I often question why I do it? Why do I open my mouth and react with indignation so often? Why after a decade in the media, and twice as long in the broader financial markets as a whole, don’t I just suck it up and let all the inconsistencies and nonsensical behavior just pass my by?
Tuesday was a great case in point. From the first minute of the show I was bristling once again on all the usual stuff from regulatory timidity to the fact that politicians continue to bemoan banker payouts and yet are failing to legislate against them. Don’t they get it? You cannot ask bankers nicely, you need to tell them sternly.
Steve, another one, not me, accused me straight away of crossing the "red line":
"Steve, take off your Karl Marx costume, it doesn’t look good,” he told me.
PJ in Seattle was harsher still. He clearly thinks I read the news and should stick to it:
“I'm going to introduce legislation to limit the pay of reporters on 'news' programs if they have an opinion. Giving opinions is not reporting news and therefore can alter the opinion of the public. That may not be in the public interest.”
Me? Read the news? I haven’t got anywhere near enough hairspray. Thick skins called for at the markets desk, methinks. Luckily balance was restored by Larry in Geneva:
“Can there be any question that you lot are the best thing available anywhere on television?
“Where celebrity cult cultivation and phony news prosper, you people -- each one of your studio team without exception -- are doing something of real quality. I suspect your shows will be studied and remembered fondly for years to come. "
No, I have not got a series of secret Internet hotmail accounts, including one in Geneva.
On to the markets and Cadbury remains in favor of splendid isolation, once again spurning the advances of Kraft. I hope they are not overplaying their hand. You see it all too often when a company gets a bid from out of the blue. The shares explode but the directors of the takeover target, egged on by the City, play hardball. It wasn’t that long ago that the LSE spurned bid after bid and fell from its takeover-frenzy high of nearly £20 to around 400p at its 2009 low? Protesting too much can be a danger to shareholder value.
Jean-Paul of Los Angeles, who is also our most prolific e-mailer so far 2010, agrees:
“Again Cadbury management and board are not being realistic and the shareholders are going to be left holding the bag at the end. Cadbury may say that the outlook is good but that does not mean that the share value of the company will stay up where it is. What is 'derisory' here is the archaic mode of making a deal on the part of Cadbury. The share price will drop and there will be a shareholder revolt. It came up fast and it will drop just as fast because of their short-sightedness in not making a deal with Kraft.”
We do, of course, get e-mail contributions to the show from some of our on-air guests too. Marc Ostwald from Monument Securities raised some pertinent issues today.
“This week's $74 Billion of US Treasury 3-, 10- and 30-year auctions this week will provide an interesting test of demand, as will the near 35 billion euros of euro-zone debt and the rather more modest £2.25 billion of ultra long 4.25 percent 2049 Gilts.”
With that lot on offer you’d think Marc would run a mile from long bond positions. Not at all. Mark is adamant:
“Simple message: this is not the moment to short Government bonds.”
Why? For a start Marc points to euro-zone redemptions and coupon payments of 63 billion euros, which more than offset the issuance. He adds that QE support, disappointing payroll numbers and valuations relative to pumped up equity markets all point to caution for the bond market bears.
Back to the burning issue of the day, month, year, and decade: banks and remuneration. I’m happy to keep chatting and debating the issue for as long as you, the viewer, still feel it’s important. Judging by your comments, we’ll by on this one for a long while to come.
Paul in New Zealand says it’s not about absolute levels of pay:
“Surely the issue is a policy one, not one of how much and how you pay. If there is excessive risk and that risk goes against the organization then that organization should fail. It is the policy makers who are not allowing failure thus encouraging behavior.
“They could have guaranteed retail deposits and let banks fold, thus removing the moral hazard we now face.
“After all, banks are businesses and should only focus on maximizing benefits to its stakeholders/shareholders, we get what we encourage, after all a main tenet of economics is that people respond to incentives.”
Glen echoes a lot of your opinions regarding the value of ‘talent’. He feels a more authoritarian approach to dealing with the bankers is in order:
“I believe it is time to realize that there is very little of the so-called talent in the banks, just very greedy people being paid far too much money for doing things in a reasonable manner without fear of redress when it goes wrong. There probably isn't a banker out there who would have kept their job for similar atrocious performance in the real world let alone be complaining about a reduced bonus. Sack them all and we will be better off.”
Final word today goes to Richard in Merseyside who picked up on our derivatives segment today. Being an old options man myself, I’m pretty evangelical about the benefits of well-managed listed strategies. Today we talked about the benefits of selling strangles. Admittedly it's not every one’s cup of tea, but it's useful in a low-volatility environment.
Richard, I think, missed the point somehow. His e-mail was entitled “Strangle Steve.” Hmm, maybe time for me to lie low for a bit.
As always, you can e-mail us with your views and analysis at firstname.lastname@example.org.
(E-mails may be edited for grammar, spelling and content.)