The Bear Signals are Aligning.

A very quick look at concerns that are building rapidly.

Background :-

Europe - Who is in charge?
Russia vs RoW - Slow escalation.
UK - Fracturing political structure.
Middle East - Deja Vu
Hong Kong - Riots with many remembering/frightened of a Tianenmen Square
DM Economies - Rolling over.

Price action :-

High Yield prices yukky.
Small stocks leading the main indices lower.
UK London house prices off.
UK stock shocks increasing (Tesco, Balfour Beatty) - Leveraged expectations being caught out.
Usual EM stress points breaking (watching Turkey).
DM and EM both moving lower (haven’t seen that in a while).
Corporate bond market liquidity a real worry.
IPO launches rapidly going negative.
Commodity prices still falling.
NZD melt down - separate issue but pretty sure John Key knows the background carry concerns so is just helping the NZD on its natural way
European markets opening down despite late NY rally

This is beginning to smell like a typical all round September/October risk dump. So this permagoldbear even thinks he'll buy gold and JPY - and that's saying something!

More Golf Balls

The Ryder Cup is back and once again has me wondering what golf is all about. Don’t get me wrong, I have been a member of a golf club myself and have wandered the fairways only to come off the other end with regular feelings of despondency only rarely spiked with ones of satisfaction. But that satisfaction is itself questioned as my achievement has hardly been through the achievement of a goal I have set myself, but the achievement of a goal set by others - those that set the rules in the first place. Golf is like a drug, it messes you up, wastes hours, turns your brain to mush but now again teases you with enough of a high to want to have a another go at it.

At the risk (no, i mean intention) of upsetting the purist it is time that the rules of the Royal and Ancient are dramatically updated to produce a sport which is not only more fun to play but also to watch as it is currently only one level up from watching snooker in black and white.

There appears to be some irony in what golf clubs have become. Despite their throwbacks to grand upper-class institutions, with their interior design strongly nodding towards Victorian hunting lodges (even if they are located in 1980s brick supermarket style buildings) and with their inane rules that challenge those of the most peculiar of English public schools, most of the cars in the carparks around here are taxis. The drivers are not delivering, they are playing.

With the number of players still falling (one of our local ones has closed down and returned to arable land) it is probably time to bust down the doors of the establishment and introduce our own new order and to do so I will present them in the format of my own dream golf club -

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Welcome to 'Polemic Dales'. Golfing as it should be. 

Dress code. No garb allowed bearing diamonds, checks or the words Teitlist or Ping. In fact no golf related words allowed at all. Any other garb allowed.

The Rules -

Rule 1 - No w@nkers.
Rule 2 - Only 7 rules.
Rule 3 - Bad shots to be greeted with howls of derision from fellow players rather than smug suggestions for improvement or sympathetic hissed intakes of breath.
Rule 4 - No out of bounds.
Rule 5 - Overtaking allowed, overtaken party to keep clear and it is up to them if they wish to take cover or not.
Rule 6 - Use of trackable balls (lent out free at reception) compulsory.
Rule 7 - Any type of club allowed, even ones you have invented (including snooker cues for the greens).

New game play variants -

Foot golf - We’ve been beaten to it already see here.
Speed golf - It's not the number of shots that count but the time you can complete all holes in. Can be expanded to take in cycle-golf.
Limited shot golf - You only have as many shots as the par for the course. Your brass plaque is pinned in the ground at the furthest point reached and is only moved on once you improve upon it.
Only par golf - You can move on to the next hole if you parred the previous one, otherwise it's back to the beginning after a 20 minute time out in the bar.  We would suggest each course has at least ten first holes. The 18th hole will have a rarely used champagne bar off the green.
Cross country pub to pub golf - Having tried this I can only say that it is brilliant.
Throwing golf - Not a master of the club? You can throw the ball or gently bowl it on the greens.
Mortar golf - Golf ball diameter small mortars are used to propel the balls. It is up to players to set the trajectory and chose the size of the mortar charge.
Drone ball - For the young tech-savvy, UAVs (without camera aid) are used to fly and drop the ball. The operator can only stand at the point of ball pick up and use line of site.

The Committee -

The following will be excluded. Middle ranking accounts managers with a penchant for petty rules. Retired company directors. Anyone who drives a Lexus or  Jaguar, or who's last holiday was a cruise.

Club House -

No tartan to be visible, no green in the carpets, no wood cladding, no dress code. Women not only allowed but compulsory. Michelin restaurant attached onsite at one end, BBQ grill the other. Large night club attached with top DJs in the evening (these places are miles from anywhere built up so no noise complaint problems). Maitre’d who is really good at his job, knows all members and introduces them to each other so they get to know each other. Staff to be polite and helpful and not tell stories about their time in the war/driving coaches/playing golf/running a bed and breakfast. Free shuttle bus to take members home to avoid drink-driving problem.

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Of course the club would welcome any other fun suggestions. If your response to the above is one of disgust and a  "Sorry sir, but it's tradition" - Well so was slavery, but we managed to change that with the times.

The iPhone6 Songs

The Apple woes don't seem to be letting up. I was just walking past an Apple store and I'm sure I heard this coming from the iPhone6 Stand.

(Apologies to Simple Minds for obliterating one of their best ever songs)




The iPhone6 Song -


Hey, hey, hey, hey
Ooh, oh

Won't you come and buy me?
I’m alone in the store you know it baby
I’ll sell you my dreams
Though I’m becoming a mess inside and out

Though IOS8 may turn your screen dark
Think of the upgrades we're working on
But slow change may pull us apart
When the light goes out in your heart, baby

Don't you forget about me
Don't, don't, don't, don't
Don't you forget about me

Don’t pick Samsung above me.
Look my way, please love me
But trust keeps falling, trust keeps falling
Down, down, down

Will you recognize me?
Call my name or walk on by
My stock keeps falling, stock keeps falling
Down, down, down, down

Hey, hey, hey, hey
Ooh, oh

Don't you try to pretend
I’m not the best, I'll win in the end
I'll try to stay flat and connect to your networks
Vanity and security.

Don't you forget about me
I’m stealing your data, you know it baby
Repair stores going to take me apart
Put my screen back together at last, baby

Don't you forget about me
Don't, don't, don't, don't
Don't you forget about me

As you walk on by
Will you call my name?
As you walk on by
Will you call my name?
When you walk away

Or will you walk away?
Will you walk on by?
Come on, call my name
Will you call my name?

iPhone, blah blah blah blah.
When you walk on by
And forget my name


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And to follow that, with gratitude to commenter 'C', The Outsiders and American Breed, I have lifted this from below -

Bend me, shape me.



You are all the mobile I need
And baby you know it
(Know it, know it, know it)
You can make this beggar a king
A clown or a poet
(Poet, poet, poet)
I'll give you all that I own
You got me standing in line
Out in the cold
Pay me some mind

Bend me, shape me
Anyway you want me
Long as you milk me
It's all right

Bend me, shape me
Anyway you want me
You got the power to turn off the light

Everybody tells me I'm wrong
To want you so badly
(Badly, badly, badly)
But there's a force driving me on
I follow it gladly
(Gladly, gladly, gladly)
So let them laugh I don't care
'Cause I got nothing to hide
All that I want is you by my side

Bend me, shape me
Anyway you want me
Long as you milk me
It's all right

Bend me, shape me
Anyway you want me
You got the power
To turn off the light

Yeah, bend me, shape me
Anyway you want me
Long as you milk me
It's all right

Bend me, shape me
Anyway you want me
You got the power
To turn off the light

Noise over Substance

Is it possible to over-analyse a market? What is the benefit of dissecting every nuance of every flutter? I ask because the number of man-hours consumed in watching, interpreting and (let’s be honest) guessing what the shape of the forward yield curves in the major economies of this world are going to be is staggeringly, STAGGERINGLY large. And to what use?

The Fed signalled over a year ago that the taps were going to be slowly turned off when it came to QE and since that point the extrapolationistas have been waving their rulers or, in the case of yield curve analysts, their bendy rulers and prognosticating in ways that at first appear to be ones of remarkable accuracy, but soon resemble spurious accuracy and finally become absurd inaccuracy.

The same process is reflected in the trades that are discussed, spurred on by the apparent unwritten rule in finance that the more complex your trade structure the cleverer you must be. A whiff of a word from an official source and rather than buying or selling a basic it’s a complex leg structure of buying barbells, butterflies, condors, seagulls and any other flying creature that you can use to show your prowess at trade structuring in order to climb up the Candy Crush like levels of peer recognition to reach the accolade of 7th dan, black belt yield curve guru.

The level of gravitas with which complex curve structures are discussed, all argued and tweaked to the nth level of basis point precision, is in most cases farcical as the next word from an official normally creates a blast of noise so great, the gossamer tuned trade is atomised. At which point the original complexity and analysis can be seen to have been as worthwhile as old men in a bar discussing their betting 4way-forecasters on the times the first goals are going to be scored in the 2022 World Cup quarterfinals.

A nice platform on which to display fancy analytical plumage but less useful than a dead duck (you can eat a dead duck).


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Post script -
I have just read Mark Dow's post 'Of Trends, Yields and Metals' which is a great read and sort of argues the same, but by stressing the importance of the large trend rather than my argument against the value of spurious accuracy in the micro.

8th Oct - update
The actions of the markets today in response to the Fed minutes is surely the strongest evidence to support the above postulation.

15th Oct - update
I call on today as the key witness in the case against the man-hours wasted in over analysing the Fed. Today's carnage in rates markets have been the biggest and most painful in years. And the Fed didn't say a word. Today wasn't just noise, it was exploding ear drums.

Unconventional Methods

Lots has been spoken about the possibility of the ECB using 'unconventional methods'. It would be a delight to see some really unconventional methods deployed, so to help out here are some suggestions.

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Replace Draghi with Alex Salmond at the ECB meeting Questions and Answers. Who needs detail when you have conviction? 

Set up an ECB youtube channel explaining how to spend Euros in shops, modelled on daytime TV shopping channels.

Introduce thumbscrews and the iron maiden as regulatory punishments for those who don’t lend. 

Create a subterranean secret society of ECB gnomes who tunnel under banks and fill their vaults with Euro notes whilst leaving their balance sheets untouched

Create an Ice Bucket Challenge equivalent where all vendors of goods and services are challenged to film themselves increasing their prices and then give €10 to the 'Bide-a-wee Home for Old Central Bankers’. They then have to nominate others. 

Build a time-freeze ray and fire it at Germany and while they are frozen go wild with money printing and inflation creation meanwhile running around Germany changing all the clocks back to 1923 and leaving wheelbarrows in every bank. Then turn the ray off. 

Announce that a large Meteorite is going to destroy the world and that Europeans only have 21 day in which to spend their money so they had better get on with it. 

Appoint Abe as head of ECB and wait quite a long time. 

Rebrand the ECB as the iECB, People will mistake the 'i=ineffectual' for a famous brand and believe everything they say. 

Rebrand all european goods iPhone6xxxxxx  e.g. the Citroen iPhone6DX hatchback. Judging by last week's i-mania sales should soar. 

Make Bund prices 50% of the CPI sample basket. 

Make Robert Mugabe head of the ECB calling upon his success in creating Zimbabwean hyperinflation. 

Call in Native Americans to do an inflation dance. 

Reorganise Europe. Sell off France, privatise Spain and Italy, nationalise Germany, buy Switzerland, put Greece on six months performance watch, promote Poland, retire off Luxembourg  and make Belgium redundant. 

Buy the company that owns the Oxford English Dictionary and redefine deflation as inflation and recession as growth. 

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Hope that helps!

This Week in Pictures

Scotland

FOMC

European Economy and the TLTRO 

Notes from the Greek Islands.

Today is our first day home from spending a delightful two weeks sailing ourselves around the Greek Islands. Sailing is imbued with many charms so I have embarked upon some home improvements to continue our enjoyment of them all year round.

I’ve left the tap running in the bathroom above my bedroom to provide that leaky hatch style Chinese water torture through the night, I’ve replaced the mattresses with yoga mats and placed them in a Sauna, I’ve set up nautical wind chimes in my and my neighbours' gardens consisting of 200 ft aluminium poles and ‘just not tight enough’ ropes attached, I’ve screwed random, not quite visible, blocks of toe-stubbing wood and metal to the floor throughout the house and I’ve taken a dolls-house toilet and fixed it into the shower cubicle, together with a bin of used toilet paper. I’ve placed a bucket of rancid yoghurty water in the fridge and thrown all the fridge contents into it, I've fixed a random time switch to the freezer power socket, I’ve unified the function of my washing basket and my wardrobe, I’ve tied every electrical wire we own into a huge gordian knot, I’ve relaid the drains using one inch diameter hose passing through a plastic matchbox on the way to our ornamental fishpond, I’ve put a wasp nest in the dining room and finally I’ve just managed to drag the car onto the roof. There, it’s just like being onboard again!

A few years ago I wrote "Notes from some small islands” whilst sailing around the Cyclades in the Aegean and most of the theme was based upon a general feeling of shock that a country that at the time was in abject financial crisis still carried on as if it wasn’t. But three years on and two trips later to the less bleak and more wooded islands of Homer’s Ionian Sea it is probably time to rebalance the view and add to the notes.

The first impression is that Greece is resigned to its lot and is just getting on with it. As a shop keeper told me "The Greek people are not poor my friend, just Greece”. Which at first had me thinking that the old game of tax avoidance hadn’t been fully addressed, but there were enough signs elsewhere that things had improved with regard to State collection of their kilo of flesh. Credit card machines are now widespread in shops and Tavernas. A mixed blessing as the convenience of presenting a piece of plastic is countered by the inconvenience of a large bill two weeks later in the midst of the post holiday blues. But for the restauranteur he has an audit trail for the taxman to follow and now that they are all being chased, there is less reason not to accept cards. One of the kids tried to haggle a trinket down on price and was greeted with a repost of the time “No way I can lower, I now have to pay 20% tax on that!” Though the cynic in me would suggest that blaming the taxman for high prices is an easy play in the game of haggling.

The level of tourism was noticeably higher than recent years, superyachts were brimming the bays of Fiskardo and Vathy and ferries were disgorging foreign day-trippers from large resorts yet the locals said the voices of foreigners belied the fact that few Greek nationals were contributing, as there is a noticeable slide in local tourists.

I am glad to report that Greek Economics is alive and well. Coffee priced at €3 for the smallest of cups in the shabbiest of cafe’s is still Alpine. Yet for the same price around the corner you can get two Gyros of beautifully roasted pork, salad and tzatziki in a homemade pitta for €1.50 each. (Gyros soon became our base unit of pricing and we suggest the Euro is pegged to it). If Greece wants to get back on a decent footing it only has to come over to the UK and peddle those Gyros beauties in place of the usual giant spam kebab-maggots on a stick we get here.

It still strikes me as odd that a small town can have so many restaurants all lined up next to each other selling exactly the same things. Walking along a quay reminded me of that old Goldfish Joke “Nice castle…Nice castle… Nice Castle”. Only in this case insert either ‘Taverna’ or 'expensive fish’. To be honest it baffles me how Brits can rave about a small grilled farmed sea bass costing 20 Gyros when the fish at home is so much better. I have to report that on the positive side a few Italian restaurants are sneaking in and when found were pounced upon as there is only so much Feta a man can take.

There are of course still glaring oddities about the infrastructure. If they spent as much money and initiative on the plumbing system as they have on the remote infra-red, hand approaching detection, lid opening and closing technology they have applied to the bins that still have to be used for used toilet paper, then the bins themselves would be mercifully redundant. It is strange too that whilst suffering the plumbing pleasures and the R2D2 bins in the most remote island locations, one can be getting high speed wifi that puts the UK services to shame.

Despite the odd minor exception, I felt that the old charms of Greece are returning. It may have been that Greece has dropped off the financial radar for so long that my impressions have mellowed but perhaps the crisis, having dashed the hubris and greed that was tainting the Greek experience, has moved through the stages of grief from denial, anger, bargaining and depression and reached the point of acceptance. As with the weather, the angry heat of summer has given way to a cooler relaxed evening.

Things are changing for the better and the irony of spotting a German street hawker was much enjoyed.

Thank you Greece, I will be back soon.