IMF and World Bank meetings this week, investors digesting disappointing employment numbers sending markets lower across Asia (-80bps avg.), Europe (just about flat) and US futures struggling for direction across the exceptionally large looking pond from a future policy response point of view if rumours are to be believed. With China’s 60-yrs of Communist rule celebrations heading through till the end-of-the-week, a lack of super-liquidity-fuelled sentiment adds to the unfortunate and tragic harsh-forces-of-nature unleashed across much of South East Asia over the weekend. UK’s Gordon Brown has been left stricken as the country’s real king-maker (Rupert Murdoch – controlling 40% of print-media and 65% of cable TV) decides he’ll vote blue this time around. Greece sees their socialists fare better, winning a snap poll in convincing fashion, the Middle East remains strangely quiet as meetings surrounding Iran’s nuclear “plans” seem to bare some decent-tasting fruits of progress – a promise to continue to discuss further and openly with “all parties” (basically the US) a better sounding conclusion than responses in the past – must be the cooler weather in the region allowing common sense to prevail over angry rhetoric.
It’s October now and the markets can feel it. Whether its despair at the thought of those long-winter nights awaiting western fund managers, or some concern as we enter earnings season in the US, several days of losses have left a sour taste after the surprisingly sweet-September experience.
Oh dear – our old friend, and constant bear, Nouriel Roubini has been at it again – all over the papers and TV media this weekend (dressed in black naturally) – preaching bleakly amidst signs and portents the end of the “fun as we know it” in markets since March has come to pass. Is it cause or effect though? Does his presence simply bring about the fall of markets, or does he become all-present when markets are falling? Certainly, the last few days of trading since the last week of September have provided signs of discontent across global markets and those seeking to squeeze out the last remaining drops of return from an otherwise overly-stretched, twisted and tightly-wrung hope of recovery. True, the markets have not been too bothered with the economic situation of late, what with all the “fun” to be had with that cheap money provided – if someone hands you a big bundle of chips at a casino and the roulette table is right there in front of you, you are going to play a few hands aren’t you? (always 24/27 and 13/14 split guys, always), but at some point the adrenalin rushes out of your system leaving you slightly dazed and strangely more risk-averse. Many have counted what chips they’ve won and headed for the cashier.
With all the talk and direction from central bankers and policy-makers, filled with sound-bites and “trust-us, we’re financial industry guys” tones, the release of an interesting script neatly ties in. Presented to movie moguls some years back, but only recently developed through the strength of ambition of a plucky English comic-genius (Ricky Gervais), it described a world where lying is absent from everyday life i.e. where everyone simply speaks the truth and the concept of anything fictional simply does not exist; meaning everyone takes the spoken word as gospel without questioning its authenticity.
Apart from setting-up a great number of philosophical and neo-religious questions, a lighter side would be to imagine a financial industry existing within this world? Now, apart from those extremely cynical and bitter individuals out there (like savers) who would surely retort that an industry based on “bending the truth” would simply not exist in such a world, you can just imagine the pitch from your designated retail bank representative: “We’d like to provide you with a ridiculously low-interest bearing instrument that carries a huge amount of risk which we don’t actually understand at all how to price, but we are going to make so much money in commission out of you that I’m strongly recommending it for your terribly performing portfolio”. The client’s response, remembering lies do not exist, “I do not trust you, like you, or even consider you a fully-fledged member of the human species, but since I have no choice whatsoever in the matter, given the state of the economy and the meagre influence I can exert on decisions being made surrounding financial stimulus packages and the use of my tax payments over the last 20 years - where do I sign?
Any suggestions as to the latest set of company earnings announcements, within this “no-lies” world, are most welcome!
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