Market Commentary

[The events of Tuesday/Wednesday has necessitated a substantial re-write of this blog – once again, markets have been wrong-footed by a massive underestimation of public mood. If it reads as if I am gloating a bit, it is because I most definitely am]. Where’s my boy @JebBush at? Clinton’s and Bush’s finally kicked out of politics. Phillip Taylor tweet 08.48 am. 09/11/16.”They would not listen, they did not know howPerhaps they’ll listen now.”Don McLean – Vincent Before the result on Tuesday, I found the following screenshot – notice anything similar? …

“Most people would sooner die than think; in fact, they do so.” ― Bertrand Russell (UK writer, historian).Steve Forbes (of Forbes magazine fame) once said (apparently) that you make more selling advice than following it. “It’s one of the things we count on in our business, along with the short memory of our readers”. An article I recently read (in Forbes, ironically), suggests that this continues to be the case. It once again takes the line that there are alternatives to Indexing, and that Dividend investing is the answer. Let’s look under the bonnet to see how it arrives at its conclusion.

“Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled” – Michael Crichton Without much fanfare, last month the IMF announced that it would be including the Chinese Renminbi in its SDR (Special Drawing Rights) currency basket for the first time, in doing so adding a fifth currency to the mix. It is the confirmation of the rise to global status of the Chinese economy (and by extension, the rise of Chinese political power), and has been hailed by them as them arriving on the world stage.As shown below, the SDR has been falling versus the US Dollar over the last 2-3 years, prior to the Renminbi’s inclusion.

“When Cash is outlawed, only Outlaws will have cash” Bill Bonner (Bonner and Partners)

“The difficulty lies not so much in developing new ideas as in escaping from old ones.” – John Maynard Keynes…

“Truly, the real black swan problem of stock market busts is not about a remote event that is considered unforeseeable; rather it is about a foreseeable event that is considered remote. The vast majority of market participants fail to expect what should be, in reality, perfectly expected events.” Mark Spitnagel, The Dao of Capital.This applies equally well to ALL assets, not just stocks. Some of the most malign consequences of QE, ZIRP, NIRPand so on have fallen on savers. It is now practically impossible to live off the interest from savings (unless you are Donald Trump, in which case you’re a bit busy at the moment), which forces Investors to “Reach For Yield”, with potentially dangerous implications. However, they are not the only victims- Pension Funds are under assault on two fronts, one more technical, one very practical.

A new phenomenon of the 2000s and beyond has been the rise of Financial Television. As the markets have soared, so has interest in them, to the point where even Channel 4 news (not an outlet known for its pro-capitalist views), now feel compelled to announce how stock markets have done that day. Meanwhile, at Bloomberg TV, CNBC, Fox Business News etc, they maintain a hectic pace, often spending as long as 3 minutes covering in depth the latest news stories of the day (hour?), and discussing economic issues with all the gravitas they can muster. One of the first casualties in all this is thought, which they replace with cliches of varying vacuity. Below are some of the best (or worst, depending on your view). 1): “China will have a Hard/Soft landing”. It is by no means clear how a country can get airborne in the first place.