** Ghost Ships ** - Thursday 17th September

Can you believe it? Despite a great deal of trepidation surrounding the start of September for the markets, we’ve had nothing but green screens as each day passes, with more optimism and investors fully shunning any piece of bad news coming through. The thing is, even the bad news coming through isn’t sounding that bad anymore. A certain degree of numbness has creeped in, but at the best of times the markets are always able to surprise and confound those that would otherwise normally assume themselves capable of foretelling changes and judging the correct entry/exit point.

The market really is a living breathing expression of a whole host of human anxieties and frailties. At the moment, it seems to be best expressing a great degree of hope and a desire to simply get on with things (read: make money) rather than continue with men-of-influence – and (lesser paid) women of course - huddled around in smokey rooms trying to philosophically figure out what the major differences between capitalism and large government intervention entail (sorry Roubini and posse).

From Asia across to the US and with all between, markets have all posted very attractive (and welcome) returns. Asia was always going to be a strong recovery player, and the emerging markets were singled out some time ago to return with swifter strength, take a look at the BRICs – at one point declared defunct as a group – striding from one point of impressive development to the next following the panicked selling off last year. Hong Kong is +10% since the start of the month with China’s extremely strong and stimulus-influenced surge continuing (CSI +16.5%) after a stutter in July and August. China’s equity indices are never the greatest indication of a “free-market” but the manipulation obviously exerted by the authorities there have succeeded in helping sentiment to ripple through in the best possible way all along the spice-route, through Europe and across the “Pond” to where the fun and games all began (S&P and Dow are up +7.5% and 5.2% respectively month-to-date).

All sounds great doesn’t it? – hold on there friends. This wouldn’t be the usual commentary if there wasn’t but a slight lining of discontent hiding somewhere within the seemingly breezily-care free and happy-go-lucky surface now would it? Take a look at the picture below. It may not look too scary to those not familiar with the ins-and-outs of the shipping world, but trust me – this is the equivalent of a Hollywood horror-movie climax shot, this is spine-tingling stuff.

The number of idle transportation vessels bobbing up and down un-merrily in the waters off the coast of Singapore, are at unprecedented numbers (it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination) – not the type of information you would be expecting to receive when you consider that September is traditionally the month where buyers keep shipping lanes and the ships themselves running at full capacity as Christmas orders are placed.
If the ships aren’t being used, no one is ordering goods from Asian factories, hence no one in the western world is feeling confident enough to go out and spend any actual real (i.e. none stimulus granted, or as Bernanke described it “helicopter money”) on goods, and why? – well, because they are still not secure enough in the “real” economy. The average US-cash-for-clunkers-lover, or European home-bargain-buyer on the street does not really care what the titans on Wall Street think about the next release of Non-Farm Payroll or CPI – and the image below serves to speak more than a thousand words in explaining why.

A word of advice for all those out there travelling out of the Mid East during the Eid holidays – a court case in the UK cleared a young-lady accused of being drunk on a plane and causing “disorder” which involved apparent nudity (the kind of disorder I can’t understand why never seems to happen when I fly?) by getting her clever-know-it-all-lawyer to persuade the jury that she was indeed simply “exhausted’ from “sleep-deprivation” – just in case you were hoping to grab a few glasses of wine on your way over for your break – try not to sleep too much before the flight.