Friday , May 29 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

Fund managers are long tech and growth…again

11 hours ago

© AFP via Getty Images It’s that time of the month again for a report from the hedgie whisperers at Bank of America. Yes, the global fund manager survey has been released and not a moment too soon as the equity markets scream: “everything has returned to normal”.Two months ago when markets were in meltdown …

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Markets Now – Thursday 28th May 2020

16 hours ago

Activist short sellers get a lot of flak. There are instances of short attacks helping bring down frauds, of course, but they are hugely outnumbered by situations where a company’s known or historic issues are hyped up for a new audience. There’s an argument to say that most investors don’t really benefit from a short seller publicising in shock-horror fashion a company’s questionable governance standards and murky accounting methods. It might be that wider attention forces the company to improve these things, but improvement is not really what the short-seller wants. Attacks are designed to put executives on the defensive. The whole gambit hangs on making the target embattled, not better.Congratulations, then, to Matt Earl’s Shadowfall for breaking the mould and helping cure its victim.

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Is the “science” behind the lockdown any good?

19 hours ago

We should all be pretty familiar with the narrative by now. An arrogant, exceptionalist British government was until mid-March pursuing a reckless strategy of herd immunity that would have callously allowed a huge number of old and vulnerable people to die and the health system to be overwhelmed. Then came a “bombshell” from Imperial College London: a “doomsday report” predicting there would be 500,000 deaths if we were to carry on down that road, prompting a sudden government U-turn, and ultimately the decision to lock the country down. Gone was the Machiavellian Dominic Cummings plan of “letting old people die”; in was STAY AT HOME; PROTECT THE NHS; SAVE LIVES. (The notion that it was Cummings who was pushing for the herd immunity idea has since been disputed, while the notion that

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Further reading

23 hours ago

Elsewhere on Thursday, — Hawks to doves in Germany?– Tesla price cuts.– The missing £4bn.– Our dangerous addiction to prediction.– Short-sighted beer for tall stories.– Venezuela’s first lady.– Dishy Rishi

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Censortech strikes again

1 day ago

© Victor Moussa/Dreamstime We suggested a few weeks ago that “censortech” had spun out of control, with platforms starting to flag even mainstream dissent of the government-imposed lockdown strategy as problematic and in need of suppression. Well, it seems, the faceless mandarins governing what does and does not make the grade on social media sites …

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Amazon/ Zoox: consolidation crunch

1 day ago

© AP Two years can feel like a decade in the rapidly-changing world of technology – and not often in the way you might expect.In 2018 self-driving car tech, whether from established auto manufacturers like Tesla and General Motors, or new start-ups like Aurora and Zoox, was all the rage in Silicon Valley. Lyft co-founder …

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CNBC clash of the titans: Kernen vs Sorkin

2 days ago

During the heights of the market sell-off in March, Alphaville watched a lot of CNBC — the 24/7 stock (and crypto) shilling service brought to you by NBC Universal.We witnessed some pretty amazing moments as markets crashed. There was Bill Ackman’s meltdown after he cashed in a $2.6bn trade via credit hedges; tech lottery winner pin-up Chamath Palihapitiya’s criticism of corporate buybacks; and, of course, Jim Cramer taking a call from the White House live on air. (Just in case you wondered what the president’s priorities were during the worst global health crisis in a century.)One simmering narrative that grabbed fewer of the headlines, however, was an ever-escalating feud between Squawk Box hosts Joe Kernen and Andrew Ross Sorkin.Kernen, who resembles a Mr Potato Head that’s lost a

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Markets Now – Wednesday 27th May 2020

2 days ago

“Everybody has a summer holiday,” sang Cliff Richard & The Shadows in the 1963 hit Summer Holiday, which was the title track of the soundtrack album for the hit movie Summer Holiday (1963). Do they though? Do they?Tui’s up another 23 per cent or so at pixel, taking its gain over two sessions to 87 per cent. From the May 14 record low it’s up 140 per cent. The rally’s based pretty much entirely on Germany saying on Tuesday it plans to drop restrictions on travel to EU/Schengen countries as of June 14, and on Spain saying over the weekend that as of July 1 inbound holidaymakers won’t have to abide by a 14 day quarantine rule. Commerzbank shepherded Tui CFO Birgit Conix on a roadshow this week, which appears to have been a waste of time. Here’s its briefing note: Spain is the most important

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Warner Music’s worried about weakening cultural transmission

2 days ago

© Getty Images Warner Music Group, the Len Blavatnick-owned music label and publisher whose IPO was waylaid by the coronavirus pandemic, looks like it might finally get out of the gate.News hit Tuesday that Warner will seek to raise $1.8bn for Blavatnick’s investment company when it lists on the Nasdaq at a mooted equity value …

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Further reading

2 days ago

Elsewhere on Wednesday: – Schumpeter’s virus. – “Sweden is not an alternative, but a glimpse into the future.”– More on Sweden. – Monzo’s expansion. – Hyde goes for Cummings. – ECB draws up post-Karlsruhe contingency plan. – How awful are food delivery apps really? (The Information, $) – Cassidy on CLOs. (New Yorker, $) – NYT on Twitter and Trump. ($) – A socially-distanced Berlin theatre. – The remaking of Steve Buscemi.

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My stay in a Seoul hospital with Covid-19

2 days ago

© Image courtesy of the author. Tobias Denninger, a businessman, caught Covid-19 in Germany, but only found out after flying to South Korea. Here he describes the experience of testing positive, the healthcare he received, and the lengthy process to discharge. When I planned my journey to Seoul, I was hoping to bring my mother …

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Markets Now – Tuesday 26th May 2020

3 days ago

This would all be much easier if we could edit old blog posts to add new information then refer back to them in a way that made us look smart and well informed. Serious journalism involves signing up to a detailed and wide-ranging code of conduct however (as well as respecting the fundamental requirement of integrity) so there would be no countenancing that kind of thing. The same is true of the Civil Service. Or was.News items from today that we demonstrably did not bring you last week include a reopening timetable for UK shops, an in-line Q3 from Softcat, a new CEO at Aston Martin and another delay for Wirecard results. We’ll cover all or fewer over the next few pages.Starting with retail, the news is that outdoor markets and car showrooms in England will be able to reopen from June 1.

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Asset-backed debt: everybody Hertz

3 days ago

© REUTERS When you borrow against an asset instead of just projected future cash flows, you can get a lower cost of capital. But a borrower is making not one but, rather, two bets. The first is revenue continues to flow, which allows the debt to continue to be serviced. The second is collateral value …

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Further reading

3 days ago

Meanwhile on Tuesday…– If you’re wondering about the market bounce…– Netflix’s questionable amortisation– A disposable workforce– The cost of lockdown– The burnout generation– Behind Baillie Gifford– Coronavirus in perspective– Banks as payment plumbing– On viruses– Fiona Apple’s radical sensitivity– Nio: the devil in the details

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Markets Now – Friday 22nd May 2020

7 days ago

In these tumultuous times we should cling onto the certainties we have. One such source of comfort is that Aim-listed oil punts will always, always disappoint. So it transpires with Hurricane Energy, whose fractured basement prospect off the coast of the Shetlands is misfiring.Hurricane warned that interference between its two producing wells at the Lancaster prospect made a target sustainable production rate of 20k barrels per day impossible. One well has been shut down. The other is pushing out 10.3k barrels per day, meaning long-term forward guidance of net 18k barrels and full year guidance of net 17kb barrels are withdrawn. Bad news. Here’s Morgan Stanley:We believe that today’s announcement significantly increases uncertainty regarding the reserves that can be recovered by the

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ESG without the ‘S’

7 days ago

© RONALD WITTEK/EPA-EFE/Shutterstock SocialAdjectiveˈsəʊ.ʃəlrelating to activities in which you meet and spend time with other people and that happen during the time when you are not working.So goes the Cambridge Dictionary definition of the word which is sandwiched by “Environmental” and “Governance” in the popular ESG acronym which has come to exert a large influence on the world of investing over the past five years.In that context, social means something …

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Further reading

7 days ago

Elsewhere on Friday: – On demand and debt traps. – Tesla’s Fremont factory’s dodgy environmental record. – The world’s most debt squeezed company is doing just fine. (WSJ, $)– The Global Ventilator Race. – The end of meat is here. (NYT, $) – Trump’s lethal aversion to reading. – Universities on the brink. – Kendall Jenner set to pay $90k to settle Fyre suit.

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Is Covid-19 a nosocomial infection?

8 days ago

© Getty Images FT Alphaville has, like many others, been questioning the often confusing and sometimes contradictory approach the UK government has been taking to battling coronavirus. There’s a lot of stuff that simply does not make sense. For instance, introducing quarantine measures at the end of the lockdown rather at the beginning. Or allowing …

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USO: Uncleared and present danger

8 days ago

© AP The United States Oil Fund, currently the world’s most controversial exchange-traded product, has just filed a staggering update to the SEC. (h/t to the FT’s Phil Stafford.)It notes (our emphasis): RBC and other market participants , including other FCMs, have taken risk mitigation measures that constrain USO’s ability to invest in the Benchmark …

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When gold and geopolitics clash, it’s rarely pretty

8 days ago

The Queen visits the Bank of England’s gold vaults. © Reuters
From today’s FT: Venezuela has filed a $1bn lawsuit against the Bank of England over its refusal to release gold stashed in its vaults, as the government of Nicolás Maduro scrambles for funds to alleviate a deepening economic and health crisis.It might strike many as odd that Venezuela, a country an ocean away from the UK with little in the way of historical ties, has its gold stashed in vaults deep underneath the City of London. Yet it’s remarkably common for governments around the world to park their gold at the Old Lady. Indeed it, and the New York Fed, have long been the biggest custodians of bullion in the world – a legacy of the gold standard and the proximity of both central banks to the world’s most active

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Markets Now – Thursday 21st May 2020

8 days ago

It’s a bit early to be thinking about the next FTSE index review (scheduled for June 3 and framed on the previous day’s prices) but as it’s something other than results let’s do so anyway. The current standings would have Carnival, easyJet, Meggitt and Centrica falling out of the FTSE 100, with ITV among those on the cusp. What’s perhaps more interesting is the list of companies that may replace them: Avast, the freemium virus scanner maker, and Homeserve, the boiler servicing policy pusher, are both in line for promotion. Ladbrokes owner GVC and ConvaTec, the maker of ostomy and wound care stuff, are also at pixel in automatic spots to move up. Assuming nothing changes, UK PLC’s top tier will be swapping international travel and essential home comforts for gambling, incontinence and

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Incoming turbulence for plane prices

8 days ago

© REUTERS Right now, there is zero price discovery When United went to the bond markets earlier this month to raise $2.25bn in an issuance backed by 360 of its aircraft, investors demanded a whopping 10 per cent return. The airline abandoned the deal. Lufthansa, which owns the vast majority of its fleet, within weeks …

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Further reading

8 days ago

Elsewhere on Thursday, — The king of Germany.– Antidepressant or Tolkien?– Why is Ryanair taking to the skies when there’s nowhere to fly?– A miserable time for parents.– “Superspreader events”.– Pompeo’s elite taxpayer-funded dinners.– China’s debt.– A resignation at NASA.– Puerto Rico’s sex workers.– One country, two monetary sytems.– Grieving in a pandemic.

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Why a restructuring strategy is needed to save jobs and growth

9 days ago

© AP This is a guest post by Jay Alix and Richard Gitlin, which argues governments need to establish dedicated restructuring agencies to help economies whether the coronavirus storm. Alix is the founder of the global restructuring and turnaround firm, AlixPartners and was appointed by President Clinton to the national Bankruptcy Review Commission. Mr Alix …

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Markets Now – Wednesday 20th May 2020

9 days ago

Experian’s wild, isn’t it? It makes up a number that’s meant to represent a person’s creditworthiness, without telling the person, then sells the number back to the companies providing the data on which that number’s based. Experian is one of three companies that make up these numbers, which are all built to the same core formula drawn up by a fourth company but with slightly different criteria added that they don’t explain. As a general rule, people can get themselves a high (good) number by taking out lots and lots of loans they don’t need. A person who wasn’t taken out any loans will usually get a low (bad) number, which limits their ability to take out a lot of loans and improve their number. If a person shops around for a loan it can lower their number. People in the US are legally

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A proposal for the UK’s answer to Darpa

9 days ago

© AFP via Getty Images Stretch your minds back to before the coronavirus pandemic really took hold in the UK, and you might remember that the new chancellor, Rishi Sunak, presented the current Tory government’s first budget since winning the general election last December.It signalled, as the FT said at the time, the end of …

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Further reading

9 days ago

Elsewhere on Wednesday…– Coronavirus and America’s creaking broadband– The genesis of social distancing– The problem of logarithmic graphs– VW is Europe’s new electric king– Buffett’s genius General Re transaction– The UK’s public finances post-Covid– Narrative distribution monopoly– Talking your book about value investing– Satya on software during coronavirus– Being sober in quarantine– The three sides of risk– The big failure of small government– Duck and cover, the redux?– Smith vs Farrow

Copyright

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Is the virus, not lockdowns, doing most of the economic damage?

13 days ago

© via REUTERS The dilemma of whether to lockdown or not to lockdown is frequently seen through the prism of a simple trade-off: either you save lives, or you save the economy. There may be some truth in this. Data from Google and Apple on people’s movement patterns suggest that in those places where lockdowns …

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Markets Now – Friday 15th May 2020

14 days ago

Farewell then to Mark Barnett, Invesco’s substitute Woodford. His “mutually agreed” departure after 24 years at Invesco follows a review of the UK product range by chief investment officer Stephanie Butcher.The review presumably took account of the performance of Barnett-managed flagship funds Invesco Income (down 35 per cent, 33 per cent, 35 per cent, 40 per cent and 33 per cent on three month, six month, one year, three year and five year measures respectively) and Invesco High Income (down 35 per cent, 32 per cent, 35 per cent, 40 per cent and 34 per cent ditto). It also, presumably, took into account the nearly unbelievable fact that on a long-term measure other active stockpickers were even worse at their jobs. Chart via Trustnet:
To markets then, and BT Group’s leading the FTSE

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