Brian Bollen's Blog

Taut Storytelling Taught At School?

From Andrew Billen's TV review column in The Times this morning (February 13), re Suspects: “What it had going for it was taught storytelling...” Presumably the kind of taut storytelling that might be taught at a writing school?

Standards slip by the day, even in the 'quality' newspapers.

Jungfrau Marathon 2014 Registration Opens February 14

Registration is just about to open for the 22nd Jungfrau-Marathon, which takes place on 13 September 2014. The online registration will open on 14 February 2014, 8.00h/8 am. The books will close once the maximum number After reaching of 4'000 participants is reached. The following is lifted straight from the official invitation from the organisers.

The starting fee is CHF 140.00 - Register as of 14.02.2014

With the online payment we can offer you additional specials as follows:

Indication of your size for your finisher t-shirt XS, S, M, L or XL Please note: women will receive a semi-fitted t-shirt. Entrance for the Jungfrau-Marathon farewell party on Saturday evening at the rate of CHF 10.00 Charitable donation for Right to play CHF 10.00 Requested starting number at the rate of CHF 20.00 Possibilities for a requested Number are words instead of your first name or a number (max. 5 signs, beginning from 300). Attention: Standard is the first name and an assigned number. Train tickets for spectators full fare at the rate of CHF 52.00 and Train tickets for spectators half fare (for children until 15 years) at the rate of CHF 32.00 Starting fee insurance – your money back guarantee in case of ailment or injury Starting fee for the Switzerland Marathon light on 7 September 2014 – Viktor Röthlin’s farewell run over 21 km at the rate of CHF 48.00 or over 10 km at the rate of CHF 38.00.

Please find more details on our website here.

The online application for the specials is also available after race registration is closed.

After transferring your starting fee you will find your name on the final starting list on our website after 14 February 2014 (update every 24 hours). You will also receive your personal starting card as well as the programme of the 22nd Jungfrau-Marathon by mail in August 2014.

Package Sleep and Run

Are you interested in booking the starting fee and accommodation? Find more information here.

Extract of the rules and regulations: With the payment of the starting fee you accept the rules and regulations of the Jungfrau-Marathon and its liability disclaimer in the invitation. Moreover, failure to participate does not entitle you to a refund of the starting fee, unless you have booked a starting fee-cancellation insurance via Datasport.

 

Separately Managed Accounts, Fund-of-One Structures, Gain Popularity

New research from global analytics firm Cerulli Associates finds separately managed accounts and fund-of-one investment structures continue to gain popularity among institutional investors.

We rejoice in our sufferings

Mint – Blain’s Morning Porridge  - February 13 2014

We rejoice in our sufferings, knowing that suffering produces endurance, and endurance produces character, and character produces hope…

An interesting day’s play in prospect, despite a soggy wicket with a slight risk-off feel this morning. Australia sums it up. Commodities down, unemployment up and the slumping A$. Some folk thinks it’s just the recent risk-on phase running out of steam. Probably. It’s not looking like a sustained down move, and we’ve got a feeling things will get better.

So what really happened in the UK yesterday? The market has completely changed its interest rate structure view following Mark Carney’s statement yesterday. It’s risen from 20% to a 50-60% “it’s gonna happen” chance of an interest rate hike in 2015. That’s not going to happen ahead of next year’s UK election, but what Carney did by abandoning forward guidance on jobs, and declaring he’s only going to hike when the economy is into overdrive (aka sustainable and balanced – whatever these might be), is effectively turbo-boosting growth. Relax on rates – rises will be cosmetic.

Same thing is going on in the USA. Yellen’s testimony effectively said easy policy till growth is clearly established. Turbo-charging the economy. That was backed up in Mexico where recent policy statements say the same thing – low inflation, the fact the US economy is “on fire”, so we are keeping rates supportive to support growth. Across the planet…

In the absence of inflationary fears – and the deflation ogre being “stoked” – markets have swung bond bullish. (I apologise for using words like “stoked” and “big air”, but I was watching the Olympic Half Pipe yesterday – the action is brilliant, but the commentary is like watching 13-year-olds pretending they are hip… like me.. yowsa, yowsa, yowsa… big air, dude, awesome, pumped, and I think I even heard gnarly.…)

In bond markets, first up is Turkey – yesterday’s $1.5Bln 6.625% bonds due 2045 was 4x oversubscribed, moving initial guidance in 15 bp to 6.7%. That’s a massive validation of what we’ve been saying about the upside game in EM – we understand the book was 45% US, 33% UK! My colleague Martin Malone has written a very interesting take on the upside potential for the MINT economies, and I'm happy to forward you a copy.

Lots of other analysts still think there is a further massive correction waiting in EM – but while we agree markets will remain volatile – the foot of the global economy is pressed to the metal.

Second big bond issue is contingent capital.

Since they first crawled out the detritus of the global financial crisis in 2009, I have viewed CoCos with disdain. I’ve described them as dangerous, poorly understood, and conceived in error by regulators with little market knowledge with a primary purpose of punishing investors rather than providing sustainable capital for banks.

Yet, increasingly, CoCos have found a market niche. My own views are moderating. I would still describe them as “The Frankenstein spawn of deranged regulators and desperate banks”, but let’s not blame the children for their parents. In fact, in film, many daughters of the devil are excruciatingly beautiful creatures. I’m increasingly of the view that CoCos represent a developing market offering some very interesting opportunities.

So what has sparked this “Road to Damascus” change in my views on CoCos?

Firstly, they are going to be too large a market to ignore. Now that banks no longer buy other banks' senior debt, banks need to appeal to larger markets. That means paying more for debt – which makes the attractions of capital spreads over senior more interesting. According to all the smart analysts at the investment banks, the European CoCo sector could grow from the current $40bn to anywhere between $150bn-$400bn in the next five years! 

Secondly, if you know the risks and can quantify them, why not take CoCo risk? The biggest risk is not reading the prospectus.

I still think they are dangerous, but the risks can be mitigated by understanding how they work and the total risk spectrum. Issues like triggers, the amount of capital cushion protecting against a trigger, dividend stopper risks and deferral risks can all be addressed. For investors that go in with their eyes wide open, CoCos offer opportunity.

In recent months we’ve been developing regular runs on CoCo bonds and been watching how they perform on a relative basis to other assets. We’ve noted the trends and the buy/sell, cheap/rich signals. Our approach isn’t as technical as some clients, but it broadly works.

I’ve written a primer note on CoCos – it contains some simple thinking about the risks and opportunities, plus an outline of some possible approaches to value. I’m happy to share it with anyone who asks (Unfortunately, it’s not the sort of thing we can attach to the Porridge lest it's read by young children, widows or orphans who subsequently lose everything investing in them. But if you ask for it.. we can send it.)

For clients, if you aren’t already receiving our runs and CoCo data, we will be pleased to add you – and if you don’t like it you can dump it, or you can keep receiving it in return for a fair chance to trade them with you. Fair?

Finally…

Every cloud has a silver lining. I’ve been getting lazy, jumping on the Northern Line at Bank to get Moorgate. (No wonder I’m so fat.) But this morning, no Northern Line. So I started walking. And then one of the new Routemaster Buses pulled passed me. Because it’s a traditional proper bus, with an open back gate, I jumped on board. Fantastic. Smile from ear to ear. Talking to the very pleasant conductor he was telling me the buses had the same effect on everyone. I like it. Not so much that I will congratulate Blonde Moppet Doris Johnston for introducing them, but they suit London. It’s just a shame I won’t get to use them. We’re moving from Moorgate to bigger offices in Canary Wharf next week.

So… very out of time..

Bill Blain

0207 786 3877

[email protected]

[email protected]

 

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BoE Forward Guidance Changes Bamboozle

Azad Zangana, European Economist, Schroders comments on the latest quarterly Inflation Report from the Bank of England

"As part of its quarterly Inflation Report, the Bank of England (BoE) has decided to expand its use of macroeconomic variables in its presentation of forward guidance. The previous 7% unemployment rate threshold would have been breached in the coming months, which has prompted the Bank to re-assess its communications strategy.

Throw a saddle on a gift horse

Mint – Blain’s Morning Porridge  - February 11 2014

It’s so refreshing to work with someone who will throw a saddle on a gift horse rather than look it in the mouth…

Rain, Hail, Snow, Wind and Floods. That’s the recipe for the day here in the UK. As I left the flat this morning, a rather ominous Red Sky – “Red Sky in the morning, Sailors take warning” – was filling the sky. In contrast to the stream of Atlantic Depressions dumping upon these soggy islands, markets are more settled – even solid.

Measuring Wealth In Purchased Souls

Mint – Blain’s Morning Porridge  - February 11 2014

He doesn’t measure his wealth in private jets, but purchased souls…

It would be a dull life indeed if there wasn’t lots of stuff to pick over each and every morning. This morning we have a mixed bag of stuff and a deluge of new issues before Ms Yellen’s first testimony to Congress as the new Fed Chief. The mood has changed. Last week’s massive market correction has well and truly morphed into a “risk-on” buying orgy across bond markets.

Amsterdam Listing For iShares International ETF

Speed read: iShares lists International ETF on Euronext Amsterdam. First ETF with an international security settlement structure in continental Europe. An integral part of market reshaping.

Systemic Market, Political Risks Biggest 2014 Concerns

Speed read: Systemic market and political risks are the biggest concerns for 2014. Expanding shareholder bases internationally is a top priority for global companies; Social media used by only 27% of firms to engage investors

Systemic market and political risk, followed by the uncertainty of new financial regulation, are the top issues named by companies as impacting global market confidence, according to the latest annual investor relations (IR) survey conducted by BNY Mellon, a global leader in investment management and investment services. 

Don't Rock The Boat

By Alan Higgins, chief investment officer, Coutts

Speed read: Equities - Forget QE - look to growth. Economics - G4 mantra: don't rock the boat. Bonds - Investors flee to 'safety'. Currencies - Next move is up for Aussie dollar

Equities | Forget QE – look to growth

Though you wouldn’t think so from looking at January’s market performance, fourth-quarter earnings results have been positive across the globe and economic data has generally been beating expectations.

What’s weighing on markets right now is widespread aversion to risk. This has been brought on by uncertainty over the impact of unwinding US quantitative easing (bond purchases or QE), and related weakness in emerging markets.

U-Start In Global Launch

Speed read: Swiss-based U-Start in global launch. €3.8bn under management for tech’ start-up investment in the emerging markets. Offices already opened in South Africa, Brazil, Russia, and Chile. Launching a series of international events in conjunction with Bessa Advogados, Telefonica (VIVO) and Amazon Web Services. First deal of 2014 announced today: PrivateGriffe secures €1.2m from VAM Investments, facilitated by U-Start.

 

Etera Mutual Pension Insurance Appoints State Street

State Street might be keeping its head below the transition management parapet following recent embarrassing headlines, but otherwise its well oiled public relations machine continues business very much as usual.

The latest news to emerge from the Boston behemoth's press release mill tells of its appointment by Etera Mutual Pension Insurance Company (Etera) of Finland to provide a wide range of pension fund solutions.

I came to Casablanca for the waters...

Mint – Blain’s Morning Porridge  - February 10 2014

My health, I came to Casablanca for the waters...

“Apparently” shall be my watch-word this week. There is lots of worrisome news and views one would expect might weaken sentiment, but markets are apparently unfazzled by Friday's weaker US Jobs Report, the deepening mire in Japan, China reopening to further debt jitters after its new year break, and the Germany constitutional court being obtuse about OMT. Instead, the collective mind has shrugged off the doubts and looks set for a bout of “risk on”… Apparently.

He had a voice that could make a wolverine purr

Mint – Blain’s Morning Porridge  - February 7 2014

He had a voice that could make a wolverine purr and suits so fine they made Sinatra look like a hobo… 

TGIF. Lots of stuff to think about this morning, but of course the only real story is today’s US payroll data. How weather affected will it be – pretty extraordinary weather last 70 days? Will it be strong, will it be weak, or will it just leave us all scratching our heads?

Pictet Asset Management: Yes To Yellen

Luca Paolini, chief strategist at Pictet Asset Management, provides his views on the current investment landscape

“Following Janet Yellen’s recent appointment, we believe the Fed could provide good support for riskier asset classes in 2014. Although we expect the US central bank to reduce its monthly bond purchases by $10bn at each of its scheduled rate-setting meetings this year, the risks are skewed towards a less hawkish scenario.

My policy on cake

Mint – Blain’s Morning Porridge  - February 6 2014

My policy on cake is pro having it and pro eating it…

Same old, same old…. I spent yesterday trying to figure out what the Dickens is actually going on. Markets less frenetic and almost stablesque. On the plus side, Mexico was upgraded by Moody’s to A3 yesterday – what crisis and more about that below. We’ve got central bank day – ECB, BoE and the Czechs - but nothing expected in terms of action.. Austrian Bank Hypo Alpe is in the headlines for all the wrong reasons (but maybe worth a punt! – give us a call if interested.)

Could Euro Rates Turn Negative?

By Georgios Tsapouris, investment strategist at Coutts

Speed read: Further ECB easing inevitable; good chance of rate cut this week; or next; inflation very weak and below forecasts; turning rate negative could encourage banks to divert funds.

We think further easing from the European Central Bank (ECB) in inevitable, and see a good chance of a rate cut at Thursday’s meeting. If not this time, then the chances would only increase at the next meeting, and we expect peripheral bonds to remain well supported in this environment as they benefit from easing monetary conditions and improving growth.

ECB To Leave Policy Unchanged: PIMCO

PIMCO Deutschland's Andrew Bosomworth, managing director and head of portfolio management, Germany, ahead of the ECB meeting on Thursday

We think the ECB will again keep all policy-levers unchanged at Thursday's meeting while emphasising the fragile recovery and signaling a readiness to ease further if needed. The ECB has been very transparent as to how it will react to either an unwarranted tightening of financial conditions or an unwelcome negative shock to the inflation outlook. The pertinent question is what likelihood of  these negative events, or a third, a strengthening of the recovery, unfolding over the policy relevant time horizon? 

I can’t untie you!

Mint – Blain’s Morning Porridge  - February 5 2014

I can’t untie you! The captain tied you up, he almost ****** tasered you!

“A sea of stability” across all markets this morning? The papers say the correction is over. It’s time to get the buying boots on. Hmm.. I will admit I was badly infected by a virulent outbreak of delusional bearishness y’day, and even a bear with a sore head has reasons to be more positive on markets today. Fundamental buyers emerged to buy at cheaper levels in stocks, and we saw a clear “whoa” to the flight for quality in the bond markets. Perhaps we’ve reached an equilibrium point and the correction is over… or was it just the proverbial deceased feline strapped to a spacehopper?

UK Second-Largest Pensions Market: Towers Watson

Speed read: The UK pensions balance sheet has strengthened the most during the past 10 years; UK pension assets hit all-time high of over £2.0 trillion in 2013, having grown by over 13% during the year; 10-year figures show the UK grew its pension assets the most as a proportion of GDP, by 64%, to reach 131%; Equity allocations by UK pension funds fell from 65% to 50% between 2003 and 2013; In the past decade the UK has increased its exposure to alternative assets from 3% to 14%.