Monthly Archives:

February 2013

Conference Call replay link: the UK’s AAA White Elephant – thank goodness it’s gone, now we can try to grow again.

In old Siam (now Thailand), kings would ruin unliked courtiers by presenting them with a white elephant – supposedly a badge of honour, but actually a dung producing money-pit. As Wikipedia describes it, nowadays a white elephant is an idiom for “a valuable but burdensome possession of which its owner cannot dispose and whose cost (particularly cost of upkeep) is out of proportion to its useful…

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Europe, China and shale gas: euphoria or rejection?

It is commonly believed that – thanks to shale oil and gas discoveries in the US over the past couple of decades – the US is on a path towards energy self-sufficiency.  Subsequent cheaper gas prices are boosting competitiveness in some domestic industries, starting from bulk chemicals and primary metals, by lowering the costs of both raw materials and energy.


But will the US and its domestic …

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6 degrees of Kevin Bacon, 5 ways to catch a subscriber – consolidation in cable

I’d been feeling pretty pleased with myself since last Saturday – I managed to get Sky TV, broadband and a landline installed in my flat. That was until earlier today, when after discussing some of the recent activity in this sector with our telecoms and media analyst, I was left feeling something of a technology dinosaur.

These three services sold as a single package is called a “triple play” …

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Middle East research trip – a rare oasis of attractive bond valuations

My last research trip video to Asia was deemed by our marketing department to be so bad that we all had to be sat down and told what would be common sense to most people; apparently it’s not a great idea to speak to camera next to a busy airport runway, and you can’t see anything if you record yourself in your hotel room at night with the main lights off. So hopefully this effort is a slight im…

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RBS – The Goodwin Lottery?

Vince Cable has suggested that the government’s shareholding in Royal Bank of Scotland should be parcelled off to UK citizens. The UK government’s ordinary shareholding in RBS Group (A shares) today stands at 65.29%, which goes up to  81.15% including B shares (shares with priority over dividends).

Assuming the UK government would distribute A shares only, this would give us roughly 63 shares e…

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European autos, stuck in reverse

French auto manufacturers Peugeot and Renault report full year 2012 earnings this week. If Peugeot SA’s write down announced on Friday is anything to go by – when it took a €4.7bn non-cash charge – the outlook for the company and indeed other European focussed auto manufacturers continues to be a bleak one. European market conditions have been described by S&P as ‘dire’. Overcapacity and genera…

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Should Eurozone governments use their gold reserves to lower their borrowing costs?

Last week we had Marcus Grubb of the World Gold Council come in to talk through the idea that Eurozone countries with high debt burdens and unsustainably high bond yields should unlock the value of their otherwise yieldless gold reserves by using it as collateral, and thereby borrow cheaply for at least that portion of their financing needs. The chart below shows that Germany (obviously one of …

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Monetary policy and the electoral cycle

When deciding economic policy, the buck, so to speak, is left with a combination of the chancellor and the Bank of England. This arrangement exists as politicians should have the final say in a modern democracy, but a modern democracy needs to have a brake on populist politicians, hence an independent central bank.

Today those worlds publicly collide, with Mark Carney, the next governor of the …

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Going Dutch – SNS nationalisation

We have been talking about the emergence of, and the effects of, the financial crisis in our blogs for a number of years now. However, more than 5 years into the crisis even we can be surprised. On Friday the Dutch government nationalised SNS, as capital injections from the private sector failed to appear. This action was undertaken to maintain the stability of the Dutch financial system.

This …

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