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Showing posts from September, 2016

Commerzbank -- cuts dividends and 20% headcount reduction

Well its official

Monday speaking to some friends at Commerzbank it was clear that something was in the air!  No one knew what but senior staff was busy and unavailable for the past few weeks.  Now we know, dividends are out of the door this year (very very serious) and 20% of the staff will be let go -- blaming automation, but in reality what we are seeing is a cut back to the profitable business only. The bank did the same thing in the early '00; They looked at shutting down business and cut a lot of  "fat". Of course, the problem is that today's star can become tomorrow's dog, but that is of no concern to management.  Stop the bleeding is the first order of business!  In reality is that from the mount of the gods (e.g. the CEO's office) came down an edict: "Cut 20% of the workforce".

The impact is always the same:  going down the various levels the bosses decide what team to keep and what team to let go; its easier to get rid of entire teams -- …

Credit Swiss statement on European banks -- That's very serious!

I started writing about the US presidential debate this morning, 48 hours after the event to be able to have some clear thinking:  Its easy, Clinton won, she was prepared and Trump showed us that he remains the "winging kind of guy"  but he did not confirm the reason for not giving his tax returns -- he doesn't pay federal income taxes.

What is much more serious is what's going down in Europe with the banks.  Slightly over a year ago Tidjan Tiam became the CEO of Credit Swiss, a good-ish financial institution that actually has enough capital.  His statement:
“You get extreme movements on the basis of relatively minor piece of news because there’s a lot of uncertainty,” he said, citing “regulatory uncertainty” about future capital requirements and concerns about “potential fines like you’ve seen on Deutsche Bank this week”.  “I think there is also a lot of doubt, a fundamental doubt, is there a viable business model that covers its cost of equity?” Mr Thiam added.  “T…

What the hell?

Ok so I don't look at the markets for a whole day and this is what happens:

Stocks are off big time (now what)Oil prices are in "free fall", well down to $44The Loonie (CAD) just took a big dive Now, the CAD and the price of oil have been linked (correlated) for some years, so the drop of one will impact the other, still the CAD is not doing well today -- a big dive off the USD.  The is also definitive economic weakness in Canada -- but then the rest of the world is not doing too great... As a export country that's bad.
It seems that the new trade agreement between US and Europe are going badly (in fact both France and Germany have said the talks are going badly -- moreover, with elections in the US -- and inEurope) there is limited appetite for new trade deals right now.
Why the markets are off there are the usual culprits; indications are that Q4/16 growth will be sub 2% and therefore its a sign... a sign of something.  Lets be clear after nearly 8 years of an ever…

Markets are falling, save yourself its all going to end...NOT

As expected after a rash of doom and gloom articles, punditry and other lesser events the markets are back up, VIX is way down (low low volatility) and the whole world is good again.  Of course the boys at Zero Hedge (conspiracy nutters the lot) are seeing the end of the world everywhere, I just don't.  Also I don't see massive growth anywhere, I see a stagnant world with little inflation (maybe a bit of deflation), excess labour availability and very low growth.  Companies continue to generate massive profits, although its hard to see how they can squeeze  that lemon anymore than they have so far.
The case of Wells Fargo is a case and point.  It is evident now that all "the little people" will pay for the desires of senior management.  Apparently the person in charge of the entire department took retirement last year and a US$ 125 MM payoff, and senior management "knew" that things were rotten in their new accounts and credit card groups.  Moreover, the b…

Bankerster -- Wells Fargo

Last week the press announced that Wells Fargo had let go of 5,300 employees following the discovery of a massive fraud.  Turns out that WF's bankers were creating fake accounts for customers and then charging fees on these fake accounts.  this is a multi year fraud that has been going on for some time.  This morning the CEO of WF was testifying before congress, turns out he could not remember anything, nada, probably not entirely sure of his name.
For the CEO of WF there are two choices:  (a) I knew of the whole thing and I will resign and go to jail for defrauding clients orrrr (b) I remember nothing, I will maybe keep my job, I will keep my bonuses and will not go to jail.  Guess what road the CEO chose; really this cannot be a surprise to anyone.
The system is such that you can be a liar (or economical with the truth) or not remember your name and it will a go away, probably.  Now if I am Warren Buffet (he owns a big chunk of WF) I will make sure that the CEO, the COO, the CF…

the great correction? Maybe maybe not!

Yesterday the market was awash with rumors of market collapse; sure the S&P500 was off a bit (not doing too great this morning), but its still above the 20 day moving average -- so not really a correction yet.
The problem is always the same; corrections are brutal, but market rises are slow and gradual -- with occasional retracements -- hence the 20 day moving average, as a sounder barometer of market health.  Sur prices are high with a p/e of 25x the market is very expensive, but then what do you compare it against?  I was reading an article about Mexico's economy; with regards to the economic achievements of the country -- GDP growth is in the range of 2.5%, inflation is at 3% and government spendings are out of control -- in 5 years they have nearly doubled.  However, over the past five years the government has enacted several major reforms (educations, energy and telecommunication).  However, there was a promise of 5% GDP growth.  Therefore the journalists call the curren…


It has been 15 years since that faithful evening -- yes evening because the events that occurred Monday morning in NYC occurred at 9 pm in Hong Kong, where I had just landed.  In fact, I had just checked into the Grand Hyatt in Hong Kong had had tuned on the TV, where on CNN the events were unfolding.  Like everyone else I had assume that a small(er) plan had hit the World Trade Center, as it had happened nearly 40 years earlier to the Empire State Building.  Then other news started trickling in, the attack against the Pentagon, the second tower and finally the aircraft that suspiciously crash.
The reason for my being in HK was that I had schedule a number of meetings with Asian airlines, as I was then an aerospace banker.  As the news unfolded I and my colleagues first digested the news and by midnight (local time) we had booked flights out of Hong Kong for the morning -- going back home to Singapore and LA.
Those scheduled to go to LA took 10 days to get home, and in fact eventuall…

Trump Fatigue

Is this how he wins?  Last night Trump said:  I was against the war in Iraq -- not true, there is tape that shows he said the exact opposite.  He was for the war until he was not for the war -- actually when it turned into such a nightmare for G.W. Bush.  Back to my point, we don't even pay attention anymore.

I fact, I am almost certain that a vast majority of Americans just don't care anymore of the incessant lies, because they have been though that all politicians are liars, and so Clinton must be lying too, about her emails, Benghazi, Clinton Foundation -- pay to play etc etc.  America has not had a candidate like Trump, ever, a brazen self aggrandising lying lier that cares nothing about details (or facts) who is uncurious. aggressive and vengeful, just the kind of guy you want with the nuclear codes...

Last night there was a little TV thing where a TV morning host (should have stayed there) asked insipid questions of Trump (who even then didn't answer) and basically t…