Twitter has imposed a cap on the number of posts that a user can see each day – 500. This has caused a backlash from some users, but my advice is that, if you are reaching that limit, maybe it could be good for you to step away from the screen for a little while. (This advice obviously doesn’t apply to me as I must search THOUSANDS of posts per day to bring you the funniest meme for ‘the bottom line’ section of this email.)

The lowdown

• 🙈 Twitter imposes a temporary cap on the number of posts that a user can see each day.

• ⚡️ Tesla delivers record number of vehicles in June quarter after price cuts, beating expectations.

• 🇨🇳 Pan Gongsheng is appointed Party Secretary for China’s central bank, as China’s growth slows.

Flex your finance muscle

Inflation-linked bonds

Inflation-linked bonds are debt instruments that offer investment returns linked to the inflation rate. The idea is to protect the investor from potential loss of purchasing power due to inflation.

The principal amount of the bond increases with inflation as measured by an agreed index, like the Consumer Price Index. When interest payments are due, they are calculated based on the inflated principal. This means that both the periodic interest payments and the principal repayment at maturity are adjusted for inflation.

The purchasing power of the cash flow from an inflation-linked bond is therefore relatively constant over time. Good for investors but can cause major problems for issuers as Thames Water are finding out. More on this below.

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The Thames Water crisis

One of the UK’s largest water companies Thames Water is reportedly struggling to raise the capital required to service its substantial debt, estimated at ~£16 billion.

More than half of its debt interest payments are tied to the rate of inflation, and this is compounded by a mismatch between the inflation indexes linked to its debt and customer bills ($).

The company's debt interest payments are tied to the Retail Prices Index, which has risen significantly, while customers' bills are linked to the Consumer Prices Index adjusted for housing costs (CPIH), which has not increased as quickly, creating a negative spread, and acting as a drain on the company’s cash flows.

The content we're consuming today

• Altered states of money consciousness: An Emotional Guide to 'Fractional Reserve Banking'.

• Digital Native: How Roblox Grows: From Virtual Playground to Global Empire.

• ING: The irony of the financial system’s largest ‘known unknown’.

Off-balance sheet items

• Wimbledon 2023 has kicked off (or hit off?). Keep up with all the action, the favorites and who to look out for with ‘The Tennis Podcast’.

The bottom line