Blain's Morning Porridge - Back in the Office - what did I miss?
Blain’s Morning Porridge – August 21st 2017
“In yacht racing, there is no second… ”
For the avoidance of doubt – the Morning Porridge is market commentary, it is not investment advice…
After spending the last 14 days on my boat, I’m looking forward to getting back to real life!
Sadly, today is going to be spent wading through 2 weeks plus of emails, finding out what’s happening on the trades I was working on, and catching up on what’s really going on behind the global economy.
Even in the middle of the Irish Sea it was impossible to ignore the noise and signals of US political instability/uncertainty, and pick up on the underlying fears across financial assets as markets assess worst-case scenarios.
For worriers about the US - do the next few weeks see General Kerry enforce stability and re-engagement or does the Washington vs Presidency standoff deepen? Is there a chance for reconciliation? Just how freaked up is the Republican Party? What are the prospects for the genuinely market positive policies of tax-reform and fiscal stimulus/infrastructure spending? These are some of the issues markets are pricing.
With further resignations rumoured, it feels pretty bleak – which explains why the snoozepapers are giving column inches to doomsters and their dire predictions of a stock market debacle on the horizon. Until the numbers suggest otherwise I still reckon a correction in stocks during Q4 will be a massive buying opportunity… But at the moment it’s hard to be convinced about anything.
As for bonds? Who can say? I’ve got to go check credit spreads - but it feels like they are unbalanced, unrewarding and an outbreak of common sense is unanticipated…
What about the rest of the world? Is Draghi likely to unveil his grand plans for balance sheet wind-down and normalisation at this week’s Jackson Hole central banking gab-fest? Based on previous form its unlikely – let’s wait to see what comes through at next ECB meet. Keep em guessing is likely to remain his motto..
So what are the prospects for financial assets?
Are we worrying to much about perceived threats like inflation and the consequences of too low interest rates? Oh.. markets do love to worry.. Or is the reality one of a stronger global economy than the news portrays? That’s what I want to work out this week…
Meanwhile, I come back to my desk facing lots of questions about a Bloomberg story relating to morning comments: “Survival of Broker’s Morning Notes in Balance as MiFID Looms”. The author, John Glover, suggests MiFID will kill market commentaries such as the Morning Porridge, but also others. I’ve always taken the view the Porridge is a commentary, and occasionally we get to stick our Archer fingers at some of the more stupid things happening in markets. We play a role keeping it honest. If the regulators are going to ban market participants from freely expressing views on the markets, then they become less safe by being less questioned.
In fact, we believe informed commentary on markets and trends is so important we’re talking about expanding our service with a dedicated site containing written and video content that is commentary, but not advice.
But, apparently the law is the law is the law – and the regulatory guardians of the markets say they are set to come down like a ton of vengeful harpies if brokers dare are to comment… It smaks of commentary in exchange for trades. That is nonsense. As brokers we get trades because we provide the best prices and the best execution. No one loses money in return for their daily helping of morning porridge.
So let me ask the readership… How much would you be willing to pay per year for the morning porridge? If a second tier French bank is charging $250k for access to it’s research portal under MiFID… what is the porridge worth? Answers by reply please..
Meanwhile, I’ve spent the last two weeks on the sea. For any readers that contributed to my Fastnet Charity appeal, I’ve attached a report on the race. I’m delighted to report we finished - but our position was middle of the third quartile - not brilliant, but great fun.
After the race She-who-is-now-Mrs-Blain and I sailed back along the Southern English Riviera and discovered all kinds of fascinating things like Salcombe Gin and Marmalade, and just how tasty the lobsters off Portland are. We also managed to catch ourselves in a Summer Gale - which was less than ideal. It made the Fastnet look tame…
Still time to contribute: http://www.sail4cancer.org/fastnet-2017-bill-blain
Full Service resumes tomorrow!
Bill Blain