Brent crude oil, the international standard, dropped 14.4% to $93.48, and futures for US crude oil sank 14.7% to $96.27 a barrel. The prices remain well above where it was at the start of the war.
WTI is above Brent these days? Long been a fixture in my mind that WTI – export constraints meeting fracking production – is lower than Brent. Even if WTI is, objectively, the lighter, sweeter, oil.
Or is this just The Guardian and prices again?
A leading Wall Street shadow bank has been hit with a surge in withdrawal requests of more than $5bn (£3.8bn) from spooked investors amid warnings of a 2008-style financial meltdown.
Blue Owl Capital said on Thursday it would block some redemptions from two major funds after it was swamped by demands from its financial backers to withdraw their cash.
The reason it’s not the same is that they can – and have – blocked redemptions.
Bank deposits are an “open ended fund”. Turn up, ask for the money back, get it. Deposits are recallable upon demand that is. As a bank must have a deposit to finance a loan this means the bank is bust if deposit withdrawals happen faster than the loans can be called in.
If you can tell people they cannot have their deposit back you are both not a bank and also not subjecty to a bank run. So, no, this is not like 2008. These are “closed end funds” and a closed end fund cannot suffer a run.
Sure, sure, many of those loans could go wrong. But the effect, if they are, is that we watch the capitalists lose money rather than the financial system falls over. It’s not 2008.
A useful test of financial market idiocy is people claiming that it will be the same.
Jeffrey Epstein described Peter Mandelson as “devious” after lobbying a bank to underwrite a mining project launched by their mutual friend Nat Rothschild, emails included in the latest tranche of Epstein files suggest.
That would have been Bumi. Which went wholly tits up in very spectaular fashion. Almost Madoff in fact. On this one specific basis – sure, coal mining in Indonesia is corrupt and political. But we can beat that, benefit from that, right?
Well, not really, no.
In contrast, Mandelson’s tip-off over Brown’s resignation seems to have been sent during market trading hours, meaning it could have been easier for someone with inside information to trade on sterling, government bonds or stocks on the FTSE 100. However, “there’s the risk that the market might not interpret the move in the same way as you did”, Beauchamp noted.
Any reaction is not some objective truth, it’s what everyone thinks about it.
On the day of Mandelson’s apparent tip-off to Epstein, the pound rose by more than two cents to $1.505, before losing all its gains as Brown’s resignation – and his plan for Labour to hold coalition talks with Clegg’s Liberal Democrats – sent shock waves through Westminster. Sterling would gain back a cent a day later, as the Lib Dems struck a deal with the Tories, handing the keys of No 10 to the Conservative leader, David Cameron.
However good your information that was not, shall we say, wholly predictable.
It’s possible to think that Bitcoin is as with gold, given that the politicians ccasnnot mess with it it is therefore a safe asset, a haven in choppy waters.
The rhetoric and price rally helped to fuel Bitcoin’s status among crypto enthusiasts as a “digital gold” – a safe haven during times of uncertainty.
It’s also possibly to think of it as a pure speculation and is thus something that will deflate in hard or uncertain times.
The price of Bitcoin dropped sharply over the weekend to around $77,000 (£56,000) as investors fled the notoriously volatile asset.
We’re coming up on hte 13th anniversary of my declaration that that’s the end of Bitcoin then so I’d not take my view all that seriously. But the above is still the choice of pathways.
According to someone who knows I’m not welcome on the Telegraph business or finance pages. Someone there doesn’t like me therefore the word is don’t commission Timmy. Can’t imagine why given me sweet and peacable nature but there it is.
Short-sellers aren’t listening, having snapped up the company’s bonds on the cheap in a bet that prices have further to fall.
Perhaps there’s a fatwa against employing anyone – even freelance – who knows fuck all?
Short sellers sell stuff in the expectation that prices will fall and so they can buy back cheaper. No one buys stuff in the expectation that prices will fall further. But here we have, a major newspaper, saying that short sellers buy bonds in the hope and expectation that prices will fall further.
Not employing Timmy is such a wise idea, eh?
The [income tax] U-turn demonstrates a lack of political competence
Well, maybe. Myself I take it to be a simple lack of knowledge. They’ve got to get to grips with the government finances. And they don;t think they need to do that. There are backbenchers – Clive Lewis say – who think just print and spend upon “need” as if he’s been reading Spud. There are backbenchers – Richard Burgon, say – who are deluded into tihnking a wealth tax will pay for everythhng. There are many more who’ve bought into the idea that there used to be austerity so there’s a pot to spend.
The basic truth is still eluding far, far, too many. Sure, you can raise the size of the state, sure you can. But you’ve got to tax someone to do that – because just printing will produce even more inflation than we’ve currently got. Just taxing “the rich” won;t do it. There aren’t enough of them, they’ve not that much money cumulatively, taxing wealth is a really bad idea, they’ll bugger off if you try and doesn’t do that inflation reduction job for the MMTers anyway.
If you want to have a larger state then you’ve got to tax the mass of the people more.
If government cannot – or won’t – get to grips with that basic truth then why would people be happy with the price on offer for lending to that government? The current post-inflation, or real, interest rate is about 1% at present – and who wants to bet that it stays that high, eh?
Shares in Japanese tech investor SoftBank have taken a knock, after it revealed it has sold its stake in chipmaker Nvidia.
SoftBank surprised investors yesterday by revealing it sold its shares in Nvidia last month, raising $5.8bn, to fund its other investments in artificial intelligence pioneers, such as ChatGPT parent OpenAI.
Now, me, I think it’s obvious we’re in a bubble here. The problem with bubbles always being not whether they’ll burst but when – therefore, how long to hold on before cashing in?
So, Softbank does cash in – and for a damn good price look like – and Softbank’s shares fall?
Hmm.
The current state of affairs feels different from 2008, when the crash was caused by the overexposure of banks to the US housing market, and turbocharged by the widespread use of new financial instruments that were supposed to reduce risk but did the opposite.
Everyone in financial markets knows you cannot reduce risk. You can, however, slice and dice it and spread it. Thereby reducing the risk to any one specific position or market participant. That also means that you can concentrate risk in a position to to a particular market participant which may or may not be one of those grand ideas.
Those mortgage pools with the income streams sliced and diced by risk. Worked exactly as they were supposed to. The risk of non-patyment was concentrated into those C tranches – the “equity” tranches. The AAA tranches were supposed to be credit risk free. Because the C, then B., then A etc tranches would all have to go bust first.
This all worked exactly as planned. The C tranches all did fall over. The AAA tranches kept paying out and some of them are even still doing so – tho’ getting to be pretty small now as repayments/remortgages happen.
Risk was spread – that’s why German banks went bust when American mortgages soured – they’d bought C tranches perhaps. You know, spreading that risk?
There was also concentration. No rational bugger wanted to buy thsoe C tranches but given the risk they paid higher rates than it cost to finance them with wholesale money on a bank balance sheet. So, banks loaded up with them. Vast, vast, piles teetering on tiny capital bases. So, when they all went bust – both dispersion and concentration of risk, see – then the banks were, umm, in serious trouble.
Everyone agrees you cannot reduce risk. But you can allocate it. The error was in who piled in to carry that risk, not the slicing and dicing of it. If those C tranches had been in hedge funds, backed by proper capital bases, no GFC. Of course, hedge funds weren’t stupid enough to take that risk but that’s another matter.
Louise Haigh is arguing that the UK should have refinaced all its debt when interest rates were low. This could not have happened. Gilts are not callable, so they could not be called in. Except Consols, which were. So Osborne did call in Consols at par. To refinance with standard gilts. Which will, when they mature be at whatever then interest rates are.
So, what the country actually did was call in 2% (2.75%?) permanent debt to replace with what will next time around be 4 or 5% debt. The actual action taken was wholly the opposite of refinancing the national ebt at lovely low interest rates.
Super, eh?
Britain’s long-term borrowing costs are nearing their highest level since 1998 amid fears that Rachel Reeves is failing to balance the public finances.
The yield on 30-year UK gilts – a benchmark for the cost of servicing the national debt – jumped as much as nine basis points to 5.63pc on Tuesday, close to a 27-year high.
This reflected the biggest daily increase of any major global economy, as economists warned that Britain was paying a “moron premium” on its debt – a phenomenon whereby investors charge countries more to borrow because of previous policy missteps.
Well, sorta and only just.
Real interest rates aren’t that far off other places. It’s that inflation here is higher. Which is the past policy mistake of course.
“Which is probably why Academics are reacting so desperately and so foolishly to the existence of chatGPT and other LLMs. They’re desperately trying to prevent people from using the tools in the hope that this will keep up their social status. But this is a doomed enterprise. The mere fact that the statistical text generator can get excellent grades means that the grades are no longer worth more than the statistical text generator.”
To change the example a bit, the entry level – and bread and butter scut work when you were on your uppers – in financial journalism was company reports. “SpudIndustries showed revenue growth from YouTube but analysts worry about credibility” etc. 300 words and there are 4,000 companies on the US markets. 10 per working day -ish. 30 to 50 outlets needed that sort of scut work done. In modern money you might get £30 per piece. You know, -ish, -ish. It was a vast sea of boring low paid work.
Doesn’t exist now, not in the slightest. You can’t get £1 for such a piece. Even if you set up an AI to write it for you then publish it on the net you’ll not gain £1 in ad revenue from it. It’s so cheap to produce it’s not worth even the £1.
You do still get paid for opinion, for analysis (actual analysis that is, here’s why I don’t believe the statistical numbers sort of analysis). Because that’s something different. Can’t, for the life of me, think why academia should be different.
Donald Trump has suggested Jerome Powell could be sacked for fraud as pressure builds on the Federal Reserve chairman over a multi-billion dollar renovation of the central bank.
Following reports that Mr Trump was preparing to oust the Fed chief, the president told reporters: “I don’t rule out anything but I think it’s highly unlikely unless he has to leave for fraud.”
Twisting what he said there more than a bit, no?
But this couild also apply to that of others:
British gilts are the most undervalued financial asset on the planet. You would hardly know it from our compulsion to talk the country down but the UK is today one of the least indebted states in the rich world.
There’s contrarian and then there’s contrarian.
His point is that corporate and household debt is down – which it is. But that doesn’t make gilts a bargain….
The Bank’s unwinding of its money-printing programme has come under increasing scrutiny owing to estimates that it could cost the taxpayer up to £150bn.
The Telegraph revealed that Richard Tice, Reform’s deputy leader, wrote to the Bank last month, accusing Threadneedle Street of prioritising bank profits over the interests of working people.
Mr Tice said the unwinding of this programme, known as quantitative tightening (QT), was pushing up borrowing costs and piling pressure on the public finances.
Yes, that’s the point. To push up borrowing costs. QE was to push them down, QT to put them back up again.
There are no such safety nets to support the UK. Bullies tend to pick on the weakest, and the international bond market is perhaps the biggest bully of the lot.
The gond markets are not bullies. There are no bond vigilantes. There are simply investors – individual, collective, corporate – who look at the price of gilts and think “Know what? We don;t want to buy that. Ta!”
The FTSE 100 index of the most valuable companies on the London Stock Exchange has soared to a record high as investors shrugged off concerns over Donald Trump’s trade wars.
The FTSE 100 had the 9,000-point mark in its sights on Thursday, as it climbed to 8,979 points, above its previous all-time high of 8,908 points.
Stock market indices are not inflation adjusted. It’s still 750 points below Sept 2019…..when inflation adjusted.
Thames Water’s bonds have crashed to a record low after the Environment Secretary said it was stepping up contingency plans for the struggling utility giant.
The price of Thames Water’s debt fell to as low as 67p on Friday, down from 70p at the start of the month, as investors took flight amid fears the Government could nationalise the business.
3% is a crash.
In something as illiquid as corporate bonds.
A special administration regime (SAR) would wipe out the bulk of Thames Water’s borrowings, although it would also leave the Government forced to foot the bill for its running costs.
You know what? It wouldn’t. The cram down would be of that debt which cannot be repaid. Not of all debt, but of that which it impossible to repay. Because a cram down of more than that would be straight out theft.
Further, the Tele here – and I suspect the conversation more generally – is missing the vital distinction between Thames Water debt – the regulated utility – and Kemble Water debt, the unregulated holding company. Kemble might well be toast. But that doesn’t wipe out the debts of the opco…..