David Cowell Rant: European Commission Not Ready

by | Dec 4, 2015

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The European Commission said in a document this week that neither they nor the industry would be ready for the original January 2017 Mfid2 implementation date, with 2018 seeming a more realistic timeframe. “Setting the timeframe at January 2018 would appear appropriate so as to be reasonably satisfied that there will be no need for a repetition of the delay, but without extending the timeframe excessively and hence relax the implementation speed,” said the document, which was seen by Reuters.

Interesting that regulators and legislators want to hobble financial services whilst it appears to be laissez-faire in big business. The ‘full-time Chief Exec’ of the Co-Op now is also chairman of Howden Joinery and independent director of Persimmon. I thought that it was only lawyers and accountants who could bill more than 24 hours in a day. It seems that the Co-Op still can’t count.

The ECB cut its deposit rate deeper into negative territory and extended its asset buys by six months, as expected. But some market participants had hoped for greater stimulus so stock markets fell in disappointment. Draghi lowered the ECB deposit rate from minus 0.2% to minus 0.3%, so banks have to pay the ECB to deposit their cash. In continuing rather than increasing its version of QE, his ‘big bazooka’ is again firing blanks but one of these days he load it with the real stuff.


Meanwhile, Federal Reserve Chair Janet Yellen told lawmakers the US central bank was close to lifting its overnight interest rate from near zero. She gave an upbeat view of the US economy, as she did in remarks on Wednesday, raising expectations that the first move will be this month.

A successful man, working as a sales representative in a large company, tells his boss one day, “If you want me to continue working for you, I need a 20% pay rise. You have 24 hours to give me an answer. I have four companies chasing me, so let me know your decision”. The boss is alarmed. “In this recession, a 20 percent rise? So many employees are being laid off, and so many others have seen a major cut in their salaries, yet you want a 20% raise?” “I will not argue with you,” says the employee. “As I said, there are four companies pursuing me, so just let me know your decision.”

Next day, the boss calls him in, and says, that due to his great performance he decided to comply and will give him the requested rise. “Great,” the man says, “ I will continue gladly with you.” As he is leaving, his boss asked, “Out of curiosity, who are the four companies chasing you?”


“Oh” man responded, “Master Card, Visa, American Express, and the mortgage company.”

More negative economic data on the Chinese economy, with government figures showing that industrial profits in October fell 4.6% from a year ago. The main index fell 5.5% a week ago after top brokers said that they were being investigated. The fifth consecutive decline in profits of Chinese industrial companies added more fuel to concerns over a slowdown. Revenue in Macau’s casinos fell by more than a third in November from a year earlier as China’s corruption crackdown continued to drive away some punters. The PMI fell below forecasts to 49.6 in November, down from the previous month’s reading of 49.8.

HSBC has significantly cut its exposure to equities in its strategic portfolio while keeping a defensive tactical position, with 76% in bonds.


“…..deteriorating global growth, reduced policy options and unattractive valuations are likely to act as a headwind for risk assets, in our view. Our asset allocation thus focuses on safety and carry,” the bank said.

It expects two themes to dominate markets next year: the path of Federal Reserve rate hikes and the effectiveness of China stimulus. The bank cut its equity position by 16 percentage points, reducing developed market equities by 11 percentage points and emerging markets by 5pp, taking its total equity allocation down to 25%.”

Husband’s text message to wife:

“Darling, I got hit by a car outside the office. Paula brought me to the hospital. Doctors presently doing tests and taking X-rays. Severe blow to my head but not likely to have any lasting effects. Wound required 19 stitches. I have three broken ribs, a broken arm and compound fracture in the left leg. Amputation of the right foot is a possibility. Love you …… “

Wife’s response: “Who is Paula?

Have a good weekend.

David Cowell, Director, Myddleton Croft Investment Managers, Leeds, 0113 274 7700


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