I was the future once....
April 19, 2017

Mint - Blain's Morning Porridge

It's the morning after the morning before and apparently we're already heartily sick of politics. The BBC wheeled out no less an authority on UK electoral trends and the significance thereof than Brenda, a pensioner from Bristol, to tell us how terrible it is we're having another election. Classic TV perhaps, but informed and incisive reporting it was not.

Get used to it – the underlying vibe of the UK election is likely to be profoundly negative. We shall have to cut through the breakfast TV pap to get to the facts and the direction of the next seven weeks. I doubt we can trust the polls anymore. Politics is just not terribly fashionable and has become the catch-all blame for everything. I guess that's the zeitgeist, why the current crop of politicos are so unimpressive, and the rise of populism.

Markets aren't particularly worried about the UK. France elections, tensions in Korea and Syria, the general vagueness about which direction is up or down are more the issues du jour, and government bond markets have been trading like it's a flight to quality moment…pushing down rates and distorting financial asset values across the investment surface.

So why am I worried about the UK election? The one thing that strikes me is how unreliable political expectations have become – in the last few years we've seen a whole run of extraordinary political results here in the UK. We've seen the first peacetime coalition government in the UK from 2010-2015, the independence referendum in Scotland and the Scottish National Party subsequently becoming a one-party state within the UK, the rise of the UK Independence Party and amateur politics, opinion concentrated on the few charismatic populists like Nigel Farage and BoJo (former mayor of London Boris Johnson), and the Brexit referendum completely wrong-footing the then prime minister David Cameron and consigning him and his chums into political oblivion.

Politics has become extraordinary and you would think that that would attract the brightest and the best...but it hasn't. For some reason politics has become disreputable...and surprising. We don't like surprises when it comes to markets...they drive uncertainty and flight.

And now we've got Theresa May – who, let's be honest, is still something of a mystery, playing the Game of Politics like she was a Lannister born and bred… (the Lannisters are the incredibly cruel baddies from Game of Thrones lest you've been hiding in a saltmine the past six years...and yes I was tempted to use a Tyrion Lannister quote this morning, but resisted.)

What if she's got it wrong? Now that would be interesting… but…the serious UK analysis is pointing to something of a "seal-clubbing" of Labour in prospect.

Friends within Labour say they are "concerned"; the trendies in safe London seats see it as an opportunity to get rid of Corbyn and come back to a "good clean game" in 2022! Heaven help us till then. However, more informed reports think the Labour heartlands oop North (which just happen to be largely Brexit) could relay some short sharp shocks.

But….what happens if Labour manage to hold on? Corbyn's apparently random thoughts and semi-policies do after all appeal to the young and the motivated. The Liberals (bless 'em) remain convinced they represent the soul of the nation and expect a resounding swing of votes their way because they are clean, middle class and terribly serious. Their earnest message that Brexit can be unwound and it's never too late to repent of last year's referendum will no doubt be as successful as Liberal politics last century. Expect them to add a few seats and be crushingly disappointed while claiming: "well actually we've done very well, our three new MPs represent the whole country telling the country we are right and they are wrong."

What happens if the Liberals successfully reverse their slaughter at the 2015 election – and re-establish themselves in the South and South-West as the credible Anti-Hard-Brexit opposition?

And what of the Tories? The consensus is it's a nice play from Theresa May – get five years behind her before Brexit starts to bite. Real wages are likely to decline as import inflation rises and confidence remains brittle – why wait to see if it bites and raises doubts? The country has become reconciled to the fact that Brexit is going to happen, none of the bad things the remainers assured us would happen have, and the Labour party is so far below in the polls its become an irrelevance. Why not pull the trigger?

What if she was wrong? What if she loses her 17-seat majority? What if the country becomes ungovernable? Who replaces her? The Buffoon or the Dodgy? There won't be a coalition with the Liberals or the SNP. What if the Scots increase their vote and use it to justify a further referendum? What if she blows her credibility just as the country heads into serious Brexit negotiations after the German elections?

All these "what ifs" above are fearful imaginings of what may or may not be…but in terms of UK strategy they have to be considered...while the media might not think so, the next seven weeks are worth watching..

Back in the real world...we really should think about France, the US Federal Reserve balance sheet and a host of other stuff...which I guess will have to wait until tomorrow..

Out of time

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners





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Mint - Blain's Morning Porridge

It's the morning after the morning before and apparently we're already heartily sick of politics. The BBC wheeled out no less an authority on UK electoral trends and the significance thereof than Brenda, a pensioner from Bristol, to tell us how terrible it is we're having another election. Classic TV perhaps, but informed and incisive reporting it was not.

Get used to it – the underlying vibe of the UK election is likely to be profoundly negative. We shall have to cut through the breakfast TV pap to get to the facts and the direction of the next seven weeks. I doubt we can trust the polls anymore. Politics is just not terribly fashionable and has become the catch-all blame for everything. I guess that's the zeitgeist, why the current crop of politicos are so unimpressive, and the rise of populism.

Markets aren't particularly worried about the UK. France elections, tensions in Korea and Syria, the general vagueness about which direction is up or down are more the issues du jour, and government bond markets have been trading like it's a flight to quality moment…pushing down rates and distorting financial asset values across the investment surface.

So why am I worried about the UK election? The one thing that strikes me is how unreliable political expectations have become – in the last few years we've seen a whole run of extraordinary political results here in the UK. We've seen the first peacetime coalition government in the UK from 2010-2015, the independence referendum in Scotland and the Scottish National Party subsequently becoming a one-party state within the UK, the rise of the UK Independence Party and amateur politics, opinion concentrated on the few charismatic populists like Nigel Farage and BoJo (former mayor of London Boris Johnson), and the Brexit referendum completely wrong-footing the then prime minister David Cameron and consigning him and his chums into political oblivion.

Politics has become extraordinary and you would think that that would attract the brightest and the best...but it hasn't. For some reason politics has become disreputable...and surprising. We don't like surprises when it comes to markets...they drive uncertainty and flight.

And now we've got Theresa May – who, let's be honest, is still something of a mystery, playing the Game of Politics like she was a Lannister born and bred… (the Lannisters are the incredibly cruel baddies from Game of Thrones lest you've been hiding in a saltmine the past six years...and yes I was tempted to use a Tyrion Lannister quote this morning, but resisted.)

What if she's got it wrong? Now that would be interesting… but…the serious UK analysis is pointing to something of a "seal-clubbing" of Labour in prospect.

Friends within Labour say they are "concerned"; the trendies in safe London seats see it as an opportunity to get rid of Corbyn and come back to a "good clean game" in 2022! Heaven help us till then. However, more informed reports think the Labour heartlands oop North (which just happen to be largely Brexit) could relay some short sharp shocks.

But….what happens if Labour manage to hold on? Corbyn's apparently random thoughts and semi-policies do after all appeal to the young and the motivated. The Liberals (bless 'em) remain convinced they represent the soul of the nation and expect a resounding swing of votes their way because they are clean, middle class and terribly serious. Their earnest message that Brexit can be unwound and it's never too late to repent of last year's referendum will no doubt be as successful as Liberal politics last century. Expect them to add a few seats and be crushingly disappointed while claiming: "well actually we've done very well, our three new MPs represent the whole country telling the country we are right and they are wrong."

What happens if the Liberals successfully reverse their slaughter at the 2015 election – and re-establish themselves in the South and South-West as the credible Anti-Hard-Brexit opposition?

And what of the Tories? The consensus is it's a nice play from Theresa May – get five years behind her before Brexit starts to bite. Real wages are likely to decline as import inflation rises and confidence remains brittle – why wait to see if it bites and raises doubts? The country has become reconciled to the fact that Brexit is going to happen, none of the bad things the remainers assured us would happen have, and the Labour party is so far below in the polls its become an irrelevance. Why not pull the trigger?

What if she was wrong? What if she loses her 17-seat majority? What if the country becomes ungovernable? Who replaces her? The Buffoon or the Dodgy? There won't be a coalition with the Liberals or the SNP. What if the Scots increase their vote and use it to justify a further referendum? What if she blows her credibility just as the country heads into serious Brexit negotiations after the German elections?

All these "what ifs" above are fearful imaginings of what may or may not be…but in terms of UK strategy they have to be considered...while the media might not think so, the next seven weeks are worth watching..

Back in the real world...we really should think about France, the US Federal Reserve balance sheet and a host of other stuff...which I guess will have to wait until tomorrow..

Out of time

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners



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