Markets Live: Tuesday, 23rd June, 2015

Live markets commentary from 

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 

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

Zombie update: the silent hedge fund apocalypse

More hedge funds have closed in the last decade than were open for business at the start of it, according to industry numbers from HFR.

A total of 9,000 hedge funds and fund of funds have liquidated since the start of 2005, almost as many as HFR estimates exist now: 10,150. At the end of 2004 there were around 7,500 funds offering to manage cash.

The figures are a reminder of the transient nature of such high fee investment vehicles, which on average survive for only five years. The rapid turnover adds to questions about how such vehicles can be suitable stewards of capital for large long term investors such as pension funds. Read more

When commodities trade at negative prices…

Here’s something that doesn’t happen every day.

The price of propane in Edmonton, Canada — home of Tar Sands production — is trading at a negative price. Read more

Markets Live: Friday, 19th June, 2015

Live markets commentary from 

Beta max

There are several reasons that the beta input in a cost of equity calculation is perilous.

The beta itself might not be statistically significant, say, or if the R-squared is near zero (recall that beta is, literally, the coefficient on a regression and is used to calculate the cost of equity per the Capital Asset Pricing Model. Cost of equity = Beta x Equity Risk Premium + the Risk Free Rate. The higher the beta, the greater the security co-varies with the market return and thus the higher return that equity investors will require). Read more

That was nuts. Is this the crash?

Chinese stocks recorded their worst week since 2008…

More bullish observers say short-term factors are to blame for the 13.3 per cent fall in the benchmark Shanghai Composite Index this week, exacerbated by a 6.4 per cent fall on Friday…

The Shenzhen Composite was down 12.7 per cent for the week in late Friday trading — its worst since week since October 2008…

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The Old Lady of Threadneedle Street blogs!

Welcome to Bank Underground, the official (and slightly subversive sounding?) Bank of England staff blog.

It’s gone live this Friday, with not one but two inaugural posts touching on topics as far ranging as the impact of driverless cars on the insurance industry to the somewhat wonkish debate over how the ELB (effective lower bound) might one day constrain monetary policy and inflation.

While the BoE isn’t the first central bank to publish staff analysis in blog form– the New York Fed’s staff have been blogging on Liberty Street Economics since 2012 — it is the first that intends to use the medium as a mechanism for self-scrutiny and internal challenge.

As Andy Haldane, the Bank’s chief economist and executive director of monetary analysis and statistics told FT Alphaville this fits with the Bank’s push to make itself more open and transparent. Read more

FT Opening Quote – Shake-up at Standard Life

There’s a change at the helm of the FTSE 100 fund manager, Auto Trader has filed its maiden results as a listed company and it’s the Aim market’s 20th birthday. FTOpening Quote is your early City briefing with commentary by City Editor Jonathan Guthrie. You can sign up for the full email here.

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FirstFT (the new 6am Cut)

EU calls for an emergency summit of eurozone leaders after the failed Greece bailout talks Read more

Further reading

Elsewhere on Friday,

- In the footsteps of an all action pontiff.

- What does Bill Gross think about on the can? He’s glad you asked…

- Austerity, the great failure.

- Are surpluses normal?

- Yanis leaks Yanis?  Read more

Greece: it can’t get *that* much worse, can it?

Conventional wisdom holds that it would be an unmitigated disaster for Greece if it left the euro. This is, after all, why the country has continued to cling to the single currency despite the catastrophic decline in employment and output. But what if those costs have been grossly overstated?

An intriguing new note from Gabriel Sterne at Oxford Economics argues that, judging by the historical record, things really can’t get that much worse. According to Sterne, staying in the euro promises only years of stagnation and crushing joblessness, while leaving offers a chance, even at this late date, of rapid growth and the end of the depression that began seven years ago. In particular, he argues that leaving the euro would provide a fillip to the private sector’s balance sheet, boost trade competitiveness, and, perhaps most importantly, end the uncertainty over default and devaluation that has been choking off credit and investment. Read more

Consensus bubble in China?

From Morgan Stanley’s China Pulse survey first (via @jjeswani):

In June, more than half of the investors believed Shanghai A-shares were already in a bubble vs. only 12% holding this view in January.

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If Google mapped the financial system…

This is a Google Map of the City of London:

It’s a “square mile” because back in the day — before phones, fax machines or the internet was invented — representatives from the key settlement banks had to gather in person to net and settle outstanding debts and claims against each other (a mile essentially being about as far as messengers could be asked to travel in a day). Read more

Come along and throw the first stone

From: xxxxxx
Sent: Friday, 5 June 2015 16:01
To: Martin Wolf; Gillian Tett
Reply To: xxxxxx

Subject: Camp Alphaville

OMG! As the kids say. “Peace. Love. Higher Returns.” With the lead
speaker “Andrew Fastow, former CFO, Enron”!!! Higher returns through
fraud: great extension of the FT ‘s brand….

Dr. xxxxxxxxxx
xxxxxx xxxxxx
University of Cambridge

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