Where finance and media intersect with reality


Spot Markets Live Transcript: 23/09/22

Screenshot 2022-09-23 at 13.12.39

Today’s Spot Markets live session is with Anjuli Davies, formerly of the Telegraph and Reuters, Davies’ last posting was as Senior City Editor for the Telegraph, moving there from her role as Acting Chief UK Financial Correspondent for Reuters.

Comments addressing audience questions have been put in bold.

Izabella Kaminska 11:58

Hello and welcome to Spot Markets Live! Unlike our predecessor, we aim to be 2 mins early.

Anyone out there?

tick tock, tick tock …

Good morning everyone…

Spot Markets Live is the real-time markets chat that takes you on a whirlwind tour of the markets.

We were off on Monday as it was the Queen’s funeral and it didn’t feel right to talk markets at 11am.

So here we are today, on a Friday. Mini-budget day.

(For the newbies, we will be back again next Monday at 11am.)

The big news is, we’ve finally come out of stealth mode (as my delightful 80s nostalgia-filled promo Tweet revealed yesterday)

That’s how I see us. Commenters of fortune (but principled etc).

If you’re new to the show, bonjour.

Today we’re joined by my old partner in crime from CNBC days, Anjuli Davies.

She’s a veteran of Reuters and the Telegraph.

Anjuli Davies 12:01

Good morning

Izabella Kaminska 12:01

Did you go and queue?

Anjuli Davies 12:01

Ummmm, no…

Izabella Kaminska 12:01

You Republican.

Before we get to a round-up of the key news stories you may not know you’re missing, an important house-keeping note.


Let’s crack straight on with markets and the mini budget.

Anjuli Davies 12:02

Britain’s new finance minister is going for growth. We are contemplating a “new era”.  At the same time, we might all want to reread Andy Beckett’s book When the Lights Went Out

Izabella Kaminska12:02

how are the markets responding?

Anjuli Davies 12:02

There’s a meltdown in the Gilt market

10yr Gilt yields now up +32bps to 3.84% 5yr Gilt yields +46bps to 4.03% 2yr Gilt yields +47bps to 3.98%

The pound was already at the lowest vs USD since 1985

Izabella Kaminska 12:04

And this is the longer range from before the main news came out:

Seems to have rebounded on the back of the tax relief and then decided actually, no.

For context, the euro has not been doing much better against the dollar:

Yeah, the Gilt moves are insane.

Anjuli Davies 12:06

Did you see Danny Blanchflower’s “short the pound” diatribe this week…? Martin Weale, another former BOE MPC member also chimed in saying the government’s tax cut plans would “end in tears” and a run on the pound…

Izabella Kaminska 12:06

No I did not!

Anjuli Davies 12:06

He made his feelings known about the government’s tax cut plans and he went viral.


The Times heads with “Short the pound, says former rate-setter David Blanchflower”.

Izabella Kaminska 12:07

The good old British Krona is back.

Sometimes we like to illustrate the new rebooted SML with images randomly spat out by the MidJourney AI visualisation bot.

Here’s what the AI thinks of Britain.

(The prompt was UK Gilt Meltdown)

Anjuli Davies 12:09
The DMO has revised its financing remit by £62.4bn:

Izabella Kaminska 12:10

Neil Collins – who will be joining us next Wednesday – has a great idea though.

The Treasury should tap into the good public will about the Queen and issue “Elizabeth Bonds” to help fund the energy caps.

As he notes:

This is not something for the Debt Management Office or the Bank of England, both of which are essentially concerned with tapping the international bond markets, what Mark Carney once irritatingly (and wrongly) described as relying on the kindness of strangers. Instead, it should be aimed squarely at individual UK investors, inviting us to understand the fiscal mess we’re in, and to fund the government to the other side of the energy crisis. Looked at this way, the state’s position today is akin to that other desperate need for money to pay for another national emergency, the First World War. The solution then was to issue a bond which dwarfed all others at the time. It became war loan.

Similarly, the Elizabeth Bond would need to be more imaginative than we have grown used to with debt offers, but since the government can write the rules for National Savings any way it chooses, it might invite NS&I to come up with an idea. The bond could (for example) allow holders who leave their money in for a decade to withdraw it with the rolled-up interest tax-free. NS&I demonstrated last year that it is capable of handling tens of billions of pounds without breaking down.

Anjuli Davies 12:12

Is this some form of economic UK conscription. Your country needs you?

Izabella Kaminska12:12

Yes exactly.

It’s called “financial mobilisation”.

First, let’s see the stock market response

Anjuli Davies 12:13

Precisely Francis

Izabella Kaminska 12:13

Here are the gainers, courtesy of the Business Insider markets tool:

Until about 30 mins ago it was dominated by the housebuilders (no surprise) and now it’s Smiths and Kingfisher (which owns DIY stuff right?)

Anjuli Davies 12:14

Everyone is rushing down to B&Q and Screwfix to do up the homes to sell.

So to recap Kwasi Kwarteng has:

  • abolished the additional rate of income tax of 45 % to  be replaced with 40 % (apparently, it only applied to 629,000 people earning more than £150,000 and will hand them an extra £10,000 a year)
  • said the basic rate of income tax will be cut from 20% to 19% on April 1, a year earlier than planned
  • Reversed the National Insurance hike.
  • Cut Stamp duty – effective from TODAY. The tax free-band is being doubled from £125,000 to £250,000. For first-time buyers, no stamp duty on first £425,000 (from £300,000). Treasury reckons this will enable 29,000 more house moves each year.
  • Scrapped plans to raise corporation tax to 25% next year.
  • And scrapped banker bonus cap

Christopher Hope reported :

There is an audible gasp in the House of Commons as Kwasi Kwarteng abolishes the 45p tax rate. One Tory back bencher texts me: “Rejoice we are Conservative again.”

Izabella Kaminska 12:15


Housebuilders clearly benefiting from the stamp duty situation — BUT

how annoyed is anyone who bought a house in the last four years?

It’s all a bit unfair…

Anjuli Davies 12:16

But apparently, this is the one policy that does actually help the less well off:

Table of potential savings

SDLT charge for standard home mover (£) SDLT charge for standard home mover (£) SDLT charge for first time buyer (£) SDLT charge for first time buyer (£)
Price (£) As at 22 September 2022 As at 23 September 2022 Saving (£) As at 22 September 2022 As at 23 September 2022 Saving (£)
200,000 1,500 0 1,500 0 0 N/a
400,000 10,000 7,500 2,500 5,000 0 5,000
600,000 20,000 17,500 2,500 20,000 8,750 11,250
England (average house price based on July 2022 Land registry data)
Izabella Kaminska 12:18

That’s a good table.

Anjuli Davies 12:18

And not the millionaire homeowners…

Izabella Kaminska 12:18

As expected, on Energy they’ve announced a new Energy Supply Taskforce which…

…will seek to negotiate long-term agreements with major gas producers. The government is also working with electricity generators to reform the outdated market structure where gas sets the price for all electricity – instead, the government will move to a system where electricity prices better reflect the UK’s home-grown, cheaper and low-carbon energy sources, which will bring down consumer bills. Successful action should smooth the price of wholesale gas and electricity and increase security of supply over time, reducing the likelihood of similar energy price crises in the future.

But also an energy markets financing scheme.

The £40 billion Energy Markets Financing Scheme, delivered with the Bank of England, will help to address extraordinary liquidity requirements faced by energy firms from high and volatile energy prices. The scheme will provide a backstop source of additional liquidity to energy firms in otherwise sound financial health to meet extraordinary variation margin calls. It will be limited to those making a material contribution to the liquidity of UK energy markets and who are thereby systematically important to the UK economy. The scheme will provide liquidity to firms through a 100% guarantee, delivered via commercial banks and will open to applications from 17 October. HM Treasury will convene an advisory committee as part of standing up a robust assessment process. Firms will have to agree to a wider set of conditions before accessing the scheme.

Worth remembering the BOE  has basically already extended emergency unlimited liquidity to energy trading companies.


So basically, even though the BoE is entirely independent, and no-one would suggest the opposite, the energy cap is going to be de facto funded by EQE.

Again entirely independently.

Now seems like a good time for a rates recap because things have been moving a lot. And it’s worth keeping the big picture in mind:

  • The Bank of England Monetary Policy Committee voted on 22 September 2022 to increase the Bank of England base rate to 2.25% from 1.75%

  • The current Federal Reserve interest rate, or federal funds rate, is 3% to 3.25% as of Sept. 21, 2022.

  • The Bank of Japan maintained its key short-term interest rate at -0.1% and that for 10-year bond yields around 0% during its September meeting, hours after the US delivered a 75bps rate hike, the third such rise in a row, and signaled more hikes would be delivered in future meetings.

  • The current official cash rate as determined by the Reserve Bank of Australia (RBA) is 2.35%. The next RBA Board meeting and Official Cash Rate announcement will be on the 4th of October 2022.

  • The Sveriges Riksbank hiked its benchmark rate by an unprecedented 100 bps to 1.75 percent in September of 2022,

So that’s about where we are.

Anjuli Davies 12:22

You’ve missed the ECB

Izabella Kaminska 12:22

@roger that means it de facto funds the energy cap!

Oh and the SNB is now also back in positive territory as of this week.

Raised by 0.75 percentage points to 0.5 per cent.

The ECB is the last man standing, but is expected to raise rates between 50 and 75 basis points in October having already raised by 75 basis points to 1.25 in September .

Rabble – do let us know if there’s any specifics from the mini budget you want to focus, otherwise some quick corp news.


Anjuli Davies 12:24

Credit Suisse is still in the news

Reuters reporting that the Swiss bank is sounding out investors for a capital hike – feels like 2008 again

Shares were down 8% earlier

Izabella Kaminska 12:25

ah seriously, we must not get together like this ( the last time we worked together was 2008)

Anjuli Davies 12:26

It would be the fourth round in 7 years

Izabella Kaminska12:26

I am appropriating Frances’ idea to rename Credit Suisse – Debit Suisse

very good

Anjuli Davies 12:26


Izabella Kaminska 12:26

That’s one to put into the AI visualiser:

12:28Can’t seem to get a quote for Credit Suisse? Is the swiss market closed or something?

Well the free chart makers haven’t updated yet

Here’s the longer-term trend:

(Subscriber note – SML is, much like Britain, still very much dependent on the kindness of bond investors with Bloomberg Terminals for the sourcing of their charts. Unless we get more significant funding soon.)

Anjuli Davies 12:30

Burberry shares were top of the losers earlier. They announced that CFO Julie Brown was planning to step down.

Izabella Kaminska 12:30

The decline has abated a bit since then.

This table comes from Business Insider and works from the BOTTOM UP. FYI

Anjuli Davies12:31

@Ciaran that’s funny

Izabella Kaminska 12:31

But yeah, it’s the energy companies mostly at the bottom of the pile. Not sure why. Was there any windfall announcement? Don’t think so.

Could be because crude is down.

12:33Ugly PMIs, Crude down. But nothing clear about windfalls as far as I can see.


Anjuli Davies 12:34

Does this now make UK plc an attractive target for M&A?

We had a bit of a French takeover bonanza earlier this week

Izabella Kaminska 12:34


Is this why Macron has been so nice to the UK recently?

I noted there was a bit of soft power display with Truss this week.

Emmanuel Macron has offered Liz Truss an olive branch after her controversial “friend or foe” remarks by saying after their first bilateral talks that it is time to “move on”.

The two leaders appeared to smooth over tensions during their meeting in New York, which No 10 said was dominated by Ukraine and energy security, but avoided the controversial issues of the Northern Ireland protocol and migration.

Anjuli Davies 12:36

French businessman Xavier Niel bought a 2.5% stake in Vodafone, Suez is looking to buy back its British waste treatment business and Schneider Electric agreed to buy Aveva – which Aveva investors are reportedly planning to reject

King Charles is also apparently planning to visit France on his first overseas outing.

Izabella Kaminska 12:37

(Imagine french accent) “It is okay about the little fishing boats… we don’t mind. We are coming for your corporate champions, mais oui?”

Anjuli Davies 12:37

Although how cross are they going to be about Britain’s banking bonfire of regulation?

Izabella Kaminska 12:37

I feel like Macron Friend or Foe, could be the makings of an excellent game show:

Speaking of the continentals

The point of this service is to draw help bridge general blind spots, especially in the macro investing community.

And one big and perpetual blind spot here in the UK (and I suspect in the US) is the local political nonsense going on with those dreaded Europeans.

Especially if they’re not France or Germany.

Anjuli Davies 12:39

@Mark Snow that’s a good one

Anjuli Davies 12:40

Which country has had 70 governments in 77 years do you reckon?

Izabella Kaminska 12:40

Italy. Everyone’s favourite luxury goods making sovereign. And Europe’s acceptable political basket case.

But, as far as the average anglo-saxon’s understanding of the country goes: Italy is mostly a black box.

Anjuli Davies 12:41

Bunga Bunga parties

The Dark heart of Italy

another political classic, still relevant today

Izabella Kaminska 12:41


Don’t get me wrong. I love Italy. It’s nuts in a reassuring loafer-wearing way.

But let’s face it.

When it comes to the mystery of Italian politics, the general Anglo-saxon view is that Draghi or Berlusconi are always in charge –  apart from that one time some comedian guy tried to take over the government. But failed.

Anjuli Davies 12:42

Beppe Grillo


Izabella Kaminska12:42

But Italy is also the birthplace of the technocratic state (as brought to you by Mussolini), modern Republicanism, and well… what did the Romans ever do for us.

(oh yeah, how did I forget Super Mario Monti. Berlusconi, Monti, Draghi)

It’s also a major European manufacturing centre and the place where lockdown policy was normalised as a European thing.

Things you probably didn’t know about Italy:  It has a larger amount of gas storage regasification facilities than Germany. And a direct pipeline to Algeria.

Anjuli Davies 12:43

(@John need I read anything else today)

Izabella Kaminska12:43

And it turns out they’re having an election. A somewhat important one.

Anjuli Davies 12:44

Berlusconi Phoenix rise again?

Izabella Kaminska 12:44

No. But in the last 24 hours, the man who shares a penchant for facelifts with Putin has been back on the radar quite visibly.

Do look at the vid

Here he is. I don’t speak Italian but apparently, he’s saying some quite nice things about Putin.

Jeremy Cliffe from the New Statesman, who presumably does understand Italian, Tweets:

Silvio Berlusconi claims his old pal Putin was “pushed by the Russian population, his party and his ministers” to attack Ukraine and just wanted to “replace Zelensky’s government with a government of decent people and be back in a week”.

Anjuli Davies 12:45

What does that mean for investors?

Izabella Kaminska 12:45

It was pointed out on the Blind Spot Discord yesterday that one of the big four democracies of the EU is about to elect a populist, socially conservative, fiscally liberal, (first female) prime minister on September 25 (Sunday)  and it’s not on anyone’s radar.

Did you know her name? Because I didn’t until I bothered to look.

Information too often is out there once you look for it. It’s just you don’t until someone prompts you to. And so I bet most people in this chat don’t yet know that the new face of Italian politics is…

Giorgia Meloni. Here she is:

 Apparently, she’s a dangerous far-right demagogue.

Anjuli Davies 12:47

“What happens if Italian bond yields become like Hungary?” is what our discord chat wants to know.

Izabella Kaminska12:47

More specifically, what do dangerous far-right demagogues arising in Italy mean for bond prices? Has this sort of thing happened before?

The important news is that in the last two hours I got an email ping from the Economist that she’s made it onto the front cover this week and they’re asking “Should Europe be worried?”:

As my former colleague, Javier Blas of Bloomberg likes to point out, based on the Economist’s front cover track record, the answer is no.

Izabella Kaminska 12:48

Though the Economist is now hedging its front-cover bets too:

We have two covers this week. In Europe we ask how worried the world should be about the probable election this weekend of the most right-wing government in Italy’s post-war history.

Here’s the hedge:

But on the Italian front, the Economist’s assessment is as follows:

A three-party alliance is expected to win more than 60% of the seats in parliament; the Brothers of Italy (FdI) looks set to dominate the trio, and its leader, Giorgia Meloni, to take over as prime minister. The FdI has its roots in neo-fascism. In speeches Ms Meloni hammers away at illegal immigrants and “woke ideology”. Bankers fret that she will tangle with the European Union, go soft on reform and lose control of Italy’s mountainous debt stock ($2.7trn, or over 150% of GDP). And yet Ms Meloni has tried to soften her hardest edges. She has clearly stated that she has no plans to strike down the law that permits abortion, she no longer talks about scrapping the euro and she has committed herself to follow the reform plan drawn up by her predecessors and approved by the European Commission. Although Ms Meloni gives European leaders plenty to be anxious about, they should calmly accept Italy’s democratic decision to elect her, while privately warning her how damaging to both Italy and the EU a falling-out would be.

Anjuli Davies 12:50

At least we aren’t Lebanon yet. Have you seen how they are having to close banks indefinitely after a spate of armed robberies because savers have been desperate to get their cash after withdrawal limits were imposed on savings. Mad. Apparently, 3/4 of the population are now in poverty.

Izabella Kaminska 12:50

Funny you should mention Lebanon, as we have a small series coming out about that from Dario (who is lurking in the comment area). He was just there and has some fascinating insights on how the formerly rich are coping with the decline.

Two closing thoughts on Italian politics.

 It’s interesting of the Economist to argue in favour of Italy’s democratic right to elect a dangerous far-right demagogue and not be penalised by European institutions for doing so.

 Because obviously the same has not applied to Hungary or Poland, and the latter is still waiting for the delivery of its Covid relief funds.

Anjuli Davies 12:52

Is it the Draghi factor?

Izabella Kaminska 12:52

Who knows. But it seems increasingly like it’s one rule for the new members and another for Europe’s premier cradle of Republican Democracy. Though perhaps this time will be different?

Urusula Von Der Leyen seems ready:

Apparently that means: “We are watching the elections and if they go in a bad direction we have means, as you can tell from Poland and Hungary”

Anjuli Davies 12:53

When will we start talking about the eurozone break-up again?

Izabella Kaminska 12:53

I’m reading a great book by Paul Einzig on the economic foundations of Fascism and I have to say there’s more than a slight ESG theme to it:

But what everyone wants to know is WHAT WILL HAPPEN TO THE BOND YIELDS?

Anjuli Davies 12:54

Should we look at Italian/German sovereign spreads and respective CDS?

Izabella Kaminska 12:55

I’d love to, but – like Britain – we are a bit dependent on the kindness of Bloomberg terminal-owning bond investors.

Anjuli Davies 12:55

You need to expand your joke repertoire Izzy

Izabella Kaminska12:55

Luckily Marc Ostwald of ADMSI is a friend of the Blind Spot, and has responded to my bat signal.

That’s the generic 10yr Italian vs the German 10yr

and this is the 5 yr equivalent spread:

So what does that tell us?

Anjuli Davies 12:58

It seems to be plateauing.

Izabella Kaminska 12:58

Yep. And my theory is this may be a reflection of Germany’s ultimate safe-asset status being challenged rather than Italian quality improving.

(Germany turning out to be the dark horse of European Sovereign Debt instability is probably not something any investor bargained for.)

And yet here we are.

Target2 imbalances suggest a similar thing.

This is data from September 1

German balances at the ECB definitely seem to be plateauing. Luxembourg ones, however, are getting larger.

Spain and Italy’s deficits are still widening tho

That would imply that it’s the tax efficient who are starting to de facto fund periphery imbalances in the ECB.

Anjuli Davies 13:00

But do Target2 balances even matter?

Izabella Kaminska13:01

Well quite. The usual response to anyone looking at Target2 imbalances is exactly that. Because the Eurozone is united. But still worth keeping an eye on.

We are nearly out of time, but since it’s our big official launch, just before we finish…

I wanted to flag this cross border audit inspections story from Reuters:

It may have meaningful effects on investors in US-listed Chinese stocks.

Anjuli Davies 13:02

Where’s Jack Ma these days?

Izabella Kaminska 13:02

Good question! Haven’t checked in on him of late, but wherever he is I would pay close attention to how frequently he is blinking.

Anyway from Reuters:

HONG KONG, Sept 22 (Reuters) – Beijing has sent a team of regulatory officials to Hong Kong to assist the U.S. audit watchdog with onsite audit inspections involving Chinese companies, four people familiar with the matter said, as part of a landmark deal between the two countries.

A China-U.S. agreement last month allows U.S. regulators, for the first time, to inspect China-based accounting firms that audit New York-listed companies, a major step towards resolving an audit dispute that threatened to boot more than 200 Chinese companies from U.S. exchanges.

About 10 officials from the China Securities Regulatory Commission (CSRC) and the Ministry of Finance (MOF) have arrived in Hong Kong and joined the audit inspection, which started on Monday, three of the people said.

The officials will assist a team of inspectors from the Public Company Accounting Oversight Board (PCAOB), the U.S. audit watchdog, who are in Hong Kong for the onsite inspection, the four people said.

This to me is an amazing story.

What it reveals is that consensus on international accounting standards is akin to consensus on international weapons treaties.

There is basically zero trust in the ability of non-US auditors to faithfully review such accounts.

The actual act of sending in “head office” to make sure things are being done right in the periphery has become a political act.

 Like Diocletian not being able to trust his own governors in the periphery and having to send in a deputy emperor to oversee things directly.

Anjuli Davies 13:04

Who is Hans Blix or Peter Daszak of the US inspection team?

Izabella Kaminska 13:04

Not sure. But I would like to find out. The board is chaired by Erica Y. Williams but it’s unclear who is on the inspection team.

Here is the Public Company Accounting Oversight Board’s factsheet on the matter:

“Our dedicated teams of professionals have been preparing for this moment for months, and they are ready to work swiftly, but thoroughly, to carry out our inspections and investigations. Whether our teams are able to complete that work without obstruction will inform the PCAOB’s determinations at the end of this year.

Okay … I think we will finish on that. Neil is back with us on Wednesday, and Anjuli will be here on Monday again.

Anjuli Davies 13:06

Izzy, did you have some housekeeping?

Izabella Kaminska 13:06

Ah yes.

There are three key things that will make or break a markets chat such as this.

1) Consistency and professional discipline.

2) Frequency

3) Actual Insight

The first is something we can already bring to the table. Come rain, shine, or electricity failure, the Blind Spot team can from now (at least until we go totally bankrupt and lose our homes) always be depended upon to gather here every Monday at 11am.

Anjuli Davies 13:07

Consider this ritual

Izabella Kaminska 13:07

But let’s face it, one gathering a week on a Monday is just not good enough. We need this to be a daily muscle memory thing for it to really start generating value.

To achieve that we need funding and scale.


So if you used to be a fan of the old sessions over at the pink un, or already have a good sense of what this could be if it got hyper scaled… do your bit. Spread the word.

SML needs you

Anjuli Davies 13:08

Blind Spot bonds

Izabella Kaminska 13:08


Or coins.

Currently, this is being made possible by the support of Coodash, an excellent media monitoring platform. They’ve brought us the tech. But we now need the brains.

If you’re reading this in transcript form, sign-up details for the Coodash platform are here:


So mention us casually to your marketing or promotional teams if they’re looking to reach high-value eyeballs. We won’t do sponsored content. But we do need a patron, and/or value-aligned advertiser.

Finally, the third variable – insight – is a function of scale. We are all professionals here and know our stuff. But we’re only as good as our sources. If you think there’s something we should be looking into but aren’t let us know. You can contact me on [email protected] and Anjuli on [email protected].

We’re in the market for bank research, independent research, tidbits, trends, start-up info, and more. Do join our discord too and our gated spot market exchange.

We’ll do the reading and calling around so you don’t have to.

Anjuli Davies 13:09

What a tagline!

Izabella Kaminska13:09

Excellent – thanks everyone for taking part.

Anjuli Davies 13:09


Izabella Kaminska 13:09

And adieu …

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