FT Alphaville

Fobor fail du jour

From Bloomberg:

Russia canceled an auction of ruble bonds for the first time since October as waning expectations of a central bank interest rate cut sent yields rising.

The Finance Ministry planned to offer 33.6 billion rubles ($1.1 billion) of December 2019 OFZ bonds in today’s auction at a yield range of 6.33 percent to 6.38 percent. The yield rose two basis points, or 0.02 percentage point, to 6.44 percent today, the highest in almost two weeks, after jumping six basis points yesterday.

Russia is not Rwanda… Awkward. 

(David)

Apple Operations International, facts (?) du jour

Compare (Apple’s testimony to the Senate permanent subcommittee on investigations, on Monday):

Apple pays an extraordinary amount in US taxes. Apple is likely the largest corporate income tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury inFY2012. These payments account for $1 in every $40 in corporate income tax the US Treasury collected last year. The Company’s FY2012 total US federal cash effective tax rate was approximately 30.5%. The Company expects to pay over $7 billion in taxes to the US Treasury in its current fiscal year. In accordance with US law, Apple pays US corporate income taxes on the profits earned from its sales in the US and on the investment income of its Controlled Foreign Corporations (“CFCs”), including the investment earnings of its Irish subsidiary, Apple Operations International (“AOI”)…

Contrast (the subcommittee’s report on ‘offshore profit sharing’):

Offshore Entities With No Declared Tax Jurisdiction. Apple has established and directed tens of billions of dollars to at least two Irish affiliates, while claiming neither is a tax resident of any jurisdiction, including its primary offshore holding company, Apple Operations International (AOI), and its primary intellectual property rights recipient, Apple Sales International (ASI). AOI, which has no employees, has no physical presence, is managed and controlled in the United States, and received $30 billion of income between 2009 and 2012, has paid no corporate income tax to any national government for the past five years…

(Joseph)

The deflation gang

We’ve written about it before but it bears repeating. China and Japan are ganging up to send deflation abroad and, in doing so, boost asset prices.

From Deutsche’s Alan Ruskin on Tuesday:

Firstly, China is a disinflationary force not only on the commodity side, but on the non-commodity goods side: US import prices from China declined -0.1% in April, and were down 0.9% y/y. Secondly, and more recently, import prices from Japan have declined sharply and are down 1.3% in the last 3 mths alone. This of course fits with USD/JPY having a significant disinflationary impact in the US. In the global context, Japan is having a dual influence - directly reducing import prices abroad, while the BOJ global liquidity boost, some of which leaks abroad, tends to help asset prices. I still regard the recent global disinflation theme as a major factor supporting asset inflation, as Central Bank’s remain accommodative for longer.

Push out deflation which allow more liquidity to be pushed out by central banks which flows into assets.

(David)

Meanwhile, in China prop trading is taking off

While much of the west outlaws it.. 

The country’s securities regulators have handed a boost to this business by cutting the capital that brokers must hold against their prop trading activities and expanding the kinds of assets in which they can invest.

More:

The broader industry saw similar patterns, making more than one-fifth of its revenues, or Rmb29bn, from securities investment income in 2012, according to data from the Securities Association of China. This was a huge rise from the Rmb4.9bn it made in 2011, which amounted to just 4 per cent of total revenues.

Source: China brokers boost prop trading profits - FT

Banker, 40, GSOH, WAA, wants to meet new friend. Must earn less than £30k.

FROM efinancial  but FOR bankers struggling to get by:

The best antidote to over-spending is to retain a single partner for life, said Cooper: it helps put things in context. Alternatively, try cultivating friendships outside of banking. “I always had a lot of hobbies which brought me into contact with people from different walks of life,” said Shapiro. “I always knew people who earned £25k-30k a year.”

Finally, there’s always therapy. Montgomery said a lot of people in banking formed insecure attachments to their parents as children. This makes them overly-competitive and ostentatious, she said. “When you’re insecure, you can take refuge in a kind of grandiosity in which you say ‘at least I’m earning a lot and going to these kinds of expensive places,” said Montgomery. “You can only get over this kind of thing with intense therapy,” she added.

Related drivel:
It’s hell being posh but poor: Petronella Wyatt Daily Mail 

(David)

(No longer) partying like it’s Y99

Just think of the energy bill. That’ll cheer you up a bit.

(David)

*SPAIN DELAYS REACHING EU BUDGET DEFICIT TARGET 2 YEARS TIL 2016

*SPAIN DELAYS REACHING EU BUDGET DEFICIT TARGET 2 YEARS TIL 2016

FT Alphaville virtual newsroom comment:

Is that, effectively, a sovereign profit warning?

Competition

The boy Olli Rehn has thrown himself into the mix to correct some misperceptions:

The current public debate on fiscal policy is often portrayed as a political battle between the Austerians and Spendanigans. As a doctrinaire agnostic, I refuse to take an oath to either of these, as there is no silver bullet or single issue movement that can solve the present crisis and return Europe to a sustained recovery. Besides, to focus only on fiscal policy misses the point that both pursuing structural reforms and easing credit conditions are at least as important in order to lubricate the economic engine and make it run with its full growth potential.

[…]

In this context, a word on the current discussion over the Reinhart-Rogoff research into the correlation between debt and growth. The Commission’s economic policy recommendations are not based on any single piece of research. We design our policies on the basis of a broad-based assessment, drawing on a wealth of studies – and also of course on our own analyses.

The precise causal relationship between debt levels and growth is a complex one. There is no hard-and-fast rule; it is affected also by many country-specific factors.

[„,]

Beyond the black and white caricatures of Austerians and Spendanigans, the truth is that fiscal policy in Europe is painted in varying shades of grey. The difficult choices that must be confronted with every decision in these times of crisis mean that pre-conceived narratives provide a poor guide to our complex reality. So it is now better to move beyond the caricatures and close the perception gap.

Job done sir. We won’t be able to simply mention that citation of “serious economic research” again any time soon.

We’ll leave it there as we don’t want to take too many clicks from europa.

Related link type link: Debt, growth and the austerity debate - NYT Op-ed by R&R

(David)

Immigration and US housing

From the FT’s Pan Kwan Yuk and Anjli Raval: 

Although they represent close to 13 per cent of the US population, immigrants accounted for nearly 36 per cent of growth in home ownership between 2000 and 2010, according to a report by the Research Institute for Housing America and the Mortgage Bankers Association. …

The number of homeowning immigrant households is projected to rise by 2.8m in the decade ending 2020, compared with a 2.4m gain in the previous 10 years. They will account for more than 50 per cent of the rise in homebuying in six gateway states, such as California and New York, the report adds.

New immigration laws being debated in Washington could potentially increase the number of homeowners in the US by 3m over the next few years. Economists say new legal status for current non-citizens could result in a potential $100bn in new mortgage loans. 

(Cardiff)

Ye olde downsizing

Thank you HSBC for this novel, exceptionally odd use of demise:

H/T to David Enrich for the spot.

(David)

Annotating the history of 10 year US treasury yields

From Goldman:

And some notable bubbles in history while they’re at it:

(David)