Wednesday , November 25 2020
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FT Alphaville

FT Alphaville

FT Alphaville is a free daily news and commentary service giving finance professionals the information they need, when they need it. In a world where market professionals are inundated with information there is a pressing need to edit and filter, and hopefully sow a few ideas along the way. That’s where the FT Alphaville team comes in.

Articles by FT Alphaville

Nikola is nuts, when’s the crash?

6 days ago

Remember Nikola?In early September, while we were all enjoying the final dregs of lockdown-free sunshine, it came to light that the fledgling hydrogen-powered truck company might not be quite all it seems.Following a quite frankly hilarious short report in which the author, Hindenberg Research, claimed that Nikola had overstated its technology, overpaid insiders and — most memorably — rolled a truck down a hill to prove its vehicles worked as part of a marketing campaign, everything unravelled.The stock got slashed in half, founder Trevor Milton departed, and the US Department of Justice subpoenaed both the company and Mr Milton. After touching a market capitalisation of $28bn in midsummer, Nikola was worth just under $7bn by September’s end.With no revenues bar those

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Further reading

7 days ago

Elsewhere on Thursday, — Inside the longest lockdown in the world.– An explosé on MI5’s unaccountable spying.– The dash to unload property on Billionaires’ Row.– Vaccine efficacy: number go up.– The difficulty in trying to unload property with flammable cladding.– Boring stations.– Dining doctors.– How to save the UK. (By The Big Clunking Fist.)– How Covid dethroned the Kardashians.– Apple’s “window-dressing”.– Harness your hopes.– The Record Deal Simulator.

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Morgan Stanley go all in on Tesla

7 days ago

We’ve joked before on this blog about how the market is rewarding businesses where the pitch seems to be their profitability is as far away as logic can stretch. “Don’t think about what we are, think about what we might become, and then add 10 years,” seems to be the mantra.Take this one example. Back in early June, we took a look at a Goldman note on Chinese electric car maker Nio, which derived its price target for the business from its forecasted 2030 earnings. Nine whole years away.Oh, how we laughed at time. After all, it is insanity to think — particularly after this year of all years — that anyone knows what the electric car market will look like in 2025, let alone five years after that. Of course, the stock is up 732 per cent since. Nice one.Yet, even though we’ve

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Further reading

8 days ago

Elsewhere on Wednesday,– Should big pharma profit from Covid?– Young retirements.– The slow death of the electric guitar.– It’s not about the recounts really.– The Chilean pension system is in crisis.– Thanksgiving Covid enforcement rebellion.– Saving Christmas.– Scotland’s one-party system?

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What the 737 MAX’s return tells us about automation

8 days ago

Dr Ashley Nunes is a consultant and academic, holding positions at the Massachusetts Institute of Technology and Harvard Law School. He previously led research projects sponsored by the US Department of Defense and the Department of Transportation. In this article, he argues that the lesson learned from the 737 MAX debacle should be that automation, like any technology, requires major, and sometimes hidden, trade offs.The longest grounding of a commercial jet is set to end. Sometime this week, the Federal Aviation Administration is expected to certify the Boeing 737 MAX fit to fly. The aeroplane was grounded in 2019 following two crashes. The first involved a Lion Air jet which killed all 189 people on board. Months later, a second MAX jet, operated by Ethiopian Airlines,

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Comrade Swift takes on the suits

8 days ago

Some of our readers may not have realised, but we’ve become quite enamoured with Taylor Swift over the past few years.Not because of her music mind you (after all, this is allegedly a markets blog) but rather her raging against the financialised music machine, which has manifested itself in a variety of ways: most notably, her long-term feud with manager Scooter Braun.Here’s the back-story. In the summer of 2019, Braun acquired Big Machine Label Group for just over $300m. That label was once home to Ms Swift and so had the rights to the masters of her first six albums which, as you might imagine, produced a pretty hefty revenue stream.Swift was pretty ticked off, not just because she disliked Braun immensely, but because it meant she lost control of her intellectual

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How hidden is inflation?

8 days ago

Come out, come out, wherever you are. Or, if you’re somewhere in lockdown, perhaps not. The pandemic has led to the disappearance of inflation — at least if you look at the official statistics. In the eurozone, prices in the year to October fell by 0.3 per cent; in the US they rose by a paltry 1.2 per cent over the same period. But was inflation merely hiding in plain sight? And if so, where? As we have argued in the past, official measures may be underestimating the degree to which prices for the average consumer are still rising. The reason being that the pandemic has upended our spending habits. Why does that matter? Inflation is calculated using a basket of goods and services said to represent the spending patterns of the typical consumer. What’s included — and the

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Was hyperglobalisation an anomaly?

9 days ago

Slowbalisation is a term Adjiedj Bakas, a Dutch trendwatcher, coined in 2015 to describe the backlash against global trade. Since then, The Economist has used it to characterise the sluggish growth in trade flows that we’ve witnessed in recent years. This trend has tended to be talked about in terms of shifts in the political landscape, chiefly the rise of populist nationalism in places like the US and UK, the retrenchment of global capital following the great financial crisis and — more recently — the pandemic, which threatened to tear apart supply chains in the spring. But is slowbalisation inevitable? That’s the argument put forward by Pol Antràs, of Harvard University, in a paper presented to a European Central Bank conference last week. Here’s the paper and, if you

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Further reading

9 days ago

Elsewhere on Tuesday . . . – The next decade could be even worse– Meet psychedelic investor, Christian Angermayer– Inside the NYT’s existential crisis– The Slack bull case– Another one bites the dust– How CNN survived the election — A new Shiller CAPE

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The Disney Park Indicator: an update

9 days ago

Back in early May, FT Alphaville posited there’s one indicator above all that we should pay attention to when it comes to measuring whether we’ve returned to normality: Disney’s parks business.You know the one. It involves a relatively affluent family paying an often ludicrous amount of money to fly to Tokyo, Hong Kong, Paris, California or Florida to visit one of the Mouse Empire’s amusement parks to ride attractions such as Pirates of the Caribbean, Thunder Mountain Railroad and Splash Mountain. (Mountains are a recurring theme, oddly.)The idea is simple: once consumers have returned to feeling comfortable enough to travel, stay in a hotel, queue, scream at a stranger’s face on a rollercoaster and pony up for a large discretionary expense, you can be rest assured the

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Amazon proclaims a united Ireland on Twitter

9 days ago

Top of the morning to you. Whether you’re in the United Kingdom, or Northern Ireland, or the rest of the world for that matter, we hope your weeks have started off well and that your weekends were filled with some good Covid-safe craic. What’s that you say? Northern Ireland is . . . a part of the UK?! And that’s kind of what all the fuss over the now-defunct “Irish backstop” was about and the new “Northern Ireland protocol” is about in the Brexit wranglings?OK well someone needs to tell this to Amazon. Over the weekend, the company caused *much hilarity* on the internet when its customer support account responded on Twitter to a user named Chris Jones who was trying to stream the Rugby Autumn Nations Cup from Northern Ireland:
Amazon didn’t back down after Jones

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Further reading

10 days ago

Elsewhere on Monday: – Tankus on the intensification on fiscal cliffication. – The Economist on the vaccine : “Now comes the test for society.” ($) – Journal article says coronavirus in Italy since September 2019. – Liverpool tests 90,000 in first week of mass programme. – Impressive sales at Shanghai’s art fair. – On FIFA games and gambling. – A London celebrity haunt closes. – Safe travels. (WSJ, $)

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The oat milk market is frothy

13 days ago

Oat milk is frothy. In more than one way. To start with the most important way: it really does, especially in its “barista” form, froth up like real dairy milk. That’s why — as well as the fact that it is both creamy and sweet and doesn’t separate like other plant milks — it has become so incredibly popular, despite having relatively little nutritional value.And that takes us to the other way: the market is frothy too. And if you would allow us to really, erm, milk this, we think are several indicators that point to something of a bubble (you know those tiny little air pockets that work together to form the froth) forming in oatmilkland. First, The Celebrities have got involved. In July Sweden’s Oatly, one of the leading oat milk makers, raised $200m — at a valuation of $2bn — from

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Was the Bank of Amsterdam the world’s first central bank?

14 days ago

The Bank of Amsterdam is to central banking history what Little Richard is to rock ‘n’ roll. While the public might like to think it was Elvis or the Fab Four that invented it, the purists know they merely popularised it. Google “what was the first central bank in the world” and you’ll get Sweden’s Riksbank, but — as we found out from a Bank for International Settlements paper out on Tuesday — an increasing number of academics think that this honour should go to the Dutch lender. The reason this matters is that economists at the BIS and elsewhere draw lessons from the Bank’s failure to come up with today’s policy conclusions.The main arguments in its latest paper, An early stablecoin? The Bank of Amsterdam and the governance of money, posits that stablecoins are not fit

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Further reading

14 days ago

Elsewhere on Thursday, — Five questions to ask about the Pfizer vaccine.– (Although now there is also the Sputnik vaccine.)– A statistician’s view on the Pfizer vaccine data.– Anti-vaxxers.– QAnon is indestructible.– What went wrong at Quibi?– Private equity necrophilia.– Fighting for a beautiful, life-changing idea.– Graphic confusion.– “An authority of sexual wellness.”

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Ticketed live music streaming’s time has come

14 days ago

A fortnight ago, FT Alphaville experienced what felt like a great privilege: we went to a concert with real people.

William Doyle @ Oslo Hackney © William J. Stokes
At Oslo Hackney — a Nordic-tinged venue in London’s East End — we sat in Covid-compliant tables of two to watch William Doyle, a floppy-haired art-pop songwriter who is somehow part Eno, part Fripp and part D. James. Perhaps it was just the sound of hearing a real sound system for the first time in half a year, but the experience was frankly euphoric.

For millions of music fans across the world, however, the ritual of going to a gig has all but died with the pandemic. It’s a serious economic problem as well as a social and emotional one. Estimates of global losses to

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Further reading

15 days ago

Elsewhere on Wednesday, — Elon Musk’s totally awful, batshit-crazy, most excellent year.– The man who could explain the $2bn Wirecard mystery is missing.– Will Covid kill our toxic work addiction?– Face hunger.– Prop 22.– Modern-day tech company.– Does optimism help up during a pandemic?– Financing the American home.– Government restrictions on religion are rising.– The man who requested an absentee ballot for his dead mother. — The viral song lyric.

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Snap AV: has value been resurrected?

15 days ago

Don’t call it a comeback just yet, but something very weird has happened in markets over the past two trading sessions.It seems, dare we suggest it, that the “value” factor — Ie companies which are cheap on a fundamental basis — is getting a serious, sustained bid after a near decade of getting crushed by the “growth” and “momentum” factors.Here’s a chart from Wolfe Research which shows just how extreme this reversal has been. It deals with the price moves from Monday’s trading session, and breaks down all listed US companies listed by industry groups before placing each of them into various baskets, measuring things including dividend yield, book-to-market and return on equity. It then charts the way in which the equities of those companies falling into each basket

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Beyond Meat’s beyond awful quarter

15 days ago

Here’s a question:z would you pay 20 times forward revenue for this business?
Yes, look closely, and that’s top line growth of just 3 per cent. The sort of number you might associate with a century-old industrial company clipping along with inflation, like General Motors or General Electric.But this company is beyond general. In fact, it’s $10bn fake flesh purveyor Beyond Meat. And that table is from its third-quarter results, released Monday night. As you might expect the stock is down just under 22 per cent to $117 in pre-market trading after missing expectations on both — surprise surprise — revenue and net profits.Tepid revenue growth, which chief executive and founder Ethan Brown put down to the “full brunt and unpredictability of COVID-19”, “retail

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Codemasters/Take-Two: slipstream stocks

16 days ago

FT Alphaville spent a good chunk of the first lockdown thinking about corners. Not in relation to home design or statistical outliers, but places where the rubber meets the road. More specifically ones of such infamy that they’ve even been given names like Rascasse, 130R and Eau Rouge.Yes, over lockdown FT Alphaville got into Formula One via the medium of the video game. Perhaps it was the therapeutic nature of endlessly circling something, or simply a coping mechanism to make up for the lack of competitive professional sport, but gliding around the streets of Monte Carlo, Baku and Melbourne bought us great pleasure during Spring’s darkest days. Just don’t mention Montreal and the Wall of Champions.It seems we weren’t the only ones. Here’s a statement from Codemasters,

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Further reading

16 days ago

Elsewhere on Tuesday . . . – Bowie at the Berlin Wall– More Brexit red-tape hilarity– The fake meat war is only getting started– Yellen as Treasury Secretary?– How to trade the magic mushroom renaissance– The hoax artist behind a voter fraud claim– Hope lives in the Senate run-off– America is borked

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Coronavirus vaccine breakthrough — here’s the sell-side reaction

16 days ago

With markets positively drunk on the latest vaccine news, there’s of course a litany of sellside reaction.So, in the spirt of FT Alphaville, here’s the best of it.First, the team at Goldman:PFE and partner BNTX reported positive top line Ph3 data for its COVID-19 vaccine, BNT162b2. The trial met the primary endpoint (preventing COVID-19 in those without evidence of prior SARS-COv2 infection) and per the release the case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90%, at seven days after the second dose. But as the study continues, the final vaccine efficacy percentage may vary. Per the release the DMC has not reported any serious safety concerns and recommends that the study continues to collect

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Markets go pop as BioNTech reveals effective Covid-19 vaccine

16 days ago

Whoa! The good news keeps on coming. Via the FT’s industry correspondent Joe Miller:
The impact of the Pfizer/BioNTech news on stocks has been remarkable with the European Stoxx 600 up a whopping 4 per cent at pixel, driven by banks, airlines and industrials. In US pre-market trading, the Russell 2000 is up 7 per cent while the Nasdaq has slipped into the red. Clearly, the pandemic/ working from home plays are suddenly out of vogue. Ocado is down almost 8 per cent, Zoom 12 per cent and Peloton 9 per cent (the latter two in pre-market).
These are the top risers in the FTSE 100 at the moment. No surprise to see British Airways owner IAG at the top eh? (via Hargreaves Landsdown.)
And here’s the bounce in chart form:
At the UK market’s smaller end,

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Further reading

17 days ago

Elsewhere on Monday,– 37 per cent of NHS staff are absent “due to COVID-19” in Yorkshire and North-East.– There’s a disturbing lack of government Covid transparency, which is undermining lockdown.– How the MAGA bubble burst.– In which media commentary absolutely does not descend to vitriolic gloating or unnecessary meanness about upcoming regime change. — Apparently Biden won because he was a white guy who could connect with black guys.– Trump gained with all demographics apart from white men. — And Trump’s gains with Hispanic voters should prompt some progressive rethinking.– Urban density is the real divide in America.– Number 10 will unleash a Coleen Rooney-style disinformation trap to catch leaker.– In a parallel universe, the Trump side is putting its faith

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The MP3 and the T-Rex: Part 2

17 days ago

William J. Stokes is a musician and member of art-pop band Voka Gentle. He has written for publications including Mojo, Q, Saatchi Gallery Magazine and Idler, and is a columnist for Sound on Sound. In the second of a two-part post, he offers his perspective the digital music revolution and its effects on the music community.In part one of this piece I’ve told the somewhat painful story of how the music industry came to accept the idea of digital music. But as a working musician faced with the real world consequences of the streaming revolution, and with a fond farewell to my Jurassic Park metaphor, what of my own experience?Like almost all artists, I have a sizeable axe to grind. But also, like almost all artists, I resolved long ago [checks motivational poster on office

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BloCKcHaiN 2020 Election ConSpiRACY *Alert*

19 days ago

FT Alphaville has spent some of this week marvelling at the audacity of the White House Gift Shop (a privately owned entity that’s entirely unaffiliated with the actual White House) to be pre-selling a commemorative series of coins dubbed: “PRESIDENT DONALD J. TRUMP DEFEATS COVID WITH ICONS OF HIS ENTIRE FIRST TERM!”The coins’ artistic merits are described thusly on the gift shop’s website: . . . a new commemorative that vividly shows President Trump’s historic presidential candidacy win, itself, from his descent on the elevator in Trump Tower, against a veritable army of superb Republican presidential candidates confluent with taunts, jeers, sneers by Media naysayers—to present day with design motifs of President Trump’s ascendance over and personal defeat of the deadly

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Making real-estate assets work for local governments

19 days ago

This is a guest post by Dag Detter, who led the restructuring of the Swedish portfolios of public assets, Stefan Fölster, President of the Swedish Reform Institute and Josh Ryan-Collins, a Senior Research Fellow at IIPP.Local governments across the UK are being hit from several directions. Business rates, council tax and transport incomes are all being squeezed by local and national lockdowns, just as new demands are being made on local public health and social care budgets. As the second wave of the virus spreads, there is increasing recognition that the central government’s commitment to “level up” prosperity across England is failing. The UK’s cash-strapped local authorities are among the most stretched in Europe, according to Moody’s Investors Service. This is leaving

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Three reasons for Rishi Sunak to keep furlough in place

20 days ago

There was another reverse ferret from the government on Thursday. After insisting over the course of the summer that he would scrap the scheme, Chancellor Rishi Sunak decided to extend furlough, the government scheme which covers up to 80 per cent of the wages of those forced to work shorter hours — or not at all — due to the pandemic, until March. It is the right decision for all sorts of reasons. We’ll stick to three here. First is that it is fair. Mr Sunak’s decision comes on the first day of the UK’s month-long lockdown. The timing is significant in that it recognises that, if you are to restrict people’s freedoms — including their freedom to work, then you ought to compensate them for that economically. Second is that there is a good chance it will boost spirits and

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Further reading

20 days ago

[unable to retrieve full-text content]Character assassinations; CNN; a Libor podcast; and much more.

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