Monday, 31 October 2016

Responding to a Direct Challenge AA Corrects The President of the Russian Federation

The Incredibly "Scary" Vladimir Putin (TISVP)
On 27 October Bloomberg reported that the President of the Russian Federation had dismissed charges of attempting to influence the US Presidential election in remarks at the Valdai International Discussion Club. 

One particular quote attributed to TISVP caught AA's sharp eye.

Is America some kind of banana republic? America is a great power. If I’m wrong, correct me.
If you've been following the news of late, you of course know that Mr. Putin is one incredibly scary individual with seemingly unbounded powers and a will of steel.   Not a man to be trifled with or provoked.  The media is in total agreement on this.

Yet, on the other hand, according to Bloomberg, he did ask to be corrected if he was wrong.

AA thought long and hard on this issue and decided to take Mr. Putin at his word. What better day to reply to TISVP than Halloween?

Here is AA's considered response  to the banana republic question.

While you are correct that the USA is a great power and that banana republics have typically been small rather weak countries (economically and militarily), I'd like you to consider that a good argument can be made that a key, perhaps the key, distinguishing characteristic of a banana republic is the nature and quality of its politics and politicians.

Singapore is a small country, yet no one would call it a banana republic (BR). 

AA can think of a couple nuclear armed states (outside the G-8) whose politics definitely qualify them for BR status. 

And would offer this recent blogpost for your consideration. 

Exclusive to Suq Al Mal -- Photo of H.E. A.F. Al Sissi's Refrigerator

Before Drinking Always Remove the Cap Yourself to Avoid Getting a Bottle Filled with Tap Water
AlSissi  Essebsi an easy mistake to make even for a fellow Arab.  Names sound alike.  They both wear Western suits.

In any case hopefully this exclusive photograph of the President of Egypt's refrigerator will put this matter to rest.

Like me I hope you notice the frugality of the President. 

No fancy imported water.

Hopefully not Baraka Vintage 1996

Friday, 28 October 2016

كشف المستور.. ببغاء يفضح خيانة رجل كويتي لزوجته مع الخادمة

It is said that falcons are more discreet.

From Arab Times
KUWAIT CITY, Oct 18: In a new method devised to detect matrimonial infidelity, a Kuwaiti woman actually used a parrot to expose her husband suspected of having intimate affair with a housemaid, as the parrot mimicked flirtatious exchange of words between the man and the housemaid, reports Al-Shahed daily. 
The woman lodged a complaint with officers at Hawalli Police Station and accused the husband of cheating, noting she had been suspecting the man for a while before the parrot started mimicking flirtatious words in the apartment. 
She added the husband was surprised when he saw her returning from the office before time and became nervous. However, the prosecution officer said the case could not be regarded as crime based on lack of credible evidence.

See the link at Al-Shahed for the Arabic version.

If you're looking for a parrot or perhaps have a sudden need to sell one, look no further.

US Presidential Election 2016: Continuing Coverage of the Candidate Polling Third

"Altered" Statesman

Don't care for either of the two main candidates?  Don't despair there is an alternative.

He is definitely a "choice not an echo".

A completely unrelated public service message from AA and the staff at Suq Al Mal.

Wednesday, 26 October 2016

Abu Dhabi Commercial Bank 3Q2016 Results: A Tale of Two Newspapers

Where Would We Be Without Ambition?

On 23 October Abu Dhabi Commercial Bank issued its interim unaudited financial statements. 
  1. Net profit for the first nine months of the year was AED 3.2 billion versus AED 3.7 billion for the comparable period last year (a decline of 14%). 
  2. Net profit for 3Q16 was AED 1.0 billion versus AED 1.2 billion for 3Q16 (a decline of roughly 17%). 
  3. The major factor impacting net income was impairment provisions which increased from AED 391 million in the first nine months of 2015  to AED 1.083 for the first nine months of 2016 (an increase of 77% percent) and from AED 66 million in 3Q15 to AED 380 million for 3Q16 (an increase of 475%).
How did UAE’s two flagship English language newspapers cover this story?
The National’s 23 October headline was ADCB Net Profit Falls 17% in Third Quarter

Abu Dhabi Commercial Bank said its third-quarter profit slid by 17 per cent as provisions for bad loans jumped almost six-fold.
Net profit declined to Dh1 billion in the three months to the end of September versus Dh1.2bn in the same period last year, the bank said. Impairment allowances shot up to Dh380 million from Dh66m in the third quarter last year

Two days later Dubai’s Gulf News took a slightly more optimistic view:  ADCB Reports Dh999m in Q3 Profits Figure brings profit for first nine months to Dh3.14 billion.

Abu Dhabi: Abu Dhabi Commercial Bank (ADCB) continued to register growth in net loans and customer deposits in the first nine months of this year despite increased challenges in the banking industry.

“The bank delivered strong financial results for the nine month period of 2016, reporting a net profit Dh3.153 billion and an industry leading return on equity of 16 per cent.   
While the challenging operating environment and the turbulent markets have impacted the industry, our underlying performance and fundamentals remain strong and we continue to grow our businesses. Our balance sheet remains resilient and registered a healthy growth in net loans and customer deposits year to date, 10 per cent and 7 per cent respectively,” said Alaa Eraiqat, ADCB’s group chief executive officer.

In a statement, the CEO reiterated his confidence in the long-term growth of the UAE’s economy, stressing the bank’s strong fundamentals and outlook of delivering value to shareholders.

In the first nine months of this year, the bank’s assets grew 12 per cent to Dh255 billion, while net loans and advances to customers increased 10 per cent to Dh162 billion compared to December 31, 2015.”

Technical notes: 
  1. AA’s calculations are based on net change not simply a division of this year’s results divided by last year’s. 
  2. Gulf News appears to be using net income attributable to controlling equity holders in the bank not total net income.
What a difference a point of view makes. 

One comes away with two very different conclusions from reading these two articles.
  1. Everything sounds just fine from the account in Gulf News. 
  2. The National the “hometown” newspaper of ADCB with perhaps more at stake to  paint a rosy picture does not.  In AA’s view it presents a more accurate picture by providing comparatives to prior periods and discussing negatives as well as positives.
Another post to follow soon with comments on things to watch in ADCB's financials. 

Here's a link to the earlier promised post.

Sunday, 23 October 2016

ذكرى ناظم الغزالي

1963 23 October


Friday, 21 October 2016

SEC to Rely on FINRA to Monitor Brokerages

"Daddy, read me the story of the self-regulating market again"
If your daddy didn't read you this fairy tale when you were young, maybe your "Uncle" Milton told it to you at university.  Or a kindly professor relayed the Uncle's wisdom to you. 

If this didn't happen, here's a quick recap. 

Even if each businessman single-mindedly pursues his or her own profit to the exclusion of all other concerns, where there is intense competition of the "free" market (note that requirement) salutary outcomes result:
  1. individual or overall market excesses are magically curbed 
  2. firms offer the best service and prices, eventually competing profits away to zero unless, of course, they make improvements to products.  [Because profits never go to zero (except in bankruptcy) this no doubt proves the creative power of free markets to constantly improve products.]
  3. those firms that do not lower their prices or improve their products are forced out of business
Since by definition, the market in the USA is not only "free" but "intensely" competitive, then with such miraculous powers there is little if any need for government regulation.  In fact by interfering with the market, governments are liable to do more harm then good as this quote attributed to Mitt Romney demonstrates. 

The invisible hand of the market always moves faster and better than the heavy hand of government.

This theory seems to be the rationale for this recent SEC decision reported this Monday by Reuters.

The Securities and Exchange Commission is leaning more heavily on partner regulator the Financial Industry Regulatory Authority to monitor brokerages as it devotes extra staff to oversee the rapid growth of independent financial advisers, a top regulator said Monday
What could possibly be a reasonable objection to FINRA taking over SEC duties?

Simply put, FINRA is an industry group and therefore has an inherent conflict of interest. 

Does this mean that it is certain that they will fail to do a proper job or that they have failed in the past?  No.  What it does mean is that a conflict could cause them to fail.

What are some of the potential trouble "spots"?

  1. Setting professional qualification standards too low.  FINRA doesn't report the pass rates on its qualification exams (Series 7, etc).  The pass rates for the CFA, CFP, FRM are all reported and suggest these certifications are difficult to obtain.  Why is that?   
  2. Restricting information on actions against brokers.  If you'll recall a while back, FINRA was criticized for failing to provide enough information in its Broker Check (BC) tool to allow investors to determine whether to work with a particular broker.  FINRA announced some improvements but just recently the  Public Investors Arbitration Bar Association found those improvements lacking and criticized FINRA because BC doesn't include reasons for a broker's termination by a firm, information about bankruptcies, tax liens and scores on relevant industry examinations.  PIABA noted that some of this information is provided by state security regulators (government agencies) which suggests (but does not prove) that legal liability issues did not motivate these omissions.  
  3. Applying a light touch on penalties when perhaps a heavier one is justified.  In the past the maximum fine was $15,000 per "offense" in the NASD days. (FINRA is the combination of the "old" NASD and NYSE separate self-regulatory bodies).   This has changed. Fee levels have increased.   In 2016 FINRA is set for a record year of estimated fines of some $160 million due to some "supersized" fines.  ("Supersized" is defined as a fine $1 million or more).  The estimated 2016 total fines is less than the fines levied against Wells Fargo by government regulators for the "fake accounts" scandal. The last time I looked FINRA's largest 2016 fine was some $25 million against Met Life (2015 revenues $70 billion net income $5 billion).  See the analysis of these "ginormous" fines by Sutherland Asbill and Brennan here.  And here for K&L Gates' analysis of 2015 fines in which it's noted that most FINRA actions are resolved for less than $50,000.  It should be noted that FINRA fines individuals as well as firms and that many of the firms in the industry are minnows alongside the major brokerage firms so $50,000 could be a firm threatening fee. 
Just to be clear, I am not accusing FINRA of improper behavior.  I am merely pointing out a conflict of interest.

During his illustrious career, AA has seen a lot of conflicts of interest turn into conflicts of action. 

Here's one "sweet" story - not witnessed by AA.

Early warning signals of the coronary heart disease (CHD) risk of sugar (sucrose) emerged in the 1950s. We examined Sugar Research Foundation (SRF) internal documents, historical reports, and statements relevant to early debates about the dietary causes of CHD and assembled findings chronologically into a narrative case study. The SRF sponsored its first CHD research project in 1965, a literature review published in the New England Journal of Medicine, which singled out fat and cholesterol as the dietary causes of CHD and downplayed evidence that sucrose consumption was also a risk factor. The SRF set the review’s objective, contributed articles for inclusion, and received drafts. The SRF’s funding and role was not disclosed. Together with other recent analyses of sugar industry documents, our findings suggest the industry sponsored a research program in the 1960s and 1970s that successfully cast doubt about the hazards of sucrose while promoting fat as the dietary culprit in CHD. Policymaking committees should consider giving less weight to food industry–funded studies and include mechanistic and animal studies as well as studies appraising the effect of added sugars on multiple CHD biomarkers and disease development

Why take a risk with this conflict of interest? 

FINRA has a role to play.  

But should the SEC cede what is properly a government responsibility?

US Presidential Election 2016: AA Ahead of the Trend

"Shovel Ready"

Regardless of the outcome of the election, Bayt Abu Arqala will be prepared. 

These beauties will go right above our Category 3 B-7 already in progress.  

Tuesday, 18 October 2016

Third US Presidential Debate: A Lonely Nation Turns Its Eyes to You

Where Have You Gone?
Given the state of US politics, Disneyland might have been more appropriate, though there is precedent for Las Vegas where the "house" and not the customer generally wins "anyway you look at it." 

Tip of AA's enormous tarbush to his departed father who shared this and other of his music with me.

Tuesday, 11 October 2016

Major US Presidential Candidates Ask Muslims to Report Stuff: Are You Doing Your Part?

It's Easy.  It's Fun.  It's Patriotic!

At the "debate" earlier this week the candidates of the Republican and Democratic parties called on Muslims to report suspicious activity.   No other group was asked to report.

Apparently, only Muslims know what's going on.  Or perhaps they are the only ones who can be trusted to file accurate and complete reports.  In any case, the ball is in your court.

Ms. Clinton: 

We need American Muslims to be part of our eyes and ears on our front lines.

Mr. Trump:

In San Bernardino, many people saw the bombs all over the apartment of the two people that killed 14 and wounded many, many people. Horribly wounded. They’ll never be the same. Muslims have to report the problems when they see them.

Within moments, patriotic Muslims sprang into action by establishing a real-time forum for the relay of suspicious activity. 

You'll find it here.   Or you can use this forum.  File your own report.

If you have an Arabic origin name or look "Middle Eastern", but are not a Muslim, you can file a report too.  No one in the USA will ever figure it out. 

A public service message from Abu Arqala and the staff at Suq al-Mal blogspot.