Monday, 18 January 2021

UK shrinks 2.6% in November - apparently great news

Many economists, like Andrew Sentance for example, are declaring it a relative success that the UK economy did not shrink more during the 2nd Lockdown. 

Determined to see a silver lining to every cloud, they were expecting far worse and think this sets the UK up for a big re-bound in the near future. 

For me, some of the logic is poor, the second lockdown was not like the first, shops and schools were open and people were fed up with the restrictions when virus infections 'felt' low. If you fast forward to today, it is a lot more like the first lockdown. 

Also, with the lockdown here set to last until vaccine escape (if achievable) we have a whole Q1 of negative growth to deal with. 

The UK economy is going to be a lot smaller by the time the pandemic is over / under control. Yes there will be a big period of catch up with 10% growth for a couple of quarters, but lots of the damage is permanent along with a much higher debt to GDP ratio.

A few positives though, the share market and Sterling are already trading very low as compared to historical norms - there maybe upside in both for a while yet.

To me the big unknown for the year remains inflation - can QE keep inflation in its box forever? Maybe 2021 is when we find out. 

Sunday, 17 January 2021

Desert Storm: 30 Years On

Today marks the 30th anniversary of the conclusion of Op Desert Shield in Kuwait / Saudi / Iraq (etc) and the start of Desert Storm.

I haven't forgotten that I said I'd write about the fighting phase, too.  Am a bit tied up at the moment, but it's on the list ... watch this space.


Wednesday, 13 January 2021

Seeing the future in the markets?

At the time of writing the FTSE100 is off around 2% on the day, a small blip but still well up in the beginning of the year.

Most years, after a Santa rally to get their bonus' in, fund managers re-allocate their funds in January to safer plays adn let the market drift whilst thier benchamrks for the year are set. 

All very old school. 

This year is interesting, there is a huge race on in the UK to vaccinate as many people as possible before Covid takes too higher toll - on people mainly but also on the economy, a lot of which remains closed.

To me, the FTSE at 6700 odd seems like a very positive readout given the economic damage wrought by Covid. The market investors must seem to think the vaccine race will be won in short order and some normality begin to return. Then again, they can soon turn down, but it is an interesting indicator to watch - more insightful than Twitter...

Monday, 11 January 2021

Bitcoin gold rush

Bitcoin Price Chart Today - Live BTC/USD - Gold Price
Being 2021, everything has to be that bit bigger than 2020. Even the price of bitcoin, which last week hit new highs and although it has come off from $40,000 per coin to $38,000 per coin, it is still a huge ramp up. 

The real action is not in bitcoin, but the variety of other dodgy tokens that have been created in the crypto-world which are sometimes going up (and soon down) thousands of percent a week. 

It really is the wild west, but bitcoin has been around for over 10 years now so we are used to it. 

Why the ramp up then?

I can think of a few reasons, the biggest clear one is the huge use of the Federal Reserve balance sheet to create more money to aid the pandemic relief. This money has to go somewhere and it flows into assets. We see shares go higher, property, anything that is not cash. historically this would mean large levels of inflation, but with the economy destroying money very quickly on main street, official inflation remains low.

Bitcoin and brethren have become assets, as hedge as much as say Gold (also riding high, at near historic highs). Bitcoin itself is becoming ever hard to 'mine' so in a way it is increasing its own value - what a genius creation it has proved to be for creating its own success. 

I think too, the whole QAnon type crowd who are very anti-reality have also flocked to something they see as anti-institutional. 

For now, I don't yet see the big crash. The issue of a huge ramp and market crash, a la Tesla, is only a matter to time, but it feels to me there is a little further to go yet until there are no more buyers. 

Friday, 8 January 2021

Weekend post - To Trump or not to Trump?

After a week in which he pushed for an insurrection and got the YMCA storming the Capitol, President Trump has now said he won't attend the inauguration of Joe Biden. Quelle Surprise. 

So the question for debate in the comments:

1 - Should be be impeached?

2 - Will he be impeached?

The new season of Earth:2021 is certainly shaping up to match the ghoulish horror of the 2020 season.