Paul Davies | Lightnews

Paul J Davies

@pauljdavies.bsky.social

5.1K followers 1.3K following 6.4K posts

Has views on banking and finance for Bloomberg Opinion.
Just because you “like” something doesn’t mean you *like* something…
Money. Music. Books and Bad like really atrocious Jokes. Also #COYS

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Economics 14%

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Paul J Davies @pauljdavies.bsky.social · Apr 9

🧵 A massive sell-off in Treasury markets is threatening to turn Trump’s tariff war into full blown financial crisis. Hedge funds unwinding highly leveraged basis trades is fuel to these fire sales – that’s bad on its own, but these trades are much more important than just bets on markets.

Shadow Banks Are Too Big to Stay in the Shadows

Mega hedge funds are so critical to modern finance they should be regulated more like banks.

www.bloomberg.com

Paul J Davies @pauljdavies.bsky.social · 11h

Camden council. Tick box morons.

It’s a picture of a mop in a bucket with a sticker on it that says: This is a fire hazard.

Reposted by Paul Davies

Bloomberg Opinion @opinion.bloomberg.com · 12h

Private credit, AI and the flightiness of wealthy individuals.

Blue Owl is caught in a trifecta of market worries, @pauljdavies.bsky.social explains 🎥

Paul J Davies @pauljdavies.bsky.social · 12h

Very good on Labour's headless-chicken budget from @jomichell.bsky.social (although I personally don't buy that there are bank windfall profits to be taxed)
blogs.lse.ac.uk/politicsandp...

Something similar can be said about the Labour government. Starmer and Reeves endlessly repeat that ‘growth’ is their aim. Yet they are unable to articulate why, beyond loosening fiscal constraints, growth is desirable. Eighteen months into the first Labour government of a generation, the greater purpose of the Government remains not so much undefined as absent. It is perhaps unsurprising that much of the left has retreated to ‘one simple trick’ stories about fiscal policy.

Paul J Davies @pauljdavies.bsky.social · 13h

Immediately made me think of @dsquareddigest.bsky.social stack last week about house prices/rents being a function of rates and wages. Simplistically: Rises in min wage ultimately (mostly?) become a wealth transfer from employers to property owners. In London at least.

Stephen Bush @stephenkb.bsky.social · 17h

Ultimately the minimum wage is a brilliant tool, but it can’t compensate for “we haven’t built any housing”, “we have cut cash transfers to the bone” and “all the third spaces have been cut to pay for social care”.

The minimum wage is not a cure all — we’re asking too much of business

Politicians spend too much time uttering cheap rhetoric about cheap labour

www.ft.com

Reposted by Paul Davies, Stephen Evans, Tim Leunig

Stephen Bush @stephenkb.bsky.social · 17h

The minimum wage is not a cure all — we’re asking too much of business

Politicians spend too much time uttering cheap rhetoric about cheap labour

www.ft.com

Paul J Davies @pauljdavies.bsky.social · 18h

If only I had several twelvety millions of money....

The Guardian @theguardian.com · 18h

‘An idealized version of LA’: fabled mid-century Stahl house on sale for first time

Home perched in Hollywood Hills, constructed for $37,500 and made famous by Julius Shulman photo, listed for $25m

www.theguardian.com

Reposted by Paul Davies

The Guardian @theguardian.com · 18h

‘An idealized version of LA’: fabled mid-century Stahl house on sale for first time

Home perched in Hollywood Hills, constructed for $37,500 and made famous by Julius Shulman photo, listed for $25m

www.theguardian.com

Reposted by Paul Davies

Dan Davies @dsquareddigest.bsky.social · 19h

Perhaps there is a role for this guy at the Labour Party, I feel like his "people like chicken, let's give them that, the pizza customers will order from us anyway because they've nowhere else to go" ideas might resonate with them.
www.ft.com/content/f0bf...

Domino’s Pizza parts ways with chief who bet on fried chicken

Andrew Rennie leaves UK group ‘by mutual agreement’ as chair says there are opportunities to drive growth

www.ft.com

Paul J Davies @pauljdavies.bsky.social · 20h

I think my next hobby is going to be lovingly sorting and selling anything worth more than a fiver online (that I don't expect to definitely want to spend time listening to in the next five years. Or maybe ten years... or maybe ever)

This is about three records.

Paul J Davies @pauljdavies.bsky.social · 20h

bsky.app/profile/paul...

Paul J Davies @pauljdavies.bsky.social · 20h

Daughter was deliberately winding me up about this the other day

Paul J Davies @pauljdavies.bsky.social · 22h

The politics of envy goes both ways you know. What is the campaign to slash welfare other than jealousy of the imagined leisure time, carefree lives and moral freedom of the great hand-outs classes?!

Paul J Davies @pauljdavies.bsky.social · 22h

When even Dr. Doom says there’s no bubble…

on.ft.com/4pbz6o4 Tech trumps tariffs: why US exceptionalism will last

Tech trumps tariffs: why US exceptionalism will last

The view that the stock market is in a massive bubble and bound to crash is incorrect over the medium term

on.ft.com

Paul J Davies @pauljdavies.bsky.social · 1d

HODL as industrial strategy.

Paul J Davies @pauljdavies.bsky.social · 1d

Thanks! The diff with SIVs was the banks *could* walk away and from memory someone did (Dresdner..?) But most choose for basically relationship reasons not to screw their clients who would have taken the hit without liquidity support from the bank.

Paul J Davies @pauljdavies.bsky.social · 1d

Another good piece on chip depreciation rates and usage possibilities/future values >> The data center boom is built on the assumption that AI chips will last at least five years. But we don’t actually know how long chips are good for www.bloomberg.com/news/article...

The AI Industry Is Built on a Big Unproven Assumption

In addition to the projections about reaching artificial general intelligence and replacing millions of human workers, there’s the mundane matter of how long AI chips will last.

www.bloomberg.com

Paul J Davies @pauljdavies.bsky.social · 1d

<stops dead>

<gawps>

I mean it feels like a thing I should basically know on reflection but still....

Andrew Martin @andrewmartin.bsky.social · 1d

When Tony Blair came to power in 1997, the UK economy was bigger than China and India combined.

Reposted by Ian Hall, Paul Davies

Andrew Martin @andrewmartin.bsky.social · 1d

When Tony Blair came to power in 1997, the UK economy was bigger than China and India combined.

Paul J Davies @pauljdavies.bsky.social · 1d

Given that Meta has supposedly guaranteed returns for even the equity in the vehicle that owns the data center, then it's hard to see how all of it is not a definite liability of Meta. Unless, owl is being somehow disingenuous with their description.

Excerpt from OWL Q3 earnings call >>

Q - Craig Siegenthaler
Hey, good morning, Marc, Alan. Hope everyone's doing well. My question is on the digital infra business. So we've seen these large deals recently, like the $27 billion deal with Meta to develop the Hyperion data center. And I'm sorry, I'm losing my voice a little bit here, but I believe the underlying leases have maturities of about 15 to 20 years. So my question is, under what scenarios can Meta terminate or walk away from the lease earlier than 15 years? And if they do that, what compensation would they owe Blue Owl's funds? And how would that impact the IRR for Blue Owl's LPs on that investment? Thank you.

A - Marc Lipschultz
Yeah. So the leases, first of all, let's step back. The leases are designed to function for 20-plus years. So just to start to level set to your point, there is a -- it is -- and this is part of the skill and art that both Meta and I think we brought to it. They're designed in a very bespoke way to create elements of flexibility for Meta. Of course, as you know, they're actually -- just yesterday, we were talking about how they're actually rapidly accelerating their spend. So I think this is more about having a flexibility, which I give them full credit for, than having anything that's likely to be used.

But just to cut through it all, and I don't want to lose the forest for the trees. If there were an early termination, there is a perfectly mathematical make whole where we make -- the debt makes all its money, we make a spectacular equity return under every circumstance. So it is -- really doesn't, we expect it'll end up being a 20-plus year undertaking, but it actually doesn't matter. If it terminated anywhere along where they have the options to do it, there is a value guarantee on the assets. So we make a great return under any one of those conditions.

Reposted by Paul Davies

Emily Flitter @emilyflitter.bsky.social · 1d

What a time to be alive

Screenshot of the top of a Bloomberg Markets report with the headline: ‘Blank-Check Firms Stuffed With Crypto Are Financial Turducken.’ The report describes how investors are forming special purpose acquisition companies (SPACs) to buy crypto holding companies and sell their shares to retail investors.

Screenshot of the illustration in the story displaying a photo of a turducken, a dish in which a turkey is stuffed with chicken and duck, with labels explaining the components of a crypto SPAC. The turkey is the SPAC, the duck is the treasury company holding crypto and the chicken is the crypto.

Paul J Davies @pauljdavies.bsky.social · 1d

Morgan Stanley is running the most successful version of the modern investment banking/wealth playbook, but this is also what left it hung with billions in unsellable Twitter debt for a couple of years. Good piece this >> @bloomberg.com www.bloomberg.com/news/article...

Morgan Stanley’s OpenAI Ties Show How Bank Reels in Hot Startups

Almost no one outside the tech industry had heard the term ChatGPT when a team at Morgan Stanley invited Sam Altman to its Menlo Park office to meet with some of the bank’s executives.

www.bloomberg.com

Paul J Davies @pauljdavies.bsky.social · 1d

My favourite OH version of this was some people on the way to a protest and one exclaimed strongly to his comrades: You can *be* anti-capitalist and still have an iPhone!

Reposted by Paul Davies

The Guardian @theguardian.com · 1d

Jimmy Cliff, Jamaican reggae singer, actor and cultural icon, dies aged 81

Star of The Harder They Come had hits including You Can Get It If You Really Want and I Can See Clearly Now Jimmy Cliff, the singer and actor whose mellifluous voice helped to turn reggae into a global phenomenon, has died aged 81. A message from his wife Latifa Chambers on Instagram reads: “It’s with profound sadness that I share that my husband, Jimmy Cliff, has crossed over due to a seizure followed by pneumonia. I am thankful for his family, friends, fellow artists and coworkers who have shared his journey with him. To all his fans around the world, please know that your support was his strength throughout his whole career … Jimmy, my darling, may you rest in peace. I will follow your wishes.” Her message was also signed by their children, Lilty and Aken. Continue reading...

www.theguardian.com

Reposted by Paul Davies

Usagi @usagi3939.bsky.social · 1d

This story blew my mind yesterday. I think there are principles around national security and engagement with foreign entities that need to be developed further within academic environments to promote understanding of why this communication is a red flag.
www.thetimes.com/article/383b...

Paul J Davies @pauljdavies.bsky.social · 1d

Have to confess I don't know about that. I guess my point is whatever the accounting treatment you can find that gets round it ought not to be doable IF the guarantee is as strong as OWL claims...?

Paul J Davies @pauljdavies.bsky.social · 1d

Good piece getting to the heart of the off-balance-sheet questions >>

George Pearkes @peark.es · 1d

Some very good arguments here but there's also a KISS question here: "Why should a company consolidate an entity where it only owns a 20% stake?"

Seems like the operating versus financing lease distinction is more important than the consolidation of the entity, they're on much weaker ground there.

AI Meets Aggressive Accounting at Meta’s Gigantic New Data Center

Favorable treatment off the balance sheet hinges on some convenient assumptions.

www.wsj.com

Paul J Davies @pauljdavies.bsky.social · 1d

I think the KISS question is: If you have written a guarantee to cover a liability in all circumstances (and OWL said on its Q3 call that the guarantee covers the projected returns on its *equity* in Beignet as well as the debt) then how can you not call it a full liability of Meta?

Reposted by Paul Davies

George Pearkes @peark.es · 1d

AI Meets Aggressive Accounting at Meta’s Gigantic New Data Center

Favorable treatment off the balance sheet hinges on some convenient assumptions.

www.wsj.com

Paul J Davies @pauljdavies.bsky.social · 1d

Yeah, agreed. Billions of losses for the hyperscalers could mean just a very bad six months and a reset. Whereas simply disappointing returns for a couple of important vintages at a much smaller private asset manager could mean it ultimately getting bought out by a bigger rival at a weak stock price

Paul J Davies @pauljdavies.bsky.social · 1d

Docklands is back!
"Daily average tube and Transport for London rail visits to the West End and City of London respectively were at 84% and 89% of pre-pandemic levels in October, compared to 105% for Canary Wharf". @bloomberg.com www.bloomberg.com/news/article...

Canary Wharf's Comeback Boosted by JPMorgan's Jamie Dimon

Five years after being battered by Covid-19 and the rise of home working, Canary Wharf is making a comeback.

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