Thursday, December 27, 2012

2013: More of the same

time © god

News comments:
Having avoided the end of the world, there are 2 questions for 2013:

1, When RIM goes bust, what should I use instead of a Blackberry?

2, What shall I do with my GBP (Great British Peanuts)?

The answer to the RIM problem will play itself out I am sure.

The investment answer is an altogether more perplexing issue. Here are some ideas:

The EUR. Well my great euro short is still in place and with rates likely to go up next year, Greece will exit. The France-Germany relationship is bust and the debt cloud will once more blow up. However, those techno crats are canny at keeping their jobs and printing presses are an option they will use when the ECB starts to run the show so the EU zone may just plod along causing grief. As you know I now live in France for much of the year and have a vested interested in seeing the EUR collapse.

The USD. Thanks to shale gas, that never die die American attitude, and the no issue end of the world fiscal cliff moral panic, the USD is my favourite destination. Growth eats debt and pays tax and the US has this. The people maybe in turmoil but the huge weight of money just makes this the number 1 currency.

China. Still don't get it. Trade wars will reduce China to empty cities and minimum wage peasants and trade unions and red tape making it an expensive place to exploit.

The JPY. Safe as houses built on foundations of sand. A sure bet.

Equities. Time to take the long view. Buy and hold with a 2 year horizon. Whereas you all love high frequency curve riding, the exchanges will soon be putting a stop to it. Mark my words.

Fixed Income. There is this odd belief that bonds are safe and those discredited price setting rating agencies know what they are doing. Much is junk but with low rates, default is low. Inflation is being held back by the banks who cannot lend but when they do, inflation will be the order of the decade and rates will go on up and up.

London Prime. No bubble here. London is the best city in the world and unless it floods it will continue to be the bond street of real estate. Rental yields are non existent but capital appreciation will continue if at a more modest pace.

Technology. Long Google Short Apple. Data is king. A white aluminium brick in the pocket versus a Samsung chip behind the ear. A no brainer.

Commodities. Volatile but more roulette than black jack.

And that is it. FX is the key trading strategy for 2013.

Today's shorts:
Fiscally dull (reuters)

Today's longs:
Taxing the islands (reuters)

Gold 2012 (resourcespots)

More celebs to die in 2013.

Thursday, December 20, 2012

Never trust a bank with initials

losers © fintag

News comments:
Most ex bankers have stories to tell about colleagues going that extra mile.

Buy me a pint and I will tell you about the head of trading at my old American bank being arrested on the trading floor and an email being sent around telling us he was mentally ill and was being "helped". A few days later it turned out he was moving markets to get his baskets into the money...

Of course much of this was done before phones were recorded and emails were believed to be private conversations. The regulators are having a field day in this facebook posting frenzy and some of the extraordinary deceits are mind blowing. Take UBS. The Useless Bank of Switzerland. The news just keeps on getting worse. This bank has whole handledly destroyed the Swiss reputation for secrecy. If you want the world and his dog to know about your finances, open an account at UBS.

Firstly it was hammered by sub prime. Then madoff. Then toothpastegate. Then a rogue trader. Now its libor fixing. Barclays may have been a bit over zealous but UBS has acted like the kid in the gang that takes the petty crime into serious unforgiving nastiness.

And who suffers? The poor ol' stockholder who just keeps on giving and throwing away dividend after dividend because the UBS management, Enron style, had no idea what its employees were up to.

The sad thing is there are many who got away with it. They are living in large houses in Holland Park and the Hamptons, showering everyday in unused dollars. Like slave owners who hope their past will be forgiven or forgotten but with the threat of archived emails becoming unarchived, those who grabbed and run will forever be waiting for the knock on the door.

But you know that. What it does highlight though is Investment Banking is no longer fun. A few weeks ago a heap of graduates were dumped on the street (reuters) because they were there at the wrong time. All those internships, firsts, masters and ass licking, all for nothing. Careers barely started; no wonder banking is no longer first choice for the young.

UBS maybe turning a corner though. The bond bubble is ready to burst, so say the experts (telegraph) and they don't want more reasons for the regulators to fine them for incompetence, mis-selling or being Swiss.

The facts tell another story. Take a look at the FSA fines league table (fsa). And there you go. Coming in twice in the top five is ....UBS. The way it is going, UBS will end up just having a bunch of safety deposit boxes; which is how the business originally started. Union des coffres-forts.

Today's shorts:
Tom Hayes, 33 (bloomberg)

Bernanke is a hedge funds best friend (bloomberg)

Today's longs:
Greece: Winners and losers (marketwatch)

Banker takes yes for an answer (sfgate).

Switzerland to rename itself to "Giving Up The Golden Ticket".

Monday, December 17, 2012

Google: I made a mistake

google © google

News comments:
This weekend I met an innovator who works as a consultant to Google.

Of course I told him Google was a dead business (fintag) but he told me things that really did turn my opinion around. Google is possibly the most exciting company since the invention of sliced bread.

You see Google collects data. A dull business but one that has serious benefits in the arena of health care. As privacy becomes something of a historical event, and the hypocratic oath a nonsense where facebook fills up with groups of people proud they have hepatitis or diabetes or bunions, the masses are happily giving away their medical records. A sort of open-source data set that Pharmas dream of in their ever increasing attempts to replace their ending patents with new revenues, it is clear that these companies will become ever more reliant on the huge samples of data that only Google can offer.

Google is right there ready to collect this data; bio statisticians are ready to find correlations and causations; android app developers are ready to launch apps that can measure your blood pressure from analysing your eyes and tell you when you will get dementia. (imedicalapps) As doctors become history, Google will not only be the doctor of choice, it will tell you what is wrong with you, prescribe remedies (they ones it wants to) and pass this information onto your life assurance company who will cancel your policy.

Insurance companies are demanding information on mortality and likelihood of illness and disease and it will be Google who will provide this information. Not sure on the ethics but I am a convert. It will happen and Google will become the most powerful company on the planet. Would you rely on a Pharma drug that has been tested on rats and a few hundred people or have Google tell you 300 million people have your condition because they live within 100 meters on a Macdonalds?

Data is king and those who have it will control pretty much everything. Up Google! I am sorry I doubted your business.

Today's shorts:
I mean what does Apple actually do? (telegraph)

End of the world is nigh (fintag)

We were wrong (fintag)

Madoff was Madoff'd (bloomberg)

Today's longs:
Google says goodbye to feuds (guardian)

HMRC love and peace (telegraph)

Useless bank ready to pay fine for being useless (reuters)

Carney won't last til end of 2013.

Friday, December 14, 2012

The Financial Strangulation Authority

fcuker © fintag

News comments:
Feeling strangely humbug, it is time to give the FSA some grief before it rebrands next year.

The news is full of red tape killing off the UK's only big private employer (the City) and the FSA is going over board. FT Adviser have counted the pages of the FSA's 2012 written documents to nearly 6000 pages. In one year. That is way too much. None of us can grasp the tax red tape let alone more words on how to do things and how not to do things in finance and it justs mean we shall all be in breach all of the time. (ftadviser)

The unregulated crooks of course just don't bother although it is interesting to note Putin's recent announcement's that assets must no longer be allowed to leave Russia (nearly a USD100bn this year alone). (bloomberg).

The most worrying aspect of the FSA is it is becoming the gatekeeper to the City and inadvertently setting up a closed shop, a trade union of people it wants in. The berating of Mr HBOS is of course justified but why did it take them so long? (telegraph)

The worst failing is why did it take the Americans who are supposed to be pretty poor at regulation, spot HSBC's money laundering issues ahead of the "asleep at the wheel" FSA who have suddenly woken up (fsa)? (bbc). Of course we pointed this out their sleepiness regarding Standard Chartered (fintag) a while back and it seems even the Libor rigging was spotted by the SEC first.

And why do the FSA keep publishing shorting tips? (fsa excel)

It is good to see the FSA tackling the crooks (banker banged) (black is the new white) though, and yes they do take a long time to be prosecuted but beyond that the FSA is just strangling everything financial. It has gone from sleeping sickness to steroid induced marathon running.

Today's shorts:
See above

Today's longs:
Queen gets in on the act and kicks the FSA (insuranceage)

FCA logo revealed (fintag)

Fintag close to getting a non exec director role at the FCA.

Tuesday, December 11, 2012

London's Newham Council leading the pack

food bank © fintag

News comments:
Slightly off piste but its going to impact something and someone.

As is being reported, London is the asset dump of the world. If you have cash, buy some London property, lock it up and come back in a few years and sell it for multiples. The impact has been huge. Horrible semi detached houses in out of the way Chiswick sell for USD10m and bedsits off Kensington High Street once frequented by out of work actors sell for USD2000 a square foot.

The locals are being displaced. Not only displaced but being forced into renting.

Lots of pension cash is going into buy to lets and groups of displaced and homeless people are living together "friends" style. This is normal except under the Housing Act 2004, two different blood relatives and 3 or more people constitute a HMO (High Multiple Occupancy) and there are rules. Its a bit vague as to whether these properties need to be licensed but Newham Council is the first in the country to license ALL rental properties.

They have hired a big team because licenses means more work for health and safety inspectors and hard earned cash from the landlords who have to register. Landlords will have to install smoke alarms, carpets that cannot fray and enjoyable living spaces.

Other councils are watching. By the end of next year all houses will be licensed. HMRC will be pushing this through. Rents will be forced upwards and people squeezed even more.

Upshot? You tell me.

Today's shorts:
UK to be junk status very soon (bloomberg)

USA to get its AAA back (cnn)

UK sells its soul (telegraph)

Today's longs:
Corn, corn, corn (bloomberg)

Long tents, bridges and sleeping bags. Short space, freedom and squatting.

Thursday, December 6, 2012

The UK is the next tax haven

hmrc © confused

News comments:
Last week Apple was like Gold, the UK Conservative party a force for capitalism and my childhood TV presenters were beacons of virtue.

This week Apple is just another tech stock, the BBC is a home for the seriously disturbed and the UK Conservative party is more Stalin than Stalin.

Us Brits are learning what it is like to have been brought up in a communist country. Everywhere we turn, we are guilty until proven innocent. We learn from Boy George Osborne's Autumn statement those of us who have created wealth are to be investigated thoroughly for tax evasion and avoidance.

Dragons Den, the Apprentice, aspiration and making the world a better place for the next generation are in tatters. The UK is heading towards the sort of anarchy Greece is enduring. (bloomberg)

Thankfully I rent, drive a 15 year old car and have a dual personality.

Australia has got it right though; as a country we all want to live in, its Government is asking the wealthy to buy a passport. Seems like a good idea. (telegraph)

But while we all fret over the impending "guilty until proven expensively innocent" by HMRC, nobody has noted that the UK is becoming a tax haven. Boy George is slashing corporation tax to 20% and less with capital allowances and other freebies (hr). Compare that to the hefty 40% the US has to pay or the 30ish% EU countries tend to like coughing up. So whilst I and my mates are whipped with electric cable for hedge fund crimes, the rest of the world can set up UK subsidiaries and pay some tax at lowish rates to help Starbucks et al avoid the continuing nasty PR headlines. Nice.

Today's shorts:
HMRC appeal against Rangers (dailyrecord)

HMRC storms Jersey and kills old people (citywire)

Another BBC man arrested (independent)

Today's longs:
Citi's Christmas Present (investorplace)

Apple turns rotten (reuters)

People with manicured hands to be jailed for not doing a fair days work.

Monday, December 3, 2012

Starbucks to launch fairtax coffee

starturn © fintag

News comments:
Starbucks has decided to tweak its management admin intellectual property fees and determine itself how much tax to pay in the UK. Isn't that a "fair" thing to do? Whatever "fair" means.

Fair - "Without cheating or trying to achieve unjust advantage: he played fair". Have Starbucks cheated? From a tax and legal point of view, no. From a decent cup of coffee, then yes.

But if only we could all "tweak" our net incomes and decide what tax to pay, wouldn't life be better? Well actually many of us already do. Hedge funds do it. Supermarkets do it. Energy companies do it. You probably do it too. When you buy a book you can decide to buy it on the Kindle and pay some VAT or you buy the paper version and pay no tax. Yep, this sort of ludicrous anomaly is why anyone with a brain can find a way to determine the tax they want to pay.

We learn two thirds of those earning a million left the country when the rate went to 50% (although reading the facts its not quite that simple). Laffer 1 Socialists 0. (telegraph)

With the UK and other countries like Italy trying to collect evaded taxes from fashionistas D&G when they sold their company at a low sale valuation to a company in the EU (Isn't this allowable as part of the Treaty of Rome?), we are living in a world where those in power are trying to pretend we live in the 1950s.

Alas, globalization is great tax leveller. With cheap travel and access to legislation at one's fingertips, Starbucks is just doing what every other company does. The UK government has procured huge contracts to the likes of IBM and Accenture who are paid UK tax and yet seem to pay no tax on their profits in the UK.

Problem is governments are helpless. Corporations run the show. The only way to collect more tax is to lower taxes so we don't mind paying. (economist). Chances of this happening in the West are pretty slim it seems.

Today's shorts:
Starbucks launches new fairtax coffee (aljazeera)

Obama to introduce 110% tax on Simon Cowell (foxnews)

Dolce & Gabbana get caught in Luxembourg trap (telegraph)

Today's longs:
Big bullies bully bullington boys (bbc)

Italian police raid Google (reuters)

eBay to introduce voluntary tax donations on sale items.