise, Ahold and Delhaize are combining shopping trolleys to create the fifth largest supermarket retailer in the US and there are more Greek crisis talks ahead. FT Opening Quote is your early City briefing. You can sign up for the full newsletter here.  Read more

FirstFT (the new 6am Cut)

ECB raised the limit on the emergency liquidity assistance available to Greek banks Read more

The case for capital controls in the UK?

If you accept the standard textbook view of central banking — roughly, that employment near its “natural” level coupled with accelerating wage growth will lead to faster consumer price inflation, whose pace should be kept moderate — UK domestic conditions would seem to merit significantly higher interest rates.

The number of hours worked is booming at the fastest rate in decades:

Nominal private sector wage growth has recently accelerated to its fastest pace since the crisis even as price inflation has slowed to a crawlRead more

Peru’s FX swappy central bank intervention

This is a snapshot of the Peruvian economy’s growing dependency on central bank intervention by way of BNP Paribas on Tuesday,

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Markets Live: Tuesday, 23rd June, 2015

Live markets commentary from FT.com 

Your half year report

Do click to enlarge:

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Have opinions on central banking? Come to Camp Alphaville!

Readers, meet Claudio Borio:

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Camp Alphaville ft. ‘Forever Young’

Do you want to live forever?

How about be Forever Young?

Because, apparently, according to Aubrey de Grey, gerontologist and co-founder of the California-based Strategies for Engineered Negligible Senescence (Sens) Foundation, there’s now an 80 per cent chance of escaping old age and ill-health indefinitely for all of us alive today. Read more

Uh oh, AO World – Update


It turns out the short position was the result of a typo. So Sylebra isn’t short 11 per cent of AO World after all, the real number is below the 0.5 per cent disclosure requirement.


Have a look at the top of the shareholder register for AO World, the UK white goods retailer which listed in London last year.

Sylebra, a Hong Kong-based hedge fund focused on technology stocks, has sold short 11 per cent of the company. Read more

Through London’s posh-door/poor-door keyhole

Selling flashy apartments in London is good business. As the FT’s Lex column reported last week, Berkeley Group, one of the most well known premium house builders, achieved a pre-tax return on equity of 29 per cent in its latest year-end results. Read more

FT Opening Quote – Ladbrokes gambles on Gala merger

Ladbrokes’ latest punt is a merger with Gala Coral, Chemring has issued downbeat results and RBS will get its IT examined at its annual meeting later today. FT Opening Quote is your early City briefing with commentary by City Editor Jonathan Guthrie. You can sign up for the full email here. Read more

Further reading

Elsewhere on Tuesday,

- Why yes, booms might cause busts.

- Oh, and yes, small booms might cause big busts.

- Will the China century end in 2019?

- Cato vs Piketty.

- Free houses, Sicily edition.

- Bernanke versus Andrew Jackson.  Read more

FirstFT (the new 6am Cut)

Athens presents a proposal that includes its first substantial concessions in months Read more

Grexit complacency, charted

From Barc as, per the FT, hopes fade ” that Greece and its creditors would strike a definitive deal on Monday to unlock €7.2bn of desperately needed bailout funds and save the country from default.”

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On those creditor ‘red lines’ for Greece

In this guest post, former IMF staffer Peter Doyle argues that in pushing for pensions, VAT and labour reforms, creditors are only stoking the latent explosiveness of Greece…


Troika-Greek negotiations are reportedly down to the wire over early-retirement pensions, VAT, and labor reforms: the IMF says all are non-negotiable; Tsipras, perhaps inadvertently echoing Mrs. Thatcher, has, so far, responded “No! No! No!”

These three issues converge on those at the upper end of their working lives, the 50-74 year old cohort, and are reflected in its participation and unemployment behavior. So it is worth considering data on those and the associated implications for the negotiations. Doing so suggests that these creditor red lines lack foundation. Read more

Markets Live: Monday, 22nd June, 2015

Live markets commentary from FT.com 

Shorters needed

Dedicated short sellers are a rare breed which has become even rarer in the last five years.

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Your updated Greek bank… Jog? Stumble? Whimper?

It really is crunch time folks. Or at least, it’s a crunch time. We’re sure another could be arranged. Related question: how many ‘extraordinary meetings’ would it take to make the phrase redundant?

From JPM’s always excellent Flows & Liquidity team…

Purchases of offshore money market funds by Greek citizens, our proxy of Greek bank deposit outflows [the purchases of offshore money market funds by Greek citizens shown in Fig 1], points to a large €6bn deposit outflow this [being, last] week, bringing the cumulative deposit outflow since last December to €44bn.

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Who cares about cost when chasing unicorns

A Monday story from Reuters catches the eye. Investors don’t think a California ruling which classed a former Uber contractor as an employee will affect valuations, either for the taxi supplying start-up or others operating in the so-called “sharing economy”.

There are a couple of ways those optimistic investors might be right, but the sentiment suggests more about the nature of hope and dream-based valuations than any real consideration of business prospects.

We’ll get the obvious argument out the way first: the ruling was a one-off, which Uber will appeal, so lets assume companies which connect consumers with contractors who want to share their labour for a price can continue to treat those contractors as independent mini-corporations, not people. Read more

Further reading

Elsewhere on Monday,

- Krugman on economists and beards. Finally.

- The weed funding bubble.

- The “nine schoolgirls challenge”.

- Grexicographers note the approaching Gredge.

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FT Opening Quote – Aggreko’s hire-splitting changes

Aggreko’s Chris Weston is putting his stamp on the rental group with a reorganisation, while Cinven has sold a 30 per cent stake in Spire for £431m. FT Opening Quote is your early City briefing with commentary by City Editor Jonathan Guthrie. You can sign up for the full email here. Read more