There is something very fishy going on following the Scottish referendum. Salmond is replaced by Sturgeon while Cameron, Clegg and Millibank are floundering around looking complete pollocks. What sort of a plaice is the UK likely to become?
Enough piscine nonsense.
The UK’s developing political crisis and need for a proper constitutional regional setup will be resolved – somehow. But meanwhile, the effect on markets is to make the country look “difficult” for overseas investors. Any uncertainty is a bad thing. Who wants to buy a country where politicians might renege on promises made to the rebellious Scots? Who wants to buy a country where Politicians lie? (Well.. don’t think too deeply about that question). And how much inefficiency will building another level of regional government create? Lots of jobs for the boys. Think Liverpool in the 1980s and despair…
Meanwhile, the Labour party are appealing to the electorate by promising lots of things they can’t afford and changing the fundamentals of the bond market by ending the withholding tax exemption that makes Eurobonds so attractive to fund managers.
Millipeed characterizes this as tax avoidance by hedge fund managers. No. It’s a perfectly sensible way of encouraging institutional investors to lend money to UK corporates through the bond markets – just as every other country does. So forget UK industry as well, unless Cameron gets his act together in time for next May, which looks increasingly unlikely.
So forget the UK.
The smart money is to compare and contrast Europe and The US. The trade we profiled a few weeks ago – fund in Euros and buy dollars is winning in spades. US bond yields have increased – meaning bond prices have fallen, but not enough to overcome the currency gains. And the Dow Jones has just hit a massive new high of 17279.
So why are my internal alarm bells sounding? One of my chartists – they chaps who draw lots of lines on graphs and then pronounce on oscillators and momentum thingy-a-jobs – tells me the charts scream one thing… Sell!
Sure enough this week looks weak, but me-thinks he may be the boy who cries wolf one too many time – but the end of that story is still the little boy making a tasty wolf snack!
Maybe it’s because its nearly October, which is a wicked month for markets, but there is simply too much negativity out there. Lots of negative stuff in the press, on the screens and in the analyst pontifications. I think since everyone thinks stocks and bonds are about to tank – I’ll get ready with the buying opportunity.
When all around are losing theirs, that’s the time to invest.. Get ready!
Badger