Temper tantrum, tempest, or teapot?

Banco Espirito Santo, the Portugese lender which had a few problems earlier this week to do with its complicated corporate structure and then saw its shares temporarily suspended on Thursday, has become this week’s goat on which all scapes may be laid.

Perhaps it is the summer quiet, but a sample of our inbox detects some caprine hitching. Read more

Further reading

Elsewhere on Friday,

- Understanding the Caliphate.

- Nonsense on toast might actually happen.

- 75bn downloads and counting. Read more

The 6am London Cut

Markets: The meteoric rise of Cynk Technology, a former penny stock which appears to boast one employee and no reported revenues, stalled abruptly on Thursday when shares of the would-be social media company tumbled by as much as a third. Cynk listed for 5 cents a share in May and then saw its shares multiply by 36,000 per cent to give the practically unknown company a market value of $6bn – more than Sina, the Chinese operator of Weibo, a microblog with more than 100m active users. (Financial Times)

Banking: Barclays is ditching the role of the traditional bank cashier as part of its efforts to overhaul high-street banking as customers increasingly use digital services. The bank said its 6,500 cashiers would take on new positions focused on giving customers advice on managing their finances rather than processing simple transactions. (Financial TimesRead more

Money Supply: Fischer worries about macroprudential policy

Note: FT Alphaville is now playing host to posts from the FT’s Money Supply box. Enjoy (and argue away, if you see fit). Here’s Robin Harding, the FT’s US economics editor…

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Markets Live: Thursday, 10th July, 2014

Live markets commentary from FT.com 

The (early) Lunch Wrap

Hays reports UK recruitment growth || Japan machinery orders fall || Mothercare appoints chief executive || Creditors fret about Espirito Santo || Stocks down  Read more

Too many professional pessimists?

Some 231 pages of macroeconomic goodness has landed from the ECB. Click for the full July bulletin.

We turned straight to page 50, and the examination of predictions for economic recovery after recessions.

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Further reading

Elsewhere on Thursday,

- “Preserving financial stability is truly a Herculean task

- Every conversation, every webpage must be tracked. It’s an emergency,

- Searching for a theory of searchRead more

The 6am London Cut

Markets: The influential head of the US House Financial Services Committee has called on US Treasury secretary Jack Lew to investigate whether sweeping financial reform has impaired the $10tn market for US corporate debt and risks amplifying an interest rate shock for large companies.In a letter sent this week to Mr Lew, Congressman Jeb Hensarling argued that it was the responsibility of regulators to ensure that the Volcker rule, a core element of the Dodd-Frank financial reforms that bans banks from proprietary trading, does not harm US capital markets. (Financial Times)

UK ministers, led by business secretary Vince Cable, have ordered a review into the sell-off of state assets, just days before MPs publish a report that is expected to criticise last year’s privatisation of Royal Mail. Lord Myners, former City minister, will lead a panel of experts to examine alternatives to initial public offerings for privatising state assets, as well as whether the process of gauging what investors are willing to pay for shares can be improved. (Financial TimesRead more

The Fed as universal banker

The Federal Reserve’s June minutes are out and as usual offer good insight into the FOMC’s thinking when it comes economic confidence and recovery (more positive) as well as its opinion on rates (still dovish).

But they also reveal a new preoccupation with matters related to exit strategy and financial plumbing.

Here’s the section we’re referring to (H/T David Beckworth)

While generally agreeing that an ON RRP facility could play an important role in the policy normalization process, participants discussed several potential unintended consequences of using such a facility and design features that could help to mitigate these consequences. Most participants expressed concerns that in times of financial stress, the facility’s counterparties could shift investments toward the facility and away from financial and nonfinancial corporations, possibly causing disruptions in funding that could magnify the stress.

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Disrupting the rating agencies

Is this an S&P/Moody’s/Fitch killer? Maybe, in time.

Credit Benchmark, a London-based start-up, on Wednesday completed a $7m venture capital financing round, led by Index Ventures, to fund its initial expansion into the $6bn credit risk information market. Read more

The cronut-ification of banking

Tracy Alloway hosted a session on the “death of a financial intermediary” at last week’s Camp Alphaville.

The discussion featured Renaud Laplanche, CEO of Lending Club, Cormac Leech, bank analyst at Liberum Capital, Krishan Rattan, founder of Voltaire Capital and Matt Levine, Bloomberg View columnist.

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Don’t freak out about UST fails (yet)

Everyone in the market is suddenly talking about the spike in repo fails.

But here’s the thing. Repo fails need to be seen in context.

Yes, this chart from BoAML makes the recent June spike look significant:

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MoneySupply: Those innovative Scandinavians

A warm welcome to our colleagues from the FT’s Money Supply blog, who are now sharing their thoughts on FT Alphaville. First up, Chris Giles, the FT’s economics editor…
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As far as “just fancy that stories” go, huge revisions to the national accounts of all EU countries have to be completed by the end of this year.

The US, Canada and Australia have already implemented changes to the way they measure GDP to conform to new international standards (the UN Systems of National Accounts 2008) and EU nations are in the process of implementing the European System of Accounts 2010, which is an EU-wide rulebook to implement SNA08. There are many changes, but the big ones that raise the level of GDP in most countries is to count research and development, as well as weapons systems, as final output (which contributes to GDP) rather than an intermediate part of the production process (which does not count). Read more

Markets Live: Wednesday, 9th July, 2014

Live markets commentary from FT.com 

The (early) Lunch Wrap

Widodo declares victory in Indonesia || Security theatre spreads to more airports || UK retailers say prices falling || House prices stabilise || Attacks on Gaza intensify || AbbVie forced to retract claims of support || Portugal bonds drop || Selling momentum for stocks fades Read more

Pre-zombie update: slow, steady and hungry they march

First-half performance numbers for the hedge fund industry as collated by HFR have arrived. Three up months and three down months leave the industry delivering after-fee gains to investors of 3.2 per cent, on average.

This first half performance is in line with 1H13 gain of +3.2 per cent, though hedge funds posted gains in only three of six months in 2014 in contrast to gains in five months in 1H13. The HFRI Fund of Funds Composite Index was up +0.9 per cent in June, concluding 1H14 with a gain of +2.0 percent but trailing the gain of +3.4 percent for the same period in 2013. Read more

Quindell and legal profitability

At the heart of the debate around Quindell, since it came under attack from Gotham Research, are a few simple questions. How was the Aim listed business built; are there inconsistencies in the accounts; and where does the group really make its money?

In pursuit of answers there are the accounts and presentations the company has published. There is the dossier from Daniel Yu’s short selling outfit Gotham Research. And there is the company’s long rebuttal.

We’re going to have a look at them and, in an attempt to work out what is going on, pick out some of the details where further clarity and context might be helpful.

First up: Legal ServicesRead more

Further reading

Elsewhere on Wednesday,

- Ferociously curious, mathematician, billionaire

- Through here is our show family, they don’t come with the house.

- ADHD does not an entrepreneur makeRead more

The 6am London Cut

Markets: Asia-Pacific equities were on a downward path after a sell-off on Wall Street, where the S&P 500 notched its sharpest fall in nearly a month. Regional data were no help in Asia, with Chinese inflation more subdued than anticipated and Australian consumer confidence failing to rebound much. (FT’s Global Markets Overview)

Citigroup is set to pay more than $7bn to resolve a long-running US government investigation into the bank’s sale of mortgage-backed securities, people familiar with the matter said on Tuesday night. The bank will pay roughly $4bn in cash to the Department of Justice and $3bn will be paid in mortgage relief to homeowners – such as principle reduction – as well as other payments to nearly half a dozen state attorneys-general, one person familiar with the matter said. Negotiations are continuing but if they stay on track a deal could be announced as early as next week, the people said. (Financial Times) (WSJRead more

A price spike story

The FCA is in danger of attracting regular readers to its Market Watch newsletter. Here’s an extract from Edition No. 46, about this momentary spike in the price of HSBC back in January…

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Welcoming Matomy, with eager anticipation… (updated)

Sorry, at pixel the doc was still not available for the leading digital performance-based marketing company, Matomy Media, which is joining the London market. We’ll update this post if and when we can. The Matomy Media prospectus has arrived (Wednesday, belatedly), so we can replace the placeholder image with the real doc…

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A Shire bump

Click to read:


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A peace of paper profits

The fight between creditors and shareholders of Apollo-backed Verso Paper looks near an end. We’ll give you the short version of the complex merger of coated paper rivals Verso and NewPage below, but for the full backstory go to our March post here.

So, in January Verso said it would buy privately-held NewPage Holdings. As well as cost cuts, another mooted benefit of the deal was a debt restructuring that would first force severe haircuts on two tranches of distressed Verso debt (between 47 and 57 cents on the dollar). Verso shares, previously worth less than a dollar, jumped 600 per cent. Read more

Markets Live: Tuesday, 8th July, 2014

Live markets commentary from FT.com 

The (early) Lunch Wrap

Overcapacity a problem for Air France-KLM || India to rebuild rail with FDI || Samsung profits fall || European stock issuance above US || Philips shakes up healthcare || Israel strikes Gaza || Sterling down Read more

Further Reading

Elsewhere on Tuesday,

- The incredible shrinking insider trading case.

- Education and the American Dream, not so much for the poor.

- Peak kickstarter, crowdfunding and the potato salad corollary. Read more

The 6am London Cut

Creditors offer Argentina breathing room in debt restructuring dispute: Holdout investors who rejected Argentina’s debt restructurings in the wake of its $95bn default have said they are prepared to give Buenos Aires extra time to settle, but only if the country negotiates in good faith. (FT)

ECB under pressure to tackle ‘crazy’ euro: The European Central Bank is being pushed to take action against a persistently strong euro with a leading industrialist calling on Frankfurt to tackle the “crazy” strength of the currency. Fabrice Brégier, chief executive of Airbus’s passenger jet business, said the ECB should intervene to push the value of the euro against the dollar down by 10 per cent from an “excessive” $1.35 to between $1.20 and $1.25. (FTRead more

Dear people of Spain,

Gotham City Research, after besting Gowex in a mere week, has decided to thank the Spanish people for their support, and address investors, doubters, haters and indeed all those who care about short selling and fraud. While quoting, of course, Batman:

It is not who we are underneath, but what we do that defines us. Read more

We are negotiating. You are litigating. They are going for the eyes

“The recalcitrant scum of the earth, I believe?”

“Ah, the vultures of global usury, I presume?”

To commemorate the beginning of negotiations in New York later on Monday between Argentina and Elliott… Read more