WE HAVE MOVED

PLEASE CHECK OUT THE NEW IMPROVED HOME OF OUR BLOG: 

MARCOMS.COGNITOMEDIA.COM/BLOG 

Announcing... The 2008 Cognito Holiday Cocktails

Every year, Cognito hosts a holiday party for clients, industry colleagues, and press - and every year, we create a special cocktail menu reflective of the year's biggest stories and trends.

This year, our "Injection of Liquidity Menu" is:

CosmoPaulson - A generous bailout of vodka, triple sec, cranberry and lime juices

Cognito Mojito - A communicative combo of Stoli Citros, strawberry lemonade, sugared rim and mint

Collateralized Drinking Obligation - A complex mix of Stoli vodka, Elderflower water and lychee with a warm orange twist

TARPatini - An instant balance sheet cleaner, with Captain Morgan, Malibu and Myers mixed along with exotic juices 

The Wall Street Bonus - Don't eliminate this sobering year-end blend - an on-the-rocks refresher for some, but not all.

If you haven't guessed, the Wall Street Bonus is a nice, tall glass of water... on the rocks.

The Mob Finds its David....

Republic Windows and Doors...

There are hundreds if not thousands of firms in this position across the US today. The challenge for Bank of America is that Republic Windows and Doors has become an emblem. It’s now a focal point for the frustrations of an entire nation.

Unions and politicians and the media are clearly willing this David vs Goliath story in to existence and to a casual observer this makes perfect sense: Banks and fat cats get a bail-out while the little guy gets crushed. Short, simple, powerful. It ‘feels’ right given what we think we know about the laws of natural justice.

The problem with this view of course is that it’s completely wrong. But it’s very hard to refute in 10 words or less.

What killed Republic Windows and Doors is exactly the same thing that killed Lehman Bros and Bear Stearns: lenders losing confidence in the ability of the borrower to repay the loan. With Lehman/Bear it happened at an institutional level so it’s more difficult to spot but the mechanism is exactly the same and the victims are no less real people with families to support and kids to put through school.

Today Main Street is going through what Wall Street went through 6 months ago. From small business bridge loans to mortgages there is a widespread reluctance to lend. The so called Bailout is in fact an effort by the government to specifically pre-empt this deadlock and get banks to lend again – not just to each other but to you and me. It’s designed to solve the Windows and Doors problem not exacerbate it!

Again this is a classic Wall Street communications challenge. Bank of America has to find a way to communicate the points above but more importantly the whole financial industry needs to do a much better job of educating the broader market about how the economy really works.

Fear Begets Fear

There was a fascinating article in the New York Times today by David Carr, titled "The Media Equation: Stoking Fear Everywhere You Look." 

In it, he quotes: “When everyone is talking about recession, we all feel like something has to change, even if nothing has changed for us,” said Dan Ariely, author of “Predictably Irrational,” a book that explains why people do things that defy explanation. “The media messages that are repeating doom and gloom affect every one, not just people who really have trouble and should make changes, but people who are fine. That has a devastating effect on the economy.”

It's incredible to see how these "doom and gloom" messages permeating the media are trickling down to those consumers who remain still unaffected by the current economy. Friends of mine who remain still safely harbored from the crisis - still with jobs, no mortgages to pay for, no real retirement plans that have lost 40% of their value - even they nervously chatter about the recession and think twice about any sort of spend.

David Carr writes, "The recession was actually not officially declared until last week, but the psychology that drives it had already been e-mailed, blogged and broadcast for months." 

It's amazing to see how powerful the media is and the sort of influence it yields on so many people, particularly when combined with this psychology of panic. One has to wonder what would happen if we turned off the TV, shut down the Internet, and stopped printing newsapers and magazines for a day - would the Dow finally inch over 10,000? 

Optimism, Cynicism and Expectation Management

Former New York Governor Mario Cuomo once said beautifully that politicians: 'campaign in poetry but govern in prose'

And so it begins. 'We as a people will get there' has morphed seamlessly in to 'it will get worse before it gets better' without so much as a wry smile or a knowing wink from our next president. We saw a glimpse of this linguistic retrenchment on election night: 'we may not get there in one year' the president elect declared confidently... 'we may not even get there in one term...' wait, what? Did you just launch your reelection campaign before your innauguration? You bet he did.

- PE Obama is about as astute and strategic a communicator as you are likely to find. He knows how closely his words are watched and he does not choose them lightly. So why this speech at this time?
- Well first of course he is playing down expectations so as to lessen the inevitable bump that will be felt by liberals, Europeans and everyone under 25 when he fails to walk across the Reflecting Pool of the Washington monument on January 20th - but there's more.
- Politically he has nothing to lose and everything to gain from a further (short term) deterioration in the economy.
- He has an ambitious wish list - including his multibillion infrastructure reconstruction which has been on his agenda since long before this crisis - and a desperate congress will be more likely to acquiesce to grand government intervention as it did in 1933 with the New Deal.
- A second, related strength this pervasive sense of panic gives PE Obama is the ability to - in the immediate term at least - sidestep the tricky deficit issue. The Budget Deficit stands at $438billion, nearly twice the deficit inherited by Bill Clinton in 1993 ($290billion). Clinton also inherited a severely weakened economy but its relative strength compared to the current climate meant that his first 100 days were spent, largely unsuccessfully, walking the tightrope between stimulus cheerleaders on the one side and deficit hawks on the other. Today's more pronounced crisis gives PE Obama the opportunity to shelve a potentially bedevilling issue and focus all his attentions on his favorite stimulus programs.
- Finally, and cynically, a rapid worsening under president bush's watch - yes, that's right, I'm afraid he is STILL President - is just that much more of a rebound once the economy is brought or finds itself back on track.

A Message from Main Street

The recent holiday brought me home to Central Connecticut. While driving on I-84 through Hartford, my attention was caught by a large billboard facing the Westbound traffic. It featured a simple message from a local commercial and retail bank – Simsbury Bank – reassuring client’s and prospective clients of the stability and solvency of their institution.

A visit to their Website reiterates a similar message, emphasizing the need for personalized attention amidst the current environment. Clicking on the President’s Message, the viewer is treated to a cohesive explanation of the current state of the market and a clear explanation of the benefits of going local when it comes to personal finance. The message here is an effective distancing from the tumult on Wall Street, with the President going so far as to lay out the bank’s capital position in plain view.

As Wall Street considers absorbing regional and local institutions - making its foray into deposit banking - they should keep in mind the intimate fiduciary message that is necessary on Main Street. Without it, public trust will be harder to gain and healthier balance sheets elusive.

The Financial Sector Needs PR

Public opinion about the financial services sector is at an all time low. The diligent and invaluable work done by many of the professionals in the sector has been overshadowed by the poor management and greed of a comparative few.

The reality is that there are hundreds of thousands of people in this sector who pride themselves on their professionalism, integrity and for whom prudence and good governance are fundamental qualities.

The industry needs a united voice about its commitment to change, to demonstrate the value of its role and its benefits as a career choice.

The Communicator Speaks

On election night this commentator suggested that Obama's true strength lay in his potential for combining action with oratory. So far he appears to be fulfilling this potential.

In addition to some well received picks for Treasury (Geithner) and NEC (Summers) which have had the media swooning and the markets reaching for the smelling salts, Obama has established an Economic Recovery Advisory Board (modeled on Pres. Eisenhower's Foreign Intelligence Advisory Board) and appointed former Fed Chairman and fabled inflation slayer, Paul Volcker to head it. 

All decisive action. But being in PR 

what has really caught this writer's attention is the series of three, well-choreographed press conferences that he held in the days running up to Thanksgiving. While most President Elects would be keeping a low profile at this point, PE Obama has judged correctly that what is needed now is not just smart action but lashings and lashings of communication. He has, of course, left himself lots of wiggle room: on day one announcing a huge stimulus package without outlining how huge or where the money was coming from; on day two promising budget cuts without telling us who exactly was going to suffer. But frankly none of that is as important as just being out there, ahead of the story. Where for three months politicians have been reacting to the story as it unfolds, for three days PE Obama decided to be the story and let the world react to him. And by drip feeding positive news across a series of conferences while leaving us hungry for more details that is exactly what he has been able to achieve.  

By the way, on the subject this - from the Economist - is very useful:

OMG! WTF? ROFL!! etc...

Seems the tone deafness that has afflicted the financial PR community of late may be contagious. Seriously:

- Who put these guys on private jets?

- Did no-one question the impression this would make?

- As they will now almost inevitably be hung out to dry does anyone seriously doubt the importance of perception management during a crisis?

Just take a look at the comments on Digg for the public reception. 

 

So what now PR people?

This weekend I'm writing an article for Cognito's communication magazine for the financial sector - word of mouth - on what companies in the sector should be doing in these turbulent markets. The short answer is to do all the standard PR activities, but to make sure they are done better and inline with company objectives. What's interesting about activity in a 'crisis' is that often it drives people and companies to improve. The good will get better and the bad either get good or go away. 

Paulson In the Twighlight Zone

Ok, so here's the deal on Paulson. We are living through a time when the wall between perception and reality has broken down. Investors, consumers, businesses, the media etc anticipate terrible news and in responding to this in such a coordinated way create and perpetuate the reality they are most scared of. It's like shouting 'fire' in a crowded ballroom: people are panicking and getting crushed in the stampede.

This scenario both exonerates and indicts Paulson. He too is responding to the market and trying to be pragmatic - which would be the correct response under 'normal circumstances'. But he has seriously miscalculated the level to which his actions are under the microscope and the ease with which the 'perception' of weakness can suddenly become 'real' market weakness. That's what happened yesterday. I can't advocate placing PR over pragmatism but he needs to pay more attention to perception because in this new world order there is no longer the same divide between what we fear and what we experience.

It all comes back to good PR...

The financial markets may be going through one of the most difficult times in living memory, but there is still activity and plenty of it. All of Cognito's offices are experiencing a high level RFPs and demand from across the financial sector which demonstrates that there are many businesses who plan on taking advantage of the benefits that good PR and marketing offer - particularly in bad markets.

Budgets will be allocated more prudently, and rightly so, but after all the shouting, companies in the financial markets still need to use good PR and marketing to drive their businesses - perhaps now more than ever. 

Hedge Fund Communications III

As this blog has noted before, in times of high performance hedge funds could get away with their trademark silence. In today's market, funds are quickly discovering how necessary transparency and disclosure to both investors and the media truly is.

A positive example of proactive communications came from Blue Mountain Capital Management (BMCM). From a communications angle, BMCM did two things right this week:

1. In the face of unprecedented outflows, BMCM Founder and CEO Andrew Feldstein wrote a letter to investors outlining revised terms for their funds. Striking a quid pro quo, investors agreeing by November 11th to hold their money with BMCM through 2009 will pay lower fees through 2010. This was a clear way to explain to investors that the stability of capital is directly correlated to both the stability of the fund and investor returns in these times of volatility. To be sure, BMCM is only down 2.4% in 2008. Investors - many fund of hedge funds and pensions - pulling out of performers such as BMCM are reacting to both irrational fear and the need to liquidate holdings to post collateral and hold cash. With BMCM, this activity is shown to be indiscriminate. Clearly a large and stable fund such as BMCM deserves better than to have 25% of its capital withdrawn by investors.

2. BMCM agreed to interview with WSJ during these pressing times. Instead of hiding and fanning media suspicion over the root of such extensive withdrawal requests, i.e. projected dire performance through Q4, CEO Feldstein spoke with the WSJ, discussing pandemic investor fear and the cycle of withdrawal while reassuring the health of the fund and the dependable cash positions held currently.

By taking these actions BMCM is effectively fighting back what has been a self prophetic cycle of fire-drill selling amongst the investment community, driving down capital, prices and sentiment and resulting in a lack of will to provide the capital and credit our global economy needs to function.

Wall St. Bonuses II

This is much more like it. ABA President Yingling's letter was good but at 3 pages it's unlikely to sway the mainstream news or the average taxpayer (correction: bank shareholder). If the FS industry really cares to defend compensation it has to be articulated in bumper-sticker sized phrases.

Finally, A True Communicator In Chief

It's 3:00am in the East Village and the streets are still buzzing with the sounds of car horns, guitars and homemade percussion. This party promises to go all night.

Forget for a moment the magnitude of tonight's outcome. Forget America's inexhaustible capacity for reinvention or the sweeping policy changes which tonight's victory will usher in. Forget slavery and segregation; the injustices of the past or the supreme court justices that will almost certainly be appointed under an Obama presidency. Others will comment on such matters.

What interests me above all is that America finally, and once again, has a true 'Communicator in Chief'. With his ability to use language, discourse, tone and even humor to such dramatic effect, Barack Obama has the potential to stand shoulder to shoulder with some of the Presidency's greatest archetypes. Leaders like Lincoln, FDR, and JFK had not only the courage to act but, crucially also, the power to persuade - and in coupling the two were able to bring around substantial change at a time when the country and the world needed it the most.

Bonuses - The Next Communications Hurdle

According to urban legend the godfather of publicists, P.T. Barnum, was asked by a fish cannery to help clear its warehouse full of unattractive white salmon. Barnum did so by sticking labels on the produce which read: "Guaranteed Not to Turn Pink in the Can..."

Well Phineas, Wall Street needs your winning brand of double-think now more than ever.

(Keeping with the fishy theme) the sharks are circling. First Waxman and Cuomo and now House Financial Services Committee, Chairman Barney Frank. All demanding either justification for or cessation of Wall Street's upcoming round of bonuses which, among the firms taking part in the government's TARP plan, is estimated to come in at around $20bn. Even the White House smells blood in the water.

How will the FS Industry manage this issue? Will this be framed for them by regulators and the media as "The Bailout" or "Wall Street vs. Main Street" have been over the past months? Or will the industry find its voice and present its case forcefully and cogently. The fightback has started here and here but so far the argument seems to be that the government is even less trustworthy with taxpayers' money than the banking industry. Will this be enough?

On a lighter note, the head of the American Bankers Association who is spearheading to counter-offensive is Ed Yingling. I was trying to recall where I had heard that name, or something very similar, before...and then it came to me: Ringling Bros. Perhaps we needn't fear after all, perhaps the spirit of the great showman still lives....

Professional Pundits & Prognosticators

Cognito commenting in AM New York this morning on the rise of the financial punditocracy. Our position: consumers and investors need quality information now more than ever. This presents a fantastic opportunity for financial institutions to position themselves as calmer heads in a crisis, on-hand to offer advice and support to investors battered by the recent turbulence. Charles Schwab actually captured this approach quite well before the recent market meltdown. Unfortunately FIs are equal, if not disproportional, victims of the current uncertainty and have become gun-shy and introverted, leaving a communications vacuum which is currently filled by what I'm trademarking the 'professional pundit and prognostication industry'. This is bad news for FI's and even worse news for their clients.

By the way: the irony (or hypocrisy) of blogging about being quoted in article complaining about the rise of financial pundits is not lost on me.

He's at it again...

I think looking back we're going to have to acknowledge that in as much as this crisis has been a financial one it has also been a crisis of communication. A failure to successfully project control has wreaked havoc for weeks across the world's financial system. President Bush was not only wrong about normality returning but, even as he seeks to reassure us, we get to glimpse one of the fundamental problems underpinning the crisis: Nobody should let this man speak. From 'wall street got drunk' to 'a state of near panic', an unscripted Bush is like a loaded gun pointed at the head of the American financial system. The President, even as the lamest of lame ducks, is a natural focal point and as such needs to work hard to instill calm. For the Sarah Palin’s of the world who argue words don’t matter – we’re watching precisely why they matter right now. The road to recovery begins as soon as this administration hands over the world’s microphone to the next.

Lessons Learned

The aftermath of the financial crisis will bring many lessons. As communications practitioners, we will be encouraging our clients to use the experience to improve their business through better communication.

We would encourage the governments of the major economies in the world to look at the way the communication of their thinking and activity has impacted the global markets and draw their conclusions for future eras to learn from.

As we continue to reiterate through this blog, the ultimate issue is confidence and good communication lies at the heart of building it.

WWAHD?

Passing, on my way to work, by the grave of America's first Treasury Secretary, I'm minded to ask: What would Alexander Hamilton Do? I have just finished reading Ron Chernow's excellent 850-page biography of Hamilton and I highly recommend it to all Chicken Littles out there. Hamilton also had to supervise a massive government intervention to prop up a broken financial system but at the same time fought off intense political opposition, lived under the faint but permanent threat of renewed war, and eventually died in a duel. Something tells me that - were he able - he would look at some of today's world-ending 'crises' as preferable problems to have.

The Media's Role...

Bloomberg .com tonight:

6:00pm - US Stocks Drop on Concerns About Corporate Profits

6:01pm - Intel Profit Increases 12%

There are many guilty parties, and certainly right now bigger fish to fry - but hopefully when things have calmed down a little we will be able to look back and make a dispassionate assessment of the media's role in this 'crisis'. 

Becoming Indispensable...

At Cognito we have only two types of client: financial firms and those that deliver solutions to financial firms. We've talked in this blog about how asset managers and banks need to better communicate with their investors but what about those companies which offer goods and services to the financial industry?

For some, such as financial consultants and analysts, the current crisis could present an opportunity, particularly around cost reduction, outsourcing or post-merger integration (PMI) programs. Others, such as the data and infrastructure providers, may be so operationally integral within financial institutions that they find themselves sheltered, at least from any short term panic response. No-one, however, will be immune to the inevitable shrinking of the financial universe (Morgan may be the next shoe to drop this week) and all will need to find new ways to become more valuable to this diminishing customer base. There is too little time at this point to dramatically change the nature of their solutions. Firms now need to focus on communicating their purpose with renewed clarity, selling their value, and convincing clients of their indispensability. Below are four recommendations to this effect:

1) Stop Panicking - Most decisions made around 9:15 on Friday were the wrong decisions. An effective response strategy needn't take a long time to put together but similarly it can't be a formulated with one eye permanently glued to the Bloomberg terminal.

2) Get Closer to your Clients - Whether personally, through their sales teams or with marketing initiatives, business heads now need to get as close to their clients as possible. While undoubtedly a brave move given the market volatility, a number of Cognito's clients have held successful and well attended user-group meetings this week and will be stronger for it in the coming months. Firms that shut down proprietary events, marketing efforts, and trade show attendance will not only project instability but will lose invaluable communication channels to their customers.

3) Have a Story - This is not the market to be without a clear story and a strong message yet it surprises me just how many firms still have neither. In an environment of fear and uncertainty, clients look for stable partners whose value is demonstrative. An interesting point several of our clients have made recently is that their direct contacts within the FIs are also looking for a clear message to sell internally - so when they are asked why the firm should keep solution x, they can clearly explain its value to the whole organization. We can't begin to equip our clients with these messages if we have not formulated them for ourselves. In addition, having this story articulated and validated by third parties such as the media and analyst communities is obviously an excellent way to enforce your message.

4) Sell Value - Value is relative and your messages may need to change to reflect this. 12 months ago a car dealer whose models were 10% more fuel efficient and 5% faster than his competitor's may still have led his pitch with a message about speed. Today there is no question which message would take priority. So it is with solutions for the financial industry. Some industry providers are lucky enough to have been talking about risk and cost reduction for some time now but others are not so lucky. Listen to what your clients are telling you they need today and be prepared to redraft your value proposition to meet this short term need. For some firms this effort will prove just too difficult but for those nimble and well equipped enough to redraft and successfully pitch this new value message there is opportunity to be found in even the direst of circumstances.

Multi-Skilled Journalists

Media consumption in the financial sector must be at an all time high as people try to work out what is going on and how it will affect them.

In times like these journalists can make or break their name and become the trusted sources they aspire to be. In some cases the calibre and reputation of a particular journalist will transcend that of the media they work for. It is claimed, for instance, that the BBC's Robert Peston can move markets with his comments alone.

Another interesting observation is how, as the Internet combines the need for good print and TV reporting, we see why some journalists will always write and never present and vice versa. FT TV , for instance, requires reporters to present to camera.

Philantrocapitalism

A quick plug for friend of Cognito and US Business Editor for the Economist, Matthew Bishop, whose book: "Philanthrocapitalism: How The Rich Can Save The World" has just come out. Matthew spoke about the issues raised in the book at Cognito's summer drinks party this year and it is certainly worth reading.

At the New York launch event last week some waggishly commented that title of the book would soon be meaningless as the 'capitalism' part of 'philanthrocapitalism' may have ceased to exist by the time the book hit the shelves. They were joking of course but one does have to wonder, in a post bailout world (and now in Germany a post Hypo rescue world), whether we are not seeing a resurgence of governments as the force for dealing with the world's problems as opposed to corporations and the super wealthy.

Hedge Fund Communications 2 - Redemption Season

Hedge funds are facing a truly unprecedented confluence of events, and when they need it the most, communications seems to be the skill that too few have an adequate store of right now. To date the success of the hedge fund industry has grown largely on the back of its ability to deliver uncorrelated alpha - i.e. performance. As such, many funds simply haven't felt the need to leverage the power of PR. For years performance remained high and when a particular fund was down it didn't matter: overall market confidence in the sector remained strong. Even uniquely spectacular blow ups like Long Term Capital Management and Amaranth were seen as just that: isolated incidents, worth examining from an intellectual standpoint but hardly denting the exponential investment in the hedge fund market.

Today several things are happening at once: 1. Performance is the worst in many of these funds' histories and shows no sign of improving soon 2. knee-jerk regulation like the short-selling ban is complicating hedge funds' business in ways they could not anticipate and, most importantly, 3. for the first time ever there is endemic fear and uncertainty in the market. These are confusing times in which institutional investors will inevitably fly to safety and poor performing hedge funds are having to explain to a panicked investor base not just why performance is down this quarter but why this string of poor performance does not mean that they are going out of business. Suddenly communication has become very important and too few fund managers have these skills available on hand...

With redemption season upon us - now, more than ever before, is the time for funds to seek professional support.

Messaging Session please

If the bailout/credit crunch crisis is a confidence issue then by default it is a communication issue too. As all good PR people know, good communication builds understanding and, thereby, support and confidence. Congress and governments should allocate more time to considering and addressing the messages their actions give out. The vast majority do not fully understand the issues involved and no one knows how this situation will play out. However we are receiving multiple messages and it is hampering confidence building.

As things stand, people will inevitably reach their own conclusions about the wisdom of the bail out. Governments should lay their thoughts on the table more clearly to ensure their public is included and involved in their rationale. If things don't work out as planned, they will at least have more chance of support.

The extreme action they are taking in the banking market is alienating people who feel market forces should be left to sort this problem out and that the heart of the problem, culturally driven irresponsible borrowing and lending, isn't being addressed.

Wall Street's Mayor

Last week, while taking a cab up First Avenue, I got to hear part of Mayor Bloomberg’s weekly radio address. It was the most sane, soothing thing I had heard all week. The mayor focused on cooling tempers around the financial crisis, rather then inflaming them.

There is no question that the mayor’s straight talking strategy is a success. Many people hardly remember when Hizzoner was being beaten up by the Tabloids practically every day and communications genius William Cunningham came on board and helped turn the tide by running the fight on issues, rather than partisan politics.

If you need a respite from the hysteria, give the broadcast a listen.

Who Speaks For the Financial Industry?

The previous post touches on something that I have been considering for the past couple of days: who speaks for the Financial Industry as a whole? After one of the worst days in Wall Street history driven,  in no small part, by confusion and resentment around a - largely sensible - Congressional proposal, one has to wonder why the best equipped, best funded, and most sophisticated industry worldwide - the Financial Services Industry - isn't better at making its own case. 

Love it or hate it the petroleum industry has used public relations with increasing success to convince consumers and lawmakers of two inalienable facts: 1) carbon fuels are a necessary evil which fill an immediate need while we search for viable alternatives and 2) for all the talk of 'big' oil and corrupt cadres, "around 41% of oil company stock is owned by 401k retirement plans and mutual funds" i.e. by you and me. 

Very similar arguments could be and should have been made around today's 'bailout' bill but the administration and its proponents have, as so often happens, failed to pay sufficient attention to the only thing that really mattered in the end: successfully framing the debate. 

The fact that the word "bailout" is now well and truly cemented in the vernacular demonstrates the need for a more cohesive and frankly more effective communications strategy industry-wide.

Can communications keep up?

The speed of activity in the markets goes someway to explaining the perceived lack of ability of communications functions in financial institutions to effectively carry out their role over the last couple of weeks. With the HBOS merger story in the UK apparently being leaked to the media, rather than properly communicated, it seems that communications functions are struggling to keep up, let alone take advantage of what opportunities are presented to in the market.

Business managers would do well to remember that, where possible, good communication with key stakeholders and publics is crucial at this time to build understanding, support and confidence.

"Memo" to Congress

President Bush’s statements regarding the crisis on Wall Street have been clear and to the point.

However, the extent to which they have failed to persuade could have more to do with format than the facts.

As communications professionals, we guide clients not just on what to say, but how to say it.

This writer believes that the President might make more headway with a song. Perhaps the following, influenced by Warren Zevon, might be useful.


Everyone, sing along!

Send Lawyers, Guns and Money

Well, they went home with their bonuses
The way they always do
How were they to know
The markets were filled with glue

They were gambling in New York
They took a little risk
Send lawyers, guns and money
Paulson, get me out of this

I'm the innocent bystander
Somehow I got stuck
Between the rock and the hard place
And I'm down on my luck
And I'm down on my luck
And I'm down on my luck

Now I'm hiding out in Washington
Waiting for the Plan
Send lawyers, guns and money
The shit has hit the fan
Send lawyers, guns and money...

Northern Wok?

Proof perhaps that the fabled decoupling of Asia from the US is still some way off. When we sneeze it would appear that the world continues  to catch a cold. 

Financial Technology Congress - A Mixed Picture

I visited Boston this morning to attend the Financial Technology Congress where Cognito was a media partner. Unlike the SIFMA or other large industry events the show is designed to be a select affair but even bearing that in mind proceedings were more subdued than expected.

Perhaps not surprising: we're hearing from other conference partners that even where travel budgets haven't been cut executives are still choosing to stay close to their desks while industry news still seems so unsettled. As one client I spoke to put it: "When my house is on fire I may one day be very interested in a discussion about flame proofing your home, but right now I just need a hose."

On the flip side one of the speakers discussing data mangement challenges was a senior operations exec at JPMorgan who until recently was a senior operation executive at Bear Stearns. His tone was measured and his vision was decidedly long-term and one delegate remarked that he gave the same speech only days after the Bear acquisition. Clearly then, per the earlier post, despite a lot of turbulence in the market there is also no shortage of business as usual.

DealBook Grows Up

Among the winners of the Wall Street chaos are the spunky, literate editors at the New York Times DealBook. Begun as a daily e-mail by the “other” Sorkin in 2001, DealBook has blossomed into a full-on blog page with writers covering the intricacies and personalities of the deal world, along with the deals themselves and the financial services firms behind them.

Historically, actual coverage of the financial services industry in New York’s daily papers has been surprisingly light, considering that the city is the world’s financial center. DealBook has changed all of that, and one can only assume that the Dealbook offices have been buzzing non-stop over the last few weeks as the team works to get out the coverage.

Give it a read, if you haven’t already.

Don't shoot the messengers

In today's Times http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article4805311.ece Oliver Kamm, a former hedge fund manager, argues that short sellers are not the cause of the chaos and have ensured that bad news is reflected quickly in market prices. Too much debt, he says, coupled with failure by banks and politicians to constrain the credit bubble, are largely to blame.

At last some sensible defence of hedge funds who were last week reviled publically as spivs, speculators and sharks. Lone voices in their defence will not be enough however. The hedge fund industry now needs a concerted effort to help correct misperceptions about its role in the current crisis. Unless it moves quickly to mend its shattered reputation, it will soon have to contend with another negative descriptor: scapegoat.

Japan Rising

As you will have seen by now, Nomura Holdings Inc. (8604.TO), Japan's largest brokerage house, has bought the Asian operations of Lehman, and Japan's Mitsubishi UFJ Financial Group Inc. (8306.TO) has agreed to purchase a stake in Morgan Stanley. This raises quite a lot of interesting questions including what does Japanese investment in the US financial services market mean about Wall Street's competitiveness, how will these storied firms integrate considering the cultural clash between American independence and Japanese teamwork, and of course, will the Japanese be able to keep these assets down the road or be focused to sell when the crisis hits home in Asia? Stay tuned to find out who might be next, and what the proposed integration plans are. Some of our clients will certainly be in the press commenting on these topics.

Despite the turmoil, there's alot of BAU going on..

Despite everything, there's alot of business as usual going on in the financial services sector. For instance, several of our consultants from our teams in London and New York have just returned from the Sibos conference and exhibition in Vienna (which covers back office and payments issues) which was attended by many thousands of people. Next month we're running the press function for the world's premier corporate treasury and banking event - EuroFinance - that will be attended by over 2,000 senior bankers and corporate representatives. There are many less high profile areas of the industry that provide essential services that plough on and keep things working.

So that's it...

Within a space of just two weeks the four remaining titans of Wall St. investment banking have, essentially, ceased to exist as they were. In a few hours we will see what the market thinks of this new financial landscape, along with the Fed's proposed plan to launch what will be, in effect, the biggest distressed debt fund in history. 

It's (not) the end of the world

I don't think I've managed to walk by a newsstand for the last week without seeing a) a picture of stricken traders with their heads buried in their hands or b) a headline with the words "CRISIS" or "PANIC" or "WHO'S NEXT?". Even my most artsy/non-financial savvy friends have asked, "Okay, what is a credit default swap and why is it causing the apocalypse?"

It makes anyone want to line up at the bank, withdraw their savings, and tuck bundles of cash under the mattress - where at the least, you'll know it's safe because, literally, you'll be sitting on it.

Seems like financial firms are starting to roll out the "It may feel like the end of the world, but don't panic" message.

Example:

Schwab - During times like these, count on us for the help you need.

Fidelity - With the recent market volatility, it’s only natural for you to be concerned about your investments. We understand. Volatile markets can make you wonder if you're on track to meet your investment goals. It’s time to put that uncertainty to rest. Fidelity has helped clients through all types of markets for over 60 years. Let us put that experience to work for you and give you the guidance you may need.

Firms can't afford to be adopting a "no comment" strategy right now, even if you're not an investment firm, but a service provider to this markte. Whatever the message may be, getting the message down and getting it down right is going to be crucial in the months going forward.

Better Hedge Funds Communications

Between skittish investors, a rapidly shrinking pool of prime brokers and knee-jerk (some argue counter-productive) regulation, this week was not a pleasant one to be a hedge fund. This year has already seen the highest number of redemptions on record and this looks only set to continue apace as Q4 approaches.

More than ever hedge fund managers, big and small, need to fully harness the power of communications to reassure investors, potential investors, counterparties, and their own teams. One thing that has become very clear over the past two weeks is just how potent and destructive the combination of rumor, misinformation and fear can be. In a world where even Goldman's future is called in to question nobody believes that ducking for cover and riding it out is a workable strategy any longer.

Hedge funds, individually and as an industry, need to get out in front of negative stories and speculation and to do this they need strong messages, a consistent story and a willingness to engage the market head on.

In the eye of the storm

What a week to be in New York. Our offices here are just a few blocks from Lehman's and scenes on the street have been easily as interesting as what's hapenning on CNN or the Bloomberg terminal.


Experiencing something first hand rather than through the media lens certainly yields a different perspective. In two weeks we will be moving out of mid-town in to larger offices in the heart of the financial district and it will be interesting to see how the atmosphere differs downtown.

Unprecendented times in financial services..

there's so much activity and challenge in the markets at the moment and we're involved in such widespread and diverse activity for our clients, we felt this was a good time to start sharing thoughts, experiences and opinions amongst ourselves first. we can open it up beyond the firm as and when..