Blain’s Morning Porridge, October 7 2020 – Stimulus is Coming!

“We are not doing a wall. Does anyone have any doubt about that?”

Whatever happens… America’s economy will get a new stimulus package shortly after the election. The polls say it’s more likely to be the Democrat package. If not, it will be the slightly smaller Republican one. Fed Head Jerome Powell warned yesterday of a weakening recovery unless further aid was delivered. I loved that he called it a “slog”! That is so Morning Porridge! He also made clear that too much stimulus will not be a problem!

From an economic perspective, Trump pulling negotiations on the package looks a rather pointless delay which won’t make anyone better off or save any jobs. His tactic was clearly hoping to pin to blame on Democrat intransigence in the face of his side’s offer.  He then tweeted he’s willing to give all Americans more money “Immediately” – but it’s clearly Biden’s fault they aren’t going to get it. Subsequently he’s been tweeting about airline support.

It was political theatre. Again.

Tonight we have the spectacle of Vice President Pence take on Senator Kamala Harris – which might even be interesting in terms of how they explain why the US government isn’t delivering to struggling families and businesses.

Markets sold off a bit in surprise as Trump shot any prospect of an immediate market and economic lift in the foot. I expect stocks will quickly recover on the back of expectation the madness may soon be over. The steepening of the US yield curve – on expectations of massive deficit spending by a new Biden administration – looks like a buying opportunity. Zero interest rates and inflation averaging for ever, and effective yield curve control by the Fed should ensure it flattens back.

I have to be very careful what I write about the US election.

Over the past few months I have been on the receiving end of increasingly unfriendly emails from America. Yesterday it some chap from the City of Hicksville in the Great State of Somewhere-in-the-Middle warning me that as a “Brit” I am not qualified or permitted to comment on Trump, and how foreigners taking cheap shots at America will soon be sorted. It was a bit ranty. I replied asking if it was ok to comment on Europe or China…

I get quite a few emails from the other side of the Atlantic asking how I am so stupid as to not know that Bill Gates is leader of the Lizard Alien faction, or why I don’t understand the devasting financial reset that’s about to come, or how it’s all a conspiracy led by either Government, the Illuminati, the Jews or all three…

I love them all. They are so informative! Please, please keep them coming. They are so elegantly written and argued and full of such basic common sense. (…..)

But, while I sincerely respect the opinion of these missives and absolutely agree that they all must be gospel truth…. it is my duty, nay, my joy as a market commentator to continue to ponder any market, nation, company, event, that I care to and offer up my humble opinions upon them.

Global Markets are definitionally global.  If American’s would rather petty infantile tantrums are not a factor in global investment decisions – then elect better presidents.  If US politics are about cheap political points – then I am going to write about them… because Herr Schmidt in Frankfurt, Ms Lu in Singapore, Mrs Jones in London, Mr Takeda in Tokyo and Signora Fratelli in Milan factor US politics into their investment decisions…

As Trump was throwing his toys out the pram, there was a fascinating article in the Torygraph about the K-Curve – how the richest in society have done very well from Coronavirus, experiencing a sharp V-Shaped recovery, while the rest of US are heading for Penury.

Without wishing to upset my US conspiracy fans by suggesting taxing and eating the rich might help…. UBS’s Billionaire Insights reports that 2189 billionaires now hold collective wealth of $8.9 trillion. Over the last 30 months, the wealth of the Tech Billionaires has risen $1.8 trillion, while Healthcare Billionaires saw their wealth rise $658 bln boosted in part by Covid. You could solve Covid, Education, and Health overnight…

Back in nearly as Madsville UK…

Under the Great Barrington Declaration (google it!), here in the UK there are 5000 scientists calling for society to return to normal – warning of grave concerns about the physical and mental toll of lockdown. They warn about the devasting effects of lockdowns on public health – and pluck a number of 75,000 likely UK lockdown deaths that won’t be related to Covid. Interesting… although it makes the Guardian, you won’t find it reported anywhere on the BBC this morning..


There is crisis brewing here in the UK. A few months ago I mentioned how one of my chums was sacked from an Indian conglomerate because he refused to claim government coronavirus loans and supports for group companies that employed very few UK citizens – because he considered it fraud. His Indian boss flew into a rage when he patiently explained the UK government was not going to give him money to support his lifestyle in India.

This morning the FT reports the Gupta family has been able to claim tens of millions of pounds of UK government-guaranteed loans for just two group companies that employ just 11 people. Funnily enough, it’s not the same Indian company my mate was sacked from – that case is going to court. But the Guptas and their convoluted GFC Simec/Alliance have been on my radar for many years.

The Guptas made the claims through Greensill Capital – which just happens to employ former UK premier David Cameron. It’s as interesting a firm as the Guptas’ and is supported by Softbank. The loans were made through the UK’s Coronavirus Large Business Interruption Loan Scheme. Together the Guptas and Greensill have history – ask Swiss Investment firm GAM how it worked out for them. It beats me how they still get away with it. Oh… they are friends of Dave?

I recently took a look at a superb tidal power scheme – but walked away the moment I realised it was associated with the Guptas.

And, also in the papers, the National Audit Office has warned over £26 billion out of £38 bln of government bounce-back Covid loans for small business may be lost to fraud.

Five Things too Read This Morning

FT – Hidden joblessness threatens economic recovery in US and Europe

Thunderer – The Chancellor may be popular now but his reputation will rest on jobs

WSJ – Companies Give Up Cash Cushions To Buy Back Debt

Bberg – Brexit Talks are Stuck on Fish

Bberg – Aviation Outsider Builds Supersonic Jet for Transatlantic Flight

Out of time and back to the day job

Bill Blain

Shard Capital