Blain’s Morning Porridge – Nov 8th 2018

Blain’s Morning Porridge  – 8th November 2018

“The English, a regiment from the county of Suffolk, had opposite them at that time the 73rd Hanoverian Fusiliers, who wear as their distinctive badge a brassard with ‘ Gibraltar ‘ inscribed on it in gold, in memory of their defence of that fortress under General Elliot; for this, besides Waterloo, has its place in the Fusiliers history.” *

In the headlines this morning:

Markets staged a predictable relief rally yesterday as the Mid-term election uncertainty evaporated. Some predictable headlines about Christmas coming early for markets. Relieved at gridlock? Well that sums up the world today… How long will the momentum last?

Not long if Trump’s Press Conference Meltdown last night means anything. Markets are all about sentiment, mood and expectations. Sadly, these are all bound up with one very angry critter skulking in the Whitehouse.

If anyone thinks Trump’s toddler temper-tantrum last night was positive, please explain.. I watched a wounded cur lashing out. His demeanour last night says we are in for a massive sulk. That is not a man who is going to embrace bi-partisan cooperation with Nancy. He’s assumed he’d be going into the critical China trade summit with Xi looking like a confident winner. Instead he’s got a scowl on his face, and it’s all about face. Trump’s sulk is likely to damage and delay both legislative and trade agendas. How he behaves heightens the risks of policy mistakes that could seriously damage the global economy.

Go refigure your expectations and percentage chances of a swift global trade resolution.

Sure, the American’s – or a very sizable number of them – still love Trump and will give him a second term… Unless….

I managed to upset quite a few people with my comments about Trump yesterday. The calmer ones suggest I’ve unfairly discounted everything he’s done for US workers and the US economy of the past two years. To be fair, I have often said: “loathe him, or loathe him, he’s getting stuff done.” Timing is everything, and the electoral cycle caught US recovery and expectations of stronger growth. Credit to Trump for reinforcing it via tax cuts.

The milder comments from readers included things like..

Get over it, politics is not a popularity contest”. Actually. It is.

“Politicians always lie” – but no so obviously, and when they were caught they used to apologise..

If you are going to complain about Trump and women, where is your outrage about Bill Clinton?” Fair comment, but Trump is now. (And while both are absolutely in the wrong, don’t conflate Trump’s and Clinton’s very different crimes against women.)

Don’t complain about inequality – the US is the richest society in world, while China still has 1.3 bln living in near poverty…” True, but Trump didn’t make that happen over the last 21 months.

These were the more reasoned comments. Some of the angrier ones think I should be shot alongside the rest of the lefty liberal elite. There is one hedge fund manager who not only questioned my parenthood and sexuality while making unflattering anatomical comparisons and fat-shaming me, who probably won’t be trading with me for a while.

Get over it.

Without labouring the point, I was warning about the long-term stability and sustainability of markets. They will become untenable if trust and decency is undermined by leaders who think the rules don’t apply to them because they claim a populist mandate. Would you invest in a company where the CEO behaved like Trump? Actually, you probably do.. but as the case of Philip Green shows – these guys are being found out and booted out!  (It does feel a little ironic for me – a classic market libertarian – to be raising issues of Social and Corporate Governance – but sometimes it has to be said..)

More than a few of my readers tell me I’m already too late complaining about Trump’s long term behaviours corrupting markets. They say I’m being naïve if I think people aren’t already following trading strategies designed to maximise returns by playing to Trump’s nefarious behaviours. One tells me to watch and listen to the message being delivered to the Technocracy: Trump’s recent comments about Amazon, Google and Facebook monopolies aren’t genuine concern, but a not-so-subtle “shake-down”. It might be worth checking just how much Bezos, Zuck, Page, Musk et all start paying in future PAC political contributions. Same chap suggests buying tech stocks because “capitalism has never been so easy to understand”… Its “pay-up” to succeed. Shades of Moscow perhaps?

One particularly astute reader suggested I can write whatever I like because I’m an absolute zero. No matter how right I am, he said, it’s not as if I’m a “real” strategist like the ones at JP Morgan.. They could never say it… And, look at how quiet Jamie Dimon after he said a few harsh words about Trump..

And that’s why markets are in danger…

Enough about Trump.. There is other stuff going on:

This morning the English Language has a new word added to the OED – Gammon: “A person, typically male, middle-aged and white, with reactionary views, especially one who supports the withdrawal of Britain from the European Union.” 

Look around your office and count the hind legs of pork!

Apparently… Bitcoin volatility is now less than S&P – see the website for full story.

There will not be any further Morning Porridge untill the middle of next week. I have to be back home in Edinburgh.

Have a great weekend..

*If any readers have been confused by the opening quotes this week, they have all been taken from German perspectives of World War 1. 

This morning’s is particularly poignant as the English regiment, the 12th Suffolks, not only fought alongside the 73rd Hanoverians at the Siege of Gibraltar in 1779, but had charged alongside them at Minden in 1759 when 6 British and 3 German Regiments routed the French! 

My Grandfather fought in France from 1916-18 in The Cameronians, the Scottish Rifles, a regiment that also boasts Gibraltar as a battle honour. (For the record, I think the Cameronians are the only regiment that remain named after a private individual – Richard Cameron, a Fire & Brimstone Covenanting protestant preacher of the 17th Century.) 

Just to confuse the matter further, while the Prussians under Blucher clinched Waterloo late in the afternoon, German regiments, including the Hanoverians, made up a fair portion of Wellington’s line through the battle. The senior British line regiment on the pitch that day, The 1st Royal Scots, was originally a French unit!