Shocks & Stares » Investment Banking http://blogs.hillandknowlton.com/shocksandstares H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-23/ http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-23/#comments Fri, 21 Oct 2011 13:22:39 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=370 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.

Or were they? As some media outlets quickly noted, the majority of MS’ profits for the quarter were a result of the company reducing the value of the debt it holds. Once the benefits of this accounting manoeuvre were removed, the results looked far less impressive - Iain Dey at the Sunday Times provided one of the best summaries of the ‘revised’ picture.

He wasn’t the only journalist somewhat peeved at the sleight of hand either:

BEHIND CLOSED DOORS…..A “dark pool” may sound like a feature of an exotic health spa and for all we know, it could well be. The increasing importance of dark pools in financial markets however was apparent this week.

In simple terms these are markets behind closed doors that allow institutional investors to trade with one another outside public exchanges like the London Stock Exchange. This week we heard that investors are increasingly using dark pools to access and trade privately owned stock in companies like Facebook before they float.

The emergence of dark pools was one consequence of the European Commission’s MiFID regulation which was in part designed to break up the monopoly of public exchanges. Now however the Commission is looking to take back control of its creation amid concerns about their lack of transparency. Complicated stuff, but as always, the FT [article here] explains developments in simple terms and their graphic below illustrates the overarching trend.

PROOF THAT PLAN A COULD BE OK?…..In amongst the growing concern about the eurozone, and increasing focus on the OccupyLondon movement, the ONS announced on Friday that public borrowing for September was below expectations. In addition, borrowing in August was actually lower than first thought.

Does this mean that the Chancellor’s refusal to adopt anything less his Plan A might be starting to bear fruit? Quite possibly, though as the BBC’s Hugh Pym pointed out, much depends on UK growth in the next few months. The Chancellor hasn’t been proved right yet by any means, but at least he now has a proof point to attack his critics with.

GOOD WEEK/BAD WEEK…..Leaving aside the obvious winners and losers over the last 7 days, it was a good week for the economist and Sunday Times columnist, Irwin Stelzer, who picked up the ‘economics commentator of the year’ award at the media industry’s Editorial Intelligence awards on Thursday.

Or at least he would have picked it up if not for a small error by the normally unflappable Robert Peston who is this week’s ‘bad week’ winner. Regrettably for the BBC’s Business Editor, he fluffed his lines on stage by announcing the wrong winner. And thus, the FT’s Martin Wolf walked on stage to collect the prize, only to have it quietly taken away from him 10 minutes later. If you want to read more on this little tale, Roy Greenslade provides a full commentary here. Mr Peston’s stablemate, Rory Cellan-Jones also clearly enjoyed the incident, as well as his colleague’s fashion sense.


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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-22/ http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-22/#comments Fri, 14 Oct 2011 14:48:34 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=354 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.

These are tricky issues for Goldman, but the real concern for them is their bottom line performance. Ahead of their quarterly results next week, some analysts are suggesting the bank may be headed for an (almost) unprecedented loss. To put this into context, the bank has made precisely one quarterly loss in the past 12 years – right in the heart of the financial crisis. To be fair, it’s not just Goldman. Other investment banks are struggling as well. But when the leader of the pack is looking down at their shoes, you know something is definitely up.

IT’S OH SO QUIET…Shhhhh…..It’s not been a great week for Blackberry users. The company avoided the Friday Fiver’s Bad Week slot but owing to a loose wire or something of that ilk, services across the globe went down and messages piled up in the virtual post-room.

As Alice Ross of the FT observed on Twitter, the business community did not know what to do with themselves. People were forced to talk to each other and instead of shuffling head down, thumb scrolling their way on to the tube, take in their surroundings. Email can become fatiguing and we’re sure this week’s enforced rest will not have done anyone any long-term harm.

APPS FOR FINANCE…..The tweet below caught our eye this week from Hargreaves Lansdowne’s Tom McPhail, signalling an interesting development in the way that people manage their investments.

GOOD WEEK/BAD WEEK…..It remains pretty hard to find people or companies enjoying good weeks at the moment, but the FT’s Claer Barrett managed to find two on Friday. As she noted, both Harrod’s and Poundland posted strong trading results this week. Regardless of which end of the retail spectrum you’re at, the message is clear – if you’re a market leader, there is still room for growth. It’s mainly those in the chasing pack that are struggling at present.

As for bad weeks, Goldman above qualifies for one definitely, but we’re plumping for BNP Paribas. It’s tough enough being an investment bank at present anyway. But what you really don’t need to add to your woes is one of Germany’s leading business newspapers losing its rag with you and publishing a quite unique interview, minus any of the words uttered by the bank’s chief executive (you can see the worded version here). PR’s a tough game sometimes….

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