| Calling the shots on the market |
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| Aziz Mc Mahon is an economist at Ulster Bank Group Treasury. We catch up with him for a busy Friday when radio interviews, the US presidential elections and the euro all vie for his attention. |
6.15am The alarm goes off and, faced with the prospect of getting up, I go through something similar to the five psychological stages of grief: denial, anger, bargaining, depression and finally acceptance. The walk to work takes 20 minutes and I’m at my desk at 7am.
7.00am The day kicks off with an interview on Morning Ireland. I have half an hour before the show starts which gives me time to scan Bloomberg, Reuters and the papers. In the interview, Geraldine Harney is keen to know what, if anything can save the euro? In particular, whether central banks will intervene to stop traders taking one-way bets against the currency.
7.45am I get ready for the dealers’ briefing at 8am. The notes I prepared last night need to be updated with events in Asia, the close on Wall St. Hints from US officials re dollar strength is becoming a problem. At the meeting we agree that central bank intervention is a real threat in the days ahead and traders decide to adjust positions accordingly. Then it’s back to the desk to finish the morning commentary and mail it to customers.
9.00am Time for breakfast. I have a closer look at some research articles I picked out earlier and take time to read through the daily material from London and the Far East. While euro weakness is the topic ‘du jour’ the market is also keeping one eye on the US Presidential election saga.
9.45am I meet with Rachel Killeen (Marketing Manager), to review progress on our Treasury web-site TraderGold.com which incorporates Ireland’s first on-line foreign exchange dealing facility. The take-up of the service has greatly exceeded our expectations and we discuss increased functionality, which will be released in the next six weeks. The benefits of the service are that treasurers can now access live market prices; historical rates and charts and equity information at the touch of a button. The important thing is that if treasurers want more detail on hedging strategies or country information and future trends, they can call me or the dealers. We want to make sure customers are aware of both avenues.
10.30am Our structured products team is meeting a new customer to discuss the outlook over the coming twelve months and corresponding hedging strategies. Because it is a new customer a large portion of the meeting consists of information gathering. Understanding the customer’s business and risk profile is key to providing the optimal hedging solution. Once this is established, I detail the outlook for markets in this customer’s specific areas of interest. This time we are dealing with an industrial equipment supplier who imports goods from the Far East. The outlook for the euro against the dollar is of crucial importance as all contracts are denominated in dollars. Also a concern is the deteriorating political and economic situation is some of the South East Asian economies as any deterioration in conditions may provide an opportunity to strike a more favourable deal with suppliers. Political instability also poses risks, however. We take the view that, on balance, the euro is likely to rise over the coming twelve months, something that our customer would like to benefit from. However, at such low levels, he cannot afford for it to fall any further. As part of the enlarged Royal Bank of Scotland Group, Ulster Bank is able to provide the widest range of hedging solutions available in Ireland. We suggest a structure that will guarantee our customer a minimum worst rate, in the event of further euro weakness, while allowing plenty of room for gain should the euro rally.
12.30pm I make it back to the dealing room and grab a sandwich. I sit on the proprietary trading desk, and the guys are busy talking to brokers over the ‘squakboxes’ and it’s getting pretty noisy. One of our interest rate traders, Toby Chapple, tells me that the 10 year Bund future, the benchmark for interest rates in Europe, is rallying aggressively on the back of a firmer euro and a growing perception that ECB interest rates have peaked.
1.45pm An institutional client has contacted our sales desk looking for information on the Eastern European economies. They need an in depth analysis on the implications of prospective EU and EMU membership. Because it there a wide range of factors that could impact these emerging markets, it takes awhile to compile the information. While I’m doing this another client calls wanting to know our views on oil prices. It, too, is big area and is one I’m particularly interested in. The consensus view is that prices will decline in the first quarter of 2001, as global growth slows. But I highlight the fact that, in the past, whenever OPEC managed to raise prices it succeeded in keeping prices by restricting output. I advise our client to pay particular attention to statements from oil producers. I have a hunch they will cut back on output in anticipation of slower growth next year to keep prices high, as they have done in the past. I then complete the Eastern European research and mail it to the client. An advantage at Ulster Bank is that I can avail of the global research capabilities of the RBS group. I frequently speak with economists in London, New York and Tokyo especially Kit Juckes and Ram Bhagavatula.
3.00pm The euro has started to rise sharply, and rumours are swirling that various national central banks have been in the market purchasing selling dollars, yen and sterling against the single currency. I notify clients and prepare a short bulletin. Today FM call and ask can I give an update on the developing situation for The Last Word.
4.00pm It’s Friday so it’s time to write up the weekly commentary for the Sunday Business Post. Finally, I plan for the week ahead, see what important data and events are on the schedule and get ready for our weekly strategy meeting on Monday morning.
5.30pm Finish interview on The Last Word and head to the Harbourmaster for a rake of pints. |
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| Article appeared in the December 2000 issue.
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