Monday, 3 August 2009

The trouble with Cynics - they are often right.

Well who would believe it? Last week Goldman - Sachs, this week Barclays and HSBC. Both banks have today reported £3bn profit for the last half year - in Barclay's case mostly from its investment banking arm. On Friday we get the RBS results. Eighteen months ago, this blog is where you would have seen the prediction that this year the banks would be back into healthy profit and demanding their bonuses again. These are my predictions: RBS will not produce such good results as it recovers from the self inflicted wound of ABN Amro. But by this time next year it will be in rude health. The share price will have realised a big profit for HMG who will start to unload their equity stakes transforming, in a trice, the public finances. The economy will be picking up smartly as a lot of foot-loose cash tries to find a home and low interest rates coupled with high government spending have their effect. The FTSE 100 will be well above 5000 and the Government will be claiming the credit for defeating the credit crunch. The opposition will have a tough time explaining how their hair-shirt policies would have achieved as much. This is the sunrise scenario which sees GB, against the odds, still Prime Minister and David Cameron contemplating a speedy exit from political life. It may not be fair, it may not be nice but the reality is that the economy could rebound as fast as it collapsed and just in time to prove Clinton's phrase that in winning elections - 'it's the economy, stupid!'.


ike said...

in relation to current hot discussions on the source of GS's robust profits, some say high freq trading is culprit, or not.

what do you say?

Professor Bob Ryan said...

Trading frequency as such will not generate a profit if the trading outcomes are random but where a player is (a) good enough (b) big enough or (c) just plain lucky then the frequency will generate a high level of profit. I am not convinced that trading the spreads would generate the sort of profits we are seeing in some of the big banks (I have not seen any data on spreads recently). My view is that there are very few big bank players that are up for risk taking at the moment but those that are, are makinga lot of cash in thin markets where there is significant mispricing.

xu said...

Hi professor Bob ryan.

Im a current P4 student will set exam in Dec.I do have a 2005 version of Principal of coperation finance by Brealey and Myers.Will this textbook able to cover the topic deep enough by compare to ur own book?

As some forum outline you set the exam base on your text book rather than the ACCA official proved textbook(BPP,KAPLAN).As the term "duration" using on Q1(b) never appeal in any textbook of above.
Will this be the trend of next setting?Im not offence here. I just wanna get a fair answer.Will this be the trend of your paper? Then i can decide where is the priority.

Anonymous said...

Can you give me some advice on John Hull's ptions, Futures, and Other Derivatives in relation to the P4 Exams?