Escape from Elba
April 12, 2017

Mint - Blain's Morning Porridge

This morning I'd like to start with a little ditty on Napoleon's escape from Elba and return to France in 1815.

The Monster has escaped from his banishment..

The Ogre has landed at Cape Juan…

The Tyrant is at Lyons…

Bonaparte is advancing – it is impossible he will reach Paris…

Napoleon will arrive in Paris tomorrow…

The Emperor is at Fontainebleau..

His Majesty The Emperor has arrived at the Tuileries. Nothing can exceed the universal joy!

"Le Spread" is the big talking point this morning. France vs Germany has ballooned out to 75 basis points-plus as it looks increasingly possible that Jean-Luc Melenchon, (the Jeremy Corbyn of France according to some watchers) might just crash his way into the presidential run-off.

The latest polls show him ahead of the discredited Fillon and trailing Le Pen and Macron by some 5-6 percentage points. He's doing well in the post-debate polls and has momentum. If he closes that gap, France could face a binary choice between unreconstructed communism and unrestrained fascism. (Although, to be fair, the polls suggest it will be Le Pen who gets shunted out in the first round if JLM's meteoric rise continues.)

JLM is shaking up Paris. Le Figaro reports on a French poll saying that if he wins 8 percent of Frenchmen will leave the country, while a further 12 percent would actively consider it. Where are they all going to go? Kensington is already full.

Melenchon should be a sensible politician's dream. He's a modern yet unreconstructed communist. He's going to bash the banks, redistribute wealth, shorten the working week, reflate the economy and do half a dozen other impossible things before breakfast.

Just about everything he says and proposes sounds pretty outrageous and unfundable to sensible Parisians. But…Paris is not France, and that's why he is going down so well with large parts of the French electorate. (Back here in Blighty, my own well brought up and somewhat educated kids think Jeremy Corbyn has some "really good policies", "cares" and would "sort the country". Heavens above...whom the gods wish to destroy they first give children who get given the vote!)

A rough analysis of his policies from my Macro Man Martin Malone – they are truly extraordinary - suggests there is a whiff of Paris '68 in the air and it might reignite a few left wing youthful hankerings. Like moths to the flame we are drawn.

Of course there is no way a sensible country could ever elect a Melenchon...er… Anglo Saxons should never underestimate the French. And when our western subsidiary state elected Trump and we decided to stick the finger to Europe...well, populist politics rears its head in extraordinary ways.

All that said, even if JLM makes it to the second round, I'm blithely assured he can't possibly win...by my Paris chums…which is why I remind everyone how Napoleon landed with 100 men in March 1815 and seized the throne back a month later. Just saying.

How to trade it? It was just a month ago I was saying wider French spreads were a buying opportunity. I still go with that – this is just an even better opportunity. Long France into the first round. If it's Le Pen and Macron, then Macron will win the second. If it's JLM and Macron, then Macron will win the second. In both cases France will tighten. I think.

Meanwhile, as South Korean credit default spreads gap wider as the US fleet approaches… I'm wondering what the future holds. Now it might have been the Martini in Dukes last night, but I'm rather thinking Tesla and Elon Musk might just be what's needed to save the United Kingdom. I've decided I don't particularly care or think it relevant that Tesla sold 75k cars globally last year while General Motors sold over 3.25 million in North America. Unimportant.

The key thing is Tesla is about power. Battery power. Capacitance is the future. Solve the problem of how to store energy and the future changes for the better. (And they are working on making solar power more efficient.)

If the 16th and 17th centuries were about burning wood for fuel, and the 18th and 19th centuries saw coal become the driver of industrialization, then the 20th century was the age of oil. It's so over. The 21st century will be the age of energy – efficiently stored and distributed.

Imagine what the future could be – unproductive deserts turned to solar energy farms shipping power around the globe, hydro and thermal energy distributed around the globe by efficient sub-sea grids, the water crisis solved though graphene osmosis, the oceans cleaned by nanobots, and unlimited power available through the capacitance revolution. Well, it might just happen. It's a better thing to think about this morning that what might kick off in Korea over Easter.

And how will that help the UK? When wee Nicola Krankie (aka Scottish first minister Nicola Sturgeon) realizes the "massive" new oil field she's found off the Shetlands is actually yesterday's tech, is too expensive to ever make sense when the age of oil is over, she might just be smart enough to realize Scotland's true wealth will be in renewables! That means she will need investment and partnership. Not particularly with Europe, but her neighbours in the UK, Iceland and Norway – none of which is in Europe!

Some recent work we've done on bonds guaranteed by the Scottish government lead us to conclude there is absolutely zero interest from global investors to invest in Scotland at present. Fraid so. The outlook for Scottish projects looking for dosh is bleak. The lack of clarity and the ongoing threats of Nevereferendum mean no sensible investor is willing to risk cash. No one thinks Scotland will go immediately bust at independence, but why invest in a country where you can't be certain of the credit? (For more on this – give me a call.)

On that unhappy note…

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners





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Mint - Blain's Morning Porridge

This morning I'd like to start with a little ditty on Napoleon's escape from Elba and return to France in 1815.

The Monster has escaped from his banishment..

The Ogre has landed at Cape Juan…

The Tyrant is at Lyons…

Bonaparte is advancing – it is impossible he will reach Paris…

Napoleon will arrive in Paris tomorrow…

The Emperor is at Fontainebleau..

His Majesty The Emperor has arrived at the Tuileries. Nothing can exceed the universal joy!

"Le Spread" is the big talking point this morning. France vs Germany has ballooned out to 75 basis points-plus as it looks increasingly possible that Jean-Luc Melenchon, (the Jeremy Corbyn of France according to some watchers) might just crash his way into the presidential run-off.

The latest polls show him ahead of the discredited Fillon and trailing Le Pen and Macron by some 5-6 percentage points. He's doing well in the post-debate polls and has momentum. If he closes that gap, France could face a binary choice between unreconstructed communism and unrestrained fascism. (Although, to be fair, the polls suggest it will be Le Pen who gets shunted out in the first round if JLM's meteoric rise continues.)

JLM is shaking up Paris. Le Figaro reports on a French poll saying that if he wins 8 percent of Frenchmen will leave the country, while a further 12 percent would actively consider it. Where are they all going to go? Kensington is already full.

Melenchon should be a sensible politician's dream. He's a modern yet unreconstructed communist. He's going to bash the banks, redistribute wealth, shorten the working week, reflate the economy and do half a dozen other impossible things before breakfast.

Just about everything he says and proposes sounds pretty outrageous and unfundable to sensible Parisians. But…Paris is not France, and that's why he is going down so well with large parts of the French electorate. (Back here in Blighty, my own well brought up and somewhat educated kids think Jeremy Corbyn has some "really good policies", "cares" and would "sort the country". Heavens above...whom the gods wish to destroy they first give children who get given the vote!)

A rough analysis of his policies from my Macro Man Martin Malone – they are truly extraordinary - suggests there is a whiff of Paris '68 in the air and it might reignite a few left wing youthful hankerings. Like moths to the flame we are drawn.

Of course there is no way a sensible country could ever elect a Melenchon...er… Anglo Saxons should never underestimate the French. And when our western subsidiary state elected Trump and we decided to stick the finger to Europe...well, populist politics rears its head in extraordinary ways.

All that said, even if JLM makes it to the second round, I'm blithely assured he can't possibly win...by my Paris chums…which is why I remind everyone how Napoleon landed with 100 men in March 1815 and seized the throne back a month later. Just saying.

How to trade it? It was just a month ago I was saying wider French spreads were a buying opportunity. I still go with that – this is just an even better opportunity. Long France into the first round. If it's Le Pen and Macron, then Macron will win the second. If it's JLM and Macron, then Macron will win the second. In both cases France will tighten. I think.

Meanwhile, as South Korean credit default spreads gap wider as the US fleet approaches… I'm wondering what the future holds. Now it might have been the Martini in Dukes last night, but I'm rather thinking Tesla and Elon Musk might just be what's needed to save the United Kingdom. I've decided I don't particularly care or think it relevant that Tesla sold 75k cars globally last year while General Motors sold over 3.25 million in North America. Unimportant.

The key thing is Tesla is about power. Battery power. Capacitance is the future. Solve the problem of how to store energy and the future changes for the better. (And they are working on making solar power more efficient.)

If the 16th and 17th centuries were about burning wood for fuel, and the 18th and 19th centuries saw coal become the driver of industrialization, then the 20th century was the age of oil. It's so over. The 21st century will be the age of energy – efficiently stored and distributed.

Imagine what the future could be – unproductive deserts turned to solar energy farms shipping power around the globe, hydro and thermal energy distributed around the globe by efficient sub-sea grids, the water crisis solved though graphene osmosis, the oceans cleaned by nanobots, and unlimited power available through the capacitance revolution. Well, it might just happen. It's a better thing to think about this morning that what might kick off in Korea over Easter.

And how will that help the UK? When wee Nicola Krankie (aka Scottish first minister Nicola Sturgeon) realizes the "massive" new oil field she's found off the Shetlands is actually yesterday's tech, is too expensive to ever make sense when the age of oil is over, she might just be smart enough to realize Scotland's true wealth will be in renewables! That means she will need investment and partnership. Not particularly with Europe, but her neighbours in the UK, Iceland and Norway – none of which is in Europe!

Some recent work we've done on bonds guaranteed by the Scottish government lead us to conclude there is absolutely zero interest from global investors to invest in Scotland at present. Fraid so. The outlook for Scottish projects looking for dosh is bleak. The lack of clarity and the ongoing threats of Nevereferendum mean no sensible investor is willing to risk cash. No one thinks Scotland will go immediately bust at independence, but why invest in a country where you can't be certain of the credit? (For more on this – give me a call.)

On that unhappy note…

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners



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