Brian Bollen's Blog

Raise Rates And The Spending Gets It!

Memo to Mark Carney, governor of the Bank of England, and the other members of the UK's Monetary Policy Committee.

My wife and I currently go out for dinner once a week, spending c£45 at ASK Italian on a Saturday evening. Raise interest rates and that spending will be the first casualty as the monetary belt tightens, and it won't be the last; I don't think that you understand for a second how tight things are for 'ordinary' people. It's not a question of putting the butler, the cook and the footmen on short time; it's a question of living rather than existing.

Push rates up and we'll see a second downwave, I predict, as people begin to take serious cost-cutting measures in addition to the ones already made over the past seven years. We have our contingency plans in place; I wonder how many others are also mentally packing the lifeboats.

US Outstrips Expectations

"Within the details, consumer expenditure was the largest contributor to the quarterly figures (+1.7 percentage points) as households took advantage of the continued improvement in real disposable income. Consumption of goods, particularly motor vehicles, was stronger than has been in recent quarters – a sign that households are gaining the confidence to make large ticket purchases.  Investment also made a positive contribution (+0.9 ppt) after a flat first quarter. We look for corporates to increase capex as confidence in the wider economic recovery solidifies. Meanwhile, net trade made a small negative contribution (-0.6 ppt) as imports outpaced exports over the quarter. Government spending made a negligible impact (+0.3 ppt), but the positive contribution from changes in inventories was very large (+1.7 ppt). Normally, the large contribution from inventories would be a concern as it would signal demand not  keeping up with supply, however, the rise in Q2 follows contractions in the previous two quarters, and so is to be expected.Keith Wade, chief economist at Schroders, comments on yesterday's US GDP figures, which far outstripped expectations with growth of 4%.

Commodity Hedge Funds Building Momentum

Commodity hedge funds continue building momentum in 2014

Newedge, a multi-asset brokerage and clearing firm that is part of France's Societe Generale group, today announced the performance for its suite of hedge fund indices for the month of June. 

Fast Reactions Limit Rate Impact

By James Butterfill, Global Equity Strategist at Coutts.

As evidence of a strengthening US economy continues to mount and expectations for the first increase in US rates are brought forward, this may cause some volatility in US equities in the near term. But we believe the Federal Reserve (Fed) will tread cautiously, and history suggests equities could recover quickly from any rate hike fears.

Bedell Trust OKd To Provide Depo Services

Bedell Trust reports that it has received regulatory approval and a variation of permission from the Financial Conduct Authority to provide depositary services to UK Alternative Investment Funds (AIFs) as well as "depositary-lite" services to non-EEA AIFs from its London office. Furthermore, Bedell has received regulatory approval from the Jersey Financial Services Commission (the JFSC) to provide depositary services from its Jersey office to all JFSC regulatory categories of investment funds.

Credit Due Where Credit Is Due

Further information has reached us relating to the winning by BNP Paribas Securities Services of a €180bn pan-European mandate from the Generali Group, one of the world’s largest insurance companies.

HSBCSS Appoints Liu New Head Of Product Strategy, China

HSBC Securities Services has appointed Elaine Liu as head of product strategy, China. She will report to Ian Stephenson, global head of fund services, HSBC Securities Services and will be based in Hong Kong.

The most recent issue of Global Perspectives from Columbia Management is now available. 

Highlights from the current issue include the following.

Guernsey Finance CEO Moves To CISE

Fiona Le Poidevin has resigned as chief executive of Guernsey Finance – the promotional agency for the island’s finance industry internationally.

I’m A bit Of A Stickler For Paperwork.

Mint – Blain’s Morning Porridge – July 28 2014

Sorry, I’m a bit of a stickler for paperwork. Where would we be if we didn’t follow the correct procedures?

The challenge this morning is to see how many metaphors I can mix. As we approach the end of a sweltery July, markets look likely to get even thinner into the dog days of August… my equities colleague Steve Previs tells me August and September are the two most negative months in stocks.

UK Economy Passes Pre-crisis Peak: Or Does It?

European Economist, Azad Zangana, comments on today's preliminary estimate for second quarter UK GDP figures.

"The release of the preliminary estimate for second quarter UK GDP shows that the economy has surpassed its previous peak, set in 2008.

Look To The Skies

Bank of America Merrill Lynch emails to confirm its involvement as adviser to Sky Deutschland in BSkyB's acquisition of a 57.4% stake in it and all of Sky Italia.

You Know Nothing Jon Snow…

Mint – Blain’s Morning Porridge – July 25 2014

Don’t be worrying about yesterday’s downward revisions on global GDP to 3.4% by the IMF. These were backward-looking and simple historical corrections –massaging the numbers so they look about right at year-end. They reflect the very bad first quarter weather conditions in the US. As a result, the US was slashed 110 basis points. France and Italy suffered from dismal economic reality by being cut 30%, but the UK was hiked by 40bps.

Surge In Jersey Private Placement Registrations

A strong surge in applications in the lead up to the end of the AIFMD transitional phase has seen the number of funds notifying the Jersey Financial Services Commission (JFSC) of their intention to privately place into Europe under AIFMD rules break through the 150 mark.

Macro Hurdles Facing Equities

Keith Wade, chief economist at Schroders, comments on the macro hurdles that he believes could challenge the continuation of the bull market and warrant a slightly more cautious stance towards equities.

Where To Now For Fixed Income Investors?

By Paul Wiseman, investment analyst, Maitland

With sovereign bond yields and credit spreads trading at near historic lows, and an ambiguous macroeconomic environment, traditional bond portfolios are no longer looking that compelling. Such portfolios are typically managed relative to an aggregate index, with limited flexibility to expand their opportunity sets and tool boxes and at this point, following a 30-year bull market for the bond market, prospective returns from traditional bond portfolios do not look that attractive.

Convertible bonds – the lost asset class

By Greg Harris, senior investment manager, Maitland

Few money managers would be willing to describe today’s global equity markets as cheap or offering great long-term value (they certainly offer less than 18 months ago). Similarly, the voices supporting bonds as a long-term investment thesis have grown steadily quieter, especially as the US Fed stands in the corner ready to unleash further tapering.

Proud To Be A Scotsman

Mint – Blain’s Morning Porridge – July 24 2014

Scotsman, Irishman, Welshman and Englishman walk into a bar.. is this some kind of a joke?

Yes, I watched the opening of the Glasgow Commonwealth Games last night and loved every mad moment of it. I wore a big smile from ear to ear, and it made me even prouder to be a Scot. However, one particularly poignant moment was when the Red Arrows flew past trailing Red, White and Blue smoke, and it suddenly struck me as another thing we’ll lose if we give the English independence in the September referendum. I love my pipes and drums, but the Red Arrows are something equally special I want to keep!

BNP, Credit Suisse FA: Official Comment

The position has moved on ever so slightly since the publication earlier this afternoon of the story that BNP Paribas Securities Services is the frontrunner to buy the Credit Suisse Prime Fund Services fund administration business, according to an industry source familiar with the topic.

BNP Front Runner For Credit Suisse FA

BNP Paribas Securities Services is the frontrunner to buy the Credit Suisse Prime Services fund administration business, according to an industry source familiar with the topic.