Finance News

“Mind The Gap!” – The life and times of a man on the move Episode 7

Alan Partridge’s apple pie, what our industry thinks of embracing online ad change, too good too soon, shrinking the country, and lordblanket’s grumpiness catches London’s attention

In this weekly series, I look back on what stood out, what was bemusing, amusing and interesting during my weekly travels, interesting findings within the FX industry and interaction with an ever-shrinking big wide world. This is purely observational and for your enjoyment.

Monday: Keep cool and carry on

This would not be a week well spent in England if I could not dedicate at least twenty minutes at the beginning of the week to mulling over the detailed barometric tendencies of the weather.

To coin the phrase of a mid 1990s, Pringle ‘sports casual’ attired Alan Partridge when contemplating the contents of his freshly microwave-reheated Bramley apple pie, Monday week was hotter than the sun.

Whilst making single-sentence comments about the weather is an intrinsically British pastime, wasting precious time when very rare extreme conditions occur is absolutely not.

Transport for London has replaced some of the rolling stock on a few of the London Underground lines, however there are still many which continue to operate the mid 1970s Metro-Cammell underground trains, all of which have separated carriages and no air conditioning system.

London’s magnificent outdoor spaces, all of which represent an ultra-modern, highly sophisticated accompaniment to the Square Mile’s glorious traditional architecture, were equally glowing with solar energy this Monday, hence alighting from an underground train with high humidity levels and a likely 40 degree Celsius interior temperature would not result in the comfort of a bracing breeze.

Empty deck chairs? Yes, that’s right. There’s work to do

Why is this significant?

It is significant because what was universally noticeable was the demeanor of calmness and normality among the City’s workforce.

The thousands of suited professionals seen walking from meeting to meeting, and commuting to offices (admittedly the offices have air conditioning but very little else has), were busily engaged, orderly, very well turned out in equally immaculate business dress just as if it the ambient temperature was a comfortable 20 degrees Celsius and no acts of agitation were displayed, even among those serving very long lines of customers for whom time is of the essence, in hot kitchens or sandwich stores.

This is a testimony toward British resolve. Yes, its only a bit of hot weather, however this summer has been one of unusual temperatures and humidity. Nobody complained, nothing faltered, no adversity was shown.

This is the pragmatic approach that makes London the ‘can do’ capital, its talent base and population being an iron fist in a velvet glove. Very polite and sophisticated, but with a tremendous amount of innovative spirit, work ethic and professional might.

Well done to a very dignified and committed city, I am thoroughly impressed.

Tuesday: One in the eye from Robert Thomson

Just as the  business newpapers hit the stands from Canary Wharf to Moorgate showing scaremongering headlines citing so-called Conservative Chancellor Philip Hammond having called for an innately socialist tax on online global e-commerce companies such as Amazon in order to attempt to preserve the physical shops – or ‘high street’ shops – from their inevitable transformation into sushi bars and artistic cafes due to the lack of retail demand anywhere outside cyberspace, Amazon News Corporation CEO Robert Thomson decided to get vocal.

During the conference call to discuss earnings for the fourth quarter of the financial year, Mr Thomson was joined by Mike Florin, Senior Vice President and Head, Investor Relations at Amazon, Susan Panuccio, Chief Financial Officer at Amazon along with various analysts, namely Kane Hannan of Goldman Sachs, Eric Pan of JPMorgan, Brian Han at Morningstar, Raymond Tong of Evans and Partners, Craig Huber of Huber Research Partners and Andy Levy from Macquarie Securities.

Mr Thomson absolutely tore into Facebook, Google and YouTube (itself part of the Google corporate empire), all of which are favorite targets of Mr Thomson and Amazon as a whole – notable by the exclusion of all Amazon Prime and Amazon TV access from Google’s Chromecast systems – he retorted “We are watching closely as Amazon, a dominant horizontal platform, expands into more verticals, bringing in the possibility of algorithmic abuse”.

Embrace the future, Mr Thomson

This Tuesday, there was quite a reaction from technologists in the FX industry with regard to this, with one particular observation having been relayed to me, that being “Is he talking about voice? That seems unlikely. Alexa’s main use is as a kitchen timer. What does he (Mr Thomson) know about Amazon’s plans that could impact news brands such as the Wall Street Journal (one of the largest global economic calendars), and the Financial Times?”

The intrepid observer continued “Ironically, on the same call, he lauded the fact that one of the firm’s subsidiaries got Amazon to pay $28 million for video rights to Lord of the Rings!”

James Brown, Sales Director at BridgeU, an educational technology startup based in Islington, North London, said “I would have thought that it is the growth of their advertising business which is making Robert nervous.”

Now this is more likely. Andrew Lane, CEO of Accuity Trading, a well known FX industry sentiment analysis and news aggregation technology provider, commented “As James says, their advertising is the largest growing revenue source”.

Indeed so, and this is apparent even at standard user level, where ‘free’ programs on Amazon TV are becoming increasingly peppered with various types of avertisements, whether pre-roll, commercial breaks, product placement or banners on the actual show itself.

This demonstrates a massively important consideration for FX brokerages. Yes, Google and Facebook have been subjected to advertising bans for online OTC derivatives brokers, however Amazon has not, and with its direct advertising business becoming large enough in its rapid growth to frighten even a CEO of a fellow subsidiary of the same company, direct advertising is the future for online FX and OTC derivatives firms.

This echoes a meeting I had in March at Eight Moorgate with a Bloomberg executive who concurred that the only way to continue brand awareness uninterrupted is via direct advertising deals rather than reliance on networks.

QED.

Wednesday: Is it the genuine revolution or a Beta test?

If it i a Beta test, it is far too much of a good one.

Being a victim of one’s own success does not just relate to a financial downfall or a sudden relegation to obscurity as is the case in certain industries such as music and entertainment, in which popular musicians can suddenly find themselves out of favor and craving for the fame that disappears as rapidly as a Ford Sierra Cosworth left outside a secure garage in 1980s Essex.

Leaders and pioneers of any new phenomenon that breaks the mold entirely and disrupts the accepted methods that humanity has become accustomed to and is perfectly comfortable with can fall on their swords through being quite simply too good at what they do.

During the early years of this decade, nobody in the world was dissatisfied with the way they travel to and from any destination, be it to and from the office, performing the school run or weekend visits and pursuits. The internal combustion engine has propelled us all for over 130 years since Bertha Benz took her first motorized journey in 1886 in the ‘horseless carriage’ invented by her husband.

The IC engine is one of the world’s unquestioned contrivances. We drive, arrive, forget about it. It is an integral part of our lives. Most people do not understand nor care about how it works, as it has now been in widespread use for several generations. Removing it would be like asking suburban families to revert to hunting instead of making trips to Waitrose.

Thus, eccentric genius Elon Musk made himself a global name as one of the most interesting business leaders in the world because he disrupted and redeveloped something that there was no immediate need or desire to redevelop.

Our very own innovators believe in Tesla: Gold-i CEO Tom Higgins with his Model S

Apart from a few purple-haired early-20s degenerates who have yet to be acquainted with modern hygiene methods, the automobile in its current form is not out of favor with anyone at all.

This Wednesday, Elon Musk ‘s desk would have been as exciting a place to be as the first test drive of one of the 700 brake horsepower fully-electric Model S P100D models by a motoring enthusiast.

Elon Musk is plotting the biggest ever attempt to take a company private, but it’s unclear how he’ll pay for it — or if it’s really worth it.

Mr. Musk, Tesla’s chief executive, shocked investors by tweeting that he was considering taking the company private at a stock price of $420. If he does, it would cost more than $70 billion. The company’s board of directors met several times last week to discuss the idea, and six of its members issued a statement saying that it is “taking the appropriate next steps to evaluate” it.

Typically, those taking a company of Tesla’s size private would borrow tens of billions of dollars to buy the shares held by public stockholders. But Mr. Musk provided scant details about his plan. In his first tweet on the transaction, he simply wrote: “Funding secured.” He did not say how much money would be needed or from where it was going to come.

This takes some extremely large proverbials, and also represents the actions of a visionary, and/or a lunatic.

General Motors, one of the world’s largest corporations in any sector, manufactures standard IC engined cars, trucks and SUVs, some of which utilize hybrid power – that being a combination of electric motor and small, efficient IC engine in series – is going from strength to strength financially, having periods of record profits and dominating as it always has. Meanwhile, Tesla is floundering with losses.

If the product and its execution had been shoddy, this would be normal however the product is outstanding and world-changing.

That is the question we should all ask ourselves as business leaders in the FinTech and electronic trading sector. Are we accepting of a status quo which fills the balance sheets and retains a comfort zone, or are we prepared to push the boundaries into new territory?

I guess if we take Tesla and Elon Musk as examples, it all depends how long that difficult period of getting a new method into everyone’s lives, and whether it can be done in a timely enough manner to bear fruit and benefit the innovator as well as customers and the industry at large, otherwise it would be ruinous.

Thus, MetaQuotes is General Motors and London’s Revolut is Tesla.

Thursday: lordblanket, what a grumpy blighter!

Advertising campaigns are more of a key component of any business these days than ever, especially as online shopping and financial services are now very much the norm in developed societies such as the United Kingdom and North America.

Ingenuity is the key and whilst London’s established FX and CFD firms with a 30 year cast iron reputation operate from plate glass offices in the Square Mile, advertising is not really a priority.

For smaller to medium sized firms, and new entrants, it is and it is clear that traditional advertising methods are no longer effective. Too much data and information drives away an already bombarded general public, whose inboxes, push notification screens and retargeted website browsers are awash with the latest special offer which is too good to miss, accompanied by jargon and figures.

Yes, London’s establishment has the well-earned backing of a very loyal, large domestic-market client base of very analytical traders, hence the lack of need to go overseas and expand into new markets and the absolute ability to not only rest on their laurels but to maximize their prestige to maintain a presence which is very strong and very UK-centric.

Just down the road, however, is the media district – Fitzrovia, Russell Square and Tottenham Court Road. Once famed for cut-price electronics, the streets between BBC’s Broadcasting House and UCL’s major Charlotte Street campus are home to thousands of young, smart media professionals – and when I say media, I mean digital media. SEO, marketing, branding and promotional consultancy.

A short journey on a bus or the London Underground demonstrates this. Some of the advertisements show a common theme. Instead of loudly displaying the name of the company being advertised, then its product in vanilla format, followed by a reason why you must buy now due to an offer that won’t last, many of London’s agencies are using very obscure messaging, and minimalist design.

One that struck me was on the Piccadilly Line on Thursday. Whilst exiting the train at Holborn I noticed a dark red sign with a quote on it. That was all, just a quote. The quote was a direct copy from the comments section of a daily online newspaper (The Daily Mail in this case), showing the comment itself and the alias being used by the commenter – ‘lordblanket’.

The message was effectively a Daily Mail reader, making a subjectless, innocuous grumble about a very anodyne news story, something that the Daily Mail is relatively well known for in the United Kingdom, coining the term “straight to comments!” among readers when an article is published.

This advertisement consisted simply of the comment by ‘lordblanket’, followed by a short message saying “Remarkable places to rent. People with feelings welcome. Sorry lordblanket.”

Underneath this was the company’s logo and the words “The Collective, For anyone not everyone.”

The advertisement contained absolutely no information about the company, and no information on what products or services it generates. Nothing at all.

However, it remained in my mind to the point that I found myself quickly researching it on the internet.

Founded by Stephen Chavez and Michael Fiore, Anyone Collective is a boutique brand management and creative services agency specializing in brand marketing, website development, video production and promotion, print and electronic advertising, trade show campaigns, event marketing, creative strategy, logo design, brand loyalty programs, and other brand marketing initiatives.

It could have been anything at all, however. It could have been a halibut. It could have been a zeppelin. Who knows?

Therein lies the genius. Humans are inquisitive characters, and FX traders are among the most analytical and quietly inquisitive – that is part of being able to master the complexity of the financial markets via electronic platforms, algorithms and mathematical combinations.

This, in my opinion, appears to be a very good means of getting attention. I suppose in the case of London’s agencies, less is more.

Friday: Fast train-ing leads to high remuneration

Traveling on the train in England is a pleasant and productive experience. I am a huge advocate of it, and when in the green and pleasant land’s capital, often make a point of using the train if I need to venture to a different city.

The internet works well, it’s silence and composed motion as it wafts at 120mph through the spectacular British countryside provides an ideal working environment, thus a two hour train journey can be very productive compared to an equal distance in a car which means no work can be completed and traffic can be unpredictable.

Trains are the lifeblood of global capitals such as New York, London and Hong Kong, all of which rely completely on integrated transport and subway systems connecting to national rail services.

Speaking to some friends about the importance of trains on Friday as the traffic piled up on the M4 London-bound whilst they whizzed past in absolute comfort on a Paddington-bound high speed train whilst catching up on emails led to the demand vs supply equation.

I am absolutely against large public spending projects and  believe in privatization, accountability and efficient business methods rather than unionized commercial disobedience, however following my conversation with said peers who arrived back in London within a short time whilst motorists battled with traffic and heat I noticed some degree of uproar which had broken out across the country relating to the high salaries being paid to employees on the new HS2 high speed national rail project.

Regression is our own worst enemy. There is a business case, and there will be money to pay for it as it connects people faster. Is this rail’s ‘Concorde moment”?

Yes, British trains are exceptional and yes, the service is outstanding, however the rolling stock in some cases is 40 years old. Yes, it is in good condition and train journey times have reduced dramatically, and the service and efficiency have both improved since the dark days of the red 1970s nationalization which brought the country to its knees and curtailed services in all aspects of life, culminating in James Callaghan’s Winter of Discontent.

The HS2 will shrink the country and lead to more efficiency and less general bother. Not that there is much bother in the UK as it is, it is one of the most business-friendly and effective nations on earth, however in this case, I see the UK as a nation of constant striving for improvement and refinement, hence HS2 will be a massive boon to an already very avantgarde society.

The grumbling this time centers on the six figure salaries paid to a high percentage of employees on HS2.

318 people – out of the 1,346 employed on the new high-speed railway – are earning at least £100,000 in salary and perks, according to a information given to The Times under the Freedom of Information Act. This number is an increase compared with the 155 who were paid six figures in 2015/16, and 112 people are receiving more than £150,000 annually and 15 have pay packets topping £251,000.

An HS2 Ltd spokeswoman said: “In a highly technical project of the scale and complexity of HS2 it is necessary to employ the right level of expertise and knowledge to deliver the programme successfully.”

She is right. This must be done properly and is a very technical and precise engineering project that requires the highest level of talent. This is an investment in the future of Britain’s economy.

As the country prepares to propel itself into commercial stratosphere following its breaking free from the corrupt shackles of Brussels, world-leading infrastructure is not a luxury but a necessity as vast entities from all over the world will flock to Britain to be part of an independent, self determined and world-leading commercial and social atmosphere.

Wishing you all a super week ahead!

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