Alphachat: the artisanal economy, Treasury flash crash (still not) explained, campaign Twitter spats

Some quick news first. The honchos who run this joint have given us the resources to produce Alphachats more frequently and regularly, and we plan to spend the rest of the summer tinkering with different ideas for content and length. But we’d also really like to know what you want to hear.

You have a few options: leave ideas in the comments section below, email us at alphachat [at] ft [dot] com, call us at 917-551-5012 (a US phone number), or tweet at me directly at @cardiffgarcia. You can find Alphachat on iTunes and StitcherRead more

Ooma, oops!

Not all US tech IPOs head directly to the moon…

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Plus500: close but not closed

Shareholders of Plus500, the London-listed but Israel based contract for difference broker, this week voted to approve its sale to PlayTech, the Isle of Man registered but London-listed gaming group controlled by Israeli billionaire Teddy Sagi.

As Plus500 is incorporated in Israel it is not subject to the takeover code, so there is no merger document online. However the merger arbitrage team at Makor visited Herbet Smith Freehills to take a look at the document, and found there are some other consents needed: Read more

Markets Live: Friday, 17th July, 2015

Live markets commentary from 

FT Opening Quote – 888 trumps GVC to win bwin

888 has played a better hand than GVC to win bwin, even though it was outbid. FT Opening Quote is your early City briefing. You can sign up for the full newsletter here.  Read more

Further reading

Elsewhere on Friday,

- Samsung wants shareholders to have cake and vote, too.

- “What market monetarists want you to believe is that there is no need to worry about fiscal austerity in a liquidity trap, because an independent monetary policy can and will always offset its impact. This is wrong…”

- DeLong: Notes on Trekonomics.

- “The Maoist toolbox into which Xi now seems to reach with increasing frequency when problems occur provides him with few suitable tools for handling many of the complexities of 21st-century economic markets.” Read more

FirstFT (the new 6am Cut)

Days after Greece appeared to escape crashing out of the euro, hawkish German finance minister Wolfgang Schäuble has put Grexit back on the political agenda, raising tensions in Berlin and across the EU. Speaking before a key Bundestag vote on Friday, Mr Schäuble said voluntary departure from the eurozone “could perhaps be a better way” for Greece than a proposed EUR86bn bailout package. Mr Schäuble’s manoeuvre makes clear he is leaving open a Grexit option, even as he is formally backing the latest rescue plan to keep Greece in the eurozone.

Meanwhile, Mario Draghi, head of the European Central Bank, affirmed his faith in Greece remaining in the euro as the central bank raised its limit on emergency loans to Greek banks by EUR900m. (FT)

In the news Read more

So, Jamie Dimon came to Europe

Fine… he runs JPMorgan Chase, it’s a big bank. What’s so interesting about him getting on a plane?

He went to Amsterdam and hosted a dinner at the fancy Museum van Loon (pictured right) and a group of Dutch executives got invites.

Potential clients had a good dinner, what’s wrong with that?

It took place on June 30 and the chairman of the NL Financial Investments, the independent body that manages the Dutch government’s stakes in companies, including ABN AMRO, attended. His name is Michael Enthoven. Read more

El-Erian: Reaction to an insightful ECB press conference

The writer is Mohamed El-Erian, chief economic adviser to Allianz and chair of US President Barack Obama’s Global Development Council.

Here are three quick takeaways from today’s press conference by the European Central Bank: Read more

Eventually, the ECB will have to make a choice…

Easier than grabbing from the wires, from @ecb:

And on that choice…. This, from RBS’s Alberto Gallo, is timely: Read more

Why you can’t technically default on the IMF

It’s a nuance, but an important nuance.

The IMF isn’t a creditor in the usual sense of the word. It’s a collateralised bilateral swap agent that exists to help countries balance international payment obligations so that they don’t have to start wars, grab resources or asset-strip trade partners when they abuse their trust.

The clue comes in the ‘F’ of the IMF acronym, which of course stands for fund not force.

But even that is a misdirection, since the fund is actually made up of capital commitment quotas, not pre-paid lump sums of capital. Pre-paying would be dumb, you see — a waste of perfectly good capital. What if there’s no crisis to allocate the funds to? That capital just goes to waste, unused. Read more

Markets Live: Thursday, 16th July, 2015

Live markets commentary from 

Insys Therapeutics vs Roddy Boyd

Here’s one to watch from the world of speculative US healthcare: Insys Pharmaceuticals.

A $2.8bn market capitalisation and a stock price chart which, well, apply your gravitational defiant metaphor of choice to the chart on the right.

The chairman, John Kapoor, owns 59 per cent of the stock, with the next two biggest holders Janus, with 5 per cent, and healthcare specialist Consonance Capital with 4 per cent.

On the other side? About 23 per cent of the free float is sold short, according to Markit.

Enter Roddy Boyd of the Southern Investigative Reporting Foundation… Read more

Twitter leads suitors

Or, at least, it might according to the ECB’s Huina Mao, Scott Counts and Johan Bollen.

Naturally, this breaks down in China, where Weibo is your friend… Read more

FT Opening Quote – Ofcom suggests BT breakup option

Will anyone have the nerve to break up BT after Ofcom’s tentative suggestion this morning? Anglo American has warned of $3bn-$4bn in writedowns and Dixons Carphone and Sports Direct have announced stonking profits. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early City briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Thursday,

- David Miles looks back.

- History lessons for euro debtors.

- Our new service economy: Hot sauce sommeliers and sandcastle butlersRead more

FirstFT (the new 6am Cut)

Greece’s parliament on Thursday backed a slew of fresh austerity measures demanded by the country’s creditors, clearing the way for talks to begin on a EUR86bn bailout package. But a rebellion inside the ruling coalition that saw 38 government MPs oppose the measures raises fears that Prime Minister Alexis Tsipras may struggle to retain control of the government and his ruling Syriza party. Ahead of the vote radical leftist demonstrators hurled petrol bombs outside parliament.

Meanwhile, German Chancellor Angela Merkel is coming under intense pressure to defend her handling of the crisis and answer the serious questions it raises for the eurozone. (FT)

In the news Read more

IMF Debt Sustainability Assessments of Greece (and others)

In this guest post, former IMF staffer Peter Doyle castigates the institution’s flip-flopping over Greece…

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NASA’s Pluto fraud, conducted in plain sight

You can Google it yourself — “NASA Pluto – images” — or click below…

Not one of those Plutos is real. Every single image has been doctored. Here are the most recent real picture of Pluto from the New Horizons probe, which arrived at NASA HQ in black and white… Read more

Reminiscences of a Chinese stock operator

It looks increasingly likely that the latest Chinese stock boom (now abating) was fuelled by a rush of margin financing rather than anything like fundamentals, turning the whole thing into a bit of a house of cards (you don’t say), but just in case you have doubts, here’s UBS’s Lu Wenjie presenting some supporting evidence.

First, a chart and some factoids:

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Markets Live: Wednesday, 15th July, 2015

Live markets commentary from 

It’s fine, there’s plenty of China bubble fear for everyone

Credit Suisse would like to direct your attention away from that 7 per cent growth figure and back towards “China’s combination of a triple bubble (with the third biggest credit bubble, the biggest investment bubble and second biggest real estate bubble of all time)” which “remains the biggest risk to the global economy.”

From their global equity strat team (with our emphasis): Read more

Mpesa: the costs of evolving an independent central bank

We started this post before a Greek deal rendered the discussion of a digital parallel currency moot. Nevertheless, it’s still worth looking to the Kenyan M-pesa for a better understanding of why it’s dangerous to treat fintech solutions as panaceas for economies struggling with productivity, poor credit profiles, tax collection issues and overall corruption without understanding what’s really at stake.

Kenya is often presented as an example of a country which has flourished thanks to mobile money adoption — the poster child that “digital payments can make the world a better place”.

But often forgotten is Kenya’s unique circumstances. The M-pesa mobile money system, owned and operated by Safaricom which is 40 per cent owned by Vodafone, was allowed an unchallenged monopoly in the country for a very long time. Read more

Of brokerage booms, hidden debt and Chinese GDP data

We’ll get to the hidden debt stuff below. But, first, an update on the health of the Chinese economy from your friends at China’s statistics bureau.

The poor fellas had to deal with a median expectation among analysts of a 6.8 per cent print for China’s Q2 GDP growth. Frankly, that betrayed a disturbing lack of confidence in China’s leaders. Leaders who eventually nailed it with a reading of 7 per cent — bang in line with Li Keqiang’s predictions for full year growth.

Of course, as per Capital Economics, these data are going to do three main things. First, bring attention to a smattering of recovery in the broader economy including some stabilisation in fixed asset investment after growth had slowed for nine of the previous 10 months.

But, more importantly, they will underline the trouble with Chinese stats — always watch the trend not the figure — and draw attention to the unsustainable contribution being made by the financial sector: Read more

No really, here’s how we’d restructure Greece’s debt, by the IMF

Here is another very strange, and short, document. Click to read.

It’s an update to the Greek debt sustainability analysis by IMF staff — yes one of those analyses again — which was originally published just before Greece’s July 5th referendum. Read more

FT Opening Quote – Burberry checked in China

Trench coats and cashmere scarves apart, Burberry sales are suffering in China, writes Deputy Companies Editor Matthew Vincent. FT Opening Quote is your early City briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Wednesday,

- Twitter attracts spoofers… and, basically, that’s ok.

- “The credit crisis that has writhed… into a Greece crisis never needed to become a conflict between nations.”

- Greece and trust, redux.

- And for balance, Germany’s unconditional surrender.

- “I was able to regularly get a higher number of dances and I would attribute that not to my dancing skills but my ability to talk technology,” she said. Read more

FirstFT (the new 6am Cut)

The International Monetary Fund has sent a strong signal that it may walk away from Greece’s new bailout programme, arguing that it will not be able to participate if European creditors do not offer Athens substantial debt relief. The move again raises the pressure on Germany, which has opposed any debt relief, just as it prepares to seek the approval of its parliament to negotiate the details of a new bailout hashed out in a summit at the weekend.

Meanwhile, economists remain sceptical that the EUR86bn agreement, which has ensured that Greece remains in the eurozone, will be enough to restore it to good health. (FT)

In the news Read more

China’s decreasing margin debt and those ETFs

What role did margin calls play in the Chinese market in recent weeks? In particular, margin calls against shares pledged as collateral by controlling shareholders, unleashing a wealth destroying vicious circle?

Following on from our previous post attempting to answer those questions, we bring you a chart, by way of Pravit Chintawongvanich, derivatives strategist at Macro Risk Advisors:

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