Market Commentary

Following on from the famous quote that Helen of Troy’s was the face that “launched a thousand ships”, Isaac Asimov, the science fiction writer claimed to have invented a new measurement unit, the millihelen, which corresponds to the beauty required to launch one ship. The Times newspaper this week pointed out that, as per a letter to the New Scientist as far back as 1959, the inverse also applies; -1 millihelen would be enough to sink one. There has been much market angst recently over the rise of inflation, as bond prices have fallen, raising yields which in turn has put equities on edge. But would a rise in interest rates actually be the -1 millihelen necessary to sink the economy?

If one turns on the TV almost any time of day, one will see a litany of property related programmes, “Homes Under the Hammer”, “Location, location, location “and countless others adorn our screens in an almost non-stop barrage of lifestyle envy. As of February 2016, Channel 4 had no less than 12 property shows on its screens and this is almost certainly below where we are now. The property market has gone mainstream and has gone Global.

“The best way to destroy the Capitalist System is to debauch the currency” – V.I. Lenin…

“Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.” “I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.” – Alice in Wonderland.

“A bubble is a bull market in which you don’t have a position.” – Eddy Elfenbein, (via Twitter). “The trouble with quotes on the internet is that it’s difficult to determine whether or not they are genuine” -Abraham Lincoln

It is the year 2030; Brexit negotiations have made a breakthrough, after a last-minute concession that allows for both English AND French cheese to be served in the sandwiches being eaten at the next Summit. Prime Minister Alan Sugar calls it a victory for the cheese makers, but in all the excitement, one is tempted to think he has been misunderstood.Meanwhile, as a result of a Global Decree by newly-elected US President Bruce Willis, Active Management is now illegal (so it’s not just their charges that are criminal). We join the trial as the Defence Counsel cross-examines one of the accused, in an attempt to tease out the justification for their strategies. Active Manager Finder-General Burgess is acting for the Prosecution. Judge Jeremy Paxman presides, with able assistance from Tess Daley QC. Defence: Could outline your investment philosophy?

“The strength of the dollar has historically been tied to the strength of the U.S. economy and the faith that investors have in doing business in America” – Steve Mnuchin (US Secretary of the Treasury). The Dollar is currently about as popular as a rattlesnake in a lucky dip; earlier this week the US Dollar Index hit lows not seen since December 2014, and is down nearly 12% since the start of the year. Speculative positioning in the US Dollar has also reversed sharply, with Hedge funds etc. now net short for the first time since 2013 (note the confluence of short positions with major market lows!). Since the Dollar is the world’s reserve currency, it is an important indicator of risk appetite across the globe. We wrote about Dollar negativity in October last year and it seems to have returned.

“When you get something for nothing, you just haven’t been billed for it yet” -Franklin Jones Journalist 1908-80.