Welcome to a new edition of the P4Digital rotating round tables.
Our special guest this week is an expert in sales, and how new technologies are changing how they are being conducted in both corporate and retail locations.
Curious about the future of sales? Well, stay tuned and enjoy.
Stay tuned and enjoy
Transcript
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Paul Volcker is an American economist who was the chairman of the Federal Reserve, under Presidents Jimmy Carter and Ronald Reagan. He is still working though, and is still making recommendations that could forever change the American banking scene.
The P4Capital team investigates.
Stay tuned.
Transcript
Amanda: Change is never easy – but sometimes it is necessary. In this week’s round table discussion the P4Capital executive team talks about former chairman of the Federal Reserve, Paul Volcker, and changes he is recommending be made to US banking.
Jim: Today’s topic, or this week’s topic, is about Paul Volcker’s recommendation to put US banking and financial industry under one roof.
Shaheerah: Yes, he has outlined a new plan for revamping the way that the US government is going to oversee their financial plans. And he’s going to be publishing a paper soon which is going to talk about consolidating and reorganizing the US financial regulators, so what they’re going to do is create one single agency to supervise the financial institutions, while the Federal Reserve will be responsible for writing these regulations.
Archana: Paul Volcker is not new to devising strategies. When he was the Chairman of the Federal Reserve he actually was the person who in fact tamed inflation at that time. More recently, he also came up with the Dodd Frank initiative itself, where we wanted banks to engage less and less in risky, Wall Street style trading, and I guess this Volcker Alliance, which terms itself as a think tank, was basically set up to improve the way government essentially works at the local state and the federal level in terms of policy making and the financial decision-making.
Jim: With that said is, the current system in the US has a heavy regulation feel to it. The institutions that play in the US are now pushing back at a fairly aggressive rate, of saying “My business is my business. My business is not supporting your regulation.” In fact, the US has leaned heavily on the regulators side over the last seven years since 2008. Some of the legislation is badly needed, but some is over the top and more importantly, in Volcker’s words, is “why is the futures exchange being regulated by the Ministry of Agriculture?”
Shaheerah: This new plan is that the Fed would write the regulations, and then another agency would make sure that these rules and regulations were actually being followed. So this would be a combination of the Federal Deposit Insurance Corporation, the office of the controller of the currency, the Fed and then the other regulators such as the SEC and the CTFC. Paul Volcker was also responsible for proposing the Volcker rule, and the role prohibits short-term proprietary trading that Archana was talking about, of the securities of the securities, derivatives, commodity futures and options on these instruments on their banks’ own accounts. Basically this rule is to prohibit activities that don’t benefit the banks’ customers.
Jim: But in fact benefit the banks themselves, as long as they introduce the element of low to very high risk. Correct Shaheerah?
Shaheerah: Yup. And it was estimated that the banks would have to hire 3000 new employees in order to implement these rules, and another study had already mentioned that it would actually cost 350 million dollars for the banks and the investors in order to implement this rule.
Jim: So a billion dollar overhead put onto the banks by and large by the representatives that may or may not have their voters’ best interests at heart. It’s an interesting conundrum. We are hoping Paul Volcker wins this one.
Archana: So by the way, while we’re on this topic of regulations and compliance, we at P4Capital – we specialize in these kinds of jobs. So if you’re a person, or a capital markets professional with specialization in this area, or any other capital markets area, please do not hesitate to either give us a call or to send us your resume. We absolutely look forward to hearing from you. And that number by the way that we can be reached at is (416)363-9888. And you can either ask for Shaheerah Kayani or Archana Ravinder.
Jim: And the interesting part of what Archana just mentioned there, is not only are we at P4Capital dedicated to this space, we also understand the heavy impact that new legislation, new rules, new governing bodies have on the overall industry, and the complexity of big data coming onto the market from a global sense. So when we look at Chairman Volcker’s think tank recommendation, we understand the very many sides that he is speaking from. Not only from a centralized regulatory body, but the impact on big data, the impact on being able to do very fast high frequency trading, and be extremely competitive in the world.
That was the P4Capital team discussing the Volcker Recommendations, and the impact they could potentially have on banks. What to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.
Facebook and Twitter changed the face of news gathering and journalism. Because of social media, news isn’t restricted to professional retelling of the tale.
Why pay a reporter money when John Doe down the street is tweeting a story in real-time? Odds are, he has no advertisers to pander to either.
Journalists themselves are becoming increasingly obsolete as these citizen journalists take over.
I should know! My University degree is in Journalism!
You only have to look at the layoffs and recent unemployment numbers of the large media firms to find proof. On March 15, 2015 CBC announced plans to cut up to 1500 more jobs as it shifted its priority to digital and mobile media. CNN is now cutting 8% of its staff to cope with decreased sales.
Now, a shakeup is happening again in the world of digital media with the birth of simple livestreaming.
No, not that one – not really. This one.
Meerkat is the newest App making its rounds on the internet – and it could very well be the most interesting digital innovation since Twitter.
This app allows users to easily livestream video from their cellphones onto their Twitter accounts. Now, that might not seem like a big deal at first, but being able to watch and record events live has the potential to affect much of the existing infrastructure.
Think of this as an example. Media companies pay big bucks to get the right to broadcast events like the Olympics live. What will happen when any of the people attending these events can broadcast them with their smart phones for free?
Or pick another hot button topic like police brutality in the United States. With livestreaming, people could broadcast their encounters with police officers live without having to worry about the footage being deleted later because everyone has already seen it.
What about politics? Now, campaigns and reporters will be able to directly broadcast video on Twitter. When everyone can broadcast live, nothing will ever be the same.
Figuring it out now?
Much like Twitter, Meerkat’s big début had everyone in Silicon Valley declaring it the next big thing. The app racked up more than 100,000 downloads in just over two weeks.
Part of Meerkat’s charm is how easy it is to use. All it takes is the touch of a button and Twitter. No programming knowledge or coding required.
The app was originally designed to work exclusively with Twitter. In fact, Meerkat required users to have a Twitter handle before they could use the app.
Originally this worked well for both companies. Given that Twitter had proven itself to be the best real-time news outlet, Meerkat seems made for the right platform. And Meerkat’s Twitter sign-in requirement has forced some people to join Twitter.
It seemed like a match made in heaven.
But things are rarely that simple.
There have been some problems.
Meerkat was originally designed to use Twitter’s social graph and user data in order to make it easier for new users to find their friends.
Then last week, Twitter acquired and launched a Meerkat competitor called Periscope.
After purchasing Periscope, Twitter decided to halt the access Meerkat had to Twitter’s social graph. This drastically decreased Meerkat’s ability to notify users when their friends are livestreaming.
So while Meerkat users can still broadcast live videos on their Twitter feeds, their followers will no longer get a notification when a new live stream begins. Hard to broadcast when no one knows to watch.
This was done with virtually no warning, which left Meerkat floundering in the Digital waters.
Of course, Twitter did this to try to destroy the competition. Periscope officially launched last Thursday, and now Meerkat has some honest competition that can access Twitters social graph.
In response to this decision, Meerkat CEO Ben Rubin told Yahoo Tech the company would build its own social graph features.
Ben Rubin said that “Twitter’s move here shows how significant Meerkat has become. This is a small bump for Meerkat — a product built-in only 8 weeks by one person — and a sad day for the Twitter developer community, who build amazing products that help us connect with each other. And lastly, this is just the beginning for Meerkat.”
Meerkat has no plans to push its video out through Facebook
“Facebook is not a real-time platform. It doesn’t cater to what we want to do,” Rubin said.
The downside to livestreaming is of course that it is live. Once it’s done, by definition, it’s done. Meerkat doesn’t have the ability to record a stream.
However, an app called Katch aims to change that.
If you add #Katch to your Meerkat video description tweet, the service will record and upload the live stream to YouTube, tweeting you a link to the video once it’s done processing.
You don’t even have to download a Katch app to use it. It’s automatic — all done by hashtag.
Why has Meerkat, and now Periscope, infatuated so many? Because there is great power and potential in the ability to broadcast live video in real-time. As mentioned earlier in this blog, in the realm of news, the app opens up new opportunities for user-generated journalism. Viewers have to wait for cellphone videos to make their way online or on TV. BBC News has already used Livestreaming in the Ferguson protests.
And it’s not just media outlets either. Brands including JCPenney and Starbucks have also started using Meerkat.
So as the slogan for Periscope says – Livestreaming lets you see the world through someone else’s eyes.
What is Company Culture? Company Culture isn’t just the mission statement, but also the values, ethics and goals of the company and how they affect you and the way the Company conducts its business. Like people, Companies have their own unique personality and so do departments within each company. This personality will decide whether you love your job or not.
Company Culture is now a major factor to consider when planning on a career change. 20 years ago you went to work, did your job and you left. 9 to 5 wasn’t just a movie, it was the company culture. Clock in at 9 and out of there at 5. An hour for lunch which you ate at your desk or you went to a restaurant. Most professional companies didn’t have lunch rooms, if you were lucky there were vending machines for coffee. Sales departments used to do team building events and some departments might have had corporate baseball teams, but that was it.
I remember when Ontario Hydro went to the open concept office. Walls came down, everyone sat in pods. One big happy family. Oops – within a month, buffer panels came in for individual departments and groups. Walls went back up for key positions, ie HR, CFOs etc. It was a nice concept but unfeasible. Too noisy and distracting. Now we have the innovative Google office, new technologies and company culture has become an important part in career planning.
You will spend 1/3 of your life at work. Not only do you have to like what you do, but you have to like the company and the people you work with. Your company and your group within that company are like a baseball team. Would you stay on the team if you weren’t enjoying yourself? If you hated the Team Captain and didn’t like the way he was running the team, you would be out of there. Yes it is harder to leave a job but if you don’t like the culture eventually you will move on. Companies want you to fit in with their culture. Retraining and rehiring new people is time consuming, costly and disruptive to running a business. The Company will be assessing your culture fit. It is important for you to recognize what the company will expect from you. Experience, job satisfaction and salary are important parts when assessing a new career. But so is the atmosphere in the company.
Start assessing the company as soon as you walk in the door.
Are the people in the elevators, hallways, reception desks friendly? Look at everyone and everything as you walk through the office. Does the atmosphere seem positive? Or do the employees look bored and disgruntled.
Assess yourself honestly?
Are you the type of person who wants to show up, do your job and head home? Do you like to read your book at your desk at lunch? Or do you want to go into the lunch room and play ping pong? Do you like team building outings or do you consider these an infringement on your free time? If you have the attitude I’m paid for a 40 hour work week and that’s all you are getting from me then you need to make sure you find a company that only expects that from you.
Technology has changed the face of company culture.
Companies provide laptops and phones to their employees. Along with that comes an expectation that they can reach you whenever they want. Deadlines don’t fall within a 40 hour work week.
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Team Building is becoming a fact of life in organizations Find out what is expected of you. Are there ping pong tournaments, Ax throwing parties (yes I said Ax throwing parties). Dinner nights, weekends away. Is the atmosphere very competitive as a team or is it based more on the individual.
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1/3 of your day will be spent with your team members and your group. Enjoying the atmosphere and camaraderie where you work will make a big difference in your attitude about your job. During the interview be sure to ask about the company culture. At the interview with your actual team members assess their characters, are you on the same page, will you be able to get along. Your team is like your family with less space to escape from them. Do you like them? If you do then grab this position, there is nothing better than wanting to get up in the morning to go to a fulfilling job.
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In this weeks P4Capital discussion, the executive team continues to talk about something most of us try to forget – the great recession of 2008.
In a follow-up to the stunning news of all the American banks passing part one of the stress test we have some bad news – a few banks didn’t in fact pass part two.
The P4Capital team investigates what this means, and how it will protect the world economy should the worst come to pass again.
Stay tuned.
Transcript
Amanda: So much for our winning streak. Several american banks couldn’t hold it together in the final inning, and failed part two of the stress test. The P4Capital team continues their discussion about what these results mean for the future of the economy, and what these banks are going to do about their failing grades.
I don’t think they can simply apply for extra credit.
Jeremy: All right, this week we’re doing part two in our Stress Test series. A couple of big European banks just failed the Stress Test in New York – Deutsche bank and Santander of Spain.
Archana: Apparently even Bank of America just received a conditional pass. This was part two of the stress test which actually happened last week, in which all of the 31 banks were cleared. Part two was essentially in order to assess their terms of raising capital by way of dividends, and these two banks essentially failed.
Jeremy: Bank of America’s actually going to try to do about 4 billion dollars into share buybacks, which they got the green light on. So Deutsche bank and Santander are going to face penalties where they can’t do any share buybacks right now, or raise dividends, but they’re still able to issue the dividends as they stand
Amanda: What does part two entail?
Shaheerah: Well it’s called the Comprehensive Capital Analysis and Review, CCAR. And basically these banks that failed, now they have to make some changes in their plans or they could have to pay some financial penalties. Basically, it prevents these US entities of the foreign banks from distributing any capital to their parent companies.
Jim: With that said, the question Amanda asked was what does this all mean? It means basically that the United States has said that either you’re going to have enough cash to be banking in the US, or you’re not going to bank in the US. As simple as that. They want a very strong and healthy financial system to spur their growth into this new age of technology meeting business and new entities being created, which should sustain their economy for the next three to five decades.
Archana: I’m just curious to hear the thoughts of the P4Capital team here – do you think the introduction of these stress tests and various levels of scrutiny – what do you think about another 2008 like meltdown? Do you think we could avoid another one of those again?
Jim: Not a chance. As the elder statesman at the table by a considerable factor so, I have seen these financial games in various shapes and forms over four decades, well – let’s call it five. And there will be a new game at hand somewhere, sometime in the future, but the objective here is to get stability for at least a 10 year run, and then let the governing bodies a decade out from now worry with what’s on their plate at that point in time. But quite bluntly, we’re in full economic recovery right now Archana, but it is so tender. It could not support another meltdown of the magnitude that was unprecedented by the way, that happened in 2008.
Archana: I would actually agree with Jim. To me, the only constant there is change. And we’ve all witnessed this within the Capital Markets environment. Yeah I mean, this is a way for stabilizing the marketing and the economy as it stands right now, but 10 years from now something else might just crop up and the regulators at that point will try to put checks and balances in place too.
Jim: The interesting part about these Stress Tests, that’s probably also illustrative to all those other financial institutions is the absolute weakness of the underpinnings of technology. I had this discussion last week with a senior banker in downtown Toronto, and we talked about their base engine technologies, which was something that the group 20 years ago installed. So now, you’re trying to run a multi trillion business using ancient, antiquated technologies. It should be very interesting as they continue to work on stress tests to see if these banks, in this case the group of 31, are going to be able to sustain it in the future or not.
Jeremy: I think what caused the financial meltdown revolved around derivative products; credit derivatives, swaps, CDS’s they were called. That was-
Jim: MBS’s
Jeremy:-right, mortgage-backed securities. Basically predicated on the fact that banks were issuing mortgages to just about anyone with a pulse, and then bundling those mortgages off as fast as they could into securities. There were three different levels of risk – they were called trenches. The lowest trench were all sold at one price – medium. They had another price – the top-level; senior level they were called. Wasn’t even that much of a risk premium that companies were taking – companies such as AIG — and there ended up being massive defaults across all three levels of risk. Lots of problems there, and here we are six years later or so, and there is still not a clear picture of what risk looks like on balance sheets, especially in the derivatives business which is largely unregulated. There are lot of measures to see how they can measure this risk better, but we’re not there.
Jim: Yeah, but that’s symptomatic Jeremy. You know any time you try to modernize debt you’re running risk, full stop. Debt is debt. But the interesting part were the reverberations in the marketplace of 2008, and how it brought the global economy down to its knees, almost overnight. So, I look at it again and say can that game of taking, using your words – providing debt mortgages to anyone who can apply – is that going to be game on in the future? I doubt it
Jeremy: It will be a different game
Jim: Maybe it will be a different game, absolutely! We don’t know what that will be.
Jeremy: Maybe it’s going on already?
Jim: I would suggest it probably is, going on already.
That was the P4Capital team discussing the Stress Test, and what these failing grades mean for the banks going forward. Want to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.
Job Hunting can be mind boggling. Knowing what kind of job you are qualified for can be intimidating. Don’t let things overwhelm you. Think of the positives and form a plan to accomplish your goal. First thing I do when anything is overwhelming me is make a list.
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In this week’s P4Capital discussion, the executive team talks about something most of us try to forget – the great recession of 2008.
The news isn’t bad though; for the first time since they were invoked, all American banks have passed the Stress Test.
The P4Capital team investigates what this means, and how it will protect the world economy should the worst come to pass again.
Stay tuned.
Transcript
Amanda: Do you remember the recession of 2008? When the banks all caused the world economy to crumble? When jobs evaporated like shallow water and dollar values plummeted worldwide? Well, the banks certainly do, and to make sure the Great Recession doesn’t happen again, they introduced a series of stress tests. And for the first time, in 2015 all the American banks have passed.
Jim: This week’s topic is about the American banks passing stress tests, and the significance to not only the North American economy, but the global economy as well.
Jeremy: For those of you that don’t know what a stress test is, the top 30 or so US banks have all agreed to undergo stress testing, in which they will look at different factors and variables and examine how these would affect their capital reserves, and their ability to do business. So for example they might look at what would happen if unemployment was to rise by 2%, inflation were to rise by 3% and interest rates were to be cut by .5%.
Archana: Just backtracking a bit here, the stress tests were essentially introduced after the financial meltdown of 2008, and it’s seen as a huge step in boosting consumer confidence in the US financial system. In 2008, we all know how that story played out; the banks had to be bailed out, the government essentially funding about 700 billion to bail out the biggest lenders in the US.
Shaheerah: The whole purpose of these tests is to ensure that the banks will have enough capital, and they will be able to continue to lend to businesses and households even in a very dark economic recession. These stress tests focus on some important risks, and those risks are credit risk, market risk and liquidity risk.
Jim: The interesting part, now the US Greenback is soaring out there and the banks that support the US dollar are now passed all the latest stress tests, is that it looks like the US economy is now back on extremely firm foundation and footing, and will be the engine that drives the global economy. We haven’t seen that in a while. The argument can be at least 7 years, some argue all the way back to 2000.
Jeremy: It’s actually the sixth year anniversary today of the low of the S&P 500. It’s up over 200% over the past six years, so it’s been one heck of a bull market.
Amanda: The date we are recording this is March 9, 2015 for our listeners who are tuning in at a later date. What does this mean for the Canadian economy?
Shaheerah: Yes, so now bringing that discussion back to Canada, Canadian banks are ranked the world’s soundest for seven straight years by the world economic form. Canadian banks are actually outperforming the US banks even in the midst of the dropping oil prices, and part of the reason is we have fewer regulations and less competition than the banks of the US. And both TD and BMO, among other banks are also expanding in the US because the US will see more economic growth than Canada over the next two years.
Jim: Therefore, expansion equals more jobs and more overall health to the Canadian economy which has in fact had a phenomenal bull run itself for almost a decade, with the exception of that mid, let’s call it September 2008 to September 2009 period, which is very good news indeed. The interesting part was the measurement of risk as well, and watching how the different financial institutions are now responding by getting rid of their archaic technologies and moving into faster engines which are allowing them to monitor risk with more clarity and make better decisions going forward.
Jeremy: Also, if banks in the US don’t pass their stress testd then sanctions can be placed on them such as what happened with Citibank. I believe it was last year they failed some of the stress tests so they weren’t able to have any share buybacks or authorize any dividend increases. They did pass them sufficiently enough so they didn’t have to cut dividends though. Not coincidently there is a new CEO implemented there.
Jim: Yeah, no kidding! How many of the competent Citi people fled to get to financial institutions that would pay them appropriate bonuses and how many should have got fired?
Jeremy: True. Goldman actually didn’t do as well as expected on these tests, so their share price was down 1.7% the day the tests were released, largely as investors are concerned that the similar sanctions may be in the future for Goldman Sachs.
Jim: Well, considering the US government is one of the largest borrowers on the planet, and they’re only going to borrow money from their financial institutions that pass their rules-
Jeremy: and China!
Jim: -And China, yeah! I think it’s very important that these FI’s that are on the line get up to speed.
Archana: Incidentally, this is apparently the first year since the Dodd-Frank act stress test, or as it’s called DFast, that all the 31 US banks actually passed the test. Citigroup actually flunked the test last year and the CEO actually went on record saying that he is quite intent getting the books in order, or otherwise his job is on the line. And apparently they did well this year. Again, this DFast is apparently round one of the new stress test measures that the government has introduced. Part two is to be unveiled this week, which is primarily concerned with whether the Fed will announce whether the capital plans of these big banks are going to be accepted or rejected in terms of their share buyback and dividends. So it’s not exactly clear whether all 31 banks will go through – that remains to be seen.
Jim: Could be a lot of nervous executives wondering if they can get their bonuses paid or not!
That was the P4Capital team discussing the Stress Test, and how it will protect the economy going forward. Want to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.
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