Going the wrong way on a one-way track
July 10, 2017

Mint - Blain's Morning Porridge

Step back from the mayhem (ie, the fear and panic inspired by a a quarter point rise in bond yields over recent sessions) and accept the world is changing. Embrace the growing sense the new hawkish central banking stance means normalization and an end to the market distortions that have made markets oh so profitable these past few years – all of which might mean, perhaps, real money will flow into a real economy rather than financial assets. Good thing! A boom in investment spending…tick box. Sell bonds – buy stocks!.

If only it were so simple. We'd like to think it's a no-brainer – the improved outlook for continued global growth in a market where rates are under pressure but stocks continue to boom is attractive, but not without challenge.

One threat is the much expected "reset": a potential short/sharp correction in global stocks to reflect the degree to which "extraordinary monetary policy" inflated all financial assets. However, so many people now expect it (I put my money on early October) that I now begin to doubt it will happen. Maybe… let's see.

The second problem is things never happen the way you expect. Politics and reality tend to intrude. After the G20 gabfest in Hamburg over the weekend.. consider the UK… it was all going so well a few months ago.. and then…

I spent a large part of the weekend bringing down the Lobster population of the Isle of Wight with one of my "remainer" chums. He's a smart pragmatic entrepreneur with a good sense of what works, and what won't. He wasn't a happy chap last year - immediately working out in clear cold logic what it would cost his group of companies in lost revenues, growth projections - and tellingly forgone employment plans. He warned the process would be a nightmare.

Even while the UK was apparently basking in a post-Brexit economic glow after the EU referendum last year, he was warning about the practicalities and likely impact across all business. Typical "Remoaner" I called him. Now he's an uber-bear, reckons it's even worse that he expected, and is feeling more than a tad vindicated by recent events.

Economic growth is a function of many things, but a major one is confidence, which is strongly influenced by politics. While the UK government has become something of a national embarrassment as it scrambles to cut deals (and generally ignores the ticking clock of Brexit negotiations), UK data and numbers have dipped into the catastrophe zone.

I even heard the unthinkable on the news last night - some politician (wannabe Liberal Democrat party leader the young and up-and-coming Vince Cable) saying perhaps Brexit won't happen. A few weeks ago such heresy would have seen him lynched!

That train has left the station and is headed who knows where... but what's the plan to keep us on track? Where was Theresa May at the G20 Summit? Perhaps I wasn't paying attention - maybe she wasn't there at all. (Actually she was, but you'd need to dig deep to realize it). Reading through the reports of what Putin said, who Macron charmed, who El Donald insulted, and how much Merkel shrugged...I didn't read May's name once.

Since the G20 agenda was about the threat of protectionism, you would have thought the premier of a country that has staked its very existence on free trade would be there front and centre. Is there any evidence she was there? Guess what.. the UK has become a geopolitical and economic irrelevance. (OK...I did read something like she declined to go into "detail on differences over free trade and other areas of potential divergence.." whatever that means. Sounds about par for May's ability to deal with realpolitik.)

How to restore UK confidence? As we're in a political mess we have to fix the politics. About the only thing anyone agrees on is there is nobody, absolutely nobody, on the Conservative bench who isn't utterly discredited as a crass opportunist, backstabbing frenemy, nutter, bigger nutter, nutjob, inexperienced, or just not PLU (people like us). Either the prospects look so bad none of the current crop of Tory lizards is willing to climb to the top of the greasy pole, or the party is too split to make the collective decision for them. (Tick both these boxes.)

So, instead, the agenda spin we're being fed is not a positive "how to make it better", but the negative "how much worse it will be under Labour.."

The polls are telling us a snap election tomorrow would put Corbyn in power. Would/could that be so bad? (Rhetorical question - don't answer it..) If the Tories have achieved one thing since losing the election, it's successfully implanting the mindworm that Diane Abbot as Home Secretary is such a frightening prospect that's it's better the country continues to dance around the hapless Theresa May as the only hope...

The only hope is sometimes a very bad hope...but hope is never a strategy. Dancing round unsatisfactory failure is not a recipe for recovery in national confidence.

To reverse collapsing UK confidence something has to change. I'd simply suggest biting the bullet now, replacing the failed regime and starting again makes more sense than the current hopeless dither spiral. End of political lecture.

At some point today I'll be writing to the Financial Ombudsman to complain about my bank losing some of my money. I spoke to them, ranted at them, and eventually discovered what had gone wrong – they shrugged and admitted procedures had not been followed. I made an official complaint, at which point they told me they had eight weeks to respond, and if I wasn't happy I could then complain to the Financial Ombudsman.

Eight weeks later and I haven't received a reply to my letter, although I've been told they are investigating it. I don't think it's right banks are hiding behind the Ombudsman as their customer complaints division…so I'm going to make an absolute song and dance about this.

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners





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Mint - Blain's Morning Porridge

Step back from the mayhem (ie, the fear and panic inspired by a a quarter point rise in bond yields over recent sessions) and accept the world is changing. Embrace the growing sense the new hawkish central banking stance means normalization and an end to the market distortions that have made markets oh so profitable these past few years – all of which might mean, perhaps, real money will flow into a real economy rather than financial assets. Good thing! A boom in investment spending…tick box. Sell bonds – buy stocks!.

If only it were so simple. We'd like to think it's a no-brainer – the improved outlook for continued global growth in a market where rates are under pressure but stocks continue to boom is attractive, but not without challenge.

One threat is the much expected "reset": a potential short/sharp correction in global stocks to reflect the degree to which "extraordinary monetary policy" inflated all financial assets. However, so many people now expect it (I put my money on early October) that I now begin to doubt it will happen. Maybe… let's see.

The second problem is things never happen the way you expect. Politics and reality tend to intrude. After the G20 gabfest in Hamburg over the weekend.. consider the UK… it was all going so well a few months ago.. and then…

I spent a large part of the weekend bringing down the Lobster population of the Isle of Wight with one of my "remainer" chums. He's a smart pragmatic entrepreneur with a good sense of what works, and what won't. He wasn't a happy chap last year - immediately working out in clear cold logic what it would cost his group of companies in lost revenues, growth projections - and tellingly forgone employment plans. He warned the process would be a nightmare.

Even while the UK was apparently basking in a post-Brexit economic glow after the EU referendum last year, he was warning about the practicalities and likely impact across all business. Typical "Remoaner" I called him. Now he's an uber-bear, reckons it's even worse that he expected, and is feeling more than a tad vindicated by recent events.

Economic growth is a function of many things, but a major one is confidence, which is strongly influenced by politics. While the UK government has become something of a national embarrassment as it scrambles to cut deals (and generally ignores the ticking clock of Brexit negotiations), UK data and numbers have dipped into the catastrophe zone.

I even heard the unthinkable on the news last night - some politician (wannabe Liberal Democrat party leader the young and up-and-coming Vince Cable) saying perhaps Brexit won't happen. A few weeks ago such heresy would have seen him lynched!

That train has left the station and is headed who knows where... but what's the plan to keep us on track? Where was Theresa May at the G20 Summit? Perhaps I wasn't paying attention - maybe she wasn't there at all. (Actually she was, but you'd need to dig deep to realize it). Reading through the reports of what Putin said, who Macron charmed, who El Donald insulted, and how much Merkel shrugged...I didn't read May's name once.

Since the G20 agenda was about the threat of protectionism, you would have thought the premier of a country that has staked its very existence on free trade would be there front and centre. Is there any evidence she was there? Guess what.. the UK has become a geopolitical and economic irrelevance. (OK...I did read something like she declined to go into "detail on differences over free trade and other areas of potential divergence.." whatever that means. Sounds about par for May's ability to deal with realpolitik.)

How to restore UK confidence? As we're in a political mess we have to fix the politics. About the only thing anyone agrees on is there is nobody, absolutely nobody, on the Conservative bench who isn't utterly discredited as a crass opportunist, backstabbing frenemy, nutter, bigger nutter, nutjob, inexperienced, or just not PLU (people like us). Either the prospects look so bad none of the current crop of Tory lizards is willing to climb to the top of the greasy pole, or the party is too split to make the collective decision for them. (Tick both these boxes.)

So, instead, the agenda spin we're being fed is not a positive "how to make it better", but the negative "how much worse it will be under Labour.."

The polls are telling us a snap election tomorrow would put Corbyn in power. Would/could that be so bad? (Rhetorical question - don't answer it..) If the Tories have achieved one thing since losing the election, it's successfully implanting the mindworm that Diane Abbot as Home Secretary is such a frightening prospect that's it's better the country continues to dance around the hapless Theresa May as the only hope...

The only hope is sometimes a very bad hope...but hope is never a strategy. Dancing round unsatisfactory failure is not a recipe for recovery in national confidence.

To reverse collapsing UK confidence something has to change. I'd simply suggest biting the bullet now, replacing the failed regime and starting again makes more sense than the current hopeless dither spiral. End of political lecture.

At some point today I'll be writing to the Financial Ombudsman to complain about my bank losing some of my money. I spoke to them, ranted at them, and eventually discovered what had gone wrong – they shrugged and admitted procedures had not been followed. I made an official complaint, at which point they told me they had eight weeks to respond, and if I wasn't happy I could then complain to the Financial Ombudsman.

Eight weeks later and I haven't received a reply to my letter, although I've been told they are investigating it. I don't think it's right banks are hiding behind the Ombudsman as their customer complaints division…so I'm going to make an absolute song and dance about this.

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners



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