Archive for October, 2011

FPS’ Friday Fiver

Hello All! We’re a little late this week, though happily the ever entertaining Matt Muir provided yet another great Web Curios which has probably kept H&K blog readers’ attentions for most of the afternoon. However, we’re still committed to bringing you a round-up of this week’s news from the world of financial and professional services (and yet again it’s been a week not to miss). It’s a little shorter this week, but we hope you enjoy it as always. Thanks to Ed Jones and Jonny H as always.

WE HAVE A DEAL – JUST…..It went down to the wire, involved a very well received slap-up meal, and what most leaders likely found an annoying intervention from the British PM. However, we have a deal on the eurozone which should see it stabilise for at least a few weeks.

The medicine is nothing if not severe though – a 50% writedown on Greek debt held by private institutions (i.e. banks) and £100bn which needs to be found in order to recapitalise banks and prevent them from falling into the abyss (sound familiar from about 3 years ago?).

Will it work in the long or even short term? The jury is definitely out on that one but already things are looking a wee bit wobbly

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FPS’ Friday Fiver

Hello All! We seem to say this every week, but yet again it’s been a very busy and news heavy 7 days in the world of professional and financial services. This week’s Friday Fiver has a distinct air of gloom about it I’m afraid, though we do find room for a spot or two of humour as always. Thanks as ever to Ed, and Jonathan for their contributions.

CHART OF THE WEEK – GREECE: IN A NUTSHELL…..Stephen Hawking’s follow-up to his immensely successful 1988 book on the cosmos was labelled ‘The Universe in a Nutshell‘. As anyone with a passing interest in physics knows, it would take a forest of nutshells to even begin explaining the wonders of our universe. At times, the complex, ever-changing state of the Greek and wider eurozone crisis can feel pretty similar.

Help is at hand though, thanks to a handy chart unveiled by The Spectator this week. Sadly, upon reviewing it, only the most optimistic person would conclude that the eurozone is heading for anything other than very troubled waters.

The options (or not) for Greece (Chart: The Spectator)

THE DEVIL OF THE DETAIL – BANKING RESULTS…..Hot on the heels of Goldman Sach’s results this week came Morgan Stanley’s trading update. Unlike their rivals, MS were able to report a large profit for the quarter of $2.2bn.

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Same inflation, different growth – China vs the UK

It’s been an exceptionally busy morning of news today. Not withstanding Goldman Sach’s widely predicted poor Q3 results (which we discussed last week alongside many others), two key stories stand out today.

Firstly, China reported another slowdown in its growth. This is likely to send shivers down chief executives’ spines, as the global economy continues to cling onto China as its last great hope for growth. Then again, the word ’slowdown’ still masks the impressive statistic that China continues to grow at nearly 10% a year.  Inflation is coming down too, and a ’soft landing’ seems more likely than a hard bump.

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FPS’ Friday Fiver

Hello All, and welcome to a surprisingly sunny Friday in central London. There’s certainly not been a shortage of financial services and politics related stories this week, and we’ve tried to give you a flavour of some of our favourites below. Thanks as ever to Ed Jones and Jonny H for their contributions.

TAXING TIMES…..Barely a week goes by without the EU sparking controversy on our idyllic isle. Among other things it was the EU’s proposed financial transaction tax causing consternation. As noted by the Telegraph this week, John Cridland said: “The likely effect of many of Brussels’ current proposals will be to damage the UK’s prospects for growth. Nowhere is this more acutely the case than for professional and financial services, which are being bombarded with unwarranted regulation.” He went on to describe the proposals as “a Brussels revenue-raising exercise, and one that will hit London disproportionately hard”. He didn’t stop there though, also slamming Brussels’ plans for Solvency II…

Cridland’s point was very clear - this will lead to the demise of London as a financial centre, to be overtaken by the perennial competitors New York, Singapore and Hong Kong. Sad times.

A TOUGH WEEK FOR GOLDMAN…..A lot of people like to have a dig at Goldman Sachs, but the first time in a while investors now have a reason to complain as well. It’s been a grim week for the world’s premier investment bank. Having their name dragged back into the mud following Raj Rajaratnam’s sentencing to 11 years in prison for insider trading didn’t help. Being accused of dodging a large UK tax bill didn’t exactly add to the party mood either.

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All that glitters

Debt, money printing, market volatility, political instability and behavioural economics – these are just a small selection of the interrelated factors currently determining the seemingly meteoric rise of the price of gold 

The extent to which current valuations are fair, sustainable or sensible is a source of some debate and I’d encourage anyone with an interest in the subject to have a listen to a short podcast just posted on The Motley Fool website.

The conversation [which can be found here] with David Kuo and the effervescent Merryn Somerset Webb is well worth a twenty minute investment of your attention.

[graph courtesy of MoneyWeek]

FPS’ Friday Fiver

There’s a heady mix of central banking, political shuffling and cat hair in the Fiver this week. Feel free to let us know what you think. 

Thanks to Dave, Marie and Ed for their contributions this week. 

From thin air… The virtual printing press is being turned on once again. This week the Bank of England announced its plans to inject a further £75 billion into the economy through quantitative easing. Ed Conway of Sky has a handy explanation as to what this actually means and what it is meant to do. You can find it here.

 While perusing Twitter for reaction to yesterday’s QE announcement, a comment [below] from Mark Cobley of Financial News caught my eye.

 

What if this money were put into people’s pockets – like a Euromillions jackpot for us all – rather than circulated through the City?

 Three initial thoughts came to mind:

1)      Low consumer confidence and consumption is one of the key problems facing the UK economy – this might act as a shot in the arm

2)      However, eliminating the consequences of personal debt would set a dangerous precedent and potentially a “too big to fail” mentality even amongst the collection of individuals

3)      We’re meant to be moving to a more export driven economy rather than relying on the consumer spending

 My musings are of little consequence as it’s never going to happen, but to read Peter Wilby’s more considered explanation of the idea click here.

 

Good week/bad week… Pretty tough to find anyone who’s had a good week whereas the list of those feeling the 7 day blues is distinctly long. The winner of the latter probably has to go to George Osborne though, if nothing else than for his quote two years ago that “printing money {quantitative easing} is the last resort of desperate governments”. I wouldn’t be surprised if some young Labour party workers had printed a few copies of that phrase and attempted to infiltrate the Treasury to plaster it on various noticeboards.

 

Searching hard for a good week, about the best we can do is one of the winners from Labour’s shadow cabinet reshuffle, namely Rachel Reeves. Barely in Parliament for a year, she’s scored a top job as Shadow Chief Secretary to the Treasury. Reeves had been capturing attention as a forthright and capable shadow pensions minister, and it’s fair to say those in the pensions community aren’t overly happy at yet another MP stepping so quickly off the pensions treadmill.

 Cat-gate… As a massive fan of felines a.k.a being a sad old cat lady, I find myself in camp Clarke on the issue of cat-gate. Teresa May clearly hasn’t felt the warmth of a purring  hairball on her lap as she tucks into a jumbo-sized Galaxy and watches Corrie in her PJs, or else she would never have ridiculed the process that kept the Bolivian bloke and his much-loved moggy together in the UK. It made perfect sense to me, despite some of my own reservations about the impact of the Human Rights Act.

[Oose - author Marie’s cat]

On a serious note though, Ken Clarke did raise some interesting and serious issues over the use of rhetoric and polarising positioning in public speaking and politics. Whether the cat or the case exists isn’t the whole point of his disagreement with May, it is the fact that she taking on the role of an alarmed Daily Mail headline writer about an issue which is fundamental, complicated and potentially explosive that irked him and rightly so. But the masses applauded and job done for Mrs. May and her speech writer. Meanwhile the real debate about Human Rights gets lost in the farce the story has now become. That said it did helpfully distract people from Cameron’s credit crackdown gaff but the Conference managers must also surely feel it was an unhelpful distraction overall.     

Umunna roll – Chuka’s meteoric rise… This afternoon, Ed Miliband confirmed what had widely been reported yesterday, that John Denham, the widely respected Labour figure would be resigning from his post as Shadow Secretary of State for Business. He would be joined by John Healey the Shadow Health Secretary and Ivan Lewis the Shadow Culture Secretary who was demoted.

 

What will surely grab the headlines however is the meteoric rise of Chuka Umunna – the British Obama – who has been promoted to replace John Denham and Shadow the wise old head of Vince Cable at the Department for Business. It has been pointed out Mr Cable, everybody’s favourite Liberal Democrat, is not only twice Chuka’s age, but has also spent longer in the Labour Party! 

Family Friendly… To finish the week, we’ll take a look at a piece of work conducted within the H&K FPS team. Working with leading children’s savings provider Family Investments, we wanted to help the business demonstrate just how well they understand their customers and family audience – particularly ahead of the new forthcoming Junior ISA which is going to be a competitive market. 

The FPS team created the Family Friendly Hotspots Report, a unique analysis revealing the best places to bring up children in England and Wales. The report was compiled using a unique analysis model combining more than 60 sets of data including education attainment from Ofsted, Land Registry property prices, police crime figures and ONS population data. 

These were all aggregated to generate overall scores for every single postcode region in England and Wales. The report listed the top 20 postcodes to bring up children and a tool was created for the Family Investments website which enabled individuals to type in their postcode and see how it scored.

Launched on 26th September 2011, the Hotspots report has so far generated over 200 pieces of coverage including 12 national articles, BBC online and BBC News pieces as well as 150 regional articles and no shortage of national debate.

The Bank of England & 9 other economists you should follow on Twitter

It seems the heart of the City has finally embraced social media, as word spread this morning of the Bank of England’s new Twitter feed. One can only picture Governor Mervyn King typing away at his desk, or perhaps on his smartphone providing updates on the latest data coming out of the Bank’s finest economic minds.

Or perhaps not, given that the Governor probably has his mind on other things, what with announcing that the printing presses will be whirring into action to the tune of £75bn of quantitative easing.

With today’s decision likely to dominate the domestic agenda for the next couple of days, here are 9 journalists worth following on Twitter to get your daily economic dose:

Ed Conway – Sky’s Economics Editor, @EdConwaySky

Faisal Islam – Channel 4’s Economics Editor, @faisalislam

Paul Mason – Newsnight’s Economics Editor, @paulmasonnews

Steve Hawkes – The Sun’s Business Editor, @steve_hawkes

Allister Heath – City AM’s Editor, @AllisterHeath

David Smith – The Sunday Times’ Economics Editor, @dsmitheconomics

James Mackintosh – The FT’s Investment Editor, @jmackin2

Jeremy Warner – The Telegraph’s Business Columnist, @jeremywarnerUK

Stephanie Flanders – The BBC’s Economics Editor, @BBCStephanie