Wednesday, 30 July 2014

Small things

At the request of some readers I've decided that instead of my usual once or twice a week mega posts I'm going to start to add some daily commentary on things that have caught my attention. I intend these pieces to be snippets that the blog may revisit in extended form later so as to provide a better track of the progression I go through in producing the big posts.

1. Yukos - 50bn not a game changer but interesting

Former leading shareholders of the Yukos oil company were awarded $50bn in damages against Russia. The Permanent Court of Arbitration in The Hague ruled that Russia had basically bankrupted the company for political reasons. The bulk of the assets now reside in state oil company Rosneft.

It's hard to have much sympathy for the beneficiary shareholders of the $50bn as they acquired Yukos on the cheap in 1995. Investors can just look at this as another reason to avoid Russia or they could look to the future when the rule of law may take hold. The beginning of the end of Putin's power? I think not. Certainly it's embarrassing, but nothing more at this stage. I tend to take the view that this plus Argentina plus a number of smaller events shows investors that countries and companies cannot hide behind international boundaries and effectively "shaft" people. Know your rights and be prepared to use any court you can.

2. Crazy end of the world theories

Paul Singer the founder of Elliot has of late been more in the headlines for doggedly pressing the Argentinians over their propensity to default on global obligations (as pointed out in yesterdays blog). Now in what for this blog is an important piece of insight into the world of risk management Mr. Singer has revealed his biggest fear is an electromagnetic pulse destroying the world. This blog will  actually acknowledge that this is possible, but modelling it may cause me to have to use many zeros after a decimal point before finally placing a one in the sequence. I put a nuclear war a couple of zeroes higher up the list when building my latest monte carlo of global risk factors. Perhaps James Bond movies should be banned anywhere near Elliot HQ?

3. How low will Eurozone yields go?

German 10 year bond yields dropped to 1.12% yesterday. That for all intents and purposes is an all time low. The ECB shows no sign of tightening rates at any time soon and therefore this blog will make the call that German Bunds can trade under 1% in yield. If that happens expect Germans to spend most of their time buying up property in the southern states of the EU and re-mortgaging properties and assets in Germany. There's a huge shift of money south and investors elsewhere in the world need to be aware that there's still money to be made in the eurozone. Just don't mention "bubbles ".

4. Bullish women's cycling

La Course, the women's race held on the Champs Elysées circuit on the same day as the last stage of the Tour de France this year was a great watch. The worlds best cyclist Marianne Vos won after some crashes in the peloton. Footage from on-bike cameras has started to come out. Check out the action:

Right now women's cycling is cheap. They're crying out for investors. If ASO, owner of the TdF introduces a 1 week stage race next year along side the men's tour the media exposure is going to grow fast.  Forget the mommy bloggers and embrace the marketing opportunities inherent in a sport that appeals to a huge constituency who have spending power. 


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