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Home » Daily Briefing » Daily briefing - 05 November 2018

Daily briefing - 05 November 2018

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Steve Carrell plays the Eisman character Mark Baum in The Big Short

Steve Eisman, best known to ordinary people as the character of Mark Baum (played by Steve Carrell) in The Big Short, told an audience in Dubai yesterday that "he knows his Trotskyists", and that thinking is informing his decision to short two UK banks ahead of an expected no-deal Brexit. "I'm shorting two stocks in the UK, but I've got a screen of about 50, and I might short all 50 if I think Jeremy Corbyn is going to be prime minister," Eisman said. "Corbyn's a Trotskyite. Now I know my Trotskyites well and I know you don't want to be invested in the UK if a Trotskyite is prime minister." Barclays (see final story) and Lloyds fared badly in the recent EU stress tests, while Metro Bank and CYBG are one of the most shorted banks on the FT 350.

The new Discover CEO Roger Hochschild sees the company's future in consumer banking, electronic wallets and network-to-network partnerships. Speaking at Money20/20, he said that "while fintechs are bringing new tools to the table, businesses and consumers are still looking for a bank they can trust. 'The winning product is the one that will add value for consumers,' he said. This is important to keep in mind, he said, as technology continues to offer new capabilities." Hochschild pointed to the company's tendency to partnerships. "Apple selected Discover to leverage Apple Pay Cash, which allows consumers to make purchases in stores, in apps and on the web, with merchants, he noted. The Discover Network payment network handles Apple Pay Cash transactions. Discover has also partnered with PayPal, Venmo, Synchrony Bank and SAP, he added."

In the wake of a survey that showed Auckland following Dubai as the most expensive city in the world, New Zealanders will be bracing for the impact of Australia's royal commission on banking, and wondering how much impact the scandal will have at home. A five-month inquiry by the Reserve Bank of New Zealand and the Financial Markets Authority found that banks will need to step up their performance in identifying and managing unethical behaviour. "New Zealand Prime Minister Jacinda Ardern said on Monday that her government would be watching the Australian Royal Commission's final findings due out in February 'very closely' and that she would ask the RBNZ and FMA to consider whether its report raised any issues that warranted further action," according to Reuters. " 'While they (the problems) may not be as widespread as what has been seen in Australia, banks would do well to pay heed around the guidance they've been given to be upping their game,' Ardern told reporters."

The Winklevoss twins are trying to recover money from Charlie Schrem, one of the original bitcoiners. "The twins asked Mr. Shrem to help them amass the beginnings of what would become an enormous stockpile of cryptocurrencies, giving him $750,000 to buy Bitcoin from other deep-pocketed investors." Maybe the Bros didn't actually have the brains to buy bitcoin themselves, but this story reminds us of this recent Dilbert cartoon. "A few months into this partnership, the twins said they realized that Mr. Shrem had not given them all the Bitcoin they were due. The brothers gave Mr. Shrem $250,000 in September 2012, but the lawsuit says that a month later, he only delivered around $189,000 worth of Bitcoin at the going price, which was around $12.50 at the time." Considering that bitcoin is currently boring its way along at around $6,000, that's a pretty savage gain for the Winklevii.

Barclays comes in last once again

LAFFERTY BENCHMARKING

Barclays scored three stars, Discover, CYBG and Metro Bank scored four stars in the Lafferty Banking 500.

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