** Greed is Golden ** - Wednesday 9th September

Greed..is it back?
One of the greatest modern icons of greed, capitalism-at-its-worst and corruption (aren’t they all the same thing?), the indefatigable, and stylishly-oh-so-cool Gordon Gekko himself, is alive and kicking. In fact, not only is he alive, but he is about to be released from prison (in movie world of course) and unleashed once again onto the very streets that made famous his character in the spot-on movie of the same name - they really don’t make them like they used to. “Wall Street” was probably responsible for an entire collection of trading floors made up of wanna-be movers-and-shakers inspired (no one said inspiration had to be through a positive conduit) by the sheer dastardly tactics employed by Gekko in the relentless pursuit of his (and the prevailing period’s) ultimate aim – money. “Wall Street 2” really could not have come at a better time…the 80s represented the epitome of the “I want” culture and Gekko was the quintessential player taking-it-all, whereas whatever new icon is created through the sequel, will surely represent the best/worst of the property price inflated era, and the characters of the super hedge fund manager, more interested in the size of their own yachts bobbing up and down in the harbour, than the dwindling size of their clients’ entrusted assets.
The fact such a character is ready to re-appear is a damning indictment of the unscrupulous behaviour exhibited by many a financial employee over the last 6-7years, leading to the excessive lending and risk-taking that has brought us to where we are today, a year after the height of the credit-crisis. Did greed come back, or just never go away?

Yawning mergers…
On the real financial streets, plenty of activity in the corporate world, as Kraft makes it clear they will not sit back and wait for Cadbury’s reluctance to a deal simply melt away, hinting they will move their offer to a hostile bid if necessary – this is like music to the ears of investment bankers and consultants, always preferring a less friendly approach that incurs (surprisingly) higher fees and hence, strangely enough, appeals more so than a friendly handshake and coming together of like-minded people. Also in the last 24 hours, we had T-Mobile and Orange agreeing to combine their mobile operations in the UK. If it goes through, they become the single largest operators in the UK. Will this hopefully mean that their service will no longer languish at the bottom of the pile? More importantly, there’s an awfully (cockney) accent that greets you to Orange’s voicemail service – surely (and hopefully) this will be the first victim to fall to the restructuring plan.
Whilst Obama is languishing across the US heartland attempting to totally revamp the healthcare system, on his East coast the tennis tournament is taking up most of the spotlight, as citizens across the country get back fully into the swing of their daily routines and start looking for the lighter side of news to escape the monotony of their daily lives – how else do stories about McLaren’s new “green” supercar and Chimpanzees imitating yawns from cartoons (don’t ask) win more views on news websites than Obama’s latest speech dealing with, literally, matters of life-and-death?
Dubai launches its Metro system today and it is, of course, the world’s longest and most luxurious. 70km of unmanned track with leather reclining seats (in 1st class at least) await those who are brave enough to step-out of their cars and figure out how to walk from the station to their homes, without fainting in a puddle of their own sweat in 40 degrees of summer heat - Hmmm, not an instant winner in my books, and with OPEC meeting today to keep production levels unchanged, a reminder to enjoy subsidised petrol in the Gulf region for as long as possible.

Smart titans…
In recent weeks the volume of corporate activity has been picking up and there are a number of had-been-put-on-hold IPOs in particular coming through from Asia. Two ways to look at this, the first the more optimistic in that chief executives are confident enough to re-enter the capital markets and tap investors for cash and other equity raising techniques, believing that the stability of the underlying market is no longer in question. The second, and more cynical (some believe realistic), the get-it-while-you-can phenomenon whereby those ever-so-clever titans of industry are playing their hand at the most opportune moment just when markets seem dazed and confused on the back of a sharp bear-market-rally, and are doing their best to lock-in as high a possible valuation while they can – before the double dip rears its ugly head and investors once more retreat from the riskier looking equity classes. Whichever you believe it is, the activity is a welcome noise away from the deafening silence earlier this year. Interesting to note that a few of the upcoming IPOs are actually being priced at higher valuations than the price they had tentatively come to market with before being pulled this time last year.

Gold Gloats…
Gold and Oil have both had some strong surges in the last 48 hours, rising above $1,000/oz and $70/brl respectively. In fact, the entire FX, Commodity and Currency space has seen a shift back towards a weakening dollar and hence the hedge plays come in (Cable is at 1.65 again). There have been a couple of interesting television interviews in recent days where some prominent US business-leaders and figures (including Forbes and Buffet) all expressed concern at the continuing government spending and questioned the medium-term sustainability of the markets given the strong wave of appreciation witnessed on the back of weak fundamentals since March – problem is, now that we’re in September and looking towards 3rd quarter earnings results, those fundamentals ain’t looking any better.

What is it about Gold? In a piece written much earlier this year, it was noted that all the Gold in the world melted down would only fill the base of the Statue of Liberty, or to visualise it another way, 77 large lorries driving down the motorway. With greater focus on what many are now terming the “last remaining currency” in the face of incredible government borrowing and spending, who is going to be benefit from Gold breaching $1,000/oz again? According to records, the largest holder is currently the United States, but there is more Gold than has ever been mined in history sitting under South Africa - apparently. Not only do they get the world’s greatest sporting event next year in the guise of the FIFA World Cup (with usual over-inflated expectations and deep disappointment awaiting England fans, no doubt), but South Africans can also sleep easy at night in the knowledge their precious ground has appreciated (and looks set to continue doing so) with the value of unrealised mining profits – no danger of a missing Golden Trophy at that end of that tournament.

Designed profits…
Finally, looks like the markets have temporarily placed their jitters to one side, with some modest gains and losses returning us to more “normal” market activity (i.e. gains and losses of 40-60bps, not 300bps swings) through Asia, Europe and the Middle East. Without being sure what is worrying most investors, the incredible amounts of liquidity flushed through the system have allowed investment banks all around to make exceptional returns since the start of the year, but now the risk models are pricing in some more worrying scenarios.
Talking about taking risk, I was reading a long article on two supposed boom-era winners, the interior re-furbishing duo Candy and Candy, who apparently were smart enough to never use their own money when making investments, but always sold-out for a full cash position during the peak of the housing market and are now sitting on a very nice large pile of (other people’s) cash. Smart by never putting up any of the risk themselves or greedily corrupt by artificially inflating prices for their own profit at investors’ expense? One of their favourite materials used in the finishing touches of their “breathtaking” designs? Yep, you guessed it, the value-increasing and oh-so-rare Gold. Would they also be making a cameo appearance in “Wall Street 2” by any chance?