From Bill Blain of Mint Partners
Blain’s Morning Porridge – July 12th 2017
“Where do the Orangemen get the money to build such big bonfires,” I pondered.. “Don’t ask, and don’t go there” replied the minister…”
Ouch. Things looking decidedly slippery for Team Trump this morning. Number One Son didn’t think it worth mentioning to Dad the Russians offered info to discomfit his rival Hilary Clinton for the Presidency. Meanwhile, it is now suggested Number Two Son-In-Law has been beating up the Qatari’s because they pulled out of property deal on an ailing 666th 5th Avenue building that’s likely to bankrupt his family.
Donald, of course, has nothing to do with any of this…
What do markets make of it?
Unimpressed.
The threat of US political instability and uncertainty is rising. We’ve got no less a figure than Dan Ivascyn, CIO of PIMCO warning “These distractions are just going to make it even more difficult to gain consensus”.
He was on Bloomberg this morning warning such damaging information dims the US economic outlook. “We’re becoming a bit more cautious about the possibility of meaningful legislation”. Key initiatives such as health care, tax cuts, fiscal stimulus and other programmes that underlay the Trump Jump now look increasingly unachievable ahead of the next electoral cycle in 2018, he said.
No doubt markets will quickly shrug it off.
Just more of what they’ve come to expect of the Trump Era. However, the pressure on markets and gridlock on Washington spending plans is probably enough to keep the Fed from doing anything extraordinary – Yellen gives here bi-annual Humphrey Hawkins testimony later today.
Meanwhile, back here in Britain... we might not have anything like Trump, but our political ineptitude is on at least the same scale.. Witness the damp-squib relaunch of Theresa May V2.2 y’day – yeah, that went well.
We didn’t get any further hints from the Bank of England on the timing of the now sort-of-expected rate hike, but we did get the government’s report into the GIG economy.. which true to form was a unsatisfactory mish-mash of “a lack of regulation red tape (ie fewer employment rights) is good for business”, and comments like 60% of Zero-Hour Contract workers are happy – presumably meaning the other 40% are not.
The bottom line was spotted by Bank of England Economist Andy Haldane months ago – although the economy is pretty close to full employment there is very little wage pressure. There are very many reasons for this, but it includes a large slice of the working age population underutilised in low pay gig-economy jobs. The priority for government should be finding a way of maintaining the UK’s comparative advantage in labour, but also ensuring the workforce is fully mobilised. Lest they forget: there is absolutely no point in business succeeding if consumers simply can’t afford to buy anything. Doh!
Interest spot from my Macro Economist, Martin Malone: 12 months ago $12 trillion of global government bonds were trading at negative yields. That has dropped to a mere $6 trillion. When the BOJ enacted its NIRP (Negative Interest Rate Policy) shock in Feb 16 it triggered a Lengthen duration, raised External assets and Diversification trade – LED. That has now played through, meaning less resistance for further back up in global bond yields.. You have been warned!
Back to London
Jamie Dimon has absolutely no idea. He’s going to move JPM to Europe if the EU so orders it.
Go and Go Now! I say to him.
He clearly has no banker’s soul. He can take his bank and move it from a city with a mercantile past, present and future, a deep well of financial talent, a place of innovation and delight. Go! Move JP Morgan to some place where the culinary highlight is sausages or garlic with more garlic and the cultural highlight is an oompah band or a badly tuned accordion.…. (Seriously, the HM Government should ban them from any UK business!)
I worked it out for myself last night. There is nowhere in Europe like London – Europe has nothing like the incredible Courtney Pine playing Ronnie Scott’s – a great gig she-who-is-Mrs-Blain and I were at last night. Absolutely brilliant….
On the other hand…
Trying to get a taxi in London in the rain is a challenge demonstrating just how screwed up this modern age is. I blame it all on Apps. I removed UBER from my phone months ago – it’s just too damn unreliable. But last night neither GETT or MyTaxi.com Apps could find taxis in the City Centre. Addison Lee (the posh mini-cab firm) told us their car would take 10 minutes, but after we’d waited half-an-hour they finally admitted they didn’t actually have any cars available. (Mrs Blain was not happy, and went dangerously silent… a sure sign Addison Lee is doomed when she writes them a very angry letter telling them how angry she is later today…)
So we walked in the rain, and noticed there are practically no black cabs on London’s streets; empty or full. By pure fluke we got one outside a hotel and the driver told us the number of cabs active in London has crashed due to apps like UBER killing their business. And as they don’t work, it means going into London for a night out is a lottery.. In a thousand years time the history books will record the decline and fall of London was triggered by the shortage of taxis.
A sub note will record the utter uselessness of expensively engineered Apps that fail to deliver. In the next few years we’ll see the introduction of 5G mobile services making connectivity even faster and more efficient – but if the brilliant concepts on App based services aren’t matched by delivery.. then “Crash”…
Take, for example Snapchat – SNAP. After its IPO the shares have crashed – not helped by the fact lead underwriter Morgan Stanley actually set a target price lower than the float price. It’s down 9%. Morgan Stanley say its been “wrong about Snap’s ability to innovate and improve its ad product..” NSS!
Not that the over-inflated expectations of Apps will matter. We’re all doomed anyway. The human race will have been wiped out by then anyway – again by Rouge Tech.
Yesterday was Amazon Prime Day. I’m indebted for an American reader who pointed out 30% of American’s are now Amazon Prime members, and guess what the prime item being pimped to them yesterday was? The Amazon Echo Dot.. a little gizmo that enables you to speak to its Artificial Intelligence - Alexa - and get her to play particular music, soften the lightening, turn up the heating, check what’s in the fridge, change the TV channel and make you a cup of tea.. The result is our roots as couch potatoes will extend ever deeper.. dooming us to death by Binge Watching and corn starch.
My American chum pointed out parallels with 2001, Space Oddessy where the astronaut desperately tries to disconnect the computer before it kills them all.. As HAL dies, it sings “Daisy, Daisy give me your answer do…. ” Subtle eh?
Out of time.