Short Covering Rally and Snapbacks

Short Covering Rally, this is what we are seeing. Well that is the word on the ground among some trader communities. 

Is this a snap back or the start of a recovery?

In this blog, we are going to look at what a Short Covering Rally is and where the market is going.

Resilience and Business Continuity

Resilience is perhaps the most important aspect of a solid business continuity program but when it comes to practice, operational continuity would become the measure of resilience.

The question we are asking today is; which industry sectors or which companies are most resilient?

Volcker me sideways

Volcker me sideways, as the saying goes. Sorry its not a well-known term but I think its about time someone coined it. Really, jokes aside, this Volcker thingy is a vulgar beast and the US regulators need to think long and hard before pushing ahead with the ruling to the letter. 

Interpretations are important as we shall see and sound regulatory guidance will be one of the key factors for determining whether an investment banks business model remains viable at all and whether the ruling itself is effective in any manner.  What might be worse, is that the Volcker rule may encourage the very disorder it is designed to prevent and in this blog we will take a look at some of these issues.

UBS making the wrong adjustments

It was to be expected that there would be many outcomes from the rogue trading event at UBS. Generally speaking, catastrophes of this magnitude have a tendency for inspiring change and they are often seen as turning points in the evolution of let’s rethink the model.  

All this aside, the industry as a whole which takes in the regulators, banking community and freelance risk advisors in this case, would do well to avoid kneejerk reactions.

Three key oversights we should stand back and think about include some of the following: 

Going rogue is in vogue

It appears that little was learned from the Jerome Kerviel Société Générale rogue trading event. However, this time it is UBS that is attempting to explain to shareholders why it has fallen into the same trap of failing to identify fictitious trades on its books.

IBM Acquires ALGO

Mergers sometimes don't add the value investors or customers expect. Is the acquisition of Algo by IBM one such an example?

Basel III is more difficult than first thought

Basel III or the implementation of it is perhaps going to be more difficult to achieve than was first envisaged.

In this relatively short article, we are going to look at some of the problems that are becoming apparent in the Asian banking arena for Basel III regulation.

US Debt Ceiling - one saga finishes another begins

The US deficit or the growth of it has been a problem that has been kicking around for so long now, that it shouldn't come as any surprise to hear that the United States of America is bankrupt. Nevertheless, at the eleventh hour the entire world seems preoccupied watching the US senate debate whether it should raise the debt ceiling or not. We all know in the end that the ceiling will go up and everything will go back to normal, yes?

Caveat Emptor Basel III Conferences and ERM

Caveat Emptor : Basel III Conferences and Enterprise Risk, yes the two are being pushed together.

I find it quite disturbing that there is a whole swag of supposed Operational Risk experts out there from the United States to Australia who are flogging Operational Risk to death.

The USD is dead ...

Last week we discussed the state of the USD and the very real potential for a rethink of the world currency for settlement. This week our argument only becomes stronger as the United States has been put on review by the rating agencies. It may have taken the agencies a while to come to this conclusion (tongue in cheek) but it didn't take the market long to react. The outcome in the currency markets hasn't been favorable to say the least.

This article is a short review of where we are heading but no secrets, I would say that direction doesn't have a bright future as it stands.

EUR/USD Parallax Error

A new monetary system has been debated by many an economist for some time however, now that the big central banks are starting to think about alternatives, we have to question whether we are on the brink of redesigning the world of floating currencies beyond Bretton Woods failure? 

This article was stimulated by Mervyn King's speech from the Bank of England although momentum has been gathering around the topic of rethinking the role of the US dollar for a while. 

How real could this be?

The FSA drops the S

In a sanctimonious move the 'S' is to come out of the FSA and it is to be replaced with the 'C'.  Yes it is going to happen. 

What was once the Financial Services Authority of the United Kingdom is to become the Financial Conduct Authority.  Believe it or not there is nothing "prudential" about it, that responsibility lies with the minister.

Private Banking - Evolve or Dissolve

Private banking needs to evolve if it is to survive.  

In this article we are going to look at the changing market dynamics and the challenges for private banking in Asia.  Private banking has experienced huge growth across both the domestic and expatriate community but it has reached a tipping point where change is imminent. If private banking is to continue to prosper over the coming years ahead, it is going to need to take advantage of these trend shifts rather than push against them.

There are two recommended and outstanding presentation links at the end of this blog which are worth reviewing.

Scenario Analysis for Operational Risk

PRESENTATION [ Fast Download Here ]

There appears to be a resurgence of interest from risk managers to engage formally in scenario analysis. This interest appears to be driven in part, from banks operational risk departments; hoping that they can move their risk framework onto the Advanced Measurement Approach of Basel II.

While Basel-III's predecessor to Basel-II doesn't require any changes to a bank's operational risk framework, some institutions are still looking to improve their operational risk reporting systems and they are attempting to achieve this goal through the scenario analysis route.

In this article we will discuss this recent curiosity in scenario analysis and provide a complete presentation which can be downloaded that explains how to build a best practice scenario analysis program for operational risk.

UK Banks heading for another disaster

Unbelievable but unfortunately it appears that UK banks are heading for another disaster and so soon after the recent credit crisis took grip of the country.

It was reported by the FSA that UK banks have been hiding distressed retail assets on their books by forcing a restructure to the amount of 63% of their entire home loan portfolios. This is dire, perhaps one of the most serious pieces of news I have read for the last six months and it is right up there with the possible collapse of the US dollar. In this blog, we are going to take look at this claim and its potential implications for the British economy.

When it comes to perspective numbers lie

When it comes to perspective, numbers do lie or to be concise viewpoints change even though the real value does not.

What I am talking about are reverse splits and in particular Citigroup's recent reverse split of its common stock.

The Operational Risk Framework Checklist Roadmap

Is your companies operational risk framework up to the mark? 

If you ask a risk analyst about their impression of their companies operational risk systems, which one has to admit is a relatively unframed question, but either way, if you did; the typical responses seem to range between: We're totally sorted or it's kind of there, perhaps we are not really sure.

Then of course how do we really know whether a company is good at managing operational risk or not. The final test of course comes when a business experiences a severe problem that puts its operations under threat and its controls to the test.

In this article we are going to review a check list for an operational risk framework that should be considered by risk management in all businesses. The aim here is to move towards best practice. 

 

Managing oil prices is all about preserving margins

In volatile commodity markets, a firm's ability to profit comes down to one thing: The capability a business has to control the transference of market volatility to margin volatility.

In this article we are going to look at how rising oil prices seem to impact commodity consumers in alternate ways and why investors often misunderstand the impact rising commodity prices have on their investments.

FSB - Progress on Strengthening Financial Stability

Progress on implementing the G20 Seoul resolve for strengthening global financial stability has recently been reported as being on track.

In this blog article we are going to look at what is being done by whom and when specific deliverables are due. This is a massive mandate for the FSB and simply due to the complexity or reach within the program alone, it chances on either being globally impacting or partly missing the mark. 

Nassim Taleb & Richard Herring - The Black Swan Debate

Black swans or to be precise, living with them is an interesting discussion that Nassim Taleb and Richard Herring have captured and published on the internet.

There are some valid and fascinating points from this chit-chat that I believe are worthy of embellishment and that is what I have taken to do here in this post.