The economic consequences of Brexit

[anonymous-user]

ATG said:

jsf said:

but I'm not betting on the experts getting the numbers right, they have a poor record so far.

Dismissing expertise is oxymoronic, plus or minus the oxy bit.

For what it's worth the consensus forecast for Q2 GDP growth was 0.5% and the ONS provisional figure released today was 0.6%. I'd suggest that was an example of "experts" getting the "numbers" right.

I don't dismiss what anyone says, as I mentioned before. I'll take on-board what experts say then keep an open mind about what will happen in reality. Even the experts don't agree with each other, which is how people manage to make (and lose) money from the markets.

In most jobs that require thinking, we make decisions based on our experiences and knowledge of probabilities, its not uncommon to be wrong, that then feeds into hopefully making a more accurate prediction in future. In the job I do you get instant results from your decisions, which is nice.

[London424]

ATG said:

jsf said:

but I'm not betting on the experts getting the numbers right, they have a poor record so far.

Dismissing expertise is oxymoronic, plus or minus the oxy bit.

For what it's worth the consensus forecast for Q2 GDP growth was 0.5% and the ONS provisional figure released today was 0.6%. I'd suggest that was an example of "experts" getting the "numbers" right.

I'm pretty sure it was forecast at 0.4%. So off by 50%.

[sidicks]

London424 said:

I'm pretty sure it was forecast at 0.4%. So off by 50%.

I can still be revised up or down as more data appears.

And it is only quoted to the nearest 0.1% due to accuracy of the approach, so to expect much greater forecasting accuracy is naive!

[Timmy40]

Digga said:

ATG said:

Burwood said:

If JPM 'predict' that then it is their actual view that the currency will do the exact opposite.

Horest.

Investment banks' credibility with their customers is largely based on the quality of the research they publish.

If JPM says they think Sterling will fall it's because they think Sterling will fall.

There are a lot of former clients of banks, not least GS, who'd disagree. They seem very adept at trading ahead of their own advice.

definitely true! There's the advice/research they publish for free because they are really nice and want to share their market insights.

And then there's what they actually do/ tell their paying clients to do.

[GoodOlBoy]

Timmy40 said:

definitely true! There's the advice/research they publish for free because they are really nice and want to share their market insights.

And then there's what they actually do/ tell their paying clients to do.

You mean like GS arranging a loan for Greece and then betting against them servicing it ?

[Digga]

GoodOlBoy said:

Timmy40 said:

definitely true! There's the advice/research they publish for free because they are really nice and want to share their market insights.

And then there's what they actually do/ tell their paying clients to do.

You mean like GS arranging a loan for Greece and then betting against them servicing it ?

Picking pennies up in front of a steam roller.

[ATG]

Timmy40 said:

Digga said:

ATG said:

Burwood said:

If JPM 'predict' that then it is their actual view that the currency will do the exact opposite.

Horest.

Investment banks' credibility with their customers is largely based on the quality of the research they publish.

If JPM says they think Sterling will fall it's because they think Sterling will fall.

There are a lot of former clients of banks, not least GS, who'd disagree. They seem very adept at trading ahead of their own advice.

definitely true! There's the advice/research they publish for free because they are really nice and want to share their market insights.

And then there's what they actually do/ tell their paying clients to do.

Guys, please take it from an insider that you are talking absolute balls. I used to be a rates and fx strategist. I wrote these kind of forecasts. I'd visit clients (central banks) to discuss this stuff. We used to contribute articles to The Times once a month that would cover our view on the UK economy and the outlook for the markets. We expressed the same honest appraisal to both audiences. We did not front-run our research because (a) it would have been immoral and most people do actually have some integrity, (b) it would have been illegal and (c) it would have been hugely impractical because the markets we were involved in were so liquid, deep and well observed that it is fanciful to think that publishing our opinion would move them materially even though we were a major player.

Nowadays there is a much greater focus on separating research publication from trading, so my old role would probably no longer be considered acceptable, even though the supposed conflict of interest de facto did not exist.

In my current bank I see our internal FX commentaries and I see what we publish to clients and the press. It's all the same stuff. No bluffs, no hidden "real" views.

It is worth keeping in mind that investment banks don't make their money by speculating on the markets. The objective is to get paid fees and commission and to run as little market risk at possible.

Edited by ATG on Wednesday 27th July 14:42

[anonymous-user]

http://www.nationaldebtclock.co.uk

Does anyone know if this ^ is true or false ?

Are we playing "Mary's Bar economics" ?

[Burwood]

ATG said:

Timmy40 said:

Digga said:

ATG said:

Burwood said:

If JPM 'predict' that then it is their actual view that the currency will do the exact opposite.

Horest.

Investment banks' credibility with their customers is largely based on the quality of the research they publish.

If JPM says they think Sterling will fall it's because they think Sterling will fall.

There are a lot of former clients of banks, not least GS, who'd disagree. They seem very adept at trading ahead of their own advice.

definitely true! There's the advice/research they publish for free because they are really nice and want to share their market insights.

And then there's what they actually do/ tell their paying clients to do.

Guys, please take it from an insider that you are talking absolute balls. I used to be a rates and fx strategist. I wrote these kind of forecasts. I'd visit clients (central banks) to discuss this stuff. We used to contribute articles to The Times once a month that would cover our view on the UK economy and the outlook for the markets. We expressed the same honest appraisal to both audiences. We did not front-run our research because (a) it would have been immoral and most people do actually have some integrity, (b) it would have been illegal and (c) it would have been hugely impractical because the markets we were involved in were so liquid, deep and well observed that it is fanciful to think that publishing our opinion would move them materially even though we were a major player.

Nowadays there is a much greater focus on separating research publication from trading, so my old role would probably no longer be considered acceptable, even though the supposed conflict of interest de facto did not exist.

In my current bank I see our internal FX commentaries and I see what we publish to clients and the press. It's all the same stuff. No bluffs, no hidden "real" views.

It is worth keeping in mind that investment banks don't make their money by speculating on the markets. The objective is to get paid fees and commission and to run as little market risk at possible.

Edited by ATG on Wednesday 27th July 14:42

I was an insider for 20 years and my opinion stands. The chinese wall is a myth. Well it was until I left the industry in 2005. And investment banks do speculate in a massive way. It's called prop trading. True traders, not order takers taking a tiny spread. Do you really work for a Bank?

[sidicks]

Burwood said:

I was an insider for 20 years and my opinion stands. The chinese wall is a myth. Well it was until I left the industry in 2005. And investment banks do speculate in a massive way. It's called prop trading. True traders, not order takers taking a tiny spread. Do you really work for a Bank?

Surely prop trading is a small proportion of what banks do (and getting smaller)?

[Burwood]

sidicks said:

Burwood said:

I was an insider for 20 years and my opinion stands. The chinese wall is a myth. Well it was until I left the industry in 2005. And investment banks do speculate in a massive way. It's called prop trading. True traders, not order takers taking a tiny spread. Do you really work for a Bank?

Surely prop trading is a small proportion of what banks do (and getting smaller)?

I think it's a lot bigger than most banks will admit simply because it's seen as risky at best and gambling at worst. I don't believe analysts reports aren't in many instances released to ensure another desk get's in front of some news. Saw it time and time again with equities. Some solid companies blow out earnings and decent guidance get st on by an analyst, only to find out their bank took a large short position previously.

[Digga]

Burwood said:

sidicks said:

Burwood said:

I was an insider for 20 years and my opinion stands. The chinese wall is a myth. Well it was until I left the industry in 2005. And investment banks do speculate in a massive way. It's called prop trading. True traders, not order takers taking a tiny spread. Do you really work for a Bank?

Surely prop trading is a small proportion of what banks do (and getting smaller)?

I think it's a lot bigger than most banks will admit simply because it's seen as risky at best and gambling at worst. I don't believe analysts reports aren't in many instances released to ensure another desk get's in front of some news. Saw it time and time again with equities. Some solid companies blow out earnings and decent guidance get st on by an analyst, only to find out their bank took a large short position previously.

I know who/what I believe.

[jjlynn27]

Digga said:

I know who/what I believe.

Who and what? Don't keep us at the edge of our seats man.

[sidicks]

Burwood said:

I think it's a lot bigger than most banks will admit simply because it's seen as risky at best and gambling at worst. I don't believe analysts reports aren't in many instances released to ensure another desk get's in front of some news. Saw it time and time again with equities. Some solid companies blow out earnings and decent guidance get st on by an analyst, only to find out their bank took a large short position previously.

I can categorically say I never saw the same on the credit side during my time in investment banking.

[Burwood]

i'm not saying it's rotten all the way to the top. But like every business, dangle large $$ under the nose and some will break every control/policy and collude to beat the system. A friend is working on a project looking at the risks associated with the Libor rigging. At a certain German bank the top trader there got $172M bonus which was approved by the CE. That is a fact and it is also bloody disgraceful. Anyway apols for going OT

[anonymous-user]

Burwood said:

sidicks said:

Burwood said:

I was an insider for 20 years and my opinion stands. The chinese wall is a myth. Well it was until I left the industry in 2005. And investment banks do speculate in a massive way. It's called prop trading. True traders, not order takers taking a tiny spread. Do you really work for a Bank?

Surely prop trading is a small proportion of what banks do (and getting smaller)?

I think it's a lot bigger than most banks will admit simply because it's seen as risky at best and gambling at worst. I don't believe analysts reports aren't in many instances released to ensure another desk get's in front of some news. Saw it time and time again with equities. Some solid companies blow out earnings and decent guidance get st on by an analyst, only to find out their bank took a large short position previously.

My experience is in rates and FX trading at a couple of US IB's. IME throughout the 2000's most of the really big prop traders left for funds, the good ones internal or seeded by the banks. Since the GFC the regulatory pressure has seen 'prop' trading move onto mkt making desks. It's not uncommon to have a prop trader notionally looking after a small mkt making book so that he's not called a prop trader any more. The loss of prop desk revenue and general collapse of mkt making spreads to etrading machines has put pressure on the rest of mkt making desks to make increasing amounts from prop, typically at least 50/50 budget. Its almost impossible now to seperate mkt making from prop revenue.

Back on topic I don't know about equities but in the biggest markets (not equities) as ATG says no one can really move anything in any meaningful way with research. Large flows, data releases and other events are far more important (with the possible exception in the past of the old medley report that anyone could pay to front run!). In 20 years trading I never heard of anyone front running bank research in fx or rates, I dont think I even read any after the first 5, clients seem to love it though.

[grumbledoak]

Ghibli said:

http://www.nationaldebtclock.co.uk

Does anyone know if this ^ is true or false ?

Are we playing "Mary's Bar economics" ?

Looks about right. All Praise to Gordon, and all that.

[ATG]

Burwood said:

I was an insider for 20 years and my opinion stands. The chinese wall is a myth. Well it was until I left the industry in 2005. And investment banks do speculate in a massive way. It's called prop trading. True traders, not order takers taking a tiny spread. Do you really work for a Bank?

I work at a tier 1 US bank in one of its capital mkts businesses, so with respect my experience is rather more up to date than yours. When I started out in the mid 90s at a major European bank, a large chunk of our activity was prop trading. Tier 2 and 3s always ended up being nothing more than prop desks because they never had any real customer flow. It was great fun, but an idiotic way to run a bank. And now the regulatory environment all but bans it. I can imagine the lack of flow means that some desks at smaller banks are bending the rules as much as they dare, whether or not their mgmt are aware of this, but we don't. We don't need to.

[WinstonWolf]

Funny how ///ajd disappears as soon as there's good news...

[///ajd]

WinstonWolf said:

Funny how ///ajd disappears as soon as there's good news...

Far from it 535i kindly cross posted a link to the pharma good news in a thread I just posted in to make sure I wouldn't miss it. I agreed it was welcome thing despite slurs here to the contrary.

Good to see the 0.6% growth in the qtr to end June. Thats just 3 months growth!

Looking forward to seeing that continue and accelerate into the next qts. Our growth should be well over 2% at year end!

That'll be a relief to all and something to celebrate.