Thursday, 22 March 2012

Ciao UBS! Ciao Chinese credit . . . .

My old shop is at it again. This time they've hired Andrea Orcel from hugely successful ML. According to the FT Mr Orcel is "one of the City’s most successful dealmakers". I'm sure his hiring had nothing to do with his close relationship with Sergio Ermotti, another refugee from ML and the current CEO of UBS. Can I please point readers to the WSJ's deal blog of 4 March 2009. In that piece the writers of the WSJ did an analysis of Mr Orcel's claim that he had earned ML $550m in fees in 2008. It seems to me that the WSJ's writers were intimating that there is no lack of hyperbole in the bankers claims. Therefore I suggest that someone at UBS read this piece and several others; it might just have some of the more cynical members of the board asking some more probing questions of the executive.

Elsewhere the Chinese banking sector has started to report numbers for the current period. As we already heard from the government things are starting to slow down. What we haven't had to deal with is what that means in terms of growth of bad debt. Remember a lot of debt is passed around like a hot potato. It's constantly being tipped back into the air by those quick enough to flip it on. The problem is that eventually the less dexterous investors get involved and when there's no one else to pass on the debt to they get stuck. Such is China now. All that massive growth in money supply in 2009 created a huge investment bubble that is now coming back to haunt the market. At this stage it's hidden in obscure numbers and ratios. Check out Agricultural Bank of China's numbers today.  Loan impairments are rising, but rather than going into that now I'll wait to see the trend across the entire space.

So, as for a workout today I headed to the gym. I tried the pre-programmed interval training on both the treadmill and the ski machine for the first time. I guess I've become concerned that I just do the same workout every time I hit the gym. I'm therefore officially mixing it up. I actually enjoyed it today. I probably started off with speeds and power settings to low, but I'll build up a knowledge base soon enough.

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