Mint – Blain’s Morning Porridge
Well, that was the week that was… End of another tough quarter and I would sum up the mood as “indifferent cautious worry”. Short comment this morning because a proper breakfast has arrived, and I’m mid-trade..
If my senior economist tells me again the world is poised on the brink of a massive recovery driven by easy monetary policy and the rest, I shall probably scweam and scweam and scweam. It ain't happening..
As we approach the final quarter – the smart money is congratulating itself on playing a slow steady wicket, while the shysters who’ve tried to bat the newsflow are wondering just how toxic their positions might be. Here in Yoorp we’ve been absolutely fixated on the troubled German banking name(s) we’ve rather missed the comedy of manners on the other side of the pond that is Wells Fargo.
When I was a kid I wore a Lone Ranger hat and played with a toy Wells Fargo Stagecoach.. years later the San Fran bank got the ultimate accolade of being made number one on “Blain’s Good Bank List”.. (To be open and transparent about my banking picks, Spain’s Banco Popular was number one the year before that!)
I won’t go into the detail, but it takes real incompetence to be accused of being clearly and unequivocally guilty of fraud, conspiracy, identify theft and racketeering, by congressmen and look like these were the minor transgressions. You would have thought in these media-savvy days the Wells CEO would take care to be a boy scout (be prepared) at his congressional hearing. Nope.
They say history is about events and ideas, and not about people, but when I get down to writing the definitive history of the collapse of the investment banking era, it will feature names like Goodwin, Diamond, Jain, Cayne, Fuld and Stumpf. Anyone else want a starring role? (I can’t quite think who of my chums at HSBC makes the naughty boys’n’girls list.. but… I’m thinking about it.. ;)
My chum Steve Previs comes out defending Wells this morning – asking who the h*ll congressmen think they are.. Who prosecutes the prosecutors? (Nice variation on “Quis custodiet ipsos custodes” (I bet half a dozen pedants challenge my Latin on that this morning..))
Meanwhile, Deutsche Bank is opening lower this morning as stories emerge about clients and hedge funds pulling lines and closing business. Ouch. We’ve heard that before. It’s not the amount of money the bank holds in its liquid trading book, or the fact it will probably get a better deal from the US Justice Department (which apparently wants to settle early to make its soon to be unemployed boss’s CV look better). It’s the fact confidence and business are walking out the front door.
Meanwhile, and away from banking.. it's interesting how there has been a sudden uptick in media stories about what a horrendous mess Brexit is. There are in-depth commentaries on the sage wisdom of former Tory grandees saying “Theresa May has “no idea” what to do about Brexit”, or “Lawyers gear up to sue government”, or Spanish/Japan businessmen threatening to pull factories if decisions don’t go his way.
One would almost suspect there is something of a theme to these dark warnings. If I didn’t know better I might think the disappointed elites who lost the referendum haven’t quite accepted the democratic will of the great British plebeian unwashed? Shurely not?
Anyway, have a great weekend!
Head of Capital Markets/Alternative Assets