Tuesday, 23 March 2010

Trading the UK 2010 Budget

The budget has approached and I have freed up some cash to put into position for the Budget. Now, normally this has been a pretty easy fish in a barrell exercise; short drinks makers and tobaccco companies, take positions on small greenwash AIM companies and such like. Last year the tax break for car selling was always going to be a winner and proved to be so.

This year though there are some really complicating factors:

1) Darling has said not big announcements
2) A badly delivered budget will hammer the markets so long share positions are highly risky
3) The Pound is already quite low so a big move is a big move likely?
4) Shorting Gilts is really hard and the spreadbetting c's have very high margins so making it not a very attractive call.

All in all, has left me a bit stumped. Drink going up in price should hammer the pub operators so I am leaning towards a short on Punch Taverns and Whitbread. VAT going up wouold hit retailers but I am not sure Darling will do that this time.

On balance I am going Short on Punch and Short on the Pound - there is even a good ETF you can use in an ISA for the latter, USD2 which is short Pound and long USD. I have bought that at 3645. Punch short at 80.5. Will aim to close these calls tomorrow

3 comments:

Steven_L said...

I still like the idea of either Sept or Dec 3 month interest rate futures.

The maximum downside is easy to predict if the repo rate and LIBOR stays where they are, but you have the potential for a much bigger upside should rates rise over this tricky budget/election/new government period.

Demetrius said...

Buy lottery tickets, at least you have hope.

Scan said...

Yes! Spring's here so it must be about time for my beer to get more expensive again :(

...and it's Punch Tavern too...

Ohhh woe is me, oh no, oh woe!