With 170,000 banking jobs lost since the American sub-prime market collapse and a further 180,000 expected to go worldwide just in the next 6 months. Will graduate placements be culled in the process?
Citigroup threatening to cull 52,000 jobs is just the latest twist in the banking sector job outflow. Recent survey state that graduate job opportunities will decrease by around 15% this year with certain areas affected harder than others. Areas such as Mergers and Acquisitions will be hardest hit as this region of banking has almost halted due to the increase in credit spreads and lack of longer term funding. Other divisions such as Private banking are still growing strong, one of the very few parts that look healthy on banks interim reports.
Competition is going to be a lot higher with more applicants after fewer jobs whilst graduate recruitment may be reduced due to banks picking experienced bankers over junior recruits.
But is all lost? Not at all. The one thing banks love is young graduates who they can mould and carve to meet their needs but now we as Cass graduates will have to be more flexible. Being willing to move to areas such as Dubai will help no end as this is one of the few places in the world where job cuts have been non-existent. Do we have what it takes to set us apart from others? Cass is an iconic business school which is well known in the corporate world and is regarded as one of the most up and coming schools not only in London but the world. This puts Cass graduates in the upper segments of the graduate recruitment wish lists, meaning top financial institutions will still want to acquire our skills.
Panic, worry and doomed are not words we should be using when describing our future prospects. Our employment opportunities have diminished but it is just a time when you have to set yourself apart from other applicants and having Cass on your CV is the first step to achieving this. The rest is up to the individual and how much you want a job in finance…
Monday, 17 November 2008
Monday, 10 November 2008
Interest rates not cut but slashed by Bank of England
The BoE is seen to have taken decisive action by not concentrating on the level of rate cuts but by deciding on what level is appropriate for these unprecedented times, hence the record cuts! But with US rates at 1% and EU rates at 3.75%, has the UK taken the initiative again in world economics?
During this financial crisis the BoE has been finding credibility very hard to come across with our goals differing from our cross Atlantic counterparts. The BoE focus is fully on inflation, economic stimulus is second on the list, and this makes the latest rate cut even more interesting. Medium term inflation seems to be dipping just at the right time giving the BoE an excellent opportunity to assist our ailing economy where fiscal stimulus, from a once well respected chancellor, now prime minister, seems non existent.
Now that all the main lenders have passed on these full rate cuts the wider economy, from households to firms, the hope is to stimulate demand and supply now that mortgage and loan costs are considerably lower. It seems that this is step one in an aim to make sure that the UK does not hit a long hard recession the like that have crippled Japan. All the news is positive, we have targeted the original problem by making banks recapitalise and then aided the economy early and not waited before we are in the first recession for over 15 years.
However there are a few key issues. What does the Bank of England know that we don’t know? Have they reduced rates by such a steep margin because they are courageous and believe that now that have the appropriate market rates or is the economy outlook a lot worse than the market believes?
The further issue is that, yes, this rate cut will be stimulus to our economy but only in the short term. Remember the banks lending is all based on how easily they themselves can get credit and they do this based on Libor rates (London Interbank Offer Rates) which are still high. If these themselves do not come down then it is a vicious cycle where banks cannot get finance to in return give to the market. It seems the huge cut has solved a tiny slice of a massively entangled web of problems.
The next question persists is how much lower can rates go? 2%? 1%? Dare we even say 0%? The US is currently at 1% but they not only have different policy beliefs than us but acted quicker. If the UK were to approach 1% that would almost be check mate for monetary policy because the room for manoeuvre would be next to none. The Japanese have this problem, what effect did the 0.2% rate cut have? Very little if any! It would be a very tricky situation indeed.
On the other hand the European rates are higher standing at 3.75%. Have the EU got anything to be worried about. It does seem the economic slowdown is appearing to affect the EU less than UK and US, so are the rates appropriate? Or have the EU left it too late? In a world where globalisation is becoming more and more prominent it is amazing that the three most important economies on the planet have such different views on how to tackle this global recession. At this important time in the economic markets the Bank of England must believe that it has the better hand over the Federal Reserve and the European Central Bank!!!
During this financial crisis the BoE has been finding credibility very hard to come across with our goals differing from our cross Atlantic counterparts. The BoE focus is fully on inflation, economic stimulus is second on the list, and this makes the latest rate cut even more interesting. Medium term inflation seems to be dipping just at the right time giving the BoE an excellent opportunity to assist our ailing economy where fiscal stimulus, from a once well respected chancellor, now prime minister, seems non existent.
Now that all the main lenders have passed on these full rate cuts the wider economy, from households to firms, the hope is to stimulate demand and supply now that mortgage and loan costs are considerably lower. It seems that this is step one in an aim to make sure that the UK does not hit a long hard recession the like that have crippled Japan. All the news is positive, we have targeted the original problem by making banks recapitalise and then aided the economy early and not waited before we are in the first recession for over 15 years.
However there are a few key issues. What does the Bank of England know that we don’t know? Have they reduced rates by such a steep margin because they are courageous and believe that now that have the appropriate market rates or is the economy outlook a lot worse than the market believes?
The further issue is that, yes, this rate cut will be stimulus to our economy but only in the short term. Remember the banks lending is all based on how easily they themselves can get credit and they do this based on Libor rates (London Interbank Offer Rates) which are still high. If these themselves do not come down then it is a vicious cycle where banks cannot get finance to in return give to the market. It seems the huge cut has solved a tiny slice of a massively entangled web of problems.
The next question persists is how much lower can rates go? 2%? 1%? Dare we even say 0%? The US is currently at 1% but they not only have different policy beliefs than us but acted quicker. If the UK were to approach 1% that would almost be check mate for monetary policy because the room for manoeuvre would be next to none. The Japanese have this problem, what effect did the 0.2% rate cut have? Very little if any! It would be a very tricky situation indeed.
On the other hand the European rates are higher standing at 3.75%. Have the EU got anything to be worried about. It does seem the economic slowdown is appearing to affect the EU less than UK and US, so are the rates appropriate? Or have the EU left it too late? In a world where globalisation is becoming more and more prominent it is amazing that the three most important economies on the planet have such different views on how to tackle this global recession. At this important time in the economic markets the Bank of England must believe that it has the better hand over the Federal Reserve and the European Central Bank!!!
Monday, 3 November 2008
OPEC oil cut
OPEC’s decision to cut oil supply has caused outrage among political leaders. Is it a case of OPEC protecting its industry or being rapacious for high profits? Simple demand analysis suggests excess supply has merely been removed but OPEC seem to be abusing power to maintain high oil prices…
OPEC has been slammed for its timing of its supply cut due to the world recession which seems ever closer. When the current over production is also put to an abrupt stop in November barrels closer to 1.8mn will no longer flow out of the 13 country strong oil cartel. Even if oil demand in the US, who receives one in four oil barrels produced by OPEC, which has fallen 10% in the current year, the oil barrel cut seems certain to edge up the present free falling oil price.
It looks like the decision will work in one of two ways but only achieve one outcome! If global demand continues to become ever lower, negating the oil supply reduction, this will cause oil prices to decelerate but continue to fall. In the event of this scenario OPEC have stated they will continue to keep cutting oil production, inevitably leading to prices going up at some point. If the current production reduction does increase oil prices in the boundary of $70-$90 per barrel then we will be going in to a recession with oil prices adding to the woes of individuals around the world who are already facing a massive squeeze.
OPEC announced their decision in light that certain members of the cartel such as Qatar and Nigeria require prices to be on the top end of $80-$90 per barrel for 2009 budgets to be unchanged. Arguments to this is that they have been rubbing their hands for the past six months whilst oil has been at record highs, reaching $147 in July, and a price which it has not been at for the last eighteen months. How can their budget have been affected so much by the recent price decreases to warrant this supply tightening?
In relation to the UK we look in a dire situation. Being half way to a technical recession which the Governor of the Bank of England says will be long and deep whilst sterling falling to lows not seen in decades this OPEC news is adding to the misery. Due to the weak pound only a proportion of the oil price falls have been passed on as oil becomes relatively more expensive for us. If oil prices starts going up the UK may well be the first ones to have their pockets empted by the gluttonised Organisation of the Petroleum Exporting Countries.
Lets hope that OPEC have not ensured that the world enters a long dark recession and supply constraints do not back fire causing a collapse in either Brent oil demand or due to market volatility and nervousness a commodity free fall as investors abandon the so called ‘bubble implode’ of the oil market.
OPEC has been slammed for its timing of its supply cut due to the world recession which seems ever closer. When the current over production is also put to an abrupt stop in November barrels closer to 1.8mn will no longer flow out of the 13 country strong oil cartel. Even if oil demand in the US, who receives one in four oil barrels produced by OPEC, which has fallen 10% in the current year, the oil barrel cut seems certain to edge up the present free falling oil price.
It looks like the decision will work in one of two ways but only achieve one outcome! If global demand continues to become ever lower, negating the oil supply reduction, this will cause oil prices to decelerate but continue to fall. In the event of this scenario OPEC have stated they will continue to keep cutting oil production, inevitably leading to prices going up at some point. If the current production reduction does increase oil prices in the boundary of $70-$90 per barrel then we will be going in to a recession with oil prices adding to the woes of individuals around the world who are already facing a massive squeeze.
OPEC announced their decision in light that certain members of the cartel such as Qatar and Nigeria require prices to be on the top end of $80-$90 per barrel for 2009 budgets to be unchanged. Arguments to this is that they have been rubbing their hands for the past six months whilst oil has been at record highs, reaching $147 in July, and a price which it has not been at for the last eighteen months. How can their budget have been affected so much by the recent price decreases to warrant this supply tightening?
In relation to the UK we look in a dire situation. Being half way to a technical recession which the Governor of the Bank of England says will be long and deep whilst sterling falling to lows not seen in decades this OPEC news is adding to the misery. Due to the weak pound only a proportion of the oil price falls have been passed on as oil becomes relatively more expensive for us. If oil prices starts going up the UK may well be the first ones to have their pockets empted by the gluttonised Organisation of the Petroleum Exporting Countries.
Lets hope that OPEC have not ensured that the world enters a long dark recession and supply constraints do not back fire causing a collapse in either Brent oil demand or due to market volatility and nervousness a commodity free fall as investors abandon the so called ‘bubble implode’ of the oil market.
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