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HFA Emerging Manager Perspectives Symposium – New York

When:

April 26^th, 2012

4:30pm-5:00pm - Registration

5:00pm-5:30pm - Keynote Speaker

5:30pm-6:45pm - Panel Discussion

6:45pm-7:45pm - Cocktails

Where:

Herrick, Feinstein LLP

2 Park Avenue

(Between 32^nd and 33^rd Streets)

New York, NY 10016

If Europe was a football team – it would be Glasgow Rangers…

Bill Blain’s Morning Porridge – March 29 2012

By Bill Blain, senior director, special situations, Newedge (as seen on TV)

T: +44 207 676 8615; Mobile: +44 777 088 1033; E: [email protected]

This market is very news-sensitive. All looking a tad red this morning in the wake of poor US sentiment. Apparently the EU blundership is going to agree a compromise €940bn bailout fund – good for a year or so. Yawn.. Unconvinced.

There is fair amount of data with weaker UK housing prices, German labour and EC economic indicators – none were likely to surprise, but all will be watched for directional signals. Italy auction of 17s and 22s may get our attention for a moment or two…

A modest decline in German unemployment trends – hinting that even the full employment German economy may be slowing as companies reduce hiring plans. Slower – but not fatal.  The rest of Europe remains a quagmire – vulnerable to externals like oil, and internals like placating the Great European God of Austerity.  

Spain – what’s to learn from Ireland and Iceland

Lots of blogs focused on Spain yesterday. Most say ‘The Crisis’ is coming. All agree

New Liquidity Summit

Finadium and IPCQ are co-sponsoring a new Liquidity Management Optimization Summit (sic).

This will be a two-day event in New York to help US banks and broker-dealers identify best practices for the liquidity management rules of Basel III and Dodd-Frank. For CFOs, CIOs, COOs and risk officers at banks and broker-dealers, managing liquidity going forward is one of the toughest challenges that new regulations present. This event will, we are promised, provide insights from leading firms and regulators on how to both manage in today's environment and succeed in tomorrow's. 

Speakers include senior representatives from the IMF, the Office of the Comptroller of the Currency, Finadium, Deutsche Bank, Northern Trust, Dexia, BNY Mellon and more.

Topics to be discussed include:

• Basel III: Understanding Recent Alterations and the Significant Impact it will have on Firms' Assets and Liquidity;
• Differences, Similarities and Contradictions of Basel III and Dodd-Frank;
• Liquidity Management Under Times of Stress.

Readers can register today for the one-day conference, the pre-conference workshops, or both. IPQC is currently offering a $999 pass for the conference day. To register, click here or call IPQC at 1-800-882-8684.

 

UK Growth Worse Than Expected: Schroders

Azad Zangana, European Economist at Schroders, comments on this morning’s downwards revision to UK GDP for Q4 2012

“The Office for National Statistics published its revised estimate for GDP growth for the final three months of 2011. The latest estimate showed the economy contracted by more than previously estimated. Q4 GDP was revised down from -0.2% to -0.3%, with most of the downward revision being made to household and government expenditure, while the contribution from inventories was increased.

“In fact, not only was Q4 of 2011 revised down, Q1 was revised down by 0.2%, and Q2 was also revised down by 0.1%, which means the economy did contract in the second quarter of last year where it had previously thought to have been flat.

“The latest GDP data is significantly worse than expected and shows weaker momentum heading into 2012. Growth for 2011 as a whole is now 0.7% rather than the previous estimate of 0.9%. Our view is that the weakness highlighted in this release in combination with the poor production and retail sales data so far for, it is more likely than not that the economy also contracted in the first three months of this year, which would put the UK in a technical recession.

“In terms of monetary policy, the Bank of England will surely react to this by increasing the amount of quantitative easing if not at the next meeting, then certainly by May.”

 

European Corporate Finance: Life After Basel III

Faced with reduced margins on loans and other core businesses as a result of the strict capital reserve requirements included in Basel III, European banks are conducting bottom-up reviews of how, when and with which clients they deploy balance sheets—a process that could have significant repercussions for corporate borrowers, according to the results of Greenwich Associates 2011 European Corporate Finance Study.

“Many of Europe’s large companies are cash rich and not in a hurry to make expansionary investments,” says Greenwich Associates consultant John Colon. “As a result, most companies to date have experienced little or no trouble in securing enough credit to meet their very moderate levels of demand. But there are signs that credit

Auctions Never Fail!: PIMCO’s latest European Perspectives

Auctions Never Fail!: PIMCO’s latest European Perspectives by Lorenzo Pagani

·         Due to the strict relationship between sovereign issuers and dealers, primary auctions do not typically fail. However, the high level of volatility in sovereign bond markets and the absence of a credible Plan B should encourage investors to remain cautious on European sovereign risk.

·         The increase in volatility can reach a breaking point when dealers are no longer willing to absorb risk and the issuer loses market access, irrespective of whether an auction fails or not.

·         Individual countries are working to regain credibility and address their debt-sustainability but what is needed is an explicit collective commitment towards fiscal union.

·         Catalysts for uncertainty may only be a few weeks away with the elections in Greece, France and a referendum in Ireland looming.

·         Foreign investors who preferred to remain on the sidelines during the rally may reappear as sellers given current price levels.

 

It's not recession... it’s an ‘activity contraction dynamic’

Bill Blain’s Morning Porridge – March 28 2012

By Bill Blain, senior director, special situations, Newedge (as seen on TV)

T: +44 207 676 8615; Mobile: +44 777 088 1033; E: [email protected]

Another ‘interesting’ day in prospect as I stare at my listless screens. It’s very much look, listen and (hopefully) learn. The markets feel poised for something to happen. But what? Is it going to be an oil/commodity driven system shock, will it be the US stepping up further system push to cure ‘unemployment at unacceptably high levels’, or will it be ‘Euro Crisis’ part 328? Who knows… we’re wide awake… yawn…

Volumes are very thin – although we’ve being seeing demand pick up for safety trades in the short-end and some corporate names, lots of our main real money accounts are sitting on the sidelines pondering their next moves.

One thing we’ve been wondering about

The Great Escape: Delivering in a Delevering World - Bill Gross

PIMCO’s latest Investment Outlook by Bill Gross: The Great Escape: Delivering in a Delevering World

·         How do we deliver in this New Normal world that levers much more slowly in total and can delever sharply in select sectors and countries?

·         When interest rates cannot be dramatically lowered further or risk spreads significantly compressed, the momentum begins to shift, not necessarily suddenly, but gradually - yields moving mildly higher and spreads stabilising or moving slightly wider.

·         In such a mildly reflating world, unless you want to earn an inflation-adjusted return of minus 2%-3% as offered by Treasury bills, then you must take risk in some form

·         We favor high quality, shorter duration and inflation-protected bonds; dividend paying stocks with a preference for developing over developed markets; and inflation-sensitive, supply-constrained commodity products.

 

SGSS Looks To Orient

Societe Generale Securities Services (SGSS) and Orient Capital have signed an agreement to co-operate whereby Orient Capital will offer its suite of investor relations services to SGSS’s registry clients.

SGSS says that following an extensive review of potential providers, it selected Orient Capital for its capacity to provide a suite of the highest quality investor relations services based around its share register analysis (SRA) service, which is delivered through its proprietary online platform, “miraqle®”.

The Sun has got his hat on and is coming out to play…

Bill Blain’s Morning Porridge – March 27 2012

By Bill Blain, senior director, special situations, Newedge (as seen on TV)

T: +44 207 676 8615; Mobile: +44 777 088 1033; E: [email protected]

Just how solid is the US economic “recovery”? Bernanke’s comment the Fed won’t withdraw stimulus too quickly before 2014 to support weak US jobs growth was greeted as nailed-on QE3 by some. The Fed’s determination to stick to its long-term interest rate view, (which started a few months ago when it announced two-year expectations), was curious at the time. Now we get Bernanke’s Aegis-like vision discerning weak employment growth: “not sure the pace of improvement in the labour market can be sustained.”

Perhaps the Fed knows (or sees) something we don’t – like just how shallow the foundations of this vaunted US “economic recovery” actually are?  Perhaps a note of caution to the current stock rally? Nope – still rallying like there is a tomorrow.

Today may provide better economic direction and clues with a raft of consumer confidence and retail data in Europe and the US. Mixed number for Germany. France came in surprisingly stronger! US is expected to be a modest positive. But the bottom line is there are few signals of the “Growth Drivers” Europe desperately requires to turn around the increasingly once-again wobbly Sovereign Debt market.

This week’s European can-kick speculation is about

India: Safe To Go Back?

Schroders’ Indian Equities Fund Manager, Manish Bhatia, looks at how investors should position themselves for the next phase of India’s economic cycle and discusses whether the worst is now over for the country’s equities

Almost everything that could go wrong within an economy went wrong in India in 2011. Inflation soared, corruption scandals erupted, and the government went through a period of policy paralysis. However, in 2012, India’s markets got off to a stunning start, surging ahead of the wider region by a strong margin. But just as the rally started to seem too good to be true, it proved itself to be just that.

Investors will be forgiven for looking at the performance of Indian equities year to date, and wondering what has gone right in India. The brief answer is,

When Is An Inflation Hedge Not An Inflation Hedge?

When is an inflation hedge not an inflation hedge? When it costs too much is the simple answer. Investment professionals warn that the cost of hedging against inflation in a number of the world's most developed economies has reached such high levels in recent times that putting such hedges in place will inevitably result in wealth destruction rather than wealth enhancement. But maybe the answer is not so simple after all.

As the debate continues over whether the world faces an inflationary or deflationary environment in the short- to medium-term, the arguments in favour of hedging against inflation are crystal clear to anyone who remembers its trajectory in the mid-1970s.

The advantages of an inflation hedge are not, however, necessarily so obvious to more recent arrivals in the financial services industry who might struggle to come to terms with the notion that ultra-low central bank rates are a historical blip rather than the norm. Consensus, and experience, suggest that they will surely eventually find that interest rates and inflation can go up sharply and unexpectedly as well as flatline for years at a time.

PIMCO, renowned for its bond management capabilities,

Blackberrys for people who think they are important… I-Phones for people who think an I-Phone is important...

Bill Blain’s Morning Porridge – March 23 2012

By Bill Blain, senior director, special situations, Newedge (as seen on TV)

T: +44 207 676 8615; Mobile: +44 777 088 1033; E: [email protected]

More evidence of the equity switch – according to a survey some 37% of global investment managers think shares will be the top-performing asset over the next three months – only 12% think government bonds have a look-in.

Yet this morning I’m thinking maybe its time for some cautious safe-haven protection. We are seeing reinforced signs of the next euro-wobble: Spain’s decision to ‘nationalise’ regional debt via guaranteed bond issuance, (effectively increasing the direct government debt load and acknowledging a whole new funding/spending problem), plus rising doubts as to its debt sustainability, have seen its bond yields widen in recent days – yesterday felt like freefall at times.

There is barely a single major real money fund in the UK looking to buy Spain debt, although some German funds are still in the market. There is a good analysis of Spain and its crushing bank problems in the FT this morning: {http://www.ft.com/cms/s/0/d18c93c0-740f-11e1-bcec-00144feab49a.html#axzz1pqSsmfiY} Well worth a perusal.

My own side bet remains for Spain to wobble on, but for a more dramatic collapse in Italy. Smoke and mirrors on the back of the LTRO

US IPOs Slump 74%

By Jean-Philippe Innocent, Dealogic

30 US SEC-registered IPOs have priced this YTD raising $3.7bn in proceeds, which is down 74% from the total raised in 2011 YTD ($14.1bn via 31 deals). Of the 30 deals, 49% have priced within range (12 deals), 36% below range (13%) and 15% above range (5%).

19 of the 30 IPOs to price this YTD have been backed by financial sponsors with only 1 IPO trading below its offer price.

42 US SEC-Registered IPOs have filed so far in 2012 YTD, down from 61 in 2011 YTD.

The largest US SEC-registered IPO to price was that of Allison Transmission Holdings Inc, priced on March 15. The deal is up 7.8% from its offer price of $23 and was backed by Carlyle Group Inc and led by Bank of America, Citi, JP Morgan, Credit Suisse, Morgan Stanley, Goldman Sachs, Barclays and Deutsche Bank.

Looking at average current returns for the three sectors with the highest 2012 YTD IPO activity - Technology had an average return of 50% (10 deals), Finance 12% (seven deals) and Healthcare 3% (three deals).

There are currently 84 US SEC-registered IPOs in the backlog, led by Technology with 17 deals, Oil & Gas with 13 deals and Finance with 12 deals.

Citi tops the YTD bookrunner ranking with a 13% share, followed by Morgan Stanley and JPMorgan with 10% and 9.6% market share, respectively.

 

Capital Flows: Good Or Bad?

An invitation from Andrew Hilton, director, CSFI

The pros and cons of capital controls: A round-table discussion on new thinking about capital flows. With Peter Chowla (Bretton Woods Project), Glenn Hoggarth (Bank of England) and Anne Richards (Aberdeen Asset Management).

To be held on Thursday, March 29, 2012 from 12:30-2:15pm.

At Innholders' Hall, 30 College St, London, EC4R 2RH.

 “Whatever we financial liberals might want to believe, there is a growing consensus in a very large part of the world that free cross-border capital movements are not necessarily a Good Thing. Indeed, post-crisis, the new orthodoxy in Asia and Latin America is that deregulation of capital flows can have potentially devastating consequences, contributing to financial/banking instability, income inequality und so weiter.

“To some extent, this is the old left-right ideological debate on development, in which the only losers are the poor souls who actually live in the countries concerned. But we now have a globalised economy, and what happens in Asia or Latin America (or, increasingly, in Africa) may well be absolutely crucial to pension fund investors in Sunderland or Sydenham. The West looks like a pretty rotten long-term punt in terms of growth (and demographics); if we are going to fund our own (and our children's) old age, it is probably only going to be

A long-term investment is a short-term one that went the wrong way...

Bill Blain’s Morning Porridge – March 22 2012

By Bill Blain, senior director, special situations, Newedge (as seen on TV)

T: +44 207 676 8615; Mobile: +44 777 088 1033; E: [email protected]

So where do we go from here? On one hand we’ve had a slew of the right kind of signals from the US suggesting Growth is back on the agenda. (Ok, so a few outliers like declines in housing y’day!) So is it time to sell bonds and buy equity? Or is that little warning voice at the back of your head saying… hang on.. WAIT.. Is this the real deal or just another false dawn?

One economist yesterday put out a very bearish call – Albert Edwards of SocGen saying: bond yields will move back down, equity rally will ‘dissolve into dust’, US bond sell-off is overdone, and by the end of Q4 earnings will be ‘decidedly weak’. A number of other blogs comment US earnings do seem to be peaking well ahead of the markets.

So what to do…? Take a back seat and wait for clearer vision on what lies before us.. Dang.. if you sit on the fence too long all you ever get

Football To Help Autism Research

A reminder came in from Lansons Communications this morning that this year's Funds Industry Charity Shield five-a-side football competition will be taking place on Thursday evening (March 22).

Calastone, the independent cross-border network for the mutual fund industry, is sponsoring the tournament for the second time, to raise money for ‘Research Autism’ – a charity which aims to help improve the quality of life and outlook for those affected by autism.

Participating teams:

Here comes summer…and the sun is shining bright... but the forecast says rain...

Bill Blain’s Morning Porridge – March 21 2012

By Bill Blain, senior director, special situations, Newedge (as seen on TV)

T: +44 207 676 8615; Mobile: +44 777 088 1033; E: [email protected]

Something’s afoot and we don’t know what it is. My finely honed market ‘spidey-sense’ tells me markets are uncertain as to how the next strategic shift is going to rile prices. The implications of ‘something happening’ in China are one of two big factors overhanging markets this morning. The other is that intangible moment when it's time to say ‘good bye bonds, hello stocks’ as the US economy continues onto a clearly discernible growth path. Do the two mutually exclude each other?

Let’s start with China

‘Hard Landing’ according to JP Morgan. ‘Soft Landing’ according to other investment institutions. Or is the current ‘slowdown’ in China growth simply part of the long-term development path of the Chinese economy? Sure, there is an apparent housing bubble and other problems – notably corruption – but I suspect much of the recent noise, panic and flame fanning on the Chinese economy is overplayed.

There is an excellent primer note from Martin Wolf on China demographics

Does He Mean Banks? He Surely Does...

Jonathan Guthrie, writing in the FT's Lombard column this morning, refers to spreadbetting firms mingling their funds with those of clients.

Does he mean banks, I wonder???

UK Budget Preview: Schroders

Ahead of tomorrow’s UK budget announcement, Schroders’ European Economist, Azad Zangana, gives his views on what we can expect from the 2012 Budget

We expect the Chancellor to focus on growth measures that will not dent the exchequer.

The income tax threshold is clearly on the agenda, but in order to fund a cut in the top rate of tax, the Chancellor will have to find a way to recoup the losses to the exchequer (likely to be small) with other measures.

Rumours are rife that the Chancellor may reduce pension tax relief for higher earners.

The focus will remain on boosting growth and employment, but not at the risk of losing the UK’s credibility with investors.

We will also be issuing another quickview shortly after the budget is announced tomorrow.