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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

The UK must stop neglecting the global benefits of English law

5 days ago

Guy Beringer, a director of LegalUK and a former chair of UK Export Finance, writes about why businesses and policymakers in the UK need to ensure the global benefits of English law endure. In the days when we all travelled to work, we recognised the enormous value of transport networks in enabling an economy to run smoothly. (Or at least when they worked.) Now that more people work from home, we recognise that efficient remote working depends on access to a reliable internet service and reliable search engines. In short, infrastructure matters. And the amounts invested in transport and communications platforms are — rightly — immense as a result.The investment isn’t merely spent on developing and building the platforms themselves. It is also directed at understanding how the

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Further reading

6 days ago

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7 days ago

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Newt Gingrich pivots to bitcoin

7 days ago

The last time you heard of Newt Gingrich was probably when the former Speaker of the US House of Representatives was calling for the arrest of poll workers in his home state of Pennsylvania following the “corrupt, stolen election” of 2020, or when he was writing op-eds refusing to acknowledge Joe Biden as president.Or maybe it was way back during his unsuccessful bid to become the Republicans’ presidential candidate in 2012. When he spent time telling supporters in Barack Obama’s home state that “we need an American president . . . with American values” and defending the Birther movement (all while his campaign was busy racking up debts of $4.6m that still, nine years later, haven’t been paid back).Well, guess what, Newt’s back, baby. And where do unsuccessful Republican

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The Port of LA has just seen cargoes hit record highs

7 days ago

Regular readers will know that we’re not at all convinced that enough is being done to emphasise the role high demand is playing in the supply chain logjams that are making headlines pretty much every day right now. With that in mind, we’d like to point you to the latest news from the Port of Los Angeles: The Port of Los Angeles processed 903,865 Twenty-Foot Equivalent Units (TEUs) in September, the busiest September ever in the Port’s 114-year history. Year to date, overall cargo volume stands at 8,176,917 TEUs, an increase of 26% compared to 2020.Yes, that’s right, during September, with several Covid restrictions still in place, the port managed to process a record amount of cargo. The news comes after President Joe Biden said the port would open 24/7 in the run-up to Christmas.

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Electric vehicles at a spaghetti junction

7 days ago

If you think you had a bad Tuesday, just think of the UK’s environmental reporters.Yesterday marked the release of Her Majesty’s Government’s Net Zero Strategy, alongside a swathe of other green-fingered documents. The total page count? 1,868, and counting (h/t to Simon Evans for putting that sheet together). That’s longer than Thomas Mann’s epic Joseph and His Brothers, which took over 17 years for the German author to write, and is marginally a better read.A cynic might suggest that such a document dump is designed to avoid scrutiny. After all, who has the time, or the concentration level, to read anything longer than a Tweet nowadays? But if that were the case, the government probably wouldn’t be committing chart crimes so early on in its flagship 368-page report. (Or maybe they

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Further reading

8 days ago

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Snap AV: demand reconfigured

8 days ago

Following our Monday read on whether the Bank of England should raise rates in the face of supply-side driven inflation (short answer: no), we had some of our loyal readers arguing with us about our assertion that what we were seeing wasn’t a rise in aggregate demand, but just a re-configuration of it.Namely, consumers, thanks to a multitude of factors stemming from the pandemic, are sploshing their cash on consumer durables — an extra screen for the home desk, an Eames chair for the office, or even a new turntable — rather than services. That, in turn, has put added pressure on just-in-time supply chains for these goods that were already operating on the edge pre-Covid. After all, supply isn’t liquid. Capacity needs to be invested in, and infrastructure built out, before supply

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Further reading

9 days ago

Elsewhere on Tuesday . . . – Productivity in late capitalism– Elon’s German Gigafest leaves the locals unimpressed– Falling rates and rising superstars– The music critic who tried to disappear– The rideshare bubble bursts– How would Spotify pay songwriters more?– Song of the day: DJ Python — Yo Ran (Do)

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The Bank of England is in a tight spot

9 days ago

Near the beginning of the Coen brothers’ classic O Brother Where Art Tho? our three escapee heroes find themselves in a barn surrounded by local law enforcement, with no clear way out — leading George Clooney’s Ulysses McGill to proclaim: “Damn, we’re in a tight spot!”

Bank of England governor Andrew Bailey and his eight fellow members of the monetary policy committee might empathise. In comments reported by the FT over the weekend, Bailey said the Old Lady of Threadneedle Street “will have to act” to control inflation, after the figure hit 3.2 per cent in the year to September, 1.2 percentage points up on where it was the previous month. Markets have taken Bailey’s remarks as a hint that rates will not only rise from their current level of 0.1 per cent later this year,

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Further reading

10 days ago

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Italy’s ill-fated dalliance with techno-democracy

12 days ago

Ben Munster is a freelance journalist covering the dubious dual beat of blockchain and Italian politics. He has written for The New Yorker, Esquire and Private Eye, and is the semi-regular author of the Zero Knowledge column at Decrypt, a crypto news site. (One of the good ones, he swears!) He lives in Rome.In local elections over the past few weeks, Italy’s once mighty Five Star Movement has suffered a series of catastrophic defeats, resulting in widespread declarations that Italian populism is not long for this world. Against a resurgent centre-left, Five Star’s base collapsed, and it lost the mayorship of two key cities: Rome and Turin. Still in government by a taut thread, the party — or the Movement, as its adherents prefer to call it — faces only the indignity of another

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Further reading

13 days ago

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The flaws behind Biden’s open-all-hours ports strategy

13 days ago

Big supply chain news from the US overnight, with Joe Biden saying the Port of Los Angeles will run 24/7 in the run-up to the festive period. The port complex of Los Angeles and Long Beach (which announced a few weeks ago it would operate round the clock) is the US’s busiest, but we doubt opening it up all day and all night will help much with Biden’s aim of speeding up delivery times. Let us tell you why. For starters, the port has been operating above full capacity for months, with staff working far more hours than they usually would. In theory, staying open at night and over the weekend could add more capacity and be the “game changer” that Biden believes it can be. But that’s only the case if the rest of the supply chain is purring. Which it isn’t. There are snafus all over the

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Further reading

14 days ago

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The cost of THG and Matt Moulding’s cashless property deal

14 days ago

In a year of London market blow-ups, it’s hard to know where to rank THG’s capitulation.Following a difficult year for the shares of the Manchester-based-protein-powder-slash-beauty-retailer-slash-wannabe-e-commerce-platform-provider, investors expected clarity from its Capital Markets Day on Tuesday. Clarity over its Softbank-backed Ingenuity platform, clarity over its margins and clarity over its restructuring plans. Instead, they got a jibe at short sellers. THG’s shares swiftly took a 35 per cent haircut. They’re now down some 65 per cent this year.Plenty of questions have been asked of Matt Moulding’s knotty retail empire. But a recurring one concerns a certain property sale and leaseback his own investment vehicle did with THG, just before its September IPO last year.The

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Higher wages for German workers would benefit all of Europe

14 days ago

Rui Soares is an investment professional for FAM Frankfurt Asset Management, an independent investment firm.Several news outlets, including the Financial Times, have drawn attention to the threats of strike action coming from German workers. The press’s knee-jerk reaction to these threats has been to link them to the recent rise in inflation, which has seen prices climb 4.1 per cent over the past 12 months. And at first glance, the workers’ actions may indeed look like a direct reaction to price pressures. But a closer look reveals a more chronic problem: decades during which Germany’s workers have failed to (fully) reap the gains of euro membership.German businesses have benefited greatly from the euro’s creation more than those in other countries. Having a currency that is fairly

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Further reading

15 days ago

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S&P 500: pay to play? [update]

15 days ago

In global markets, there’s not a more important stock market index than the S&P 500.Depending on who you ask, the blue-chip index of the US’s largest companies acts as an economic indicator, a benchmark for executive compensation or a primary source of social welfare, thanks to the trillions in dollars of household savings that track its every move. Being included in the index is obviously a big deal for firm. Not only because it provides a certain level of prestige, but also a stable shareholder base in the form of passive funds that will hold the shares no matter what.But less is said about how the equity cake is baked.You’d assume, as many do, that to be included in the index, a company would have to pass a set of rules. And, on paper at least, you’d be right. S&P lists

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Further reading

16 days ago

Elsewhere on Tuesday . . . – Drugs, arms and terror: a North Korea defector speaks– Just what is the metaverse?– A Nobel Prize for the credibility revolution– Exotic falconry and finance– Undercover at the BLM march– Natural versus vaccine immunity (video)– The real essentials of automation– Globalisation and inflation– Song of the day: Anz — Loos in Two

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KKR: memories from Barbarians at the Gate

16 days ago

Henry Kravis and George Roberts, two of the co-founders of $57bn private equity titan KKR, are to step down from their positions as co-chief executives of the firm.Best known as the pioneers of the leveraged buy-out — the practice of acquiring businesses using shed loads of debt and a sliver of equity — KKR rose to prominence over the junk bond boom years of the 1980s, buying up companies like Duracell, Beatrice and Safeway. But one deal stands out amongst the rest.In 1989, KKR acquired tobacco-and-biscuit-specialist RJR Nabisco for $25bn, making it the largest leveraged buy-out in history. The deal was the conclusion of a prolonged takeover battle between KKR and a management buy-out backed by Shearson Lehman Hutton, and marked the first time Kravis and Roberts’ firm did a deal

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Twitter Spaces on the Pandora Papers

20 days ago

You’ll no doubt have heard a fair bit by now about the Pandora Papers, the latest leak of documents describing the financial shenanigans of the global elite, obtained and released by the International Consortium of International Journalists. From tax avoidance to money-laundering to corruption — it’s all in there.And here at FT Alphaville there is nothing that we love to hate more than financial shenanigans. So we thought we’d use our weekly Twitter Spaces session, which is on Friday at 4pm London time (11am EST) to look at what exactly this Pandora’s box does — and doesn’t — contain. Joining us will be Tom Keatinge, director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute, a London-based defence and security think tank. As he set out in

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Shipping costs have finally slumped

20 days ago

The cost of shipping goods from China to the US has finally slumped. The chart below shows the spot rate (that is, the rate it costs to take a shipment half-way round the world ASAP) for taking a 40ft container from China to the US West Coast halved between September and October: Here’s the same chart for the China to East Coast route (data in both instances comes digital freight forwarding company Shifl):It is, industry bods note, largely the result of Covid-19 outbreaks and power shortages in China. So will prices remain this low? Shabsie Levy, founder and CEO of Shifl, thinks so, arguing that agents who took advantage of price increases and congestion by buying up capacity are now (perhaps sensing the market has peaked) looking to unload it fast.“For shippers [somewhat

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Is “buy now pay later” a viable business model?

20 days ago

Those of you who keep an eye on what’s happening in fintech will know that, outside of the fantastical land of crypto and non-fungible delights, the hottest game in town right now is “buy now pay later” — or BNPL as it is widely known (best pronounced as buh-n-pul). The market has, until now, been dominated by BNPL pioneers like Sweden’s Klarna — Europe’s heftiest fintech unicorn at a valuation of over $45bn — and Australia’s AfterPay, which in August was acquired by Jack Dorsey’s Square for a tidy $29bn, the largest takeover in the Land Down Under’s history. But ever more firms are now jostling for a taste of that sweet BNPL sundae. Just last week, old-man “fintech” Mastercard said it would launch a product called “Mastercard Installments” next year. Apple and Goldman Sachs have

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Further reading

21 days ago

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Rent the Runway doesn’t think buying clothes is a cost

21 days ago

Rent the Runway is a high-end fashion company with a difference. Instead of directly selling wares from top designers — like say, Net-A-Porter — the Brooklyn-based business allows its customers to rent items from an extensive closet of styles and high-fashion brand names. The price? You guessed it, a monthly a subscription fee.The so-called “closet in the cloud” service filed for its IPO Monday and, as is often the case here at FT Alphaville Towers, we couldn’t help but have a quick read of the S-1 to see if the numbers added up.As you might imagine, Covid has not been kind to Rent the Runway. Working from home killed the commuting catwalk, while lockdowns kept the gladrags in the back of our wardrobes, so it’s of little surprise that the business saw its revenues contract 39 per

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Nat gas goes parabolic, again

21 days ago

Whoosh. There’s been a further surge in UK gas prices, as this Bloomberg chart shows:
No-one is expecting much relief in the short term, with the cost to suppliers of buying for delivery in three months from now spiking too. Here’s the chart showing what traders expect to happen further into the winter months:
While the surge might be more dramatic in the UK, it’s not confined to it. Via Andreas Steno Larsen:
Further afield, we’ve seen power shortages in China and India reportedly has just four days’-worth coal supplies left. It looks set to be a long, cold, lonely winter. Unless you’re long smog.

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The IMF needs an ombudsman with clout

22 days ago

This is a guest post by Daniel Bradlow, the SARCHI professor of international development law and African economic relations at the University of Pretoria, arguing that the IMF needs to appoint an official ombudsman to help it navigate its reputational issues. An independently commissioned inquiry has alleged that IMF managing director, Kristalina Georgieva, may have put pressure on subordinates to favour China in the World Bank’s Doing Business Report during a previous role at the institution. Georgieva has stated that she disagrees “fundamentally with the findings and interpretations” of the report. The IMF Board has stated that it has been briefed by its Ethics Committee and has had an exchange of views on the matter. It has also met with the authors of the inquiry.The

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Further reading

22 days ago

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David Einhorn’s market nihilism

22 days ago

It’s easy to poke fun at David Einhorn. The star fund manager turned poker player turned bubble-stock-shorter has had a torrid ten years in markets, following his rise to financial fame during the post dotcom crash, and his Lehman Brothers short.Despite the poor recent returns at his fund Greenlight Capital, however, FT Alphaville remains interested in the investor. Not least because his book Fooling Some Of The People All Of The Time is one of the best yarns on stock selection out there, in part because it does an excellent job of explaining the kind of mentality that is required to have and hold onto positions in the market, alongside the usual waffle about valuation metrics and whatnot.So when one of Einhorn’s comments on value investing from Simplify ETF’s event at the New York

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