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Robert Gordon’s “The Rise and Fall of American Growth”. An interview, and win a copy of his book.

Professor Robert Gordon of North-Western University was in town this week to give speeches at Prospect Magazine (which is ace by the way) and the LSE.  His latest book, “The Rise and Fall of American Growth” was released earlier this year, and is a tremendously powerful antidote to the wave of techno-optimism we might feel when we see shiny electric cars and gadgets coming out of Silicon Valley…

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China’s rising domestic bond defaults could spell offshore bond market rout

Chaori Solar and Baoding Tianwei will forever remain in the history of China’s bond market. In March 2014 the former became the first defaulter in the country’s onshore bond market whilst the latter turned out to be the first state-owned enterprise (SOE) default in China in April 2015. Since then, 24 other bond defaults occurred in the country, the majority of which in the manufacturing, metals…

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Will the €500 note trade at a premium or discount once the ECB stops printing them? The poll results are in…

Earlier this week Richard Woolnough wrote a blog about negative rates and tax on interest.  In it he also suggested that once the ECB stops printing the €500 note and ends issuance of its existing notes at the end of 2018, the legacy notes will trade at a premium.  The argument is that because the notes will remain legal tender across the Eurozone, demand for a note with the lowest storage cost…

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Negative rates – a tax on saving? Don’t forget about actual tax

There has been much discussion recently that by introducing negative rates central banks are effectively taxing savings. This is self-explanatory, and is one of the criticisms of how negative rates can distort economic behaviour. This however is not a new phenomenon.  Let’s not forget that money has always been effectively clipped by the traditional enemy of savers – inflation. Fortunately, hol…

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How severe is the current energy sector default cycle?

To date the defaults we’ve seen in the US high yield market have largely occurred in the energy/commodity sectors. To see whether this trend is likely to persist I spent some time comparing the current default cycle with that of the US telco sector in the early 2000’s (see also James’ recent blog for the parallels between today’s high yield market and that of 2001).

The telco bust occurred slig…

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Martin Ford’s Rise of the Robots: a short interview. Also win one of 5 copies of his book.

My book of the year in 2015 was The Rise of the Robots by Martin Ford.  I wasn’t alone in liking it; it was the FT McKinsey Business Book of the Year, and set the debate for a year of robotisation stories in financial markets.  Last week we held a Bond Vigilantes x Technology conference here at M&G, with great speeches from Diane Coyle on Digitally Disruptive GDP (are we measuring growth or inf…

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Fossil fuels – The end is nigh

Fossil fuels – The end is nigh

There’s no doubt that the oil industry has seen better days. Adding to present-day woes of price levels of $30-40 per barrel are questions about the long-term viability of the industry’s business model as a whole. Take for example the Rockefeller dynasty and Saudi Arabia, two names synonymous with gigantic fortunes built on oil. Well, the Rockefeller Family Fund just announced its intent to div…

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Which corporate bonds will the ECB buy?

Bond markets have reacted strongly to the 10th March announcement by the European Central Bank (ECB) of its new corporate sector purchase programme (CSPP). Credit spreads of euro-denominated investment grade (IG) corporate bonds have tightened by around 20 bps on average. Still, a lot of the CSPP’s particulars are anybody’s guess at this point. The publication of the account of the last monetar…

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Russia Trip Notes – catching a cold but still standing up

Russian corporate bonds were one of the best performing asset classes last year, with a total return for the JPM CEMBI Russia index of +26%, despite Russia’s GDP dropping by -3.7% on the back of a hugely challenging economic backdrop and geopolitical headwinds. I recently spent a week in the cold of Moscow’s early spring, meeting banks and corporates to help me assess whether the economic sanct…

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Negative Rate World (NRW) – a wiki of unintended consequences

The world has seen negative interest rates before – Switzerland set interest rates below zero for foreigners in the 1970s in order to slow flows into the Franc.  But today’s negative rate environment is far more widespread, with Switzerland, Denmark, Sweden, Japan, and the Eurozone all setting negative policy rates.  Lots has been written about the intended transmission mechanisms of negative r…

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