So long farewell, . . . it's my way or the highway . . .

After I sent out yesterday's blog I was listening to the Bloomberg headlines when I heard a piece on Credt Suisse looking to announce along with their results next week a further cut of 4,000 jobs. Tacked on the end was a further rumor that UBS would do likewise and would look to concentrate on the core . . . i.e. Zurich. For those of us who've worked for the Swiss banks it was always implicit that where possible you didn't mess with the Swiss offices, they were sacrosanct. In fact where possible managers were always encouraged to look internally for young Swiss talent. So be it. I made a mistake once of going internally to look good in front of the Swiss and I swore afterwards I'd never play politics like that again. The fact that UBS will start cutting at the core tells me a number of things:

1. The Swiss Government are willing to forgo Swiss jobs in order to shrink the bank from a position of too big to fail
2. Returns in Investment Banking are currently not big enough to justify the systemic risks also encompassed by the business
3. Sergio Ermotti the CEO is clearly in control now
4. The Andrea Orcel hire was a waste of time and dare I say it . . . money

In relation to all this comes my favorite quote of the day via the FT:

“Investors are keen for UBS to shrink capital from the low returning investment bank to reveal the value of wealth management franchise,” Huw van Steenis, analyst at Morgan Stanley, said.

I wonder what Mr van Steenis thinks of the shares he owns in Morgan Stanley . . . perhaps I'm a little unfair because James Gorman, MS CEO is definitely skewing towards wealth management.

If that was the most interesting thing from investment banking in the last 24 hours, then the most interesting financial product I've seen in the same period was the announcement that the New Zealand Government may issue at least NZ$1 billion ($817 million) in inflation-linked debt by syndication.

Coincidentally the lead manager will be UBS and they mailed out a press release saying the bonds would carry 2% coupon and  be linked to an inflation indexand mature in September 2025. I'm getting this from various news sources and would of course be interested in the termsheet if anyone has it. I kind of like this product at the moment as I believe that the inflation geenie is hovering close to the opening of the bottle. If I believed in the NZ dollar, or lived in the land of the long white cloud I would definitely be buying these for my pension fund.

I know I'd be a buyer of Australian inflation linked paper at the moment. Aussie Inflation jumped during in the September to 2.1% v. an expected 1.6%.


There was a big jump in electricity prices and the new carbon tax had moved inflation up faster than than economists had forecast. As usual the market focused on the fact that it was still comfortably within the RBA’s target range of 2 - 3% . . . therefore prepare for another rate cut. Maybe, but I'll be watching inflation and hoping we can get some AUD inflation linked paper soon.

We've had best quote of the day, so what about best headline:

The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a three-month high of 49.1. I believe I'm correct in saying that reading of 49.1 is still implying a contraction in conditions. I know all the usual CNBC arguments will be about flattening or stabilizing trends etc, but big improvement? Really?

A concerned reader sent me the a picture of US road racing champion Tim Duggan's special edition Cannondale Evo. The saga of the slipping handlebars clearly influenced a few of you to check out your own setup.

In the above you'll notice that Duggan is using the FSA OS99 CSI stem and SL-K handlebars. I have adopted the stem and managed to get the same SL-K aluminum handlebars on sale for only 53 bucks! I had some doubts about the stem because I hadn't seen another rider with one of these installed. I'm leaving m y current K-Force Nano bars on for the moment, but will change next time I decide to freshen up my white handlebar tape. The main benefit would be a greater stiffness . . . and maybe even a safer ride.

Lance-gate continues with more ex-team mates outing themselves and Lance. It's looking more and more like an exercise in arse covering to me. A friend in NY sent me a piece in today's Cycling News detailing David Millar's response to Rabobank's decision to leave cycling. It's a very thoughtful piece by a man who's recent book Racing through the Dark details his own spiral down into cycling's drug culture. The response is an open letter that criticizes Rabobank for abandoning young riders trying to compete without drugs for the sake of their own corporate image. I like the idea of sponsors responsibility, after all Rabobank benefited from many years of winning through drug boosted riders who knew that if they didn't dope they'd be on the street. I encourage all readers of the blog to take a look at it and think about what Millar is saying. Maybe Nike, who benefited most from Lance's single minded pursuit of victory might be better off taking over a team and setting an example of how to give something back.

Dear Rabobank,

Before I explain my initial reaction to your announcement of pulling out of sponsoring professional cycling (@millarmind: Dear Rabobank, you were part of the problem. How dare you walk away from the young clean guys who are part of the solution. Sickening.) I’d like to tell you what Rabobank represents to me as a cyclist, and a British cyclist at that.

It represents the Netherlands, from the orange kit to the comprehensive national support across the board, from grassroots level to men’s and women’s professional cycling. The Netherlands is the cycling nation, that’s how we see you, the fact you had a national bank who was willing to nurture and carry your nation's cycling hopes seemed so wonderfully appropriate.

There was a certain jealousy for me that I wasn’t Dutch, that I didn’t have that sporting ladder to climb up, from racing as a school boy to one day doing the Tour de France all within a national team. Of course, now it does exist, with Sky whose sponsorship starts at grassroots participation right up to their British Tour de France team. A sponsor that is inspiring a country to become cyclists on a very similar model to what Rabobank have done. Contrary to Rabobank and the Netherlands this is only a recent development for the UK.

I have raced against Rabobank riders since I turned professional in 1997, and it’s always been a powerful team, a team other professionals have been envious of with its big budget and massive support and strong national affiliation. Like me, and many others, it lost its way. To the point where it was accepted by Theo de Rooij that doping was tolerated within the team. The truth, which the world is now accepting, is that at the time doping was tolerated within the sport to some degree.

The downfall of Lance Armstrong has opened the world’s eyes up to what most of us within the sport knew, if not in the detail that the USADA file has revealed, that to win the Tour de France and many other big races was impossible without doping for a certain period of time. Of course races were won by clean riders, and many clean riders achieved remarkable careers, especially in hindsight, without doping, but the bottom line is that doping was rife and necessary to be the best.

Who is responsible for this? Most of us involved in professional cycling were in some way or another, it became a way of life. I’d hoped the Festina Affair would force change but the problem was too deeply embedded to be changed by one event.

It took several changes to take place. First came the anti-doping controls, they became more advanced, the drugs that had been previously undetectable became detectable.

Doping became a criminal offence in many European countries allowing for criminal investigations to delve deeper than any anti-doping agency or cycling governing body ever could; it was a criminal investigation that discovered my history of doping.

A whereabouts system was put in place, giving anti-doping agencies the ability to do doping controls out-of-competition effectively for the first time; out of competition being the time when most doping took place.

As the anti-doping measures became more effective more riders and teams found themselves being faced with doping scandals. This had the effect of sponsors asking questions, or simply withdrawing their sponsorship, thus making team managers more responsible for the actions of their doctors and riders. Some teams reacted more strongly than others, Marc Madiot and FDJ are a prime example of a manager and sponsor who made the decision in the late 1990’s to eradicate doping from within their team. They didn’t rely on anybody else, they did it themselves.

This is where my critique of your withdrawing stems from. The sport in the past five years has cleaned up massively, my team and our sponsors came into professional cycling with the intention of having a 100% clean team, we knew what the sport was about, Jonathan Vaughters our team manager is an ex-doper, I was the lead rider and I am an ex-doper. Our sponsors understand what professional cycling is about because we have explained it to them, they share responsibility with us, we have explained cycling’s history and how it is our intention to change the future through our actions every day.

Rabobank the cycling team is an institution, the amount of dreams that have been shattered by your pulling out are uncountable. You have some of the most amazing athletes, I’ll mention Marianne Vos and Robert Gesink because they are the most famous, but there are many more who do not deserve to pay for the mistakes of the past.

Those of us who make up the past have to take responsibility for the future.

You have stood by your team through scandals, I credit you this, but did you really try hard enough to prevent those scandals before or after they happened? I don’t think you did. Is your team clean now? I believe it is. Should you be proud of your cycling team and what it represents today? Yes, you most definitely can.

Yet you choose to pull the team, and within your statement make this remark, “We are no longer convinced that the international professional world of cycling can make this a clean and fair sport. We are not confident that this will change for the better in the foreseeable future.”

You are wrong.

We have made a huge difference these past few years. I KNOW it is now possible to win the biggest races in the world clean, that is a fact. I can empathise with your disillusionment with the sport, but please do not belittle all the work we’ve done and difference we have made. You are throwing away the chance to be part of the future of what is, in your own words, “…a beautiful sport.”

I admire your decision to not discard the teams immediately but to have them race in unbranded jerseys next year, many other sponsors would have seen this as an opportunity to jump ship. This says something about you. Maybe take some time to understand the sport, find a way to be part of the continued change. I believe all of us who were part of the recent history of cycling have a responsibility to accept we made mistakes (deliberate or not) and a duty to fix what went wrong.

That is the ethical thing to do, and more importantly, it is our duty.

Well said . . .

Ciao!