Posts Tagged ‘Ed Balls’

Friday Fiver

posted by Edward Jones

1. In a late breaking development, FSA regulatory chief Hector Sants announced his resignation from the soon to be disbanded organisation. It’s an unfortunate end to a week when the FSA successfully stung another trader for insider trading. Where next for Hector? Some are already suggesting a high profile role in industry awaits.                                                                                                                                                                                                                                              

2. Budget fever grew nicely, with more leaks from Treasury than there are hangers-on at an Only Way is Essex party. In no particular order, scrapping pensions tax relief, scrapping the 50p tax rate, issuing absurdly long-dated bonds, tax breaks for the TV and film industry and raising the income tax threshold towards £10,000.

3. Following on from point number one, it seems insider trading is a crime, but one that is only punishable by removing half a bonus. Then again, based on this, the key to insider trading really is as simple as playing a popular after-dinner game with your client over the (recorded) landline at your desk.

4. Hell of a week for Tesco losing its UK boss and telling its employees they’ll have to work two years longer before they retire – on the latter they’re to be applauded for addressing the issue sooner rather than later, many more are likely to follow.

5.  Fitch joined Moody’s this week to put the UK economy on a negative outlook threatening the AAA rating. Some have said it’s a gift for George Osbourne before the budget as it will set the tone for continued austerity. Indeed the agencies have been clear that any deviation from austerity would be more disconcerting. Ed Balls’ line however, that you should never set policy by the credit ratings agencies might just get some traction, particularly given the criticisms they face.

Rating Rhetoric

This post is by Marie Cairney, an Associate Director in our Financial and Professional Services team:

Only a few years ago rating agencies were being lambasted by investors, financial institutions and governments alike for their role in the unholy financial mess of 2007-2009. Prior to the crisis, trust in the Big Three agencies ratings on corporates, financial institutions and mortgage-related securities was high. This created a world where investment decisions were more or less made based on a couple of letters of the alphabet. Credit crunch finger-pointing blamed institutionalised ‘bad calls’ on the part of rating agencies as a major factor precipitating the crash. Blaming someone else for allowing you to do something that you knew was inherently stupid never looks good but a lack of transparency and competition in the ratings industry made the agencies a valuable commodity in the scapegoat market and let’s face it, they did get it wrong even if it was along with everybody else.

Ratings agencies assigned 'AAA' designations to exotic securities pre-2007, which led to a bubble of investor confidence in these products (Image: CNBC)

Fast forward five years and rating agencies are still here and still apparently creating mayhem; this time in the sovereign debt markets. Perhaps determined not to get it wrong again, they are all over Eurozone and US deficits and debt. Instead of building faux-investor confidence though, they are, according to beleaguered country governments, wrecking it. Damned if you do, damned if you don’t one might think.  “It wasn’t me, it was them” seems to have been replaced by “It’s not fair” as the key criticism of rating agencies in the global financial playground, with successive Prime Ministers, Presidents, and Chancellors publicly livid with their new grades.

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Friday Fiver

posted by Edward Jones

For this week’s festive fill of Friday fun from the FPS team, sorry, I’ll stop with the Fs now. This week’s 5r below…

UK goes alone over Europe

Picture: BBC

It looks like the Prime Minister, David Cameron, has bowed to domestic pressure at the expense of international, or at least European influence. The history of Europe and the Conservative party looms large over his decision, but it does appear to represent an element of weakness in his leadership which wasn’t there before. The PM’s detractors are getting increasingly confident, backbench MPs were particularly vocal in PMQs this week, and one commentator even questioned what the odds might be on all party leaders being in present position by the time of the next election; at the moment it feels like an appealing bet. At least Cameron can take heart in Labour’s travails which it seems, according to the latest opinion polls, are getting worse.   

Christmas on the High Street

Every year it seems to get later. Logically you’d think that the busiest day on the high street would be mid-December, to allow time to wrap gifts and because people are keen to avoid the last minute dash.

Guess the road...

In reality, the busiest shopping periods over the past few years have been shifting towards the 22nd, 23rd or even 24th Dec as our client Visa showed last year, with 23 December being the peak. Christmas arouses the best of our consumerism, but even that has finally been dampened by high inflation and low or no wage growth. Why is this? Firstly, there’s the economic situation. Secondly, is the knock on effect of this dampening – retailers have to work extra hard to get us into shops. Discounting is the most effective way to do this but this presents a problem – discount too soon and your margins shrink. With big stock bills and rent to pay, its hard to afford that for long. So begins a game of poker between retailer and customer – the retailer always blinks first, it’s just a question of when.

It can’t be! Some good news…

In a rebuff to Dr Doom, the UK’s export market is apparently staging a come back. According to ONS statistics published today the value of UK’s exports have hit a record high and we’ve been importing less, meaning a narrowing trade deficit. Chemicals, medical products, and telecoms equipment performed particularly strongly in what will be seen as a boost to the Government, UKTI and the Department for Business who are banging the drum on this increasingly loudly. In last week’s Autumn statement the Government allocated £10 million to help mid-size British businesses export and £35 million to double, from 25,000 to 50,000, the number of SMEs that UKTI supports each year.  Analysts have cautiously welcomed the news, but the Government will be delighted.

There’s an app for that

You may have noticed, but the Fiver team are rather fond of the FT. On Tuesday everybody’s favourite pink paper launched an app for Android, which will replace the slightly clunky web browser version. We’ll await the Apple version with anticipation. If anyone has got round to downloading the new app, we’d be interested to hear what you think.

Osborne and Balls get in the Festive spirit

George Osborne and Ed Balls

Enough said.