Blain’s Morning Porridge – October 15th 2019
“I’ve calculated your chance of survival, but I don’t think you’ll like it.”
Blain’s Financial Porridge Podcast on Website (Subscribe to Audioboom podcast or go via Spotify or iTunes (Other channels available from Audioboom)
Book: The Fifth Horseman – How to Destroy the Global Economy, is on Amazon in Kindle or book format.
Reed Smith Alternative Finance Roadshow/Conference
Every year Reed Smith, the top London Lawyers, host an Alternative Finance Roadshow Conference in their Broadgate HQ on November 28th. I’m delighted to have been associated with the conference since its inception. Nick Stainthorpe, the partner behind the conference, lets me invite my clients from the buy side. The success of the conference is measured by the way its has connected capital with investments over the years.
If any asset managers, CIOs or strategists reading the Morning Porridge would like an invite to the event, please get in touch and I’ll arrange it.
The bulk of the issuers are speciality finance companies, but we will also feature some real asset issuers. In addition to a number of market discussions, the conference features short-sharp speed-dating presentations from Alternative Issuers – with the opportunity to meet them in breakout sessions. A particular focus this year will be the SME sector where there will be sessions examining insolvency and restructuring for SME borrowers, default scenarios, underwriting standards and due diligence.
I will be hosting an investor panel to talk about what’s likely to happen the alternative credit in the event of a credit market downturn – which I’ve been long predicting. I’m broadly positive!
If you fancy an invite, please email me back asap.
Back in what passes as the real world…
The on/off Brexit discussions continue. Will they, won’t they reach an agreement? Probably not in time for Saturday’s special sitting of Parliament – what will they talk about? I am slightly concerned by the number of times I hear members of commentariat referring to something called a “confirmatory referendum” rather than a “peoples vote” or “second referendum”. Maybe they think confirmatory gives it more gravitas, a chance for the stupid UK voters who got it wrong last time to vote correctly. I suspect it would be the worst possible outcome long-term. Saturday will be interesting: a hostile parliament, a Labour party increasingly drifting towards a second plebiscite, a massive second referendum march planned for London. Its turning into a race – does Boris get his deal to take to Parliament? Do the remainers force a delay or referendum? Can Boris get an election? Impossible to say – no one is in charge.. (I had to explain the State Opening of Parliament to some French lunch guests on Sunday.. that was interesting…)
Sterling – will remain fraxious.
I wonder what Nicola Sturgeon makes of the Spanish locking up Catalan leaders for 13 years for sedition? Of course.. it’s absolutely shocking that an EU member state would lock up leaders of a region looking for its independence… isn’t it? If the Scots did the same…. That would be treason then? This modern world is so difficult to understand…
Back in the USA
Last week Donald Trump wrongfooted his party, the military and decades of policy, stabbed his allies, the Kurds, in the back, and opened the door to Turkey to dispose of unwanted refugees, when he unilaterally declared the US is out the Middle East and exited US troops from Syria. The Assads must have been whooping with joy. Last night he slammed tariffs on Turkey for going too far and demanding an immediate ceasefire to the war he pretty much created on his own. Does his left brain know what right brain has already done?
Meanwhile, the US economy has been struggling to deal with the consequences of trade war with China – the imposition of tariffs on Chinese exports has stung US consumers and the already beleaguered retail sector. Over the weekend we saw a sort of peace break out as he cancelled planned tariff hikes. The market didn’t buy it – it remains very nervous of the global economy heading for recession, largely on trade fears.
You would have thought Donald’s unpredictability might raise some questions about his leadership. Not really. Do not underestimate Donald Trump – his standing with his US electorate has barely shifted. Pulling out of middle east entanglements plays to his voters. Looking tough with China works. He can win with a 42% approval rate.
If you want to predict what’s likely to happen next – think about the 2020 US election. The peculiar maths of US elections – which means Trump can poll less votes but still win the electoral college, means the majority of US states are irrelevant. Trump knows it’s all about the key states – what rural voters in Wisconsin and Ohio think, what car workers in Michigan believe, and especially what the good voters of Pennsylvania and Arizona think.
Watch these states for clues as to what Donald does next. I guess Europe will be next in the sights – daring to do a deal with Huawei will not go down well. Time for a dose of car tariffs and comments about fraudulent German auto manufacturers… ?
Pennsylvania will be the key state – which would tickle my Uncle Jack enormously. (Jack ran away to sea as a boy from Glasgow, (can’t fault him for that) and ended up very successful and happy in the States. He was a committed Wobbly (an international socialist and member of the Industrial Workers of the World), his whole life, despite owning a magnificent estate in Pennsylvania!)
Apparently, Michael Bloomberg is considering a run for the Democrats. Might have a few thoughts on that myself… the leader of huge data and news organisation running for power. What chance of distortions there… (US readers: Sarcasm Alert.)
I spent yesterday afternoon attending the Society of Professional Economists 2019 conference. It’s amazing just how much knowledge and experience its possible to cram on to a London stage! Yesterday’s event was no exception. The themes were growth and the UK, but central banking, QE, growth and politics all came up. These are all topics I discuss regularly in the Morning Porridge – and the points raised are already colouring my thinking. (Any economists reading The Porridge who would like an introduction to SPE, https://spe.org.uk/let me know and I’ll put you in touch.
New Stuff on the Porridge Website: www.morningporridge.com
From today I’ll be posting 5 stories ever day you really should read on the Porridge Website with a bit of commentary. (The page should be up and ready by midday each day.)
Out of time, and back to the day job…
Five Things Too Read Today:
SCP – Investors loss of confidence in monetary easing comes at worrying time for the world economy
WSJ – Bond Investors Worry This Is As Good As It Gets
WSJ – Boeing’s New Chairman Is a Boardroom Force Familiar With Crisis
BBerg – WeWork Prefers JP Morgan Lifeline to a Rescue by Softbank
FT – State Street chief Crys Taraprevala: my 5 predictions for asset management in 2029