Is Progress Assured?
“And a step backward, after making a wrong turn, is a step in the right direction.” ― Kurt Vonnegut Jr.
Market Commentary
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A Bit(coin) of a Bubble?
“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
The Trial of the Century
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?
Dumping the Dollar
“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.
QE for the People?
“When you get something for nothing, you just haven’t been billed for it yet” -Franklin Jones Journalist 1908-80.
It’s looking Grim up North
“The Americans will always do the right thing… after they’ve exhausted all the alternatives” . (attributed to Churchill, though there is doubt as to its veracity). The row between the US and North Korea has been escalating, with increasingly angry words and threats (whose intensity is mirrored 5000 km away on the Indo-Chinese border) being exchanged. After studiously ignoring the rise in the diplomatic temperature for nearly a month, last week it suddenly exploded into life with markets, especially Asian markets, understandably taking fright. Buying resumed this week as nuclear Armageddon didn’t occur over the weekend, (though one must wonder who these “investors” think they will be able to sell to in the event of a holocaust), but the situation remains tense as both sides contemplate their next moves.
What next for the UK?
“Those who are easily shocked should be shocked more often.” ― Mae West I wrote a blog piece 18 months ago, looking at the possibility of Jeremy Corbyn winning the next General Election. It seemed daft at the time, but if recent history has shown us anything, it is that shocks are the new normality. Corbyn has claimed “victory”, (which given the shortfall in Labour seats relative to the Conservatives does raise concerns about the future course of the economy under his leadership), but in truth, it was the Conservatives who “lost it” (in both senses).…
To the Polls!
“In April, May announces election in June”- tweet from Ivan the K 18/4/17. It is debatable whether the population of Britain really wants this, but we are heading for an Election (the third in two years); With almost perfect comic timing, the IMF announced an upgrade to the UK growth forecast on the same day! The immediate response was a fall in Sterling to $1.2515 followed by a sharp reversal to c.$1.29. Sterling has risen, as opinion polls suggest a Conservative majority of at least 90 seats (and possibly as much as 200). This is what happens when record levels of shorts meet news…
Au Contraire Blackadder…
Just as with Carlsberg, we don’t do predictions at EBI, but if we did they would probably be the best in the World… I am sure you have already had your fill of predictions for 2017, but just in case you haven’t here are some more, but with a slight twist – these are the opposite of the consensus view, taken precisely because of that fact. Call it a control experiment – how right can one be simply by saying the opposite of the pundits? We shall check back in approximately 350 days… 2016 was a normal year in most senses – pundits got it wrong, as usual, but this time the magnitude of failure was spectacularly large: not just the puditocracy though. As the screenshot below shows the Bookies got it badly wrong too, and it cost them real money.