The 6am London Cut

Markets: Asian stocks joined a global rally following gains on Wall Street, where stocks notched record highs to begin the first quarter. The Japanese yen weakened 0.2 per cent to Y103.8 against the US dollar, its fifth straight fall, reinforcing investors’ preference for risky assets over havens. (FT’s Global Markets OverviewRead more

The Closer


-”When is it ethical to hand our decisions over to machines? And when is external automation a step too far?” Read more

Credit ratings are weird, Crimea edition

Ho ho Standard & Poor’s, very clever, but we saw right through your April Fool’s joke.

First, the parody of lifeless regulatory jargon here is just a little too carried away: Read more

Readings from the book of Sam

After a half-century with the FT, Sir Samuel Brittan retired last week, signing off with a valedictory essay and video chat.

I was new to journalism when a friend bought for me Against the Flow, a collection of Brittan’s essays published in 2005. My friend thought I might enjoy the book based on an enthusiastic review in The Economist, which proclaimed it “so good that rivals in the field will, like this reviewer, put it down not knowing whether to feel inspiration or despair”. Read more

Turning Japanese

In addition to John Authers… please welcome James Mackintosh, the FT’s Investment Editor, as an Alphaville blogger. Like John, James has written for us before, on everything from fair value accounting to EM hot money.

Economists have been worrying about Europe turning Japanese. Investors seem to be more concerned about Japan turning European: for the first time since IBES started compiling forward price/earnings ratios in the 1980s, Japan is cheaper on this widely-used measure than Europe (as this chart shows): Read more

Hello Alphaville! This is Rock ‘n’ Roll!

Unlike Spinal Tap, John Authers has found his way to the stage. Please welcome the FT’s Senior Investment Columnist back to FT Alphaville, (after a brief stint of moonlighting in 2008, which included this piece on a mildly hawkish chair of the San Francisco Fed ).

Lets explore the notion that at least part of the downturn for Emerging Market equities in the last three years has been driven by the creeping realisation by investors that not all emerging markets will inevitably and swiftly adopt a shareholder-friendly version of western-style capitalism. Many had lazily assumed this, and such assumptions drove the long EM bull market of the last decade. Read more

Markets Live: Tuesday, 1st April, 2014

Live markets commentary from 

The (early) Lunch Wrap

FCA rules could force quarter of payday lenders out of business || Hollande fires prime minister in bid to relaunch presidency || Bob Diamond re-enters world of banking || Corporate America’s overseas cash pile rises to $947bn || Growth in UK manufacturing activity slows || Factory output points to stabilisation in Chinese economy || BHP weighs asset spin-off to focus on core business || Former Citigroup co-chief John Reed warns of ‘managerial turmoil’ || Markets  Read more

A right Royal listing, charted

The UK’s National Audit Office has delivered its opinion on the privatisation of that other British institution, Royal Mail. (Click for the full doc)

The short version of which can be summed up in one share price chart: Read more

Tiger hunting on fiscal cliffs

Your anti-corruption, anti-vice driven growth in Chinese government deposits from BofAML:

 Read more

Further reading

Elsewhere on Tuesday,

- Does economics make you a bad person?

- 18th century French philosophers weigh in on inequality debate.

- Shoe boxes full of cash in Turkey.

- “Mr. Lewis seemingly glosses over the real black hats: the big stock exchanges…” Read more

The 6am London Cut

Markets: A solid end to the first quarter on Wall Street, aided by a dovish Yellen, prepared Asian equity markets for an upbeat start, but a deluge of mixed data took the wind out of a potential rally. In Japan, sentiment was dented by Bank of Japan’s Tankan survey, which revealed that companies are bracing for a slowdown. (FT’s Global Markets OverviewRead more

The Closer


- The highest-ranking American airport (Cincinnati) is 27th in the world. Read more

Mini-miners for sale?

Wanted: mid-scale mining company with potential to renovate and extend. Desperate and/or motivated sellers preferred.

Mick Davis, who can reasonably claim to be one of the true operators in mining after he and the Xstrata team built a company that rode the Chinese demand commodity super-cycle all the way up to the final deal with Glencore, is back. Read more

Yellen: four pieces of evidence of slack in the US labour market

From her speech in Chicago:

One form of evidence for slack is found in other labor market data, beyond the unemployment rate or payrolls, some of which I have touched on already. For example, the seven million people who are working part time but would like a full-time job. This number is much larger than we would expect at 6.7 percent unemployment, based on past experience, and the existence of such a large pool of “partly unemployed” workers is a sign that labor conditions are worse than indicated by the unemployment rate. Statistics on job turnover also point to considerable slack in the labor market. Although firms are now laying off fewer workers, they have been reluctant to increase the pace of hiring. Likewise, the number of people who voluntarily quit their jobs is noticeably below levels before the recession; that is an indicator that people are reluctant to risk leaving their jobs because they worry that it will be hard to find another. It is also a sign that firms may not be recruiting very aggressively to hire workers away from their competitors. Read more

Mobile money and the UK aid conundrum

Putting a financial value on aid is tricky. Case in point, Monday’s FT editorial on the UK’s overseas development budget:

The expansion in the budget of the Department for International Development has not been without its critics. Some have questioned what intrinsic merit there is in spending 0.7 per cent of Britain’s output on overseas aid. The target is one that the development lobby has long been attached to… At the same time, there have been worries that Dfid’s £12bn budget is not spent effectively. Read more

A dangerous or ingenious musical precedent?

The Wu-Tang Clan are releasing just one copy of their latest “secret” album in the hope of sparking a shift in the way music is funded and distributed.

The general premise is that the art of music has been devalued by cheap modern distribution techniques and it makes sense to revive the…

“400 year old Renaissance-style approach to music, offering it as a commissioned commodity and allowing it to take a similar trajectory from creation to exhibition to sale, as any other contemporary art piece, we hope to inspire and intensify urgent debates about the future of music…”

The Wu Tang Clan appear to be miffed, basically, that music isn’t being treated the same way high value art is. Read more

Markets Live: Monday, 31th March, 2014

Live markets commentary from 

The (early) Lunch Wrap

Eurozone inflation at five year low || UK and Switzerland investigate benchmarks || X2 secures $2.5bn in funds || Greece approves structural reform package || Libya sues Soc Gen || ING to resume dividend in 2015 || North and South Korea exchange artillery over water || Markets: Positive sentiment at quarter end Read more

ECB credibility

Ebbing, one month at a time. (Via Eurostat’s March flash estimate)

Full circle idealism, the HFT story

What with the Michael Lewis furore building up, here’s some Scott Patterson:

Because as Levine sponged up the technical details of the market’s plumbing, he had begun to cobble together a revolutionary vision: a vision of how the market could work — and should work — if run by computers.

 Read more

Is Abenomics Working?

Evaluating the success of Abenomics has been an ongoing obsession of ours.

A recent paper, part of the Brooking’s Papers on Economic Activity conference, by Joshua Hausman and Johannes Weiland argues that Abenomics has been successful in generating monetary regime change, and that this has lead to an increase in output — but much more work is left to be done. Read more

Further reading

Elsewhere on Monday,

- Michael Lewis and HFT on 60 Minutes.

- Putin’s economic Achilles heel.

- Jobs and skills and zombies.

- So now it’s the 0.01 per cent but lets keep drilling. Read more

The 6am London Cut

Markets: Asia-Pacific markets were upbeat on the final day of the quarter but for most major indices the climb did little to offset a poor start to 2014. (FT’s Global Markets OverviewRead more

The capex call

Like other parts of the US economic recovery — housing, the labour market — capital expenditures by companies have been a letdown recently, even accounting for the weather.

The latest example came in Wednesday’s durable goods report, in which the “nondefense capital goods orders excluding aircraft” component fell. (That figure is a proxy and obviously doesn’t capture everything that normally counts as capex, which also includes investment in property and structures, imported capital goods, and certain intangible assets. Capex is often poorly or loosely defined in discussions about it.) Read more

A defense of occasional slow disclosure

Some lawmakers are calling on the SEC to look at the disclosure rules for activist hedge funds, according to the Wall Street Journal, which has decided to stir the pot after it made the shock discovery that investors talk to each other.

That discovery was in this piece, which is strange for a couple of reasons we’ll explain below, but was notable also for this endearing image:

There also is a kind of buddy system among activist investors, some say. Many high-profile investors who know each other don’t want either to get blindsided by another’s investing—or to blindside others.

And seeing as there didn’t appear to be much space to include some of the more well worn arguments for the current system, we’ll throw those in as well. Read more

Guest post: Bitcoin, derivatives, and the IRS

This guest post is by Tim Karpoff, a partner at Jenner & Block and formerly Director of the Treasury Department’s Office of Financial Institutions Policy and Counsel to CFTC Chairman Gary Gensler, and Israel Klein, a Principal at the Podesta Group and formerly a senior Capitol Hill staffer. The authors do not represent clients with interests related to Bitcoin.

——————- Read more

A “forward looking regulator,” in reverse gear… (Updated)


Are we about to see Mr Martin Wheatley do the perp walk? Read more

Commonwealth Reitaliation

Fans of shareholder activism that we are, it is not true that activists have at all times covered themselves with glory. Case in point ADT, a popular short since Keith Meister of Corvex bowed out last last year.

That campaign is one to file under activists helping themselves, not all shareholders, which is a tricky label for an agitator to carry. Indeed, our attention is drawn to the proxy materials from the latest company to come under urgings for improvement by Corvex: Commonwealth Reit.

We missed the letter when it came out, but as nominations for the board closed this week, let’s revisit something that didn’t get much attention earlier this month: Read more

Markets Live: Friday, 28th March, 2014

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