Market Commentary

“A reliable way to make people believe in falsehoods is frequent repetition because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact.” – Daniel Kahneman Extend and Pretend is a phrase that encapsulates a desire to bring forward gains into the present, whilst deferring costs or risks into the future. It refers to the practice of Banks during the mid-2000’s of refusing to accept losses on loans (mortgages for example), by allowing borrowers to pay back over a longer time-frame, thus avoiding having to book loans as non-performing in the short-term, but in the process storing up even greater risks into the future. It came back to haunt the financial system in 2007-09, leading to the biggest financial crisis for at least 70 years. The policy never ends well in any sphere of life.

“Tina Turner doesn’t need another hero, but Bonnie Tyler is holding out for one. Tina, give one of your surplus heroes to Bonnie. Job done.”- @limberstar (Dean w) Tweet from 26/04/18…

“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer” – Adam Smith (the Wealth of Nations).

“Some calamities – the 1929 stock market crash, Pearl Harbor, 9/11 – have come like summer lightning, as bolts from the blue. The looming crisis of….. the demographics of an aging population, its causes, timing and scope are known”. George Will – Political Commentator for the Washington Post, NBC et al. Over the next decade or so, the Developed World faces the prospect of their populations shrinking at an increasingly fast rate, whilst at the same time the Developing World is seeing continued strong rises in fertility. This fascinating website shows it all in real time, (well not exactly in real time but you get the drift).

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…