Blain’s Morning Porridge – Nov 18th 2019

Blain’s Morning Porridge  – November 18th 2019

“He would, wouldn’t he?” 

What have we got to look forward to this week?

i. Markets will be watching for smoke signals hinting at some agreement on trade between the US and China..  I suspect there will be little tangible, just more promises and electioneering dressed up as what passes for statesmanship these days.

ii. Traders will be straining to divine portents the global economy isn’t in as much trouble as we thought, but likely to accelerate beyond the IMF’s miserable outlook.. They will likely be rewarded with more data from the US and Europe showing a mini-economic trough has been turned. Still lots of stuff to worry about globally, but a small tick upwards in the economic trend feels likely.

iii. Analysts will be listening for some conciliatory mumble-swerve from Central Bankers about no need not to keep monetary conditions easy, while putting a cap on any further cuts..  Fed minutes are out on Wednesday.

In short; Markets are likely to remain in thrall to every trade rumour and economic sigh through the coming week – and fascinating stuff it will be.

It doesn’t really matter. Markets are what markets are… As 2019 draws to a close, it’s been another surprising year: everyone thought 2019 was going to be a terrible year, but if you’d gone bullish into Stocks, Bonds, and played the dollar and sterling back in January, you would be sitting on market hammering returns!  Remember, the market is never as bad as the market thinks it will be.

What’s the outlook for next year? Will it be the 13th year consecutive year of low growth, low rates and stock market gains? Can you continue to gamble on Heads coming up 13 times in row?

The consensus today is a trade agreement largely depends on fraxious Trump mood-swings, the case for Growth is unproven, and monetary policy is now discredited demanding rate normalisation. If that is the consenus, then maybe it’s time to bet against it.

Or maybe not. Perhaps the only thing that matters is the too much money argument. I’m feeling curiously bullish – time to put cash on a lower for longer slow growth and low rates environment into 2020, and bet that too much money chasing markets will keep stocks high!  Heads it is..

Of course, you have to be selective. All that glitters is not gold – as Prince MBS is discovering on the back of minimal international demand for Aramco. As the valuation congeals around $1.6 trillion, he’s resorted to bending the rules to lend Saudi Nationals cash to buy the deal – hang on, didn’t that kind of behaviour put a couple of Barclay’s bankers in the dock? And, he’s offering all-expenses paid holidays in the Riyadh Ritz-Carlton to anyone that doesn’t buy.

One of the key factors driving markets is politics, but Modern Politics has become pure Soap Opera. The only way to trade politics is “assume the worst, and wait for it too happen”!

Here in the UK, we’re all wondering when a “sobbing” Jennifer Arcuri is going to release a sex-tape of her and Boris, telling us how deeply in love she thought they were, as she milks the “nothing-as-dangerous-as-a-woman-scorned” moment.  Her recent interview is extraordinary listening – the BBC couldn’t resist playing the Arcuri interview in full this morning, (which comes just after Boris was mugged on air by the BBC’s Naga Munchetty, when she asked the killer “are you relatable question”). In any normal world Boris’ philandering, and elitism shouldn’t  bode well for his popularity.

Wow. Shock Horror! Boris caught with his pants down.  Again. What a surprise. I can hardly believe it… Actually… that’s exactly what we would believe of Boris. He is definitionally a bad person, and we all know it.  Does it matter? Jennifer a says she’s been let-down by Boris – and says she wasn’t a one-night-stand. What was she then? She was definitely  a consenting adult. And nothing about Boris shocks us any more..

It’s a tough call. What the UK needs is leadership – which loath him or loath him, Boris can conceivably provide. But if Boris the manipulator is willing to let himself be manipulated by a manipulative woman – what else is going to ensare him? And if he lies about her – what else does he lie about? In short – where do we call the line?  Boris is somewhat fortunate few people are paying much attention because Prince Andrew has taken the headlines…. Nice one Andy! Taking one for the team..

UK politics is half-way to hell in the proverbial handbasket.  It would be wrong to trust the polls – because it’s not just politicians are lying.  So is the electorate. Everything has been turned on its head.  My chum A, who runs a very successful business and is the very model of a small “c” conservative self-made man is so disgusted by the years of Cameron, May, and now Boris, that he’s actually going to vote for Corbyn on the basis it can’t get any worse.  N – who has been a lifelong falafel-conservative is going to vote Liberal Democrat to save the UK from Brexit. And me? A lifelong champagne socialist who is likely to vote Tory. What a mess… !  Its really not natural.

Almost as bad as in the States… Trump will be “impeached” by Congress, but the sentate will not vote for conviction or removal from office. Nearly every single American I speak with – which includes Democrat and Republican big-wigs – agrees Trump is a thoroughly loathsome impetuous bully. While the Democrats fume and fret how unforgivable he is, the Republicans deflect and argue he is bad but not bad enough.

The UK and US demonstrate the same issue – how much politics has changed. Its no wonder we don’t respect politicians any more. In our hunt for strong leaders, it would seem we are willing to excuse behaviour that would have ended a political life just a few decades ago.  We seem to have lost sight that Politics is all about leadership.. Sometimes  Leadership has to trump behaviour.

Where are the leaders???

(Extra points for the context of this morning’s quote – without Googling it.)

Five Stories to Read Today

FT – Credit market fears of a downgrade have not materialised

WSJ – Cyclical Shares Propel Stock Market to Latest Milestone

WSJ – FAA Chief Explores Overhaul of Plane Approvals After 737 Max Crashes

BBerg – Saudi Cuts Aramco Valuation, Boosts Loans to Get IPO Done

Indy – Jennifer Arcuri turns on Boris and warns she has been “keeping his secrets”

Out of time and back to the day job…

Bill Blain

Shard Capital