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Markets for the Digital Generation

Web 2.0 Banking?

Blogged in People, Communication, *, Business Environment by Sean Tuesday September 19, 2006

First Direct’s new CEO Chris Pilling gives a great engaging and friendly interview published as a podcast on their website. Despite being part of the giant HSBC group, they seem to manage to keep their unique cultural and organizational identity and remain leaders in bringing innovation to retail banking.

Podcasts are useful but don’t really constitute a new paradigm for banking. It’s a good start, but will be interesting if the new guy can build on this foundation and stay out in front of the pack.

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Trade hurricanes not gas

Blogged in Trading, betting, etc., * by Sean Tuesday September 19, 2006

Ok hindsight is obviously 20/20 but from reports coming out over the past couple days it would seem that the reason that Amaranth has lost billions of dollars (yes billions) in the natural gas market is because their traders decided to make the same bet that last year made them hundreds of millions. ie That supply disruptions caused by hurricanes in the Gulf of Mexico would cause the price of gas and certain calendar spreads to soar.

Aside from it being a crowded trade - who wanted to be short heading into hurricane season this year? - this would seem to be a good example of bad basis risk. If the goal was to speculate on the number and strength of hurricanes in the Gulf, there should be a better way.

Of course then again if you look at it that way, you might be loathe to pay a manager 2-and-20+ , would be easier and cheaper just to place the bet yourself.

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