The outlook for English cricket must be dire if the whole nation goes into ecstasy because they beat Scotland...
Markets are high-fiving themselves on the Greek "solution", but it’s just crisis delayed. Sentiment will become increasingly fractious again as the clock ticks down to the next cliffhanger. Lots of comments say Germany won and the Greeks lost. Nonsense. The Greeks didn't get much, but they got something.... and you don’t need to be a professor of game theory to know that’s better than nothing. Everyone has focused on the most recent passage of play and the apparent German win, but this is a long game, and markets would do well to consider the possibility the Greeks might be playing three or four moves ahead.
Nothing will happen in economic terms in four months that can possibly change the desperate Greek numbers which scream impossible, but lots can happen on the political front. We haven't heard the last from the Greeks, nor from similarly disenfranchised European peripheral voters. As a Greek chum told me: "We are the ones who say No - people don't say No to us - look up October 28, “Ohi Day” on the internet, and while you're at it, check how Podemos is doing in Spain..... explaining why the Spaniards were so anti any Greek deal.
From the comfort of London the answer seems obvious: take the pain and leave the euro, but that's an Anglo Saxon perspective. Even the Greeks apparently want to remain in the euro. But more than a few commentaries suggest the next four months are about giving the Greeks and Europe time to part company with honour. My equity colleague Steve Previs suggests the recent price action of bank note printer De la Rue might be indicative that drachmas are already being printed!
Just how bad would Grexit be? It would be an admin nightmare - capital flight from the Greek banks would be impossible to control. (Frankly why would any Greeks leave their money in Greece?) Europe would clearly take a shoeing from the amount of Greek debt held in bodies such as the EFSF and ELA programmes, but it’s just paper. Longer-term GDP-linked bonds issued by a financially independent Greece could be very attractive.
Would it actually matter to the rest of Europe if Greece were to exit? European upside data shocks continue - European PMI, jobs and consumer confidence numbers confirm a slow but steadily improving backdrop. A few years ago we would have regarded such a slew of weak gains as disappointing, but after years of recession, the markets are prepared to read any green shoots as positive. Which explains why European stocks are off to the moon on little more than a shaken-up can of coke.
Elsewhere...this morning it looks like the Austrian government is pulling its guarantee and the restructured Hypo Alpe Adria may miss its bond payments. Chatting to accounts last week about financials there was a lot of concern the market was ripe for a puke. Reasons to sell bank AT1 paper include:
How much new supply there has been and how well held it is?
The recent issue-a-thon looks suspect – some deals not performing.
How much more supply is still to come?
Leverage ratios – Swiss will impose tougher capital ratios and stricter leverage ratios on UBS and Credit Suisse. Higher leverage ratios to come in UK and then Europe.
Market has been very quick to scoop up any bargains – we’ve not seen a proper shake-out yet.
How will longer-dated financial AT1 perform when rates reverse, curve steepens, and we see the bond sell-off begin?
No one really understands banks any more. Capital and regulation are over complex.
Still more fines and regulatory action to come – watch HSBC for signs of how easy it is to deflect pain onto banks.
HSBC and Swiss tax continue to dominate the UK press. I get the sense CEO Stuart Gulliver will be thrown to the baying mob. He's done nothing wrong, but he's failed the "front page of the FT" test: if you ever find your name in the press because of questionable dealings (even if perfectly legal) then short your career longevity. His departure will be regrettable - but someone has to pay the cost. HSBC may have cleaned up its tax planning team and shared names with HMRC years ago, but the bank comes first and life just ain't fair.. (Which is basically what I was told years ago when HSBC booted me out... welcome to the club...)
Meanwhile, a very interesting report was published by the University of Cambridge Business School this morning – “Moving Mainstream: The European Alternative Finance Benchmarking Report”. It highlights that the online European Alternative Finance Market grew 144% last year to nearly €3bn. They expect it could top €7bn this year.
Online alternative finance comprises platform lending like crowdfunding and peer-to-peer business lending. It’s becoming an essential funding source for SMEs, start-ups and other businesses across Europe. The report reckons some 5,801 SMEs and start-ups used online alternative funding in 2014.
Robert Wardrop, executive director of the Centre for Alternative Finance at Cambridge Judge, and co-author of the new report, says: “These new forms of alternative finance are growing quickly, and this growth is beginning to attract institutional investors. Alternative finance, at least in some European countries, is on the cusp of becoming mainstream.”
The UK is by far the largest European country for online alternative finance, at €2.34bn (£1.78bn) in 2014, followed by France at €154m, Germany at €140m, Sweden at €107m, the Netherlands at € 78m and Spain at €62m.
This is critical stuff – the sheer number of online platforms and their diversity is staggering; 65 of them in the UK alone! We’re thinking about how to use them in alternative asset financing business..
Charlie Croker moment.. “Hang on.. I’ve got an idea..”
English ecstasy at beating Scotland...at cricket
Mint – Blain’s Morning Porridge
The outlook for English cricket must be dire if the whole nation goes into ecstasy because they beat Scotland...
Nothing will happen in economic terms in four months that can possibly change the desperate Greek numbers which scream impossible, but lots can happen on the political front. We haven't heard the last from the Greeks, nor from similarly disenfranchised European peripheral voters. As a Greek chum told me: "We are the ones who say No - people don't say No to us - look up October 28, “Ohi Day” on the internet, and while you're at it, check how Podemos is doing in Spain..... explaining why the Spaniards were so anti any Greek deal.
From the comfort of London the answer seems obvious: take the pain and leave the euro, but that's an Anglo Saxon perspective. Even the Greeks apparently want to remain in the euro. But more than a few commentaries suggest the next four months are about giving the Greeks and Europe time to part company with honour. My equity colleague Steve Previs suggests the recent price action of bank note printer De la Rue might be indicative that drachmas are already being printed!
Just how bad would Grexit be? It would be an admin nightmare - capital flight from the Greek banks would be impossible to control. (Frankly why would any Greeks leave their money in Greece?) Europe would clearly take a shoeing from the amount of Greek debt held in bodies such as the EFSF and ELA programmes, but it’s just paper. Longer-term GDP-linked bonds issued by a financially independent Greece could be very attractive.
Would it actually matter to the rest of Europe if Greece were to exit? European upside data shocks continue - European PMI, jobs and consumer confidence numbers confirm a slow but steadily improving backdrop. A few years ago we would have regarded such a slew of weak gains as disappointing, but after years of recession, the markets are prepared to read any green shoots as positive. Which explains why European stocks are off to the moon on little more than a shaken-up can of coke.
Elsewhere...this morning it looks like the Austrian government is pulling its guarantee and the restructured Hypo Alpe Adria may miss its bond payments. Chatting to accounts last week about financials there was a lot of concern the market was ripe for a puke. Reasons to sell bank AT1 paper include:
How much new supply there has been and how well held it is?
The recent issue-a-thon looks suspect – some deals not performing.
How much more supply is still to come?
Leverage ratios – Swiss will impose tougher capital ratios and stricter leverage ratios on UBS and Credit Suisse. Higher leverage ratios to come in UK and then Europe.
Market has been very quick to scoop up any bargains – we’ve not seen a proper shake-out yet.
How will longer-dated financial AT1 perform when rates reverse, curve steepens, and we see the bond sell-off begin?
No one really understands banks any more. Capital and regulation are over complex.
Still more fines and regulatory action to come – watch HSBC for signs of how easy it is to deflect pain onto banks.
HSBC and Swiss tax continue to dominate the UK press. I get the sense CEO Stuart Gulliver will be thrown to the baying mob. He's done nothing wrong, but he's failed the "front page of the FT" test: if you ever find your name in the press because of questionable dealings (even if perfectly legal) then short your career longevity. His departure will be regrettable - but someone has to pay the cost. HSBC may have cleaned up its tax planning team and shared names with HMRC years ago, but the bank comes first and life just ain't fair.. (Which is basically what I was told years ago when HSBC booted me out... welcome to the club...)
Meanwhile, a very interesting report was published by the University of Cambridge Business School this morning – “Moving Mainstream: The European Alternative Finance Benchmarking Report”. It highlights that the online European Alternative Finance Market grew 144% last year to nearly €3bn. They expect it could top €7bn this year.
Online alternative finance comprises platform lending like crowdfunding and peer-to-peer business lending. It’s becoming an essential funding source for SMEs, start-ups and other businesses across Europe. The report reckons some 5,801 SMEs and start-ups used online alternative funding in 2014.
Robert Wardrop, executive director of the Centre for Alternative Finance at Cambridge Judge, and co-author of the new report, says: “These new forms of alternative finance are growing quickly, and this growth is beginning to attract institutional investors. Alternative finance, at least in some European countries, is on the cusp of becoming mainstream.”
The UK is by far the largest European country for online alternative finance, at €2.34bn (£1.78bn) in 2014, followed by France at €154m, Germany at €140m, Sweden at €107m, the Netherlands at € 78m and Spain at €62m.
This is critical stuff – the sheer number of online platforms and their diversity is staggering; 65 of them in the UK alone! We’re thinking about how to use them in alternative asset financing business..
Charlie Croker moment.. “Hang on.. I’ve got an idea..”
Bill Blain
44 207 786 3877
44 7770 881033
[email protected]
[email protected]
Posted at 10:08 AM in News & Comment | Permalink