Wednesday 17th of April 2024

a sick baby...


a difficult choice...

The Western central bankers are conducting "the greatest experiment in monetary policy" history with consequences impossible to predict, Lord Rothschild writes, warning that the world is now in "uncharted waters."

Trouble is brewing for the global economy with the consequences impossible to predict, RIT Capital Partners Chairman Lord Rothschild warns in his semi-annual address to investors, criticizing central bankers for what he called "the greatest experiment in monetary policy in the history of the world."

"The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world," Jacob Rothschild, a British investment banker and a member of the prominent Rothschild banking family, underscores.

"We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale," he stresses.

Rothschild has called attention to the fact that despite the policy having resulted in the rapid rise of stock markets, this growth cannot last forever as the real sector remains anemic with weak demand and deflation in many developed countries.
Meanwhile, the geopolitical situation is not getting easier: China's economic growth has slowed down, the election atmosphere in the US remains fraught and the conflict in the Middle East continues to rage on. Germany, France and the US have been subjected to terrorist attacks. To complicate matters even further the UK voted to leave the EU.

"In times like these, preservation of capital in real terms continues to be as important an objective as any in the management of your Company's assets," Lord Rothschild emphasizes.

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neoliberalism is killing us...

After almost nine years, we are finally beginning to reap the political whirlwind of the financial crisis. But how did neoliberalism manage to survive virtually unscathed for so long? Although it failed the test of the real world, bequeathing the worst economic disaster for seven decades, politically and intellectually it remained the only show in town. Parties of the right, centre and left had all bought into its philosophy, New Labour a classic in point. They knew no other way of thinking or doing: it had become the common sense. It was, as Antonio Gramsci put it, hegemonic. But that hegemony cannot and will not survive the test of the real world.

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economic mud...

The consistency of global markets to be caught off-guard by the blindingly obvious is a surprise in itself.

The Federal Reserve's cut last week was a given, yet markets went into conniptions when the communication from chair Jay Powell was a bit cloudy.

Shortly after, another minor panic broke again out with a @realDonaldTrump tweet informing his 62.5 million followers that US tariffs would be ratcheted up another notch, or two.

Surprises? Really? Another round of tariffs was always likely. There is also a strong school of thought that central bankers always err towards to the opaque.

As former Fed chair Alan Greenspan once said during his tenure at the top of the monetary tree, "If I turn out to be particularly clear, you've probably misunderstood what I said."

The 10 per cent tariff on every other Chinese import not already taxed — around $US300 billion worth of goods — should hardly have been a jaw-dropper either.

The outcome of the trade talks at G20 meeting in June was far more a "no deal" than "truce".

'Recession-like' market activity

However, the under currents of the week's events are still deeply disturbing.

"Similar to last May, an unexpected re-escalation of the US-China trade war is creating recession-like/risk-off market dynamics with government bonds rallying and equities and risky assets selling off," Nikolaos Panigirtzoglou, a London-based strategist from investment bank JP Morgan said. 

"But what we find more troubling in this week's events is that rate markets were signalling higher risk of a US recession or protracted slowdown post-FOMC [Federal Reserve Open Market Committee meeting] even before the tariff announcement came out on Thursday."

The US economy is not exactly struggling. 

The Fed's move was driven more by the on-going trade hostilities, increasingly weak global growth and a slowdown in manufacturing, as well as entrenched low inflation in the US.

Certainly last week's rate cuts — and the prospect of more to come — allows the Trump administration to take an even more aggressive stance against China on trade.


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$250 trillion.....

The Rothschild family’s Swiss and French branches are battling for dominance in the wealth management industry, which is causing tension and sparking speculation of a merger that would significantly impact the global financial landscape, Bloomberg wrote this week.   

The Swiss private bank, Edmond de Rothschild Group, and the smaller French lender, Rothschild & Co., are the only remaining banks with links to the family whose name has been a synonym for wealth and power for more than two centuries.  

The Rothschild family emerged from the Jewish ghetto in Frankfurt in the 19th century to become one of the world’s richest and most powerful financial dynasties that bankrolled wars and empires, and helped shape Europe’s economic and political history.  

After decades of operating in relatively different segments, the Swiss and French branches are now targeting the same wealthy clients. The odds of a merger within the renowned family are now rising as both banks are fighting for a bigger share of the $250 trillion global wealth management industry, the outlet said. 

They are now targeting similar clients,” said Christoph Kunzle, a lecturer on wealth management at Zurich University of Applied Sciences. “It’s very competitive and their centuries-old name is a big asset that they are both trying to leverage.”   

The Paris-based Rothschild & Co. run by Alexandre de Rothschild, the 43-year-old seventh-generation scion is the smaller of the two banks. The bank had over €102 billion ($110 billion) in assets under management in mid-2023. However, it has been growing rapidly by opening more offices in the same segment, rivaling its Swiss peer.   

An aggressive expansion comes as the Swiss-based Edmond de Rothschild led by Baroness Ariane de Rothschild grapples with a stagnating business, the article stated. At the end of 2022, assets under management in the bank were down to 158 billion Swiss francs ($179 billion) from 178 billion the previous year.  

Meanwhile, over the past few years, the Paris-based firm has opened wealth-management offices in Italy, Luxemburg, UK and even made some acquisitions in Switzerland, Ariane’s backyard.   

Experts also point to confusion among customers as two separate Rothschild businesses are moving into each other’s territories.  

“Among consumers there is definitely confusion between the two,” said Declan Ahern, a strategy and valuations director at Brand Finance.   

Experts say a merger would give heft to the Rothschild empire in a globalized economy, where the lines between tradition and innovation are increasingly blurred. The two banks are too small when set against industry behemoths such as Morgan Stanley and UBS Group AG or even Swiss private banks Julius Baer and Banque Pictet.  

“There is a need for consolidation, notably for small wealth managers due to the increase in costs and regulation,” said Nicolas Payen, an analyst at Kepler Cheuvreux. “A rule for the industry now is that they need size.”   

The idea of joining forces has been proposed by the French branch in the past, but turned down by the Swiss side. Baroness Ariane has repeatedly rejected the move even though some of her high-ranking private bankers believed a rapprochement would make sense. The 58-year-old CEO of the Swiss bank is now reportedly eyeing a near-term expansion in the oil-rich Middle East and much promising Asian market.

“On the one side there is an economic rationale, on the other there is personal pride,” said Philippe Pelé-Clamour, adjunct professor at the HEC Paris business school.

He believes that the period of “egos and disputes” is relatively short against the backdrop of their 200-year history and forecasts that a merger of the two branches could take place within a generation.






dead in his prime....

Lord Jacob Rothschild, a financier and member of the Rothschild banking dynasty, has died at the age of 87, his family announced on Monday, according to media reports.

The British peer, who was also well-known in the arts and chaired the National Heritage Memorial Fund, started his career in the family bank, NM Rothschild & Sons, in 1963. He later went on to co-found J Rothschild Assurance Group, now called St James’s Place, with Sir Mark Weinberg in 1980. Lord Rothschild also founded Windmill Hill Asset Management to manage the family’s philanthropic portfolio.

In a statement to the news agency PA, the Rothschild family said: “Our father Jacob was a towering presence in many people’s lives, a superbly accomplished financier, a champion of the arts and culture, a devoted public servant, a passionate supporter of charitable causes in Israel and Jewish culture, a keen environmentalist and much-loved friend, father and grandfather. 

“He will be buried in accordance with Jewish custom in a small family ceremony and there will be a memorial at a later date to celebrate his life.”

Lord Rothschild was awarded the Order of Merit by Queen Elizabeth II in 2002, and received the Prince of Wales Medal for Arts Philanthropy in 2013.

READ MORE: Rothschild clans battling over bank clients – Bloomberg 

He was married for more than 50 years to the granddaughter of a Canadian financier, Serena Mary Dunn, who died in 2019 and with whom he had four children.

Lord Rothschild’s family has an estimated fortune of around £825 million (over $1 billion), according to last year’s Sunday Times Rich List.

The Rothschild family emerged from the Jewish ghetto in Frankfurt in the 19th century to become one of the world’s richest and most powerful financial dynasties that bankrolled wars and empires, and helped shape Europe’s economic and political history.