Blain’s Morning Porridge – September 2nd 2019
“A gentlemen will walk but never run..”
Book: The Fifth Horseman – How to Destroy the Global Economy, is on Amazon in Kindle or book format.
Charity Walk –https://www.justgiving.com/fundraising/bill-blain
I completed my 100 mile walkfor my Charity – Wessex Heartbeat – on Saturday. Over the previous week I strolled the beautiful South Downs Way from Winchester to Eastbourne. I loved it. The scenery is marvellous, the landscapes magical and the people I met wonderful and interesting. I’m going to write it all up and attach lots of photos – and post the resulting story on the Morning Porridge website. My feet are covered in blisters, but I feel healthier, stronger, fitter and, importantly, more awake and tuned in than I have in months! The walk says its 100 miles, but my GPS records 113 miles. There is still time to make a donation to Wessex Heartbeat – but I shall close the appeal next week. 100 miles over 8 days might not sound much.. but for a fatty like me.. I’m happy!
Although friends and family joined me a couple of the days, most of the time I was walking entirely on my own. It wasn’t one of these organised charity events. One day in August I just decided the time was right to do it. And that’s a whole story in itself – maybe I’ll check my boots fit next time…
Walking on your own is a great way to find the space and solitude one needs to think. A number of market insights came to me during the Walk – and I really should have written them down…! I also came up with a cracker of an argument about Democratic Government vs Government Bureaucracy – but I’m struggling to remember the critical points that’s provide my theory’s basis.
I’m wondering if the political breakdown we’re currently seeing develop across nation states is something inevitable in terms of economic evolution – a response to new technology and the changing demands societal change creates. It’s not necessarily a disastrous outlook… but its challenging to find the right investment responses to how our economies are developing.
In terms of global markets, I’ve come to the conclusion we’re currently passing through the end of one cycle – the Era of Globalisation. We’re likely to see more turmoil as the current economic and political foundations continue to crumble. The next cycle is going to be very different in terms of implications of trade, growth, utility, and the way in which society works – or doesn’t. A new form of capitalism perhaps? A new society? I have some ideas – which make me some kind of Neo-Keynsian… Happy to discuss anytime.
What did I miss in markets? For a whole week I didn’t open the FT, trawl Bloomberg, sneak a look at Zerohedge, or open any emails with attachments. I’ll spend today playing catch up – but the main issues remain the same:
- Where does China vs US Trade War take us in the short-term?
- What are the long-term implications of the end of the Globalisation Era – who will be winners and losers? (This is a massive topic – I will put some thots out later this week.)
- What is the outlook for Europe – and is it relevant?
- When does the UK become investible again?
- What’s the right portfolio mix for a market is flux?
- And, most immediately – How noisy will be the bursting of the current bond bubble be? (Some of the recent central bank comments surprised me, and inflation is on the horizon.)
Answers to these questions and a billion more will be written on the cold dead pages of financial history, but today we can only guess and offer opinions on what they might be.
I suspect the China story is about to become more complex because of Hong Kong. I reckon we’re heading towards a tragedy that will only widen the divisions between East and West. If the UK was truly smart we’d be offering the 170,000 Hong Kong people hold British Overseas passports UK residency rights.
Realistically, the protestors have zero chance of achieving democracy, and they must know that. The protests are impressive, but poking a hornet’s nest is never smart. Eventually China will clamp down or the Hong Kong economy becomes irrelevant. The cynical position for the US is a win/win: Pro-democracy protests will ultimately undermine Xi’s authority, while precipitous action by China will allow the US to claim the moral high-ground. But the protestors will be very mistaken if they expect the US to bail them out. Hong Kong isn’t on the US list. But is full of smart, well educated UK passport holders who could be of great use here in the UK. (Years ago someone proposed the UK gives Hong Kong 100 square miles of otherwise empty land, and 50 years later it would be the richest city in Europe!)
I have no opinion on Boris’s constitutional shenanigans – if we have to destroy democracy to achieve it, well I guess that’s what it takes. It looks to be more of the same – noise and more noise. Let’s wait and see what happens.
This week is likely to remain up and down, much like my walk! Full porridge tomorrow once I’ve caught up!
Bill Blain
Shard Capital