Weekend interlude: The curse of the Hammers

Longtime readers may recall that Macro Man is partial to the footballing stylings of West Ham United.  The story behind his support of West Ham is a convoluted one; suffice to say that when he first moved to Europe more than two decades ago, the allure of East End pie'n'mash and jellied eels proved stronger than the fancy-Dan surroundings of certain other London clubs more generally popular with his fellow expatriates.  And hey- if the Hammers are good enough for Frodo Baggins, they're good enough for him.

Anyhow, as your author was enjoying the 3-0 thrashing of Hull City this morning, he was struck by the ongoing blandishments of erstwhile club sponsor Alpari FX on the advertising hoardings around the pitch.  Alpari, as you may have heard, was one of the casualties of the SNB this week; like many FX bucket shops, it was unable to recoup the losses from short CHF customers trading on razor-thin margins, and has gone bust.



Curiously, this was not the first firm associated with West Ham that has run into a spot of bother.  Although the club is currently owned by a couple of East End boys done good (if becoming a porn magnate can be described as "done good"), its previous owner was an Icelandic sugar-daddy named Björgólfur Guðmundsson.   Mr. Guðmundsson, who alas no longer qualifies for sugar-daddy status, was also the majority owner of highly levered Icelandic bank Landsbanki, proprietor of such too-good-to-true financial schemes as Icesave.   As readers may recall, Iceland did not exactly enjoy smooth sailing during the financial crisis, and both Landsbanki and Mr. Guðmundsson declared insolvency in 2008-09.



Prior to that, West Ham was sponsored by a no-frills airline called XL Airways, which catered to the package holiday customer more interested in the size of the ticket price than the comfort of the travel or the convenience of the embarkation/debarkation locales and times.   The business model was a familiar one in the airline industry:

1) Borrow money
2) Lease aged planes and slap a new logo on them
3) Charge punters little enough to fill the planes but just enough to turn a profit

Such a business is inherently leveraged, and as you may recall leveraged businesses did not fare so well in 2008.  XL, however, was almost prescient in the timing of its failure; it ceased operations the Friday before Lehman Brothers went bust.




Let this little history lesson be a word of warning.  It seems unlikely that the demand for pornographic materials is going to wane in the near future, so the core business of West Ham's owners would appear secure.   If you happen to own stock in the club's next sponsor, however, you might be advised to sell...or at least take out a cheeky hedge in case the curse of the Hammers strikes once again.
Previous
Next Post »

28 comments

Click here for comments
Anonymous
admin
January 18, 2015 at 4:53 PM ×

Forever blowing bubbles eh?

Reply
avatar
Leftback
admin
January 18, 2015 at 4:58 PM ×

1 point each for "jellied eels", "Fancy Dan" and "core" business. A 3-0 win !!

Reply
avatar
CV
admin
January 18, 2015 at 6:17 PM ×

West Ham MM?! Hmm ... alright then ... I lived close to the WH ground when I was in the Big Smoke, but alas I am a Chelsea fan so I had to make the gruelling trip to West when watching a match, courtesy of one of the season tickets of the senior traders on the desk (blackmail is the word you're looking for!).

Suggestions for new sponsors? FXCM made it apparently ;)

Reply
avatar
CV
admin
January 18, 2015 at 6:17 PM ×

West Ham MM?! Hmm ... alright then ... I lived close to the WH ground when I was in the Big Smoke, but alas I am a Chelsea fan so I had to make the gruelling trip to West when watching a match, courtesy of one of the season tickets of the senior traders on the desk (blackmail is the word you're looking for!).

Suggestions for new sponsors? FXCM made it apparently ;)

Reply
avatar
Hotairmail
admin
January 18, 2015 at 6:36 PM ×

Not exclusive to West Ham though. Remember AIG who blew up the world a few years back being the main sponsors of Manc U?

Reply
avatar
Anonymous
admin
January 18, 2015 at 7:32 PM ×

Ah, maybe they should have relocated to India, help Modi win..

"Banks accumulate bad loans when political interest prevails over commercial interest. Did the SBI(State Bank Of India - govt owned) go into the merits of the case while sanctioning the $1 billion loan to Adani's Australian project or was the bank's interest sacrificed to humour a favourite of the present political dispensation? Why has the SBI exposed itself so much to the troubled power sector?
To meet the global capital adequacy norms recommended by the Bank of International Settlements, the two dozen government banks need Rs 4 lakh crore by 2018, or Rs 80,000 crore every year. To raise money, the government plans to reduce its stake to 51 per cent in its banks. To revive the investment cycle, build infrastructure and accelerate growth pick-up, the government has to depend on foreign investment as well as bank loans. But banks are already over-stretched....The taxpayers' money is pumped in at short intervals to keep the government banks afloat, while no one is held accountable for the huge pile-up of NPAs. A small borrower is hauled up if he defaults on a small loan, but the well-connected industrialists get away lightly. Their properties are seldom attached or auctioned; they are not shamed or blacklisted. Bank unions can go on strike to oppose reforms or demand higher salaries but not to resist loans to top bankers' or politicians' favourites".

http://www.tribuneindia.com/news/editorials/clean-up-of-banks/26658.html

Reply
avatar
@dreadfuldrivers
admin
January 19, 2015 at 1:05 AM ×

The Hammers could always get celebrity hairdresser Paul Mitchell to be their sponsor. Oh, but he's already playing in the midfield.

Reply
avatar
Anonymous
admin
January 19, 2015 at 1:15 AM ×

"like many FX bucket shops, it was unable to recoup the losses from short CHF customers trading on razor-thin margins," - bucket shops thrive on customer losses, don't they?

Reply
avatar
Macro Man
admin
January 19, 2015 at 1:58 AM ×

Typically, yes. But in this case the bucket shops would have hedged their clients' aggregate EUR/CHF position with professional counterparties. When there was the massive gap lower, the bucket shops were on the hook with the professional counterparties, and unable to recoup the losses from their massively leveraged customers, whose equity was no doubt wiped out after the first big figure or two, as they sized their positions on the assumption that they'd be able to stop out on a continuous rather than massive jump price distribution.

Reply
avatar
Anonymous
admin
January 19, 2015 at 3:20 AM ×

From the FT: Who owns the SNB

http://imgur.com/upUdKQy


Surprise. Surprise.

Reply
avatar
Anonymous
admin
January 19, 2015 at 3:36 AM ×

Oil to $30

http://www.bloomberg.com/news/2015-01-18/iraq-pumps-crude-at-record-level-amid-plummeting-prices.html

Iraq pumping oil like there is no tomorrow. Well, maybe there won't be, the way things are going over there.

Reply
avatar
Nico G
admin
January 19, 2015 at 6:29 AM ×

here is the man in charge of Italy

http://video.corriere.it/telefonate-selfie-renzi-fa-aspettare-schulz/05253e7c-9d6a-11e4-b018-4c3d521e395a

late for conference, then on the phone while others wait some more, selfie with Italian women outside, then yawn at press conference

Brussels at work. Good luck for your European QE

Reply
avatar
Polemic
admin
January 19, 2015 at 9:43 AM ×

Anon 3.36.
If iraq are already pumping that much then its already on the mkt and in the price.

China.. the next spec destructor has just cleared the decks there.

God I so hope UK's PCWorld are next sponsors of West Ham.

Reply
avatar
January 19, 2015 at 1:34 PM ×

@nicog... there's only a Way To have consensus in italy: fare il simpatico :) when i See these scenes i cry

Reply
avatar
Nico G
admin
January 19, 2015 at 7:35 PM ×

yes Bond, Renzi suddenly reminded me of a good friend in Milan... but that friend is a club promoter !

Reply
avatar
SCM Trading
admin
January 20, 2015 at 3:56 AM ×

Wonder how UBS, Credit Suisse , JB and Cantonal amongst others got on after the surprise SNB move?

Reply
avatar
Nico G
admin
January 20, 2015 at 6:29 AM ×

from Macronomics

€600bn of lost corporate lending

The European corporate loan book has shrunk by €600bn since 2009, the point at which corporate credit volumes began to retreat. Around €450bn of this shrinkage has taken place in the last three years – the period of austere governments and regulators. Almost all of this correction is down to three banking systems: Spain (€400bn lost from peak), Italy (€100bn lost) and Greece (€30bn lost).

Reply
avatar
Anonymous
admin
January 20, 2015 at 1:36 PM ×

"Speculators using futures to wager the franc would weaken versus the dollar had more than $3 billion worth of such bets as of Jan. 13, according to Bloomberg calculations based on Commodity Futures Trading Commission data."

We all know that the 45 percent privately owned SNB told all the owners to take the other side of that the trade just before the announcement.

Reply
avatar
Anonymous
admin
January 20, 2015 at 1:40 PM ×

Today's joke:

"SEB AB, the Nordic region’s largest currency trader, said it’s been fielding calls from hedge funds wondering whether Denmark might be next after the Swiss National Bank shocked markets by exiting a three-year-old euro cap on Jan. 15. Economy Minister Morten Oestergaard a day later sought to silence doubts surrounding Denmark’s currency peg, which he said remains “secure.”

Are we at peak Central Bank now? Will they just scurry away and disappear or will they collapse the whole system?

Reply
avatar
Polemic
admin
January 20, 2015 at 1:49 PM ×

Re that SEB comment - Well we know how risk works. Overestimates repeat of things that have just happened and underestimates that of things that haven't happened for ages.

So tell 'em yes and sell them overpriced puts on danish bacon and watch them get smoked.

Reply
avatar
CV
admin
January 20, 2015 at 1:58 PM ×

Ding ding ding ... points of the day goes to Polemic, for this;

"So tell 'em yes and sell them overpriced puts on danish bacon and watch them get smoked."

Are the actually quoting EURDKK puts outside the band?!

As a Dane, I am obviously biased here. But what a load of crap. Denmark is not about to revalue against Germany (its biggest trading partner), and besides the peg is POLITICAL. The central bank cannot break it unilaterally. Also, it is a symmetric peg, not a floor like the CHF .. etc etc etc (please stop this nonsense now!).

Anyway, if Germany decided that it had enough of money printing and decided to re-introduce the D-mark, Denmark would just peg to that (i.e. Denmark is really pegging to Germany, not Italy et al!). An FX union between the Swiss, DK and Germany would probably work out very well, but that doesn't mean it will happen.

Reply
avatar
Polemic
admin
January 20, 2015 at 2:01 PM ×

thanks CV, agree the question re the currency puts, thats why the hint at buying puts in danish equities, specifically the exporters and what more famous Danish export is there than Danish Bacon ( apart from Lego, but that doesn't get smoked)

Reply
avatar
Anonymous
admin
January 20, 2015 at 2:09 PM ×

Headline at Bloomberg View:

"Denmark Should Cut Loose From Euro"

http://www.bloombergview.com/articles/2015-01-20/denmark-should-cut-loose-from-euro

Reply
avatar
CV
admin
January 20, 2015 at 2:09 PM ×

Yes Polemic, buy really need to buy single name puts here because the index is currently on hyper speed due to the biotech gians Novo Nordisk and Novozymes. Danish assets selling like hot cakes at the moment, even mortgage bonds despite private sector debt to GDP being 280%.

I think the peg will might actually fall, eventually, but it will happen because Denmark overextends itself and starts running an external deficit. Of course, that requires a significantly stronger euro, but give it time ... ;)

Reply
avatar
Anonymous
admin
January 20, 2015 at 6:20 PM ×

SNB shakeout:
“The losses will be in the billions -- they are still being tallied,” said Mark T. Williams, an executive-in-residence at Boston University specializing in risk management. “They will range from large banks, brokers, hedge funds, mutual funds to currency speculators. There will be ripple effects throughout the financial system.”

Reply
avatar
Anonymous
admin
January 20, 2015 at 6:28 PM ×

1700 private jets expected to Davos in Switzerland to discuss climate change

https://twitter.com/flightradar24/status/557563754557480960/photo/1

Reply
avatar
hipper
admin
January 20, 2015 at 8:21 PM ×

Well it's an economic forum after all... oil is the biggest culprit so what better way to show example for the world what we all could do to stimulate the economy.

Grab some tax-payer money, rent an armada of private jets and burn some of that excess supply off.

Reply
avatar