Wednesday, August 29, 2012

Nice currency. Shame about its people.

run a mile © fintag

News comments:
America is the new pariah.

Thanks to Obama, Europeans have been told not to "touch" an American. Banks, insurers and funds are turning away and booting to touch anyone who is or maybe an American. Americans are not wanted because they carry a disease called FATCA that can only be treated with a trip to a Doctor called IRS.

Not only are Europeans (in fact every country in the world) frightened of Americans but many institutions do not want to trade in USD either. As you know movements of USD have to pass through the FBI in New York City where every dollar coming and going is checked over. It may take a few seconds to move cash around the world but moving USDs takes days as the FBI are in no hurry to sniff for money laundering.

A mate who works at Lloyds underwriters no longer deals in USD and runs a mile if he hears an American accent. He insures against earthquakes and 9/11 events and his premiums are in anything but the USD.

Not that he can rely on the Euro, which nearly became the reserve currency of the world, and all his recent contracts have clauses about what happens when the Euro collapses. This is obviously an issue because if it's no to USD and EUR, then what is it yes to?

As much as the EUcrats want to save Real Madrid (guardian) and the olive groves of Sicily, the Euro is dying painfully and despite the USD looking like the new JPY carry trade with all its debt but active printing presses, the USD is back to being the world's reserve currency.

As long as it never touches America itself of course, the USD is the preferred currency. So the contracts use the USD as the reference currency but the cash is delivered in GBP. USD is like the new virtual gold standard.

Yes to USD and no to its people.

Today's shorts:
American people (youtube)

Apple is a rich bully (reuters)

Greedy man throws his train set out of his pram (cityam)

Today's longs:
GOP GOLD (marketwatch)

Gossip:
Spanish speakers in America to replace USD with the Peseta.

The detail:
Reporting by Foreign Financial Institutions

FATCA will also require foreign financial institutions (“FFIs”) to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. To properly comply with these new reporting requirements, an FFI will have to enter into a special agreement with the IRS by June 30, 2013. Under this agreement a “participating” FFI will be obligated to:

(1) undertake certain identification and due diligence procedures with respect to its accountholders;

(2) report annually to the IRS on its accountholders who are U.S. persons or foreign entities with substantial U.S. ownership; and

(3) withhold and pay over to the IRS 30-percent of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income, made to (a) non-participating FFIs, (b) individual accountholders failing to provide sufficient information to determine whether or not they are a U.S. person, or (c) foreign entity accountholders failing to provide sufficient information about the identity of its substantial U.S. owners.






Wednesday, August 22, 2012

Caught with trousers down

caught with trousers down © tmz


News comments:
The world is falling apart and those in control have been caught with their trousers down:

China is turning into Japan (telegraph).

Europe still believes it can save the Euro with words and agreements (nyp).

The UK said it was cutting public debt when it was increasing it. (debtbombshell).

The US rally is all huff and puff (fa).

The USA's fiscal cliff will have more impact on the world's economy than Greece exiting the Euro. (washingtonpost).

Four Floors Whores (eveningstandard).

However, the really good news is hedge funds are as safe as houses (fsa/telegraph). So AIFM which aims to curtail hedge funds is a complete waste of time. But in this new world of CYA, red tape is the new way of doing things and the chances of this regulation being scrapped is as slim as Prince Harry announcing he is Gay.

Red tape and business prevention is here to stay in Europe and it is all this tweaking and consensus that will bring the "big one" later this year. Can't you feel it? A crash is in the air.

So what to do? Well if those who lead read their history books, they should realise growth comes from confidence. So give us some confidence. In the mean time, I shall be saving up for that trip to Mars (cnn) to start over. Fancy being my Eve?

Today's shorts:
Everything Everywhere (the register)

Today's longs:
Everything Everywhere (itproportal)

Gossip:
Being useless is the new PhD.



Monday, August 20, 2012

Greece is like Air Berlin

not ryanair © fintag

News comments:
Having just flown back from France after a few weeks of sun and wine, it was while slumming it on RyanAir it became clear that Europe is paralleling the airline industry.

Moving people via plane is pretty easy. The airports exist, leasing aircraft is simple and finding staff a doddle too. Entry requires access to capital and some competitive spirit. The industry has created wealth (Virgin to EasyJet) and yet in true capitalistic style seen the mighty TWA, AA, JAL, and numerous others to fall too; often as a result of nothing but poor management.

In Europe we learn Air Berlin is struggling to survive and state owned Malta Airways is also facing the harsh realities of competition. Bloated with aging people and pensions and leaders who are not up to the job, the parallels are strikingly like that of Europe.

RyanAir is truly a leader in this space. It doesn't need state bailouts and has one the highest ontime flight programmes and fastest turnaround of any airline. The people hate it but still use it. Countries like Italy and Spain should take note. Unlike Emirates which is a money is no object airline, most countries cannot even afford to service their own sovereign debt and the quality of its airlines shows the character of the country. Ireland maybe dead but it is coming back faster than Iceland.

We note that RyanAir wants to buy an airport so it can control the full supply chain. Will its products become even cheaper or will it get bloated like BA and lose sight of what its purpose is? I don't thing so but it got me to thinking which country in the EU is like RyanAir? Mmmmm... probably none of them.

Today's shorts:
Air Berlin (despeigel)

Air Malta (maltatoday)

American Airlines (wp)

Today's longs:
RyanAir to buy Stansted (guardian)

RyanAir looking to buy (independent.ie)

Gossip:
Greece to turn itself into an airport.



Thursday, August 9, 2012

Long Supertuscan: Short Superdry

super © fintag

News comments:
With so much whining in the world, it is time to talk about proper wining.

Wine.

Now not all is well in the wine world. The Chinese who have in last few years hoovered up the first and second growths from those well known label vineyards appear to have lost their appetite and prices are falling faster than Facebook (or soon to be Manchester United).

However, some of the cheap and cheerful stuff like the Clos Fourtet '09 and Calon Segur is slaughtering the Laffites and the Latours which like the Carruades are down 20% ytd versus a healthy 14% uplift for the 100 points plonk. Of course those in the know are not touching the French stuff because the Tuscans like Omellaia are so much more profitable despite tasting like a flat macdonalds coca cola. Italy is the new France.

I am currently in Bordeaux enjoying the 2009s and with the bad weather of 2012 not putting down any orders. Odd years tend to be the best anyway. The falling Euro is making life easier but prices are still way too high although the 5 year Liv-Ex 50 is nearing 30% against the S&P's -10%. I so much prefer grapes to Apples anyway.

So if we are going long supertuscans what are we shorting?

Well Manchester United has to be the joke IPO (you get no dividends or voting rights!) but Superdry is still a stock I just don't get. Consumers are fickle and its passed its best buy date.

Not that I am allowed to make recommendations so best ignore that and enjoy some wine instead.

Today's shorts:
Glazier (independent)

Italy and Hitler wines (dailymail)

Supertuscan ready to be engulfed with lava (reuters)

What do I know about retail? ((femalefirst))

Today's longs:
Spain's begging bowl is out (reuters)

Gossip:
Superdry America to build pipeline to the north pole for water.



Wednesday, August 8, 2012

Mervyn "Don't talk to me about life" King is worth 0%

Marvin King © fintag

News comments:
As a nipper I had the pleasure of dealing with the late Eddie George, the predecessor of the current Guv at the Bank of England.

George looked like a boxer. He was hard but fair. He endured some harsh economic times during his career and, as I have mentioned before, was with him saving the UK banking system in the early 1990s [Ed: You were an intern, if I recall correctly, who cleared out his ashtrays]. Behind closed doors of course. He was a doer and he did with limited powers.

King, who has morphed from the Fastest Milkman in the West to Marvin from the Hitchhikers Guide to the Galaxy, has unfortunately been a total disaster. What is the point of having him around? He likes to blame after the event, is more volatile with his predictions than Facebooks stock price, and refuses to listen when he should have listened (2008 and all that). He is the ultimate civil servant who should have been fired after letting RBS and Northern Rock crash and burn. The Bank of England is like and old boys club that looks down on the coal face that is Canary Wharf, as if bankers were still barrow boys in the East End (which in most cases is still the case, except it includes women now.)

King's role is to manage the money supply through interest rates and some money printing. That is it. Two simple things to do. So why should we take any notice of his gloom and doom growth forecasts? He acts like a second rate research analyst with dodgy data and a large audience [Ed: Sounds like you then]. (guardian). He loves thinking he is control when he is actually completely out of control.

His recent speech about his job being like that of a Team GB sports coach is quite frankly ludicrous. I want to hear ideas not opinions and analogies; see him lobbying the government and getting it to slash taxes and provide incentives for wealth creation; have him explain why inflation is still so high and why he cares more about the banks than pensioners who are living off pizza crusts; have him stop blaming the euro crisis and technocrats and the FSA and deliver something of value; perhaps he should stop having any media exposure at all. You know what I mean.

Given Boris Johnson will not stand as UK PM (independent) can I suggest he takes on the role of Bank of England governor? Even he could do a better job.

Today's shorts:
Bernanke follows King (bloomberg)

Super Mario will soon morph into King (marketwatch)

Today's longs:
StanChart starts WW3 (reuters)

Gossip:
Mervyn King's Mansion House drinks to be spiked with bath salts (latimes)



Tuesday, August 7, 2012

StanChart. Where was the FSA?

money cleaners © yahoo

News comments:
For many years, Citi was the choice of money launderers because it was like an octopus with branches all over the world.

Even this year it was reprimanded for having poor controls (ft) but now there is a new kid on the block. Standard who?

Many sources state 2-5% of the world's GDP is dirty money but life is certainly getting more difficult for those wanting to move large chunks of illegally obtained money around. With sophisticated monitoring tools and eager-to-fine regulators and bank bashers seeking blood, it is no wonder suitcases are back in fashion as well as prepaid Mastercards, back to back loans and IOUs.

The "NO NAME GIVEN" on various transactions at Standard Chartered was a signal that something wasn't right and a bank with decent returns that had avoided the worst of the "too big too fail, give me a bail out for bonuses" turns out to be controlled by the Iranians. Nice.

Behind all this of course is politics. Is all Iranian money embargoed and sanctioned? Are no countries allowed to trade with Iran? I note Iran has its own anti money laundering policies (wiki) but this is not enough and the USA is effectively at war with Iran and is trying many tactics from cyber warfare to bullying Chinese banks to close down offices in Tehran. The attack on a bank that dares trade with Iran is another way to damn those terrorists.

The USA, which always wins by the way, is behind a lot of the current shifts in focus. Following the humiliation of American Bobby Geezer being made to look pathetic over the libor fixing scandal (its gone a bit quiet don't you think? JP Morgan? DB? ML? Where are their fines?), the London Whale debacle, London's gold medal in money laundering at HSBC, the American CRAs attacking the Euro to avoid it ever being the world's reserve currency again, the Ben Bernanke printing show, the world's balance is become more unbalanced.

Now I don't know much about StanChart except it is a bit odd. It is made up of lots of banks and has offices in the awful Barbican. It is the sort of place you would work at if you couldn't get a job elsewhere. Sleepy and dull it appears not.

StanChart is a FTSE100 company and headquartered in London (wiki) so where were the FSA or Bank of England on all of this? At the Olympics it seems.

Today's shorts:
USD250BN hidden (deccanchronicle)

Today's longs:
HuffPost has an answer (huffpost)

Suitcases (antler)

Gossip:
ECB to be caught money laundering.