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Finance

Allegations, eh?

Ashley Reading, left, whose daughter is dating the footballer Scott McTominay, right. There are allegations that some investors’ funds were “used for the purpose of the Reading family”

Undoubtedly such allegations will prove to be wholly and entirely unfounded.

It was an unregulated investment scheme that promoted returns of up to 18 per cent a year

Entirely and wholly.

Fortress’s borrowers included the former agent of Gareth Southgate, the England football team manager, and Kevin Maxwell, son of the late media baron Robert Maxwell.

Absolutely.

I do think this is unlikely

Given the “seismic” windfall millennials are set to inherit – £71 trillion in assets in the UK alone, or more than £500,000 apiece for those inheriting from the wealthiest 10pc, according to Knight Frank – the future looks contentious.

Total value of household assets in UK (so, financial wealth, pension pots and property) is around £15 trillion.

Sure, we can mutter about overseas assets and all but really, not that much.

How ‘selfish and entitled’ millennials are capitalising on a £71 trillion goldmine
As baby boomer parents die, a record number of wills are being challenged in the courts

Both subs and the journalist seem to believe it though.

Charlotte Lytton

Tsk.

Erm, why?

A stronger banking industry, with greater lending capacity, would help strengthen the economy, make it easier for companies to raise capital, and distribute money to where it was needed around the Continent.

It’s nicely rah rah but there’s no particular logic to it.

The background is let’s have lots of mergers to create megabanks across Europe. Didn;t Fred the Shred already try that?

Banks really don’t just create free money

Y’all y’all will recall the Great Potato declaring that banks simply do not need deposits. They only take them as a favour to customers.

Profits at Lloyds Banking Group fell by more than a quarter in the first three months of the year after Britain’s biggest domestic lender was hit by tougher competition for deposits and mortgages.
….
Its net interest margin, which is the difference between the interest it pays on deposits and charges on loans, fell to 2.95 per cent from 3.22 per cent a year ago, which it blamed on “headwinds due to deposit churn and asset margin compression, particularly in the mortgage book as it refinances in a lower margin environment”.

Net interest margins are a key measure of banks’ profitability and had surged since late 2021 as the Bank of England lifted interest rates to combat inflation. This is because commercial lenders were slower to raise the rates they paid to savers than they had been for their borrowers, boosting their margins and profits but prompting criticism from politicians and regulators that depositors were being treated unfairly.

If banks don;t need deposits then why are they competing for them on price?

Err, yes

I have absolutely been borrowing more than I previously did, everything costs more and wages are low in rural Alabama,” he says. What affects him the most, he says, is the high interest on his debts.

“If you have to borrow money and can’t get it from a bank, you are going to pay interest rates at 35% and that’s just ridiculous. I took out a loan for $2,000 for 24 months, and I have to pay back over $4,000.”

The Guardian finds those Americans being hammered by high interest rates. Or, perhaps, their own choices.

They shoot bosses, don’t they?

Evergrande, the world’s most indebted property developer, has been accused of fraudulently inflating its revenues by £62bn.

The China Securities Regulatory Commission said Hui Ka Yan, the founder of property giant Evergrande, “instructed other personnel to falsely inflate” the company’s accounts in 2019 and 2020.

Who is – and quite literally, possibly at least – going to get it in the neck for this? For anyone who thinks this is the only such thing in China’s property industry is dreaming.

Well, guess the money has to go somewhere

Victims of the London Capital & Finance (LCF) scandal have demanded Google pay back tens of millions of pounds that was spent on misleading digital advertising to promote the alleged “Ponzi scheme”.

The High Court heard last week that a marketing agency working on behalf of LCF paid Google more than £20m to promote its financial products.

Many of the 11,500 people who put money into LCF did so after discovering it through Google. LCF, which sold “mini-bonds” to investors, raised more than £237m before it collapsed in 2019.

But if 10% of the funds raised are spent on just one part of the marketing programme then imagine how high the internal rate of return has to be to privide a margin for investors.

Assuming it’s on the up and up in the first place of course.

Gary Stevenson’s telling us all about banking again

There’s no real surprise this is being run in The Guardian. They don’t understand enough economics to know that it’s tosh.

The next year, 2011, I placed a bet. It was a bet that the hundreds of billions of pounds of economic stimulus being poured into the UK and US economies would not reach the people who needed it. It would settle in the pockets of the richest, who would use it to buy the homes of the poor, and the economy would never recover. That year, I was Citibank’s most profitable trader in the world. They paid me $2m and asked me to do it again. It was around about then I realised the whole economic system wasn’t working.

That wasn’t a bet, that was a certainty. On the basis that the Fed and the BoE actually announced that they didn’t want that QE cash flowing into the real economy. The entire point and aim wsa that it should sloh around the financial markets. The effect – the desired effect – was to lower long term interest rates and thereby push people out along the risk curve in pursuit of yield.

If they’d actually desired QE to be money that govt then spent into the real economt then they’d have done tens of £ billions of it, not hundreds of £ billions of it. Because – as lockdown QE showed – if you then spend vast waves of newly printed money into the real economy then you trigger inflation.

Traders do not care about the budget, because the budget is not for traders and the budget is not about the economy. The budget is a piece of theatre meant for your consumption. It is a cute moment – a photogenic moment where a multimillionaire can hold up a red box and bribe you with a bit of your money, while they and all the other multimillionaires bankrupt the government with monetary and fiscal stimulus packages that seem somehow to always end up in their own pockets. They then use that money to buy assets such as all the houses that your children will need but never be able to afford to own.

Very Guardian economic analysis, isn’t it?

And the traders, traders like me, we sit in skyscrapers and we laugh. Because we know that Jeremy Hunt and Rishi Sunak, who are multimillionaires just like we are, will never tax us. We know that we will get richer and you will get poorer, and our lives will get better, and yours will get worse year after year after year. And each of us are paid millions of pounds every year to bet on it. To bet on it, instead of telling you.

Very, very, Guardian.

Erm, no

Church of England’s pension fund invests over £30m in water firms despite sewage crisis

Not really, no:

The Church of England’s pension fund has more than £30 million invested in water companies despite the sewage crisis, according to a new documentary.

At some point in the past the Church pensions invested some indeterminate amount of money in het water industry, which is now worth £30 million.

This isn’t the same as has just put £30 million in.

And given that the Church pensions are going to largely reflect the overall market – sensibly – then it’s probably right that they should have been in water.

Further, I’m really pretty sure that the big complaint about water is that the bastard capitalists have been getting all the money. That is right, isn’t it? Which means water is a great place for a Church pension to be invested. Of course, they may not, in fact, have made money in water. But that does mean that the capitalists haven’t been getting all the money.

Seriously? Idiots like this get elected?

Dame Siobhain McDonagh, a Labour MP on the Commons’ Treasury select committee, said: “Just before Christmas, Aurelius released a statement saying they would ‘re-energise the business’ and ‘deliver the next chapter of success’. Less than three months later they are putting the brand into liquidation and look like they are first in line to be paid. You have to question their sincerity. Did they ever intend to grow the business?

“The same statement said that The Body Shop has been a pioneer in corporate social responsibility. If they want to live up to that, they had better put their shop and office staff first before paying out to themselves. There are more than 2,000 jobs at risk and I want to see them protected before private equity firms profit from this deal.”

Wages and redundo payments are protected (or whatever the word is – ah, preferential debt) creditors. They get paid first.

This is, entirely and wholly, bullshit

For a start it’s Owen Jones in a beanie. But other than that:

Today we are having tea and biscuits at his flat overlooking other multimillionaires’ yachts in London’s Docklands, but Stevenson remembers a time, as a child in Ilford, east London, when he had barely any clothes apart from his school uniform. That gave him a near-manic drive to succeed in the privileged world of the City, while also leading his rivals to underestimate him — and pay the price. “Rich people expect poor people to be stupid,” Stevenson says.

Traders in The City – and yes, he was a trader, not a banker – have always come from those who know how to trade. Half of them still wearing white socks with black shoes by the time they retire with their millions.

Many a City house has prospered by having an Irish Marquis, or one of the dimmer Emglish Viscounts, – but with good manners of course – to usher the money in the front door and half a dozen costerboys making the money in the back room. The costers being paid an order of magnitude more than the poshos.

Class matters in The City – because this is England, of course class matters – but the City is deeply, deeply, unsentimental about class. Certainly the least sentimental place about it in the entire country. If class can be used to make money then it will be. So too if talent can be used to make money then it will be. And when there’s a distinction between class and the ability to make money then it’ll be the money that wins.

If that Irish Marquis trades as well as the white socks lad then he’ll be paid as much as the white socks lad. If he can’t he won’t and will remain on a tenth the sum.

It’s a meritocracy for fuck’s sake.

Right, OK

Women would need to work for an extra 19 years to retire with the same pension savings as men, according to data from the Pensions Policy Institute.

The research found women retiring at 67 – the new UK state pension age from 2026 – will have saved an average of £69,000, compared with £205,000 for men.

The data, published by the PPI and pensions provider Now: Pensions, suggests that under the current system, in order to close the “gender pension gap” a girl would need to start saving at three years old to retire with the same amount of money as working men.

Career gaps, caring responsibilities, childcare costs and lower earnings all contribute to the disparity.

And the problem with this is what?

If you defer less money from your working income over the years into that pension provision for your old age then you’ll have deferred less of your working income into your pension.

And?

Oh dear, very bad, how sad

So Matthew Lynn decides to tell us how Meta paying dividends really changes everything:

And yet it will surely just be the first of the technology giants to start returning cash to its owners. Apple stopped paying out anything under Steve Jobs – he thought it was a crazy waste of money that he could spend on new gadgets instead – and has only paid out the minimum possible since he died.

At some point that will have to increase. Amazon announced blockbuster profits last week, and moves such as showing ads on Prime should drive earnings even higher, so it is surely only a matter of time before it starts a payout.

Alphabet, the owner of Google, may not be able to resist paying something out of its $113bn cash pile for much longer. With surging revenues from its crackdown on password sharing, Netflix is making lots of money, and may be forced to return some of it.

Nvidia will have plenty of room to increase the paltry 0.3pc it currently pays to its shareholders, while if Tesla can afford to pay Elon Musk $50bn, assuming he can overturn the court ruling against that decision, surely it can afford to pay something to its shareholders as well?

The giant tech companies will start to rival the oil, pharma and banking conglomerates for their ability to deliver huge sums of money for their shareholders every quarter. Given their size, their semi-monopolistic positions, and their growth rates, they will probably quickly overtake them.
….
Next, far more money will be available for the rest of the market. If the payouts start to match the $100bn delivered by the energy giants, and there is no reason why it shouldn’t, then most of that cash will find its way back into other equities.

That will drive the whole market upwards, as cash that was sitting on the Meta or Alphabet balance sheet starts to be deployed elsewhere.

Facepalm.

They’ve all been returning cash to shareholders in vast great chunks in recent years. Apple $90 billion in the past year alone (if I’m reading Mr Google right). Stock repurchases do exactly the same thing as dividends, send money back out the corporate treasury into the hands of shareholders.

Sigh.

I call bollocks on this

‘I want to tell you a story.’ Caleb’s face loomed over the table. ‘I used to know a really good trader. Smart guy. Young. Just like you. But he had one serious problem – he thought he could walk away.’

I felt my stomach sink. We were in a corporate restaurant in a skyscraper in Tokyo, bowls of ramen between us, only I couldn’t eat a thing. ‘Anyway this guy decided he was going to take the money and leave the industry. Sweet.

‘But he didn’t understand how it works. They went back and looked at all of his trades, his chat history, managed to find some stuff he shouldn’t have done.’

I could feel fire in my legs now. A burning. But I didn’t move. ‘They took that trader to court. He hadn’t really done anything that bad but they put something together. The case rumbled on for years. Never got to leave. Just courtrooms. Best years of his life…’

My boss’s face loomed closer still. ‘Gary. I like you. But we can make life very difficult for you.’

So, the plot is, plucky little scrote with vast talent for trading. Makes it in the Big City. Then wants to leave – at which point his boos blackmails him into remaining a trader.

Bollocks.

The moment you even indicate that you’re thinking of changing trading desk, let alone leaving the trade, you’re cut off from the phones, the email, your desk, everything. You don’t even get to go back to your desk to retrieve the piccies of your dog – those are collected and handed to you in a black plastic bag.

Because if you’re about to jump ship then no one will still trust you with tens to hundreds of millions of the bank’s trading capital.

Quitting is brutally easy precisely because they don’t want anyone who doesn’t want to be there.

So, my view is that everything else being said in this new revelatory book is also toss.

Is this good or bad?

Electric cars lose as much as half of their value after just three years on the road, new figures show, as the rate of depreciation far outstrips conventional equivalents.

Research from Auto Trader said there were “unsustainable levels of depreciation” in the electric car market, with used prices of battery-powered vehicles dropping by 23pc in the last year alone.

The online vehicle marketplace said a motorist buying a £50,000 electric car could expect to lose £24,000 in value over three years, while a similarly priced petrol car could lose £17,000.

Well, OK, it’s sorta different to a petrol one but not glaringly so.

Hmm

Perhaps we recast that. You lose 20% just by driving it off the lot, right? And if we accept that for both then the EV suffers much more in the next 2.99 years?

Ah, so idea 1) was right

Tingo. Weird company.

I run with one of two ideas.

1) It’s all simply the most brazen and outright fraud.

Yep:

There was just one small problem: Mmobuosi’s businesses, as they were commonly understood, may never have existed.

That is the extraordinary claim made this week by American regulators, who accused the 45-year-old Nigerian businessman – real name, Mmobuosi Odogwu Banye – of perpetrating an ongoing fraud of “staggering” proportions.

At its peak last year, his publicly traded company, Tingo Inc, was valued at $7.23bn (£5.7bn), according to Bloomberg data.

This is simple enough then

Israeli authorities are investigating claims by US researchers that some investors may have known in advance about the Hamas plan to attack Israel on 7 October and used that information to earn millions of dollars by short-selling Israeli shares.

Research by law professors Robert Jackson Jr from New York University and Joshua Mitts of Columbia University found significant short-selling of shares leading up to the attacks that triggered the war.

It is known who the short sellers are. Call ’em in for an interview. Have a chat.

It’s an Israeli paper that gets this right – I think:

Hamas may have profited from Oct. 7 assault with informed trading — study

Do I think that Hamas might contain financial sophisticates able to work this out? Do this? Sure. Waste a thousand of our fighters but we get to make a profit on the markets? Sure.

The difficulty will be keeping the money, or keeping it and out of jail at the same time. Because surveillance of financial markets does tend to be of sufficient detail to know who is doing what trade if anyone wants to really find out.

“Although we see no aggregate increase in shorting of Israeli companies on U.S. exchanges, we do identify a sharp and unusual increase, just before the attacks, in trading in risky short-dated options on these companies expiring just after the attacks,” they said.

Short dated options. Folks with inside information just love them. So do the authorities – they’re even easier to track. And I’d not really want to be the compliance officer who can’t tell the Israeli authorities, or the SEC, who was behind those trades.

Clever – bad, but clever

The latest move in ransomware extortion: reporting your victim to the SEC.As Recorded Future News explains, a financial software company called MeridianLink has confirmed “a cybersecurity incident,” which isn’t uncommon.
What is unusual is the AlphV/BlackCat ransomware gang allegedly trying to pressure the company by filing a report (included below) with the Securities and Exchange Commission (SEC) accusing MeridianLink of failing to disclose a breach. However, the new rules requiring disclosure have some loopholes, and, they don’t take effect until next month.

The simple shopper

Har Har:

A council in Wales has been rebuked by the auditor general after it was tricked into giving away 10 per cent of its annual budget to a fraudster.

Officials at Harlech Community Council, in North Wales, made an “advance payment” of £9,000 of taxpayers’ money to a man named Oluwafeni Odunuga for “consultative work”.

They were only alerted to the fraud when HSBC told the authority that it was the victim of an “authorised push payment” scam in which criminals trick people into transferring money.

One of the problems with migration is that foreign names are no longer quite the alarm bell they used to be.

Still, to be fair, they’re not quite so deluded as Novo Integrated Sciences. A provider of Tai Chi style health care in California. Who have been regaling the market for months now with news about all the lovely capital they’re – no, really – about to receive:

So, why? Well, there’s the idea that this money is about to come through: “Novo Integrated Sciences Advised Receipt of Proceeds of RC Consulting Promissory Note Expected in 3-5 Business Days” As we’ve commented on that before we don’t think so, we really don’t. That cash is not about to arrive at Novo Integrated: “15 year unsecured money at one and a half percent? No, doesn’t exist. “The RC Note is unsecured and there is no provision for the conversion of debt, issuance of any class of shares, or the grant of any warrants by the Company to the Buyer. The Company is expecting to receive an initial draw against the $57,000,000 in the near future.” No, we do not believe this. There are no circumstances under which we would believe this.”

They’ve also announced this: “BELLEVUE, Wash., November 3, 2023 – Novo Integrated Sciences, Inc. (NASDAQ: NVOS) (the “Company” or “Novo”) today announced the issuance of the underlying One Billion Dollar gold backed bond (the “Bond”) specific to the previously disclosed Master Collateral Transfer Agreement. The issuance of the Bond is the initial step in the establishment of the instrument to commence the legal transfer of the collateral for the exclusive benefit of the Company. The instrument is subject to filings and safekeeping deposit creating authentication and validation for the transfer and leverage of the collateral for the benefit of perspective lenders.”

Simply deluded.

WeWork dies

Not that we didn;t know this was going to happen at WeWork:

So, what is going to happen here? The secret is this “Further Streamline Real Estate Footprint” Or, as we’ve said before, this is where the landlords get the shaft at WeWork: “WeWork (NYSE: WE) stock is down another 50% over night on news that they’re about to file for Chapter 11 bankruptcy. We can imagine all sorts of speculative flurries in WE stock as a result – the ability of the memesters and hoddlers to play with such stories is near inexhaustible. However we’d also very strongly suggest that there’s going to be no recovery for the equity here. The landlords aren’t going to allow that. And this is about the landlords too. The idea here is to shaft those landlords – to be able to break the leases. And the thing is, weirdly, that commercial office space has such vast problems right now that the reborn WeWork could even work.”

It really could work too – if they can renegotiate those leases down far enough.