Wednesday, 20 September 2017

The left are now the establishment censors and the right is the counter culture

Why do I have to keep paying for the BBC left wing propaganda machine?

More pics in the link

Monday, 18 September 2017

West London house prices off 10%

Prices down 8-10% in west London YoY but still barely a 3% gross rental yield if fully occupied.

Unwinding George Osbourne is going to be painful for those left high and dry. Havent seen Brexit repatriated related selling and only the cusp of Buy to Let exiters. Carney is also threatening a rate hiking cycle to cool off the real economy which will pressure the financial and asset economy here.

Is the USD bull market really over?

I wonder if the USD bull market is really over, the Fed is far from a neutral rate setting for the real economy if you believe there is some strength in the US economy and that strength should support a gradual wage-inflation cycle. That said with the amount of leverage out there neutral rates for the financial economy are much lower than the real economy. Potentially 2-3% lower. The world is still very short USD and the EZ problems are plastered over rather than rectified.

If the Fed looks set to be on autopilot to the dot plot neutral rate of 3-4%, or if they are forced to walk the terminal rates higher in the dot plot, it could put a real squeeze on the financial economy and the USD shorts. 

Thursday, 14 September 2017

Let them serve cake! Some wage growth charts

Many service jobs created, but public sector pay well ahead of average and service jobs

Recent weakness two sectors: retail/ restaurants and construction.

NRA member Trumpets vs smashed avocado on toast loving Massholes?

Companies forced to give payrises to the least productive workers, while senile Boomers retiring at peak productivity with little savings are having to step down to part time service jobs

The tea party states

Much of the weakness in headline numbers in Q2 and into Q3 has been a function of disasters in a few sectors (autos, retail, some areas of industry), but by definition these can only be temporary, are partly down to structural shifts, and elsewhere there is tightness.

Companies have been reluctant to pay up for more staff, but we need the stronger companies to pay more and squeeze the weak ones. If that starts to happen and the July bouce continues it will squeeze margins into year end and underpin a pick up in defaults in 2018.

One fly in the ointment is the collapse in credit growth this year, which has continued through August.

Tuesday, 5 September 2017

Could CAT bond yields reset into next year

I wonder how the CAT bond funds will do this year. 

Most of them had been running at about a 4-4.5% gross spread. Florida hurricanes are often the no. 1 risk and Texas hurricanes often in top 5. 

Would just need a Japanese or Californian payout or another hurricane to travel up the east coast to round the year off and perhaps reset premiums back to attractive levels for next year.

The space is interesting as it offers a reasonably liquid credit spread but is economically insensitive. Spreads normally reset wider after big payout years and its been several years since there was a big payout. 

August UK car sales weak

August sales weak again in both cars and commercial vehicles vs a year ago. Van sales down about 3% YoY. Autos faring worse.

Plug-in hybrids growing strongly though. Petrol hybrids up 75% to 2200 YoY.

Monday, 4 September 2017

North Korea's miscalculation

North Korea's miscalculation as it continues to escalate.

Why is the US even interested in North Korea?

Because its a bellicose dictatorship and like many others creates an external enemy/ supposed aggressor to enable domestic martial law and internal control. The calculus of this has led North Korea to progressively escalate to the point of creating nuke bombs and ICBMs while still threatening the US.

If the US does nothing with North Korea escalating, the pain is felt in Washington, while if the US strikes and it goes wrong, the pain is felt in Seoul. If the US strikes successfully the upside is felt in Washington and lots of contracts for US companies.

If the US opts for stockade-like sanctions, North Korea pretty much has to escalate. 

Hopefully the situation wont escalate but North Korea seems determined to do so and perhaps they are miscalculating the willingness of the people around Trump to act.