The Closer

FURTHER FURTHER READING

- The economics of Burning ManRead more

Kinder Morgan, MLPs and the sell case

The $44bn self-acquisition of Kinder Morgan has been heralded by some as a great deal for shareholders.

But is it? Is it really? At least for the ordinary investors?

We’ve already wondered about the motivation for the deal.

Among our initial thoughts: Kinder Morgan MLP units trading under the KMP ticker had got expensive due to the heavy promotion of MLP structures as a safe-ish and yieldy investment at a time of low interest rates.

But we now think there may be more to it than that. Read more

A Bitcoin flash crash

Bitcoin has been on a sharp course downwards for a few weeks now (chart courtesy of Bitstamp).

But on Monday, the unthinkable happened.

Bitcoin prices on the BTC-e exchange suffered a flash crash that took the price as low as $309 per bitcoin from a day high of $497.79.

Here’s the damage:

 Read more

The (early) Lunch Wrap

Fed blow to banks over ‘living wills’ || Smartphone owners’ appetite for new apps wanes || Bovis pre-tax profit surges on robust property market || Chinese banks step up lending to housing || US banks plan ahead for UK exit from EU || Markets Read more

Before Jackson Hole, roundup of Yellen’s quotes on the labor market

Janet Yellen’s speech this Friday at the annual Jackson Hole symposium is titled, with understated simplicity and brevity, “Labor Markets”. The wider symposium is itself themed, “Re-Evaluating Labor Market Dynamics”.

And it’s no wonder. Even now, after more than a year of monetary policymakers and academics arguing about the amount of labour market slack and how much it should matter, most of the known unknowns in the debate remain, well, unknown.

In anticipation of the speech, the economics team at Credit Suisse has rounded up some of Yellen’s quotes on the labour market since she became Fed chair earlier this year (emphasis in the original, and my own thoughts follow the excerpt):
 Read more

That was nuts. Is this the crash?

From Bloomberg:

London home sellers cut asking prices by the most in more than six years this month, adding to signs that the property market in the U.K. capital is coming off the boil.

London values fell 5.9 percent from the previous month to an average 552,783 pounds ($922,300), the biggest drop since December 2007, property website Rightmove Plc said today. Nationally, prices declined 2.9 percent, a record for an August.

 Read more

Taking the Billiton out of BHP

Nothing has been decided yet, but it looks increasingly like BHP Billiton is going to spin off its unwanted smaller assets in a new company — effectively undoing another dud mining industry deal what’s left of its 2001 merger with South Africa’s Billiton.

But lots of questions remain unanswered. Two stand out in particular: What does this mean for a share buyback and what will PLC shareholders get out of it? (Remember BHP is a dual-listed company with Ltd shares in Australia and PLC shares in the UK). Read more

A new secular stagnation e-book

Click the image for a link to the pdf of a new secular stagnation e-book, which features entries from Summers, Krugman, Blanchard, and many others, including some critics:

Earlier this year we wondered if perhaps Janet Yellen was thinking of secular stagnation as one of the potential reasons for the Fed’s recent, if slight, downgrading of US potential growth. Read more

“Humans need not apply”

 Read more

Further reading

Elsewhere on Monday,

- Under what circumstances should you worry that the stock market is “too high”?

- Serried Yuppiedromes.

- Don’t bank on Europe’s banks.

- Nationalise the clearinghouses? Read more

The 6am London Cut

Markets: Asian markets were mixed following a broad rebound last week, with some housing-related stocks under pressure after an index of mainland property prices fell for a third straight month. (FT’s Global Markets OverviewRead more

Fantex puts points on the board

Buck French just may spike the ball this Monday.

Mr French is the CEO and co-founder of Fantex Holdings, the company that made a splash last October when it unveiled its comprehensive apparatus for trading shares in professional athletes. The details around the establishment and trading of its athletes’ “tracking stocks” were complex and ultimately controversial (for mostly practical but also some ethical reasons). And just as those questions were raised, its first IPO, for Houston Texans’ star running back Arian Foster, was pulled after he was seriously injured in a game. Read more

Ukraine, war, and sovereign default

Ukraine claimed at pixel time to have fired on a number of Russian tanks crossing its borders.

Being invaded by Russia is not very conducive to a country’s GDP. But also, bizarre as it seems if its armour really is aflame in the Donbas, Russia is also the owner of Ukrainian sovereign debt. This has some precarious terms (for the borrower) restricting growth in debt to GDP to below 60 per cent. Read more

Valeant and the IRS

Buried in page 27 of Valeant’s recent quarterly regulatory filing was some potentially significant news: the pharmaceutical company, currently pursuing a $53bn hostile takeover of Allergan, is under investigation by the Internal Revenue Service.

According to people familiar with the situation a number of individuals, including former senior executives, have raised concerns with the IRS, which has been holding an inquiry into the company for the last two years. The probe by the Large Business and International division of the agency has included an examination of Valeant’s tax arrangements following the 2010 merger with Canadian Biovail, a so-called “inversion” deal that enabled the former US company to dramatically reduce its tax bill. Read more

The (early) Lunch Wrap

Russian convoy at Ukraine border || Alibaba reports accounting regularities at film unit || China banks raise capital || Markets: stocks and bonds rise Read more

The leverage clock tolls for thee

If you buy this…

… keep reading. Read more

Further reading

Elsewhere on Friday,

- Let’s Gowex: How a Spanish tech star fooled the world.

- The ECB is not doing its job. Again.

- What should the ECB actually do, the Tyler Cowen solution

… with a Sumner critiqueRead more

The 6am London Cut

Markets: Asia-Pacific equities were on track to finish the week with their biggest weekly jump since March. The laggard was Japan, where the Nikkei 225 average lost 0.1 per cent, although other markets are buoyant. For the week so far, the MSCI Asia Pacific Index has gained 2.6 per cent, rebounding from last week’s 2.4 per cent tumble. Barclays analysts said that this week’s gains in emerging markets were a relief rally “without a catalyst”. (FT’s Global Markets OverviewRead more

The Closer

FURTHER FURTHER READING

- Alan Beattie on RussiaRead more

Oil and the prospect of a Chinese shale boom

Russia geopolitical risk? Check. Middle East geopolitical risk? Check.

But commodity prices, and in particular oil prices, are doing nothing: Read more

Barclays, the banking and serial defendant combine

The Group faces legal, competition and regulatory challenges, many of which are beyond the Group’s control. The extent of the impact on the Group of these matters cannot always be predicted but may materially impact the Group’s results of operations, financial results, condition and prospects…

There’s not much that’s actually new in a base prospectus published by Barclays on Thursday, covering a future $60bn debt programme. But what the document does offer is a compendium of all the litigation and regulatory action the bank faces around the world. Read more

Best keep an eye on @courtneymoscow…

Here’s some Tina Fordham while we await developments… Read more

The (early) Lunch Wrap

US rows back on need for international rescue mission in Iraq || German benchmark bond yield slips below 1% || Bill Ackman plans to raise $4bn by listing new investment vehicle || || Gold loses its shine as Chinese curb jewellery purchases || European companies slam Chinese antitrust probes || Eurozone economy fails to grow in second quarter  Read more

Germany joins the 1 per cent club

Bloomberg:

GERMAN 10 YEAR YIELD UNDER 1% ~ 1st TIME EVER

Trading ever so slightly above 1 per cent at pixel time, but near as dammit to 1 per cent for anyone not inclined to multiple decimal places. Read more

Eurozone stops, waits for ECB

Germany shrank, and France stagnated in the second quarter. Italy we’ve all agreed not to talk about until Matteo Renzi waves his magic liberalisation wand, right? Here’s the FT:

The data from the currency bloc’s two largest economies came as the embattled French government said the disappointing growth meant it would miss its budget deficit this year and halved its gross domestic product forecast for 2014.

Germany’s economy, which provides more than a quarter of the euro area’s output, shrank 0.2 per cent between April and June, according to official figures. The French economy recorded zero growth during the period.

 Read more

Further reading

Elsewhere on Thursday,

- Inequality and the common pool problem.

- Through the seasons in a village in India’s Melghat.

- The economics of pricelessness.

- Smithers on the Scottish questionRead more

The situation in Ferguson, MO

A departure from the usual Alphaville fare…

The tense standoff between protesters and the police in Ferguson, Missouri worsened dramatically on Wednesday, while the arrest of two journalists focused attention on the extent to which the city’s police force has become militarised.

Throughout the day, images of armed police officers perched on tanks and aiming weapons at protesters spread throughout social media. The police also issued a statement requesting that crowds assemble only during daylight hours. Read more

The 6am London Cut

Markets: Asia-Pacific markets advanced following the release of strong earnings from Australian companies, and the first rate cut in 15 months from the Bank of Korea. (FT’s Global Markets OverviewRead more

The Closer

FURTHER FURTHER READING

- Investors pay for hedge fund illusionsRead more