Ken Silverstein wrote a fascinating portrait of commodities trader Glencore for Foreign Policy. It sets the scene thus:
LEVERAGING TIES TO DICTATORS has always been at the heart of the business empire built by Rich, the Belgian-born U.S. citizen who founded what would become Glencore in Switzerland in 1974.
The explanation of why Glencore chose Switzerland as its base is another highlight.
Fortune’s Adam Lashinsky looks at Apple’s evolution since Tim Cook became CEO. Striking statistic:
2,153 Apple employees reference the term “MBA” in their LinkedIn profiles out of a nonretail workforce of nearly 28,000. More than half the employees who reference “MBA” have been at Apple less than two years.
Will be interesting to see if that announces the beginning of the end for Apple…
The FT highlights some Norwegian day traders that succeeded in beating algorithmic traders. In one instance the traders got sued for market manipulation. But then:
The courts found them not guilty of market manipulation this month, concluding that they were making the market more efficient by exposing a flaw in the system.
Arguing the Efficient Markets Hypothesis in front of a judge, that’s brilliant.
This weekend’s FT has an exquisite piece on the travails of Anthony Bolton in China. After 30 years of managing Fidelity’s Special Situations fund in the UK and posting a 19.5% annual return (6% better than the FTSE All Share), Bolton set up a China Special Situations fund in 2010 which has lost 17% so far. The FT writer seems a bit embarrassed at having to expose this sorry track record and essentially ends up arguing that honest, hard-working Bolton was conned by the devious Chinese:
Fraud is a global phenomenon […]. In China, however, rampant corruption and a weak rule of law mean that when things go wrong there is little recourse.
…
“If people want to rip off people here, they’re very inventive,” says Bolton, with a hint of admiration.
The first line of the article gives a hint as to the real problem, however:
Anthony Bolton may be one of the world’s most accomplished investors, but using chopsticks is still a struggle.
The article sets up the strawman argument that Bolton’s failure to speak Mandarin was an insurmountable handicap, but then discredits it by quoting a native Chinese fund manager who insists that speaking the language is “not essential.” The larger issue, Bolton’s apparent lack of the cultural sensitivity necessary to do business in China, is thus deftly side-stepped.
From my understanding, what the article calls examples of fraud are not purely seen as such in China. Rather, one’s perceived stature is of paramount importance to successful business negotiations, and thus inflating one’s importance is fair game. It is up to the other party to cut through the smokescreen and see the reality. In short, nothing really is what it seems in Chinese negotiations, which is obviously a far cry from the direct nature of Anglo-Saxon ways.
As a result, successfully doing business in China as a Westerner requires a great deal of humility and accepting that deals in China are now done on Chinese, not Western, terms. Bolton, on the other hand, clearly arrived in Asia expecting something like Hong Kong in the 1950’s, where everything operated along the Anglo-Saxon patterns he knew. He got burnt as a result. Commenter “coolhead” captures the idea:
Oh, the hubris of it all! Acclaimed Occidental fund manager descends in Hong Kong to teach orientals how to invest
Some tidbits about Bolton’s lifestyle also betray his tragically outdated imperial perspective on life in Asia, despite the article’s assertion that “Bolton is remarkably ordinary”:
At weekends, Bolton and his wife skim across the South China Sea in his motorboat.
…
It’s a long way from the Hong Kong Club, the ultra-exclusive, 166-year-old private members’ venue where Bolton mingles with the city’s elite.
…
The Boltons’ 2,900 sq ft flat cost HK$72.8m (£5.8m) and is located in a tower called The Mayfair, overlooking Hong Kong’s Victoria harbour.
Unfortunately, it is now all too clear to the locals that the emperor has no clothes. What a brave new world it must be for Bolton and his cohort.
This Bloomberg story from a month ago was still sitting in my Instapaper queue: “JPMorgan Said to Transform Treasury to Prop Trading”. To me back then it simply illustrated how banks’ organisations would change in response to the new rules brought in after the financial crisis. There was an undeniably ominous background to it as well though, along the lines of “let’s hope this ends well.”
Well, it didn’t:
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the firm suffered a $2 billion trading loss after an “egregious” failure in a unit managing risks
The FT:
Investors and dealers have shied away from foreign exchange trading this year amid frustration at the strength of the euro.
This statement is much more in line with what I hear from trader friends, despite the resurgence of sensationalist headlines announcing the euro’s demise after this weekend’s election results.
So the actual data seems to get in the way of the desired narrative again, but one can always hope:
Some believe it will take a more drastic event for the euro to finally break out of its range. All eyes are on Greece.
Not well, says Felix Salmon after reading a report from an institutional investor:
the average VC fund returns less money to investors than they invested in the first place.
The Atlantic interprets a sell-side research chart from JPMorgan thusly:
And here is your tweetable fact: A monetary union might make more sense for every nation starting with the letter “M” than it does for the euro zone.
Fortunately the Internet does a good job debunking that in the comments section, worth a quick read.
Reuters has a report on older Japanese engineers being hired by Chinese manufacturing firms, mainly for their skills and experience.
Many of the Japanese engineers finding a second life in China do not have the cutting-edge technology that would deal another crushing blow to Japan Inc yet, analysts say, but the long-term impact could be severe because they will give Chinese manufacturers the skills to make high-quality goods efficiently.
Flashes of the historic rivalry between China and Japan also seep through, which makes for an interesting subtext (“traitors”…)
Journalist Brent Schlender argues that Jobs’ time in between his two Apple periods was instrumental to his later success:
He became a corporate architect, coming to appreciate the scaffolding of a business just as much as the skeletons of real buildings, which always fascinated him.
Insightful piece overall.
Scheldt Capital is not a company, it's a concept. It's also a place where I write about finance, economics and banking. All views expressed here are entirely my own and most likely do not represent those of my employer, past, present and future.
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