Blain’s Morning Porridge – 23rd Jan 2020; Plague, Famine, Trump

Blain’s Morning Porridge – Jan 23rd 2020

“Being a bully on the internet is a sure sign of insecurity and weakness…”

I glanced up at the screens y’day and caught a headline flashing across the screen: “No more boom bust cycle” said the talking head on the screen. Really? Go ask former Premier Gordon Brown how well that worked out for him…

The big news this morning is the frighteningly rapid escalation of the Wuhan Plague – the SARs like Coronavirus has now killed 17 (doubling overnight) and is spreading. Wuhan is in lockdown with trains and planes closed down, apparently overflowing hospitals, and restrictions being placed on citizens. It sounds scary, but “horse and stable door” springs to mind. Chinese stocks took a thumping – down 3.5%. Its all about uncertainty. Thus far it looks like the virus is most dangerous to the elderly and infirm, but until everything is known about the source and contagion, we really don’t know.. Fear is the mind killer…


Let me assure readers I regard Davos as a nonsense of preening inequality – but it does throw up interesting moments. Yesterday was no exception – from Prince Charles demanding proper Carbon taxing, and the EU agreeing  – making excellent points.  Carbon should be taxed. It’s going to happen.  That will go down well with Trump, who earlier lambasted the gathering with his rejection of “alarmists” and the “prophets of doom”. The scientists respond their role is to simple provide the evidence – which they have done.

Who do you want to listen to? Donald or The Scientists?

Then we had the unpleasantness when the UK told America our priority is a trade deal with Europe.

The UK’s chancellor, Sajid Javid was one of the reasons I voted Tory for the first time ever back in December.  He’s competent.  Yesterday he explained why a digital services tax – not dissimilar to the one the French just surrendered on – remains important as a temporary step ahead of global agreement on how to fairly tax pixel-based sales around the World. Javid sensibly explained why the UK will be prioritising a trade deal with EU – its where 45% of our current business lies and needs to be protected, as does the 20% we do with the US. Doing a deal with the US is also possible – or should be.

But, you could see the disbelief etched across US Treasury Secretary Steven Munchin’s brow. Who the hell was this person telling him things he wasn’t interested to hear? He was expecting The Saj to abase himself, cave-in on Tech Taxes, and promise the US first dibs on trade and everything else the Americans demand or fancy… So, in standard Demi-Trump-mode he threatened arbitrary trade-tariffs on autos, told the World his leader will simply bypass the Chancellor and go to Boris to sort our the US’ place in our priorities, while promising hell and high-water if we ever have the temerity to mention digital services again.

I am beginning to be a bit concerned about our cousins across the pond.

This is not the way things should be done. I was brought up to believe the Americans were just like us; a little bit more successful, but essentially sharing much of the essential characteristics of hard-working, honest and honourable Brits.  They would always be our first call in times of trouble.  Put the English-speaking tribes together in a bar, and we all get on famously.

At least we used to.  The Anglo-sphere is breaking up.  There is a shocked realisation that American’s, under Trump, aren’t necessarily the best or first call any more.  It’s not just Trump’s underlying thread of me, me, me, America first, isolationism and protectionism. He might call it the art of a deal – we call it bullying, hectoring, dishonesty and unreliability. There is a growing realisation the Land of the Free doesn’t give a rat’s-arse how they are perceived anymore.

Fish rot from the head down.

It’s a truth American businesses will increasingly discover. Perceptions are important – it’s what defines nations.  You could buy into the cliché how US stands for Liberty, Truth and Honour – when they were reliable business partners and allies. How Trump behaves doesn’t actually matter – he and his crew are binary – loathe or love him, his polling levels wont shift. His biggest threat is Democrat the opposition can unite around. His biggest support is it’s the Democrats he’s up against.

However, and this is the key point; investment managers rank the presidential election as an even bigger threat than trade wars to the 2020 market. Why? Because 8 years of Trump might or might not make America great in its own mind, but it will sure as hell change America’s place in the world – and it’s not looking likely to be in a positive way.

America is changing. And don’t take my word for it. This is from the most ultra-right wing UK newspaper – The Torygraph: My unsettling shuttle rise in Davos with China’s top brain scientist

Global Stocks 

I continue to look for evidence the current stock market is about to pop.  Speaking to a CIO yesterday, he warned me I am far too early. This particular chap – who’s unconstrained fund can by public/private, debt/equity – reckons the market still has plenty of room to run higher. Despite crazy Price / Earnings ratios, they could still go higher to match the excesses of 1999, just before the first bubble burst and led to a 5-year clean up.  A top is coming, but its still got a crazy leg higher to go…

Or has it..?


After my explosive rant about SouthWestern Rail on Tuesday, the UK government transport secretary said its “financially not sustainable.” A “No Sh*t Sherlock” award is winging its way to Westminster. As I sit and write on yet another packed, standing room-only, late train that was built in the 1960s, where the 800 commuters jammed onto it each paid £6000 for the privilege – the company says it can’t continue because its making significantly less money than it anticipated. It expects to be bust within a year after losing £136mm last year.

Seriously? Someone’s head should be on a spike at the gates of Waterloo station.

Five things to read today: 

Businessweek – The Tesla Skeptics Who Bet Against Elon Musk

FT – Wall St Steady as investors assess China Virus impact

WSJ – The Dark Business of Coronavirus

BBerg – Italy’s Conte Cancels Davos Trip with Coalition in Turmoil

Torygraph – Ursula von Der Leyen threatens a carbon border tax, opening new front in the trade wars

Out of time and back to the day job!

Bill Blain

Shard Capital