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:

  1. Steven_L2:56 pm

    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.

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  2. Demetrius4:42 pm

    Buy lottery tickets, at least you have hope.

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  3. Anonymous7:42 pm

    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!

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