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Why UK Banks Will Continue To be Hot

 4 min read / 

Global markets have lost circa $3tn in the past few days. The economics do look shaky but markets, as we’ve seen post-2008, often beat to a different drum. From an investment standpoint, however, the same question applies: have markets overshot the economics or have the economics validated the markets?

In this context, overshooting is to the downside so from a long-term perspective, there are companies out there with a tonne of cash trading at considerably fewer multiples than just two weeks ago. Of course, the canary in the coal mine is Brexit, which slammed the pound down to its record two-day collapse, but until the UK triggers Article 50, nothing changes.

In risk-off periods, cyclical stocks take the full force of negative headlines. Banks and homebuilders have taken the brunt of the sell-off, some for rational reasons, and others not so. In this brief article, I want to tackle the question: should investors add bank stocks to their portfolio?

In risk-off moods, banks take the brunt. Why? Because risk-off periods tend to ask questions of the underlying economics, which banks play a pivotal role in supplying credit to households. Markets tend to overshoot on the downside and equities get unfairly treated. The obvious question is when will the stock revert to its mean, or even its high. The problem with that question is when the paradigm changes, the previous high may not even be achievable given the change in market dynamics. To assess a stock’s potential, you need to almost forget the past because in some ways it’s irrelevant what the previous high was. One needs to evaluate its future performance incorporating current conditions.

Given that, what does the future look like for UK banks? The first thing to say is: avoid investment banks because business uncertainty is killing the market, so fewer mergers and capital raisings will take place. Retail banks in the UK look somewhat decent. Low-interest rates for even longer should provide a more solid asset side, although, with rates more likely to go down than up, that clearly isn’t good for the top line growth. Furthermore, if the Brexit fears do start to play out as forecast, unemployment will rise, meaning the banks’ loan books will come under pressure. Add to that, uncertainty over the cost of obtaining the passport, i.e. the access to EU business, is unknown. Those are the main reasons to be cautious on banks, but are they justified? Let’s take them one by one.

Key Issues

Firstly, low rates will kill banks. Low rates have been around since God was a boy. We knew this was going to be the case, even if Brexit didn’t happen. Granted a rate cut is even worse, but in my view, the Bank of England will not cut rates. It will restart QE, which is good for banks because it gives them cheap cash and compresses their corporate bond spreads. Both of which save the bank money. Sure, squeezing their net interest margins is bad which is something to gauge should a rate cut happen.

The second point referred to an increase in non-performing loans. Article 50 hasn’t been triggered as yet. Will it ever be? The UK still wants access to the common market, so it will likely delay the whole process as much possible and given its politicians leading the debate, I wouldn’t be surprised if this process lasted 3+ years. In this scenario, businesses will need to invest because they will be under pressure from their shareholders to place the excess cash. Therefore, from a consumer perspective, this is highly unlikely to cause mass unemployment and people to start defaulting like it’s 2007 all over again. In 2008, the major issue was the payments and settlement system, i.e. banks’ ability to conduct business. Brexit is nothing like that, rather a decrease in confidence and costs. Both of which are uncertain but can change as the market receives solid economic data.

The retail banking industry has been unfairly hit and should an investor have a long-term perspective, UK banks look a decent proposition.

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Uber Eats to Offer Europe Couriers Insurance

 1 min read / 

Uber Eats insurance

Uber has announced that it will be offering a free insurance package to its food couriers in nine European countries.

The company has teamed with AXA Corporate Solutions for the insurance product, which will be introduced from January 8 next year. It will cover personal accidents, cash benefits for hospitalisation, property damage and cover for third-party liability of up to a maximum of $1m. Uber eats operates in Austria, Belgium, Poland, Italy, the Netherlands, Portugal, Spain, Sweden and the UK.

If a driver is involved in an accident, they will simply need to fill in an online claim form available on the Uber Eats app.

Previously, both Uber Eats and Deliveroo have come under scrutiny over how workers are treated. In the UK, Deliveroo riders went to court to seek employment rights, including the minimum wage. The UK government has looked at whether the employment law needs to be changed to take account of modern working practices, such as the gig economy.

Keep reading |  1 min read


Google News: The Secret War Against Net Neutrality

 5 min read / 

Google Net Neutrality

Anyone watching Google News can see that mainstream news outlets are a monoculture, with 100 different outlets reporting essentially the same “big” story. That is, whatever is the top scandal of the day. With click-bait headlines the norm, mainstream news and fake news look indistinguishable. Readers struggle to tell the difference. It’s all negativity and shouting. That’s changing our culture, and not in a good way.

Google News is making the news monoculture worse by blocking independent news publishers seeking to join Google News. There’s an almost insurmountable headwind for new publishers who haven’t been “grandfathered in” to Google News. Google urges us to take action to support net neutrality while at the same time defeating net neutrality by giving favoured nations treatment to big business news organizations at Google News. Why is that a real problem? Let’s talk about what happened to news in Spain.

The Case in Spain

Spain’s repressive Google tax, and consequent Google News blackout, crippled independent news there. When that happened at the time, Google may have thought, serves Spain right for passing a stupid law. However, the suppression of independent news in Spain has had consequences. The Spanish news blackout by Google News played into the hands of the Spanish government seizing mainstream media, reducing mainstream news to official propaganda.

In its early days, Google News was a tremendous democratic influence for good. Smaller news sites you wouldn’t otherwise know about could get to the top of Google News based on merit. A colleague once wrote a story about a TV movie premiere starring Jennifer Love Hewitt. There was surprisingly big interest in this story. It was the only story that quoted Hewitt talking about her film. That story went to the top of the entertainment section of Google News on a Sunday morning and stayed at the top all day. It drove tremendous amounts of traffic to the news site that published it. They took a lesson from it.

Their success with that story on Google News changed their editorial mandate. The new marching orders? Find more stories that we can uniquely cover that will put us at the top of Google News. What Google had done, intentionally or not, was support diversity and make journalism better. For years that publication ranked on the front page of Google News almost daily. They survived on that traffic. It doesn’t work that way anymore. It isn’t how good you are. It’s how big you are that gets you into the Google News club today.

Difficulty for Small Publishers

In fairness to Google News, this publication, The Market Mogul, is carried by them, so clearly it’s not impossible for a new publisher to gain access. However, given their loud support of net neutrality, why doesn’t Google News have a program that nurtures net neutrality on their own platform? Why not help small publishers, rather than making it more difficult for them to launch and sustain themselves?

Maybe Google simply hasn’t thought about the consequences of not helping small publishers. After all, it can be more work to deal with them. They may have more questions to answer than establishment outlets. However, big mainstream publishers aren’t actually subject to the official rules. Google News isn’t about to drop the New York Times or Washington Post if they make a web template change that moves the author byline down a line or another superficial change that might confuse Google crawler robots.

A small publisher, however, is expected to play 100% by Google’s rules. A long-time Google News forum advisor talks about how things have changed at Google News:

In simple terms, the Google News guidelines have tightened up over time.  I joke that the NYTimes might not be accepted these days.  Yes, that tight.  So your goal is not to generate a marginally passable website that might get accepted into Google News, but one that is so wonderful that Google will drop all of your perceived competitors to find room for you.

Maturity.  If the site doesn’t have 6 months of strong journalism history to review, don’t bother applying.  Maybe 1 year in some niches.  And don’t be surprised to be rejected as 99% of all sites that apply will be rejected.  Think of this as a challenge and go forth and make the best possible news site in your niche.

Why should better journalism mean dropping a perceived competitor? Has the Internet run out of space?

If the above observation is correct, and it is judging from what small publishers have told me and the general feedback on the Google News forum, then Google News has changed. No longer a news democracy with room for every legitimate news publisher no matter what size, Google News has morphed into a walled garden that embraces big business. It’s the opposite of net neutrality. Google News has become a censor promoting the establishment viewpoint. Think that’s bad? It gets worse.

What billionaires think, is the establishment viewpoint. Billionaires control the mainstream press. Google News is boosting the 1%. Whether that’s Jeff Bezos, owner of the Washington Post, which continues to provide outstanding journalism, or Rupert Murdoch, owner and head of Fox News, which does not. Warren Buffet owns 31 news dailies and 50 weeklies. In the UK, five billionaires, Rupert Murdoch, Jonathon Harmsworth, Richard Desmond and the Barclay twins own 80% of the newspapers, plus TV stations, press agencies, book companies, and cinemas. None of the top UK billionaire press owners actually live in England.


A handful of billionaires, many tax avoiders living mostly beyond the law by bending it to their wills, has become our society’s thought overlords through their control of the press. And Google is helping them do it. Why has Google become a gatekeeper to enforce a news mono-culture? Will Google reconsider, stop suppressing small publishers and demanding they be “better” than the New York Times before allowing them a voice?

What society needs is news net neutrality.

Keep reading |  5 min read


Bulletproof Clothing: How US Fashion Is Going Ballistic

 2 min read / 

Bulletproof Clothing

As the US continues to allow civilians to carry weapons and gun violence becomes more of a concern, an increasing number of bulletproof apparel retailers are emerging across the country. Their target clients? The average Joe. Or at least those who can afford the hefty price tags associated with the “exotic” new fashion segment.

Miguel Caballero, a Colombian designer, sells his bulletproof blazers for 4,343.50 euros, and his tank tops for 2,023 euros. At a lower price, but still too high for most people, Joe Curran, who owns BulletBlocker, sells his bulletproof leather jacket for $875 and bulletproof classic two-piece suit for $1,200.

Source: Miguel Caballero

Caballero said that his clients include world leaders from South America and the Middle East, and international businessmen. Damien Ross, another manufacturer of bulletproof clothing, said that his clients are mostly college-educated, professional men, between the ages of 34 and 75.

Ross said:

“They [clients] see what’s happening on the news, and, any time they’re in a crowd or an area that can be prone to attack, they are concerned.”

Source: Bullet Blocker

Body armour manufacturing is a $465 million-a-year industry in the US, according to a report in August from Market Research. The retailers, who mostly entered the industry because of the surge in gun violence taking place around them, are presenting upscale bulletproof clothing, from blazers to tank tops.

Owning body armour is completely legal, and does not require a special permit or background check. However, guidelines vary from state-to-state, and felons are not able to purchase it.

Keep reading |  2 min read