While You Were Working - June 23

“People need banking, but they don’t need banks”

I heard that quote at Pershing’s INSITE 2017 event last week when Uber co-founder and CitiVox CEO Oscar Salazar Gaitan recounted hearing it from a young person he met on a trip to Brazil. And I was reminded of that quote when I saw this story about Swedish fintech startup Klarna. Klarna CEO Sebastian Siemiatkowski says the firm wants to disrupt financial services by becoming the “Ryanair” of the industry. Before dismissing such a goal, consider the following:

Does Ryanair have lousy customer service? Yes.

Does Ryanair nickel-and-dime travelers for every aspect of air travel? Yes.

But did Ryanair disrupt the travel industry? Yes.

Do millions of people fly on Ryanair every year? Yes.

Major banks are constantly trying to develop new services they can offer consumers. But what if consumers are actually looking for a bank where less is more.

Ryanair is dominant because it gets people from Point A to Point B. Most consumers would be happy with a bank that simply gets their money from Point A to Point B.

A Citi analyst’s research mistake sparked a strange question

While there are certainly some red faces at Citi after one of the bank’s analysts admitted an error in her formulas led her to mistakenly place a buy rating on MercadoLibre. After spotting the error, the analyst reversed course and switched MercadoLibre to neutral.

That is all well and good. Mistake happen. But the funny nugget is that after investors followed the initial buy rating to boost MercadoLibre’s share price 4.1%, the share price has not budged much after the error was revealed.

In the world of MiFID II, the value of analysts’ research has been in the spotlight in recent years. But how valuable can such research be when investors don’t react even when an individual analyst admits their research was erroneous?

Lithium baby, lithium

One of the more under-reported stories from the world of commodities centers on the available supply of rare earth metals needed to produce the batteries used in electric cars and mobile phones.

Look at lithium:

“Global demand is forecast to reach 188,000 tons of lithium carbonate this year, and could reach 611,000 tons by 2035, according to Corfo’s most conservative scenario. The agency’s most optimistic outlook is demand of 1.2 million tons in 2035, about half of which coming from electric-car makers.”

With geopolitical risks on the rise around the world, smart countries are making sure they have access to these natural resources. But are companies following suit and shoring up the commodity pipeline they need to continue operations and win increased market share?

WYWW Appetizers

  • This is what light-touch regulation looks like.
  • It looks like hedge funds were trying to save 2 Italian banks before Rome thwarted their efforts.
  • Friday Fun Day: If you have one of these in your area, take a swing. ‘Tis good times.