Quel Fromage! The Badger of Broad Street

We are into the last real month of the financial year. December, of course, is just a never-ending round of parties and drinks – or at least it used to be before markets lost their sense of fun and got serious. And I can’t be particularly enthused about office parties. About 100 years ago, when I was young, I’d make the effort, but I might just regret what the “old man/drink combination” might make me say to some of our corporate finance ladies if they put on bling and tight dresses. Ah.. to be young again…
         
But at least it looks as if we’re back into positive markets through to the year end.

A number of factors are supporting further upside. Last week saw a surprisingly massive injection from the Bank of Japan in a move co-ordinated with the Post Office (one of the world’s largest pension investors). The effect of throwing everything to buy all kinds of assets in Japan has been to push the Nikkei higher and the Yen lower. The jury is out on whether it can help a real turnaround in Japan after 25 wasted years. But here’s hoping!

Meanwhile, the markets are increasingly confident the global economy is gathering steam.

Just two weeks ago it felt like we were on the verge of a stock market crash, but markets have already recovered and who cares what happened last week…

Look at corporate earnings, where the bulk of reporting companies have exceeded analyst expectations, reassuring buyers the worst is behind us. And the speed of the recovery has left everyone with little more than a blurred memory of the 10% mid-October dip. The market’s memory isn’t what it used to be.

Of course, recovering stock prices and apparent economic growth should have everyone worried about rising interest rates.

Now that US QE is over, and the European Union seems incapable of agreeing anything significant within the ECB, interest rates should be a concern – but they are not. Investors are confident that central banks won’t rain on the parade to bring down a new financial collapse. Rates look certain to stay ultra-low right through H1 2015

The main worries in Europe are now political.

The left wing potentially forcing a no-confidence vote in Greece is an ongoing worry. Then there is the rise of the protest Podemos movement in Spain (more popular in the polls than Government). And in the UK we have the possibility the Cameron government will be bounced into precipitous action over Europe, triggering Britain’s exit from the EU.

I do think UKIP is over-doing the “no Europeans in the UK” nonsense in their efforts to trigger BREXIT. Why would anyone want to live in the UK anyway? French author Josselin de Roquemaurel has lived here 13 years and has published a book (only in French) bemoaning England as too expensive, services as inadequate and complains natives look upon him and his fellow French emigrees with mockery.

Quel Fromage I say! (Yes, I know it’s not right, but “what a cheese” just sounds better…)

I agree with de Roquemaurel. We should be paying the French to distribute it for free. Tell Europe that the English are simply awful folk with their property obsessions, mockery of ridiculous accents, and worst of all, treating French as a dead language by speaking it almost as badly as they speak English…

What’s not to like in London? Lighten up Joss. In case you were wondering.. that’s a bloke’s name.. even if he does sound a complete girl… More to the point… he’s staying here in London and buying a new home in Kensington (which will no doubt collapse in value as it looks and sounds more and more like the Gare du Nord.) Ouch!

So what’s the trade this week?

Buy Japanese stocks and buy the dollar.

Badger