Thursday, 16 January 2014

Back for 2014 ... views from an airport lounge

Belatedly I have finally got the time to sit down and start considering the year ahead. Right now I'm on my way back to Europe and therefore have decided that this particular issue of the blog will be in the form of general thoughts as I travel to Europe for the next 3 weeks. I'm hoping that a bit of time off the bike might help stimulate some new ideas for investing during 2014.


Siting in the Singapore airlines lounge at Changing Airport I notice a pretty dark haired European woman in a t-shirt that says:  "I'm bored. I need some inspiration" ... I'm taking this as an omen. Of course as a new age man I feel slightly guilty that it took such a t-shirt to jog me back to the blog, but such is life. 

I think I've listened to about 4 hours of podcasts since I landed here. I used some air miles to facilitate this trip and unfortunately that meant I was subject to some vagaries in my schedule. All-in I'll spend 12 hours in Changing Airport waiting for my connection to Zurich.

The BBC interviews a bond fund manager about Greece. The recovery juggernaut roles on. Greek bonds continue to make gains and the manager (I failed to catch his name) argues that Greece now is more credit worthy than France. This to me was a laugh out loud moment and coincides with the latest revelations that President Hollande has been caught with his pants down in the midst of an affair with an attractive actress, leaving his current first lady somewhat melodramatically hospitalised for shock. Hollande looks to me like a high school deputy principal of sorts. It's a mystery to me what the three most recent occupants of his bed see in the man that sneered at former President Sarkozy's lifestyle and proclaimed that if elected . . . "I will ensure that at every moment my behaviour will be exemplary". Just hilarious. 

Back to Greece for a moment and a reminder that this blog has recently been advocating a cautious move into Southern European assets. Investors need to be aware that much of the recovery phase is already in place and the bond markets have probably seen their best  moves.

On the same podcast there's an interview with the Director of the Detroit Institute of Art regarding a proposal by creditors to sell off the gallery's works. Christies valued 2500 works bought under the auspicious of the City of Detroit directly over the last 100 years. the valuation is not revealed in the interview seemingly to my ears because it might just be too good for the city to resist actioning. Of course this blog would never advocate such a liquidation and I hope the bankruptcy courts validate the legal argument that the works are held as part of a public trust and not as an asset on the City of Detroit's balance sheet. Hopefully the people of the city will agree . . . As painful as it is for them to face the current proceedings.

Changi Airport remains my favourite transit point to Europe even though Hong Kong is newer because the Singaporeans are constantly renewing the asset. One thing they haven't had to change is the transit motel which offers 6 hour blocks to travellers such as myself when connections times at extended and a trip into the City might prove a little taxing on the liver . . .  If you get my meaning. SGD 92 gets you a good sized bedroom and access to the rooftop swimming pool without having to go through immigration. 

The TV in my room had only local channels and so as an ex-resident of this city state I was braced for the usual semi-propaganda nature of the news broadcasts. During one round table on "what makes an Eco-city" I wanted to yell out loud when the moderator asked the usual apparatchiks . . .  "what then do Singaporeans have to give up to achieve Eco-city status?" . . . My response would have been "democracy" . . .  But that would have been too cruel. 

In the meanwhile I noted the ticker at the bottom of the screen . . . The Australian Dollar seemed to have weakened to new lows while I was in the air. Looks like some stronger numbers out of the US and the UK. Sterling looks good with the BoE 2% inflation target finally being hit and therefore the realisation that the days of ultra cheap rates in the UK are coming to an end. The quid pro quo now must be when the austerity policies in certain EU countries (or should that be jurisdictions?) are loosened by the politicians and the central banks stop QE and raise rates. 

Fun fact of the day comes from my old friend Albert Edwards of SocGen. Edwards is the über bear of über bears. Edwards is pointing out that relative gains by investors who poured money into the BRICs countries at the height of the crisis in 2008 has now been wiped out after peaking at 180%. I don't have the piece in front of me so the relative part remains a bit of guess at this stage. Hopefully a reader will send it o me.

It's snowing in Europe and unlike many of the worlds decision makers I haven't been invited to the world economic crisis in Davos. I have to say though if you want to ski on pristine slopes almost free of the usual euro hordes then Davos and the adjoining resort of Klosters are fantastic at this time of year. The secret is getting a room; you see the rationale is quite simple . . . The whole area is occupied by politicians, bankers, NGO'ers and the usual celebrity types all focused on pushing various a genders and positively not skiing. That means that trails are relatively (there's that word again) free. You don't have to go heli-skiing in Alaska to be far from he maddening crowds. 

I wonder if the Davos bankers are like me a bit cynical when it comes to shadow currencies and the Bitcoin fad. Why if the world is recovering hasn't this particular thing none the way of Rubics cubes, hoola hoops and Madoff? I must ask Albert Edwards whathe thinks of the craze. I'm sure Jamie Dimond has a few Bitcoins in a vault at JP Morgan. I was never a big fan of what came to be the current mega-bank that Mr Dimond runs and therefore wasn't surprised that the whole Madoff thing finally aught up with JPM. The financial services industry has contracted sharply since 2008 in part because of the complexity of meeting regulatory requirements, the fact that JPM acted to protect itself first Madoff and failed to report suspicions to regulators as required in a timely fashion still makes me worry about the "Sandy Weill" integrated services model. Take for example UBS who denied this week that they were contemplating a sale of their investment bank (Warburgs 2.0?). I'm sure they'd love to sell the bank, but how do you get a price for capital hungry asset when the full ramifications of new regulations have yet to be worked through. I can only imagine the positive effect on RoE that many of the asset manger type banks (CS, UBS etc) might achieve absent the risk management reserves a sale of the operations in question might see.

The next leg of my journey will hopefully pass without problems. I'll be meeting up with a CFO of a large industrial company for a spot of skiing. I wish over the years I'd spent more time with business people and less with bankers . . . I wonder if they (the business types) think the same thing?



  1. Glad to see you back on the bike blog, even if you're not on your bike.