UK investment blog and feed aggregator. Last updated: 2010-09-04 09:10:27
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Markets pay undue attention to the monthly US payroll numbers, which are at best a coincident economic indicator and are often revised heavily.
The latest figures show a rise in private sector employment of 235,000 in the three months to August, down from 450,000 in the prior three months. Such a slowdown was to be expected given a fall in GDP growth from 3.7% annualised in the first quarter to 1.6% in the second.
Commentators were relieved that private jobs continued to increase in August, by 67,000, with some having feared a contraction, signalling the ...
This week I ran into a piece written by the outstanding hedge-fund manager Seth Klarman in 1992. It's however so relevant to the current market environment it may as well have been written yesterday.
The article called Don't be a Yield Pig, is just 2 pages long but definitely worth 5 minutes of your time.
If you are frustrated by the current low interest rate environment I understand completely.
Both my parents have asked me if its not worthwhile to look for something else offering a higher return. My advice to them was to please stay away from ...
How important will be BP's report into the causes of the Deepwater Horizon oil disaster, which is due to be published in the coming week or so?
And some will refuse to believe any analysis by BP, on the basis that it can't help but be tendentious.
But even if you see the report as the case ...
Well, that didn’t last long, now did it. Two consecutive quarters of minimal GDP growth seem to have exhausted the forces of a more than fragile Spanish economy. All the post-June data we are seeing suggests the economy has now turned the corner (in the bad sense), and we should expect a negative quarterly GDP reading in the July to September period.
Perhaps the clearest indicator we have so far of the shape of things to come is offered by the August services PMI reading, which shows the sector went back into contraction in August, a performance that for ...
I have often written about my skepticism over hedge funds, absolute return funds, and other sexy investment vehicles.
Some of the problems with these exotic funds include:
Now we can add a new drawback – poor performance versus ETFs.
It turns out most hedge funds are currently doing worse than the simplest tracker-and-bond portfolio ...
Now I will be the first to admit, as something of an old fogey in the matter of risk and credit analysis, that I have never been a fan of the modern vogue for delegating a lot of risk analysis to the rating agencies, who to use the vernacular expression, "have no skin in the game", but it gets worse when it turns out that these so called experts get things wrong.
A few months ago, we had a Chancellor, called Darling, although his first name escapes me for the moment, Roger, Andrew, Peter, something like that. Anyway, like most of our financial problems over the last few years, he was Scottish (and probably still is) and is largely behind us, but he popped up the other day to tell us that his bankers' bonus super tax was mostly ineffective.
Indeed, a few days ago, one of the Swiss banks in London announced that several hundred "senior" bankers in London were to be paid big retention bonuses to make up for the ...
The women go shopping. They are disappearing from the ranks of US finance workers, despite a decrease in sexual discrimination charges and a rash of new corporate programs to attract and retain them. Meanwhile, the number of men in the business has surged.
In the past 10 years, 141,000 women, 2.6% of female workers in finance, disappeared from the industry, while the ranks of men in the industry grew by 389,000, or 9.6%, according to a review of data provided by the US Federal Bureau of Labor Statistics.
The discrepancy is particularly pronounced at brokerages, investment ...
"I don't seek agreement. I seek merely an understanding that the arguments for and against were and remain more balanced than conventional wisdom suggests... When I use the word responsibility, I mean it in a profound way. I say in the book the term responsibility has its future as well as past tense."
Future responsibility, as in being held to account in a court of law? I suspect not.
Aside from big picture stuff like extreme frugality, I’ve never focused much on ways to save money here on Monevator. Plenty of blogs have that niche covered.
But be under no illusions. Spending less than you earn is the key to getting rich, whether you earn 20K a year or two hundred. The Micawber Principle is the one rule of financial planning that rules them all.
So I was delighted when fellow money blogger David Hamilton agreed to fix the frugal tip deficit on my blog with a guest post offering more than 100 ideas for how to ...
The modern world moves at a breathtaking pace, even when most of us find ourselves on holiday. No sooner do we receive, read and start to digest one set of economic data than we find ourselves pushed to think about what the next set will look like. The clearest recent illustration of this undoubted reality is to be found in peculiar twist of events which meant that just as the news reached us that the German economy had expanded at a record rate in the second quarter, at almost the very same moment Federal Reserve officials meeting in Washington decided ...
Posts since the spring have suggested a defensive investment stance on equities and other "risk" assets, for two reasons. First, the annual growth rate of G7 real narrow money, M1, fell beneath that of industrial output in February (firm data available in early April). Historically, equities have underperformed cash on average under this condition, while outperforming significantly when real M1 has outpaced output.
Secondly, the US monetary base started to contract in early 2010 – markets have exhibited a lagged correlation with base fluctuations since the Federal Reserve embarked on "QE1" in late 2008. The fall in equities from April followed ...
So how big has been the recent boom in some parts of the banking industry?
Big enough, according to new figures released this morning by the Bank for International Settlements (the central bankers' central bank, as if you didn't know) and the Bank England.
According to the results of their latest triennial survey, global foreign exchange turnover rose 20% to $4trn per day on average (yes, that's each single day) in April 2010 compared with April 2007.
Or to put it another way, a sum equivalent to the entire output of the global economy is traded around once ...
My analysis of the latest cash-flow figures for the two main political parties yields two stark conclusions:
1) Labour is dangerously dependent on funding from a tiny number of wealthy individuals and trade unions;
2) The Tories still rely on contributions from the City of London and financial services, especially hedge funds and fund managers, to a considerable extent.
In the crucial second quarter of this year, from 1 April to 30 June - the general election quarter - the Tories and Labour received almost identical cash donations, according to figures supplied to the Electoral Commission. The Conservatives received £10.23m and ...
Bank of England Governor Mervyn King and other MPC members continue to claim that the current inflation overshoot reflects transitory factors including the weak exchange rate and higher global energy prices, while underlying inflationary pressures are weak. This is not supported by a national-accounts-based measure of domestic inflation.
The “implied deflator for gross value added at basic prices” measures the domestic cost – in terms of wages, profits and rents – of producing a unit of output. It excludes, by construction, indirect taxes and import prices, including the cost of imported energy and other commodity inputs. The GVA deflator rose by 2 ...
Pakistani players for all their talent are not as well-paid as their counterparts abroad. As long as they are underpaid the tendency to be bribed remains.For me, this rings true. There are four aspects to the problem.
Spain’s EU harmonised seasonally-adjusted unemployment rate (which is the interesting number) went up again in July, according to the latest data from Eurostat. It rose to 20.3% from 20.2% in June.
So despite a double digit fiscal deficit, Spain has not yet succeeded in putting a brake on the upward drift in the headline unemployment number.
And the number of those officially working continues to decline, according to the data on those paying insurance contributions from the Labour Ministry.
Clearly having broken the 20% barrier the number looks like heading up even further in the second half ...
Key UK money supply measures were unchanged in July but have grown at a faster pace since early 2010, supporting hopes of a continued economic recovery. Corporate liquidity, in particular, has improved further. Unusually, households failed to expand their money holdings last month, probably reflecting a combination of low interest credited, an ongoing switch into mutual funds and use of spare cash to repay borrowing.
Broad money (i.e. M4 holdings of households, private non-financial corporations and financial corporations excluding intermediaries) stagnated in July but has still grown at solid annualised rates of 5.6% and 5.9% over the ...
The current generation of policymakers seem to be like Captains of large ocean liners, out there on the high seas, bereft of either compass or adequate charts, trying hard to calm there worried passengers by telling them nothing is amiss. But the charts are there, if only they would look at them, and in the present Spanish case, unlike the old refrain, the future is ours to see, and it has a name: Germany.
For those willing and able to examine our present situation with a reasonably open mind, a comparison of the recent history of the Spanish and German ...
I wish I could say I was overjoyed to be back in the supposedly real world, after a few days being revitalised by the benign winds and periodic sunshine of the Welsh coast.
But everywhere I look this morning there are gloomy stories about pensions (see the front pages of the Daily Mail and Telegraph, for starters) - and, of course, there is a direct relationship between the perceived salience of pension issues and age (which is why they oppress me and my contemporaries, and why younger people can't be bothered to save for a pension at all).
But here ...
Well, as we all well know one swallow doesn’t make a summer, and one data point doesn’t swing an argument one way or another, but the latest retail sales PMI reading for Germany is far from being either uninteresting, or (for my part) surprising. Basically after only two months (in the last twenty seven) of registering growth, the August PMI suggested that German retail sales once more fell back. And the anecdotal explanation for this: Spain’s victory in the world cup affected the shoppers appetite! Actually, from a long term aggregate point of view I think (and ...
Not only is the French economy the grateful recipient and beneficiary of sustained German export growth, so too is Poland (I’m sure they’ll be glad to hear that in Warsaw!). According to the FTs Jan Cienski:
German recovery boosts Polish GDP
Poland’s economy grew by an unexpectedly strong 3.5 per cent in the second quarter; the country’s statistical agency said on Monday, thanks in part to continuing strong exports to the rapidly rebounding German economy, as well as resilient domestic demand.
In fairness to Cienski he then does go on to inform us that according ...
Well, based on secondary market transactions, Facebook is now worth as much as $33.7 billion. Common stock in Facebook trades as high as $76 a share as investors try to get a piece of the company before it files for an IPO.
Media industry sources say Facebook may soon make as much as $1 billion in annual revenues, mostly from its "engagement ads" program. Facebook dropped traditional internet advertising when its partnership with Microsoft expired and has chosen to focus on ads based around users' stated interests and preferences.
Facebook is certainly making money and the Facebook "fan page ...
I spent longer than usual in bed this morning and listened to the BBC propaganda machines recitation of Chris Mullin's diary. Now I have a thing about politicians who sell off their scribblings about the time when they were supposed to be working for the people who put them intom office, but all I can do is refuse to read their memoirs.
But listening to this I was struck by two things. First of all there was the vanity of Mullins, which was lirttle different from most politicians. Contrary to their view of themselves, an MP is not an ...
The FSA had 241 employees on staff in March who were paid more than £100,000, compared with 81 employees in March 2006, according to the regulator’s response to a freedom of information request.
One would like to think that is good news, but if 81 people can't figure out wghat is wrong with the banking system, why would 241 of them do any better? How many public companies in the private sectoractually have that number of employees earning that much, particularly outside the financial sector? And how many government departments.
They probably won't, but this is ...
Well, having just posted a lengthy study of the German economy on this blog, I started to lazily browse my way around today’s economic news headlines, and Lo & Behold, what did I find over at the FT, a contrarian voice. That of Wolfgang Munchau. In his comment column he berates the Euro Area for its lack of product market and labour market mobility – in the sense that there are large differentials in both price and wage levels, yet few seems motivated to either shop or work around in the search for a better deal. Few seem motivated to follow ...
Karl Friedrich Hieronymus, Freiherr von Münchhausen was a German baron born in Bodenwerder in the eighteenth century. Made famous by the Hollywood director Terrence Gilliam, the baron first came to public attention for his ability to recount outrageously tall tales about his adventures while fighting abroad in the Russian army. Among the astounding feats which legend attributes to him are riding cannonballs and travelling to the Moon. But perhaps his best known marvel is the story of how he managed to escape from a swamp by pulling himself out by his own hair (or by his bootstraps, depending on who ...
By Ian Fraser
Published: Sunday Herald
Date: August 29th, 2010
Martin Gilbert, chief executive of Aberdeen Asset Management, has declared that big institutions that straddle the investment and mainstream banking divide should be broken up.
Echoing the views of Scots economist and author John Kay, who coined the widely used “casino” and “utility” banking analogy for the divide, and Business Secretary Vince Cable, Gilbert claimed the UK’s banking sector must undergo radical structural change in order to become safer, serve the customer better and be less prone to blow-outs.
“The banks should be split up. That’s our view ...
Not seen on the newswires from the Federal Reserve retreat in Jackson Hole, Wyoming –
“The world of economics was rocked to its foundations yesterday when European Central Bank President Jean Claude Trichet urged countries to run huge structural budget deficits and massively pro-cyclical fiscal policy while creating huge contingent liabilities in their financial sectors.”
Because that’s not what M. Trichet actually said, or what the media took him to say. But did he know that was the apparent implication of what he said? Yes, it’s Ireland again, seemingly everyone’s favourite misunderstood episode of boom and bust. It ...
August 28th, 2010
Living the high life
[Editorial Note: This article was written in June 2010 but has not previously been published in its entirety. An edited version was published in The Sunday Times on June 27th, 2010]
Directors of an aviation business that went bust owing HBOS £113 million in September 2007 were allowed to buy the business back from administrators Price Waterhouse Coopers for an initial consideration of just £7.
A few months later they paid an additional £49,999 but were unable to pay the additional €10m they were supposed to pay by February 2008 to ...
A silly season weekend musing followed by links to some of the week’s great posts.
I am in Edinburgh for the fag end grand finale of the Fringe Festival this weekend, so no links from this morning’s papers I’m afraid. Even my beloved FT will have to wait until I’ve boarded the train at Kings Cross.
Really looking forward to the trip; we’re in the quiet carriage outward and in first class for the trip back, and just £70 for the lot. The train takes five hours, but it deposits you right in the center ...
Ed Balls, the desperate also-ran in the Labour leadership race says that we are facing an economic hurricane and that George Osborne's plan has as much economic credibility as a ''pyramid scheme''. Well Balls knows all there is to know about running a Ponzi scheme having presided over the last government's attempt to boost the economy by borrowing against aour grandchildren's future.
Unfortunately for Mr Balls' narrative, the UK economy grew slightly faster than initially thought in the second quarter, expanding by 1.2% rather than the 1.1% cent first estimated. That is the fastest quarterly ...
This site is run by Graeme Pietersz, who also writes Moneyterms, an investment reference site.
Investment Reads is a simple feed aggregator for sites of interest to British investors. It combines the feeds published by blogs and other sites to allow you to:
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