Brian Bollen's Blog

Another Mighty Landmark

This week marks another personal landmark, in that it was 40 years ago this week that I made my first-ever sale as a professional writer.

It was of a one-line topical gag, to The News Huddlines, at that time a popular show on BBC's Radio 2, produced by Jonathan James-Moore.

It was the very first time I had submitted any material to the programme and I hit the target, and continued to do so for the next 18 months or so.

I can still remember almost word-for-word what the joke was, and to the penny how much I was paid for it (plus a 65% repeat fee as the show was broadcast on Thursday evening and repeated on Saturday afternoon).

The following evening I had another gag used on Weekending, BBC Radio 4's then flagship topical satirical show., which was repeated on Saturday evening

In the space of that 24 hours I went from being an aspiring international banker at Midland Bank International to knowing that what I really wanted to do for a living was to write.

I knew I wouldn't be able to do it selling one-liners but I started scanning The Guardian Media section on the Monday morning hoping to find something suitable...

The Lauterbrunnen Valley

If you haven't seen it for real, take a look at the breathtakingly beautiful Lauterbrunnen Valley in Switzerland's Bernese Oberland, courtesy of Rupert Maas.

Home-made stuff

I've been busy making edible things in the past two or three days.

Including a pizza, tablet (a traditional Scottish sweetie) and an attempt at Strathaven Toffee that hasn't turned out quite right, but is still frighteningly edible.

I don't think this was a try

I don't think this was a valid try: https://www.bbc.co.uk/sport/av/rugby-union/68395119.

The player's feet were in touch when he put the ball down and one of the first lessons I learnt when starting to play rugby back in 1968 or 1969 was that even being level with the touch line meant you were out of play.

Why on earth did he not just stay on his feet?

Saturday Night With The Cassiopeia String Quartet

I'm not quite sure how to put this, but I spent Saturday evening in a cultural environment, soaking up the Mozart and Beethoven output of the Cassieopia String Quartet at St Lawrence Church in Towcester, Northamptonshire.

The works on offer were Mozart's String Quartet No 19 (Dissonance) K 465 in C major and Beethoven's String Quartet Op 18 No 4 in C minor.

Thank you Lizzie Rowland (Viola), Rosanna Lowe (Cello), Thomas Bentley (Violin 1) and Jacob Gritt (Violin II).

I stand in awe of their technical excellence, discipline and concentration and wish them the best for the future they deserve.

Another Day, Another Freelance Milestone

Today marks 31 years to the day that I left the Financial Times for the last time as a staffer and launched into the freelance world (January 22 1993).

When I arrived home that Friday afternoon there was a commission sitting on my fax machine, from Will Goodhart, the then editor of Euromoney Corporate Finance, for 3,000 words at £250/1,000.

I hit the ground running on the following Monday morning, have barely stopped since and quickly learnt a prime lesson: no matter how busy you are, you never stop looking for work.

I bet the Euromoney rate is still somewhere around that level, but feel free to correct me if I'm wrong! 😀

UK is a hub for innovation, but business still struggling to scale up

YFM Equity Partners has released new research today showing that despite the fact that UK entrepreneurs generate £950bn in annual revenue, entrepreneurs in the most innovative regions are struggling to access the funding they need to grow. The findings are included in YFM’s Entrepreneur Economy report. 

 

DHO Journal 2023

The DHO Journal 2023 is now out.

 

Anyone out there fancy a cycling challenge?

Once upon a time I might have thought about attempting this, but those days are behind me now...or are they?

Anyone care to join in?

 

Anyone out there fancy a cycling challenge?

Once upon a time I might have thought about attempting this, but those days are behind me now...or are they?

Anyone care to join in?

 

Braverman must resign

Suella Braverman must resign. Simple as that.

But then, she should have been sacked the moment the story came out in the press that she regards herself as being above the laws that she, as home secretary, is responsible for.

She MUST resign.

No need to be alarmed, says Bank of England; so why am I suddenly alarmed?

The Bank of England has, I just read in The Times, in effect said in the wake of news that UBS will rescue Credit Suisse, that there is no need to be alarmed about the British banking system.

Why does that send a chill down my spine?

 

 

It was 30 years ago today

It was 30 years ago today.

No, not that Sergeant Pepper taught the band to play, but 30 years since I left the Financial Times building for the last time as a full-time staffer and went freelance. It's been three decades of ups and downs, but I've never regretted it for a minute. Standard office life was never for me.

Here's to the next 30!

The issue of WHT reclamation: the view from Northern Trust

Helping out with a recent feature I wrote about withholding tax reclamation for Asset Servicing Times magazine, Howard Rapley, global product lead, securities services at Northern Trust, emailed his views on the topic right on deadline. Unfortunately they did not make it through to the published pages, but Northern Trust has agreed that I can use Howard's contribution here.

Brian Bollen: What are the main themes and big issues currently relating to WHT that affect asset managers, custodians and their clients and other market participants or market servicers? 

Howard Rapley: We see a convergence of two key pillars, harmonisation of the withholding tax landscape alongside increasing attention and governance from regulators.

Every market has its own set of rules, typically with specific documentation requirements and manual handling processes. This makes sense if you consider that entitlement has to be evidenced against local rules, however it places technical and administrative burdens on both clients and service providers working to pursue relief across multiple jurisdictions.

For instance, one of the challenges faced by clients is completing the various different tax forms while ensuring their technical veracity. Asset managers and custodians face the similar challenge of navigating a web of disparate tax procedures at scale, whilst also supporting their clients.

Additionally, with increased scrutiny from tax authorities, we anticipate the need for even more data and information sharing across market participants. This forms the basis for industry discussions around harmonised tax systems to drive a more efficient tax landscape.

BB: Have those changed in recent times? 

HR: We have seen an increased focus on effective beneficial ownership, which extends through many different concepts from; legal form and structure, tax transparency, evidential documentation, transaction activity, and trade motivations.

BB: Have there been recent regulatory or cultural developments in any major markets that we ought to be more aware of?

HR: As part of the continuance of market change, the last six months presented a number of market consultations in the tax space. These afford the industry an opportunity to consider initial proposals, provide feedback, and engage with policy makers directly to influence change. Notable recent developments include:

EU: Consultation on Action 10 of the Capital Markets Union (CMU) plan to alleviate tax associated burdens to cross-border investment.

Germany: Updates on the Reform of the German Withholding Tax regime, including modernisation of withholding tax procedures.

Finland: Early adopter of the Tax Relief and Compliance Enhancement model (TRACE), a regime that is now live but one that has undergone extensive industry discussion over many years.

Sweden: A new proposal that is under consultation and shares some attributes of the Finnish framework.

Denmark: An example of a live consultation that could see changes to the mode of tax reliefs available to investors, depending on their profile.

Poland: not a regime overhaul per se but an example of an extremely fluid sequence of legislative changes. 

Market and regulatory changes are not new phenomena. Custodians and service providers have always needed to navigate a complex and disparate rule book to provide global tax services to their clients at scale. These market developments reflect this and illustrate a range of perspectives – from those taking a central view on opportunities for market harmonisation to those with a more insular view.

However, the emergence of innovation and new technology heralds the opportunity for a paradigm shift, where key concepts of governance and market efficiency may more easily co-exist. After many years of industry debate, we could be at the precipice of real transformational change meaning that market advocacy efforts and input into industry consultations have never been as important in the tax space as it is right now.

BB: Can we expect to see further technology or infrastructure development? 

HR: It is clear that digitalisation will reshape financial services and regulatory changes continue apace to ensure the banking system and all of the inherent layered protections remain robust and resilient. This presents interesting opportunities to create a brave new world where, for instance, digital tax identities integrated within distributed ledger technology might connect beneficial ownership principles to the asset and income record.

One of the benefits of digitalisation will be the step-away from iterative, gradual, and layered change towards a first-principle approach. The global tax system is full of market standards that have developed over time through a layering of rule changes making them complex -- not necessarily by design, but by evolution.

Yet opportunities will exist for all parts of the value chain to innovate. And for those providing tax services to their clients, this may provide them with the edge they need to increase alpha, improve client experience, and differentiate their product.  

 

 

 

 

Sadness Boosts Sustainable Investment

 Emotions have a strong influence on purchasing decisions. Because of the growing popularity of assets with a strong focus on environmental, social and governance (ESG) goals, scholars decided to look at what role emotions can play in determining people’s preference for sustainable investments.

In a new paper published this month in the journal Economics Letters, professors Alexandre Garel (Audencia), Adrian Fernandez-Perez (Auckland University of Technology) and Ivan Indriawan (University of Adelaide) found that pessimism and worse mood are associated with greater investment in sustainable assets.

US Heads to the Moon, but European Inflation Remains on a Rocket Trip

Mark Dowding, CIO of BlueBay Asset Management, looks at UK recession risk, and European, US, and Japanese inflation.

Global yields continued to move higher over the past week, as markets discounted a progressively more hawkish path for monetary policy in the months ahead. In the US, money markets now project rates peaking around 4% at the end of Q1 2023. With inflation now on a downward trajectory, we think this is broadly in line with fair value. The latest print on PCE Core inflation (the Fed’s favoured measure) stood at 4.56% in July, down from a peak above 5.3% earlier in the year.  By the end of 2022, we think that this reading could decline towards 3.5%, as base effects push the year-on-year rate lower. A strong dollar, declining oil prices and a cooling in demand, following fiscal and monetary tightening earlier in the year, are all helping to restrain price pressures. However, the Fed is likely to remain very alert to secondary inflation effects, in particular, evidence that wage costs are accelerating in a relatively tight labour market.

Energy Crisis and Inflation Dampen Growth Prospects

Nordic corporate bank SEB has released its latest Nordic Outlook report this morning. The report contains SEB economists' views on Swedish and worldwide economic developments, including the policy dilemmas brought on by the energy crisis and accelerating inflation, the impact of China’s strict COVID-19 policy on long-term growth, key forecasts and analysis of other major trends affecting the world economy. 

It also includes an in-depth article on the economic effects of the war in Ukraine, and examines quantitative tightening in monetary policy, mild recession expectations, and Sweden’s upcoming election. 

Please see the top line points below. A link to the full report can be found here; the following represents the contents of the associated press release, ad verbatim.

Fed Affirms Hard‑Line Approach to Taming Inflation

In Jackson Hole, Federal Reserve officials unequivocally emphasised their commitment to bringing inflation under control – even as the U.S. economy slows.

By Tiffany Wilding, North American Economist, and Allison Boxer, Economist, at PIMCO

Market participants listened closely to Federal Reserve officials at the annual symposium in Jackson Hole, Wyoming, for any sign of how committed the central bank remains to fighting inflation amid concerns about the associated costs to growth and employment.

PIMCO: Fed Reaction

By Tiffany Wilding, North American Economist at PIMCO

• As widely expected the Federal Reserve raised their target interest rate by 75 basis points taking the midpoint of their target rate range to 2.35% - just below their estimate for a neutral policy stance in the longer run.
• At the press conference Chair Powell also guided that “modestly restrictive” monetary policy is warranted by the current economic fundamentals, including elevated inflation, and mentioned that another outsized move in the Fed Funds rate may be necessary in September in order to ensure monetary policy is restrictive.

The US economy is teetering on the brink of recession

The US economy is teetering on the brink of recession, World Economics has stated this morning.

Business activity indicators all remain close to the 50 "no growth" line. Business confidence is actually sitting right on the 50 no-growth fence. Both sales and market growth indices fell in July, the former just below and the latter just above 50. The staffing index rose sharply year-on-year, but remained at a lowly reading of 48.1. The overall sales managers index remained marginally under the 50 no growth line. Prices continue to rise, but at a rapidly diminishing rate, perhaps the most encouraging sign this month.

PIMCO: Corporate Credit - Capitalising on Potential Disruption

A Q&A with Christian Stracke, global head of credit research & Adam Gubner, head of US corporate special situations at PIMCO

Record corporate leverage and challenging macroeconomic factors are combining to create a compelling investment environment for managers with flexible capital. Christian Stracke and Adam Gubner explain why.

Why is the credit market compelling right now?

Stracke: There are three key reasons. First, there is a limited supply of flexible capital. Second, there are global macro headwinds. And third, we are seeing a significant increase in corporate leverage. The market is increasingly fragile against a backdrop of rising rates, higher inflation, and slowing growth – this supports an increasing demand for that flexible capital.

Can you explain the need for flexible capital?

Gubner: Demand for private credit is growing from a variety of factors. Assets under management in the private debt space reached a 20-year high of $1.2trn in 2021 from $50bn in 2001. The sheer growth of the market means borrowers often have a greater certainty of execution, while the private market is often more flexible for the customised financing terms required to meet certain unique borrower needs.