Monday, January 30, 2012

Long chocolate

Chocolate © fintag

News comments:
Chocolate is the new black.

Chocolate is booming. The tonnage price for cocoa liqueur is pushing new highs and the size of chocolate bars is ever falling. London has opened up a number of top end chocolate boutiques and my understanding is obese people often have a love for this tobacco additive substance and there is a correlation.

What is staggering is the rise of fine chocolate in the USA. 10 years ago you had Hershey bars and that was about it. Today there are 30 plus brands (I made this up but it seems reasonable (wikipedia)).

And the price is going to go up even more (nestle). Child labour abuse and poor health and safety eradication will give way to more costs. The demand by the BRIC countries continues to rise. So there you go.

OK. I know you want to know what the latest Greek excuse is and all I can say is my hedgie mates want a default because default = CDS trigger event = big chocolate bars.

Today's shorts:
Ed Milliballs berates Cameron for his chocolate u-turn (bbc)

Today's longs:
Tango Chocolate (edp24)

Gossip:
Chocolate to be become the new currency of Europe.



Thursday, January 26, 2012

Lunching while Rome burns

Spots © Rich Con Artist

News comments:
At this stage of a new year we expect to see a spot bursting.

A celebrity death or misadventure, a natural disaster or an economic event to give us food for thought.

Nothing yet. Nothing but people talking and red tape and conference calls that should never have happened.

Take Einhorn. Insider dealing. They have a call and learn about something that may happen in the future. They act on it. It is deemed inside information and they get fined. Why? They had a large stake, it was obvious they were winding down their position, no need for Sherlock Holmes. No wonder faxes, ink and paper, and lunches at places in back and beyond are back in fashion.

Take Mervyn King. He hasn't much to do these days expect print more cash. Which is what he wants to do. QE = Cash = Bonuses. Bankers are going to have another bumper year of failure and bonuses. (cityam)

Take Merkel. She loves to talk. She loves to tell us the Euro is safe, the Euro is fcked. Today Greece is fcked but we know that already. Portugal is fcked. We are all fcked. (europa). HSBC is fcked (cityam).

Today's shorts:
Hedge Fund managers to be plastered onto cereal packets: "Have you seen this overpaid man?" (ftalphaville)

Transparency kills the hedgie star (cnbc)

Today's longs:
Flat tax to hit the UK very soon and about time too (telegraph)

Hedgies get the upper hand over the Greek refinancing debacle (bloomberg)

Gossip:
Grangers in Notting Hill. 202 London in Notting Hill. 90:1 Female / Male ratio. Inside trading gossip off the menu as too many distractions ...



Tuesday, January 24, 2012

Banks orgasm over ECB cash

Orgasm © fintag

News comments:
The ECB as new lender of last resort is causing us all to scratch our heads.

Risky banks can now borrow dirt cheap money with crap-for-collateral. Risky sovereign states can now sell their high yielding govt debt to their risky banks who are awash with cheap cash. Banks get a margin, and governments get to see another day. The ECB is like a drug dealer handing out below market rate drugs or high class hookers for dollar a trick rates. The banks are addicted; sovereign debt yields are falling; liquidity is restored. The ECB is buying up government junk that it is indirectly guaranteeing and so enjoying its yields.

The ECB is risk free. The responsible banks are being forced to lend overnight to the ECB because capital adequacy is turning the only tier 1 asset to ECB debt / LTRO.

This is win-win-win all round. The Euro survives, Governments survive and the banks get to orgasm on easy profits. But how long can this go on for for it is the tax payer who is funding all this? (felixsalmon)

One thing is sure. Cash=Bonuses. Just as the UK and US helped prop up the bank's bonus pools with its QE, the ECB is doing the same but in more spectacular style. No wonder bankers are expecting huge bonuses in the next 5 years.

What is very clever about this scheme is the ECB has the banks and the governments by the short and curlys. The EU has at last got full control of the European banking system and can enforce any rules it wants. So that means another winner - the regulators. Regulation means jobs means socialism means the end of capitalism.

So please explain how this can continue? Will the IMF offer even cheaper debt? Will China muscle in and grab some of this cheap debt too? Will the US banks starting shouting "trade war"? Will this be the beginning of hyper inflation? Will the ECB steal the banks profits? I wish I knew. This is all so unprecedented.

My head is scratched and now I am bald.

Today's shorts:
Siemens turns into RIM (cityam)

Will Harry Rednapp do a Diamond Back? (hedgeweek)

Today's longs:
Food is the growth stock for 2012 (cityam)

Mitt Romney enjoys capitalism (the rest of the little people suffer from incomeism) (bloomberg)

ECB looks to save Portugal (wsj)

Gossip:
ECB to become the new IMF.



Monday, January 23, 2012

Hedge Funds versus Merkozy: The Greek Fight

Greek fight © Greece

News comments:
The fight of 2012 is on.

Well it's been on and off for a few months now. In the blue corner are the hedge funds. In the red corner are Merkel and Sarkozy as team Merkozy.

The Hedge Funds have teamed up with some rogue French Banks and the Merkozy team have the eurocrats firmly behind them.

The IFF is the referee and the contest is like a trade union wage dispute. The hedgies want 100%; Merkozy are only prepared to give them 20%. Merkozy hate the hedge fund locusts and despite hating the Greeks who will benefit from a decent debt write off, wish to see the hedge funds take a smackering loss. As you know hedge funds are having a torrid time and Merkozy can sense blood.

How many hedge funds bought discounted Greek debt? That would be lots. I doubt many of them saw the skinhead haircut and the 30 year bond swap that isn't guaranteed by the EU coming either.

Winner? Well whoever wins, Greece loses.

Today's shorts:
Do any hedgies play by the rules (businessweek)

Today's longs:
UK tobin tax fudge (telegraph)

As we said they should (fintag oct2011), RIM changes course (wsj)

As we said they should (fintag jan2011), Tesco changes course (telegraph)

Gossip:
RIM to get their new dos driven blackberry device to be built in Greece.



Friday, January 20, 2012

Why isn't America censoring the greatest pirates of all? China


So if we post this image, are we too in breach of copyright?

More importantly, is this the beginning of the end of the hippy free internet we all love so much? Next it will be porn, extreme political views and the NRA...

Google's days (fintag) are truly over.

Privacy law postponed (bbc)



Google. Good days are over

Google © Google

News comments:
Google hasn't delivered. (abc).

Google is facing unprecedented threats from all angles.

Here are some:

Copyright and IP: Google search links to sites that sell illegal services and goods. If PIPA and SOPA and the EU's copyright laws kickin, it will make Google culpable for its content distribution. There is no way Google will be able to continue as is. The attacks on Youtube have been contained but taking down a video clip is easier than 57.7 million blogs and websites linking to piratebay.org. The challenge is very challenging.

Android may appear to be "open source" but with Apple et al hitting the courts for IP theft, it is possible Android could be taken out of action. Does Google want to end up funding lawyers? As Google has said its greatest threat is itself (nytimes nov2011)

Google is now of age. It is sweet sixteen and is already obese and prone to tantrums. It has too many offices, too many people, too much corporate red tape holding back innovation, and is too big (anti-trust, monopoly arrogance). It made the mistake of going public too.

Tax mitigation and avoidance is putting Google on par with Mitt Romney. Only little people (on minimum wage) pay more in percentage taxes. (amazon)

Forays into social networking like G+ are not working. Google doesn't know what its core competency is anymore. (wiki)

Google servers are contributing to global warming and they are looking to move them to Iceland and Norway. That is admirable but the business model is wrong. Client - Server cloud maybe ok for holding files, but search indices? New kids on the block are looking at free peer to peer search using all those devices that always on to be the "servers" for search. (YaCy)

Google ads are superb. Easy to set up, easy to get paid, it is brilliant. It has enabled Google to grow extremely fast because it is so cost effective. But others are catching up and like the iPhone, others are starting to do it better and cheaper. (5 alternatives).

And as for Google Wallet ... (stinks)

So where next? Buy, Sell, Hold? Ask you local equity analyst. RBS seems to have a quite a few .... (efinancialcareers)

Today's shorts:
Google best place to work in the USA (mercurynews)

Grrrr hat-tip (CO)(businessinsider)

Today's longs:
IBM and Microsoft dinosaurs show how it should be done (sky)

Gossip:
Very few Google employees use google plus.



Buffett takes our advice

Buffett © fintag

News comments:
Good to see Buffett following our advice.

Although we are not allowed to give advice we did say if we could then Tesco TESO.L would be a good buy (fintag). So we were pleased to see Buffett tucking in for some more cheap stock. (guardian)

We also mentioned after Christmas (fintag) that UK Doctor's pension funds put Bob Diamond's to shame and the media has now picked this up. Nice. (telegraph)

And yes, French zombie banks have been propped up with the blood of Greeks (fintag) and it is running out (bloomberg).

But nobody likes a show off.

Proper news to follow ...

Gossip:
Fintag is the hier apparent.



Wednesday, January 18, 2012

Goldman Sachs. RIP.

Goldman Sachs © fintag

News comments:
Goldman Sachs is a bit like the Catholic Church. Nobody really understands what goes on behind closed doors.

The hedge fund, sorry bank, has come along way. It was just another American bank in the 1980's when it was cooler and more profitable to work for Salomons or Bear Stearns and even Morgan Stanley [Ed: Really?]. Today it employs google smart people and is driven by money and not politics, unlike many of its competitors.

The chaff is continually thrown out and in 2011 many were let go in an attempt to keep the average bonus levels up. Profits may have dived 50% as Goldman provided lots of bonus provisions for itself (the shareholder comes third, the client second and the employees first). The party is over though. Recent Goldman IPOs have been failures and many ex Goldman hedge fund start ups never get off the ground. Alpha is dead and interns don't want to work there. The good days are over.

Goldman Sachs is in its last ever year. Volker will kill off Goldman Sachs and they know it which is why they are paying bonuses because these are the last.

So what happens next? Will Goldman become a partnership again? Will it leave the USA and HQ in London? Will it just turn itself into a hedge fund?

Whatever it does, it will be a shame for we all love a villain.

Today's shorts:
Hedgies force a Greek default (independent)

Goldman lawyer moves (bloomberg)

Goldman playboy gets STD (efinancialcareers)

Today's longs:
Goldman were the first to use Blackberry devices so it makes sense to help RIM out (zdnetasia)

Gossip:
Goldman Sachs to be bought out by Ocado.



Tuesday, January 17, 2012

SOPA PIPA: America eats itself





Friday, January 13, 2012

Who cares about France when Greece is ready to blow?

AAA © fintag

News comments:
Sarkozy's legacy is the turning of France into junk.

Well he had it coming. He wanted to mix with the big boys and in this election year will, as we predict, end up being a chat show host after he loses. Of course, AAA or AA doesn't mean that much and if the euro-tarp ends up costing a few bips more, who really cares? And what about Fitch who thinks France is still a good bet?

While us Brits laugh at France's inability to print euros and screams across the channel "AAA", the real drama is in Greece. A mate of mine who runs a large exposed hedge fund is in Athens refusing to take a haircut of 50%. It is like a game of poker. 50% or nothing. The reality is if the private debt holders refuse the 50% they will sue the Greek government and the EU. It is the game of the century.

Today's shorts:
Greece preps for the Drachma 2.0 (bbc)

Today's longs:
AON follows the UK's AAA (telegraph)

Gossip:
France to takeover the Netherlands for its triple A.



Tesco: Analysts asleep at the wheel

tesco © fintag

News comments:
Tesco used to be a dull ranging stock that never did much. The company was well run, always hit its targets and was on the way to becoming the next Walmart. It has been the stalwart of pension funds for years and as safe as houses.

Nearly all the equity analysts had Tesco as a buy. And why not? No need to do much research like visiting a Tesco express to see how souless and expensive the supermarket is. And why do they never stock the produce the locals need? Go to the one on Kings Street in Hammersmith. A nice middle class area and it sells the stuff used to make Subway food.

And then Tesco told the markets it got Christmas wrong (so proving my luxury is the new black blog post spot on) and the stock tanked. It is human after all.

All Investment Banks have analysts. They are an overhead and yet still get bonuses for failure. No wonder the Investment Banks are starting to sell everything off because capitalism works that way (with the helping hand of redtapelators). I have never come across a stock picker who was any good. If you are a good analyst then you should be a trader.

The UK has one of the most competitive supermarket sectors in the world and seeing Tesco fall is a great thing. We don't recommend stocks on fintag because we are not allowed to but if we did then Tesco would be a good buy. Of course you can pay for an overpaid analyst to tell you the same thing but alas they are usually wrong.

Do as Goldman Sachs do. If they say jump, run away. That is how they make money. Well sort of.

The COO of Tesco made a cool profit by selling before the announcement (inside trading or what?). He didn't need to look at any analyst report to know he saw an opportunity to make a quick buck.

I am not a great fan of senior people holding stock precisely for these reasons. Senior management should not be allowed to trade the stock for the company they work for.

Today's shorts:
Analysts are the new credit rating agencies (slow) (telegraph)

Today's longs:
The brown and orange come up the rear (yorkshirepost)

Gossip:
Burberry 1 Asda 0.



Wednesday, January 11, 2012

Luxury is the new black

Luxury © fintag

News comments:
We are all living in some bizarre dichotomy.

We hate the rich and yet we need the rich. The rich (the person whose wealth is 1 dollar more than yours) should be taxed hard and yet should be cuddled for they buy expensive things and provide jobs and opportunities.

Take the UK. We are the luxury brand of choice. From Burberry to Rolls Royce, us Brits just ooze class and bling. Despite living in times where the IMF has never been so busy (Hungry, Greece et al) the Asian way of life is pervading the west (small roomed houses and bling galore).

The West used to enjoy large houses, expensive education and aspirations of elitism. Today it no longer wants houses, gets it education from wikipedia and elitism is having a wage-slave job.

It is great to see the luxury brands are booming contrary to academic economic theory where luxury goods are the first to go in a recession (elastic) whereas necessities are the last (inelastic) like food. Obesity is out of fashion and brand labels are as strong as ever (take a look at SuperGroup (cityam))

Luxury is the new black and if you are to go long this year, make sure your portfolio has some commodities like Oil, Silver and Copper and handbags, super-cars and kitchens (have you noticed how our high streets are full of bathroom and kitchen shops? I met someone at Christmas who owns that well known one in Holland Park; he turned up for drinks in a spanking new Lambo. This time last year he was an unemployed banker)

Today's shorts:
Hedgies fight to the greek death (reuters)

Today's longs:
Sainsbury (cityam)

Supercars (bloomberg)

Flying first class (reuters)

French wine (bloomberg)

Gossip:
Today is gossip free day.



Sunday, January 8, 2012

Forget banker bashing, civil servants are the 1%ers

Civil Service © fintag

News comments:
Finance professionals (Bankers et al) are greedy, high earning people who deserved to be berated, bashed and blasted. And yet the facts show it is the civil servants who are on the gravy train.

Your average finance person is the 20th highest paid person in the UK.

Yes, 20th. Civil Servants come in 2nd and 3rd places.

A mate of mine who is a GP has a pension pot worth GBP1.5m. And he isn't alone. Civil servants are greedy scum who live off the humble tax paying banker.

Time we saw bankers occupying Whitehall.

Here is the list of median salaries / packages (with yoy changes)(its from Nov 2011):

1. Head of major organisation £114,549 +15.3%
2. Medical practitioner £82,962 +1.5%
3. Senior national government official £78,182 +3.4%
4. Aircraft pilot £74,442 +8.8%
5. Dental practitioner £60,098 (2010 figure; 2011 unavailable)
6. Finance manager/chartered secretary £59,301 +4.4%
7. Senior police officer £58,746 +3.5%
8. Air traffic controller £56,800 +9.6%
10. Business/financial broker £52,902 (2010 figure; 2011 unavailable)
11. Public service admin professional £51,090 +5.4%
12. Solicitor, lawyer, judge, coroner £48,449 2.2%
13. Research/development manager £47,895 +0.2%
14. ICT manager £47,254 +2.1%
15. Senior local government official £45,420 -12.7%
16. Hospital/health service manager £45,412 +6.0%
17. Higher education teaching professional £45,364 +0.4%
18. Marketing/sales manager £45,263 -0.5%
19. Electrical engineer £44,867 +1.2%
20. Financial institution manager £44,161 +6.5%
21. Electronics engineer £43,772 -2.9%
22. IT strategy/planning professional £43,667 -8.5%
23. Personnel/training manager £43,369 +2.8%
24. Purchasing manager £43,263 +2.8%
25. Train driver £42,350 +3.2%
26. Production/maintenance manager £41,539 +2.1%
27. Construction manager £41,375 -0.7%
28. Physicist/geologist/ meteorologist £41,177 +2.7%
29. Advertising/PR manager £41,110 +2.8%
30. Broadcasting associate professional £40,778 +1.4%
31. Mechanical engineer £40,476 +2.7%
32. Management consultant/actuary/statistician £40,199 +0.4%

Today's shorts:
RBS to start over by firing its civil servants (reuters)

Today's longs:
Hedge Fund seeding is back big time (hedgeweek)

Gossip:
Tony Blair is worthing USD25m. Now where did that come from?



Friday, January 6, 2012

The valuation time bomb

trees © fintag

News comments:
Ever tried to value a bi-lateral illiquid derivative?

Well you try and get some broker quotes for starters. You may do some theoretical modelling. You may just take a Directors' valuation. It is near impossible as their is no price discovery and no real market value.

How about valuing real estate in Spain? Or forests in China? Or long dated Greek debt?

It is a perennial problem and since Lehman many banks and private equity funds are sitting on assets that are seriously over-valued. Regulators and Auditors have turned a blind eye because there is enough gloom and doom and tax authorities like profits. Bad debt provisions have been so low. But this starting to change.

Take these recent new stories...

Today's shorts:
Lloyds and the tax payer wake up to negative equity and empty commercial property (bloomberg)

KPMG gives up valuing trees (businessweek)

KPMG berated for not being able to add up (wsj)

Irish fantasy real estate valuation (irishtimes)

Gossip:
French run IMF riddled with corrupting influences.



Thursday, January 5, 2012

Which Euro Bank is the next Lehman?

© fintag

News comments:
We all know this time next year the Euro will not exist as it does now.

What has been intriguing is what will be the trigger to bring it down?

Bets are on Greece or Italy leaving, but having hung my tail firmly between my legs over my rather exuberant claims the Euro would be dead by the end of 2011, some soul searching and analysis on the ECB financial statements (plus lots of gossip and rumour) it is clear the Euro will crash when a bank or two turn into almost dead zombies.

Take UniCredit (reuters). It is struggling like many Euro banks to adhere to higher tier 1 capital ratios in a market that doesn't want bank debt and where bank's are being forced to asset strip themselves. Most bank's are depositing everything overnight at the ECB and just like Lehman there is a battle between PR and spin and reality.

UniCredit could be the next Lehman. Or was that Dexia?

Banks that are on the cusp are many. RBS, Credit Agricole, Alpha Bank and even supposedly safe Santander.

When Lehman went down it was pretty clear it was bust. In this Euro game of roulette, it is less clear because the banks and sovereign states are reliant on each other. Sovereign banks buying its own sovereign debt is a pyramid scheme that Madoff would be proud of.

It is in nobody's interest for a Euro Lehman to happen but it is well known many Euro banks are zombies. They died a while back and are surviving on fabricated assets.

SocGen, BNP, Bank of Greece, Bank of Ireland, Commerzbank. All potential Lehmans currently on probation.

Today's shorts:
RBS to cull all its staff and turn itself virtual (telegraph)

SocGen culls too (reuters)

Today's longs:

France to defy gloomsters (marketwatch)

Gossip:
Europe to outlaw banking.



Wednesday, January 4, 2012

The death of the shopping mall

Westfield © fintag

News comments:
Retail figures are coming out.

The last time I was in a London shopping mall, Westfield, it was noticeable that there were no shoppers between 18 and 35. This generation cannot be bothered with the stress to shop and pay premium prices for products they can buy on-line. Those under 18 go to hang out and those over 35 are still part of the shopping generation and go to keep warm.

The shopping mall business model is dead. So it is with bemusement that a huge center in Stratford near the Olympics has opened.

Today's shorts:
UK shops (cityam)

Today's longs:
World's most boring man to race Obama (marketwatch)

Gossip:
Amazon river to be rerouted into Oxford Street.

Finbar Taggit's delayed knighthood to be announced shortly (that is, he has turned it down).