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Market commentary “Wrapping the Week”

Alion Partners Capital LLP

Brokerage advisory and consulting

Welcome to another edition of Alion Partners Capital LLP’s “Wrapping the Week”, the place where we (a bunch of serious market guys) write our views about what has been going in the markets during the past week. Our commentaries and analysis are like no others’ – we take a humorous approach whilst trying to make you think about serious matters- Our aim is to be informative, analytic, precise, thoughtful, yet light and entertaining for a Friday afternoon.

And hello! Welcome to the end of another barnstorming week of market and political fun and frolics!

Where to start this week???  So many options…ah… I think this is good…

After the wonderful claim that the US Midterm Election results were a “WIN FOR WEED” little did Tilray’s CEO know what would happen next: Weed wins on election day. So what comes next?

The firing, ahem, “resignation” of Attorney General Sessions, while turning most political analysts bananas with exclamations of “CONSTITUTIONAL CRISIS!!!, was a lot more interesting for Cannabis Speculators as the stock ramped up over 30%. Still lower on the month however. But that is why I love markets. Sure, the constitutional crisis is here, but hey, Sessions are now gone and so we are far more likely to see more progress toward marijuana legalisation.  It makes sense I guess, as the republicans come crashing down the only thing that the population can turn to, which are mind altering substances (and the companies on the stock market that benefit from it)! Awww, the beauty of capitalism in its all glory!

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Moving on. The markets had a fairly decent recovery since the Armageddon of last week. Volumes on the move up are fairly lacklustre, which some suggest it means that it will come back down again.

Others do also suggest that it means that people didn’t buy the rally and if so, why will have to buy the rally before the Santa Rally comes!?… Well, whatever. There are far bigger animals out there than the little equity markets that will be driving this macro environment in the future (as noted by Peter Bookvar on Twitter):

Rates, rates, rates…that is all that matters now. Debt and Credit analysis are very unloved whilst everyone could borrow at -more or less – the same ultra-low rate and they should be back in vogue along with the return of Macro. Hoorah! Sorry my dearest Fundamental guys…it is time to move over. Check this great conversation David Perrel has with an anonymous and excited Macro guy (apologies for the whole thing but it’s worth reading):

The return of macro has been trumpeted far too many times in recent years, usually by fund salesmen, but if we continue to have higher rates, then its time has come again. Buckle up!

No DBK GY chart this week but its -now far bigger- competitor managed to grab a little of the negative limelight this week.

This has been rumoured in the market for decades. It had actually moved from rumour to conspiracy over a decade ago with Zero Hedge running the story in various guises.  The best quote of course is at the end “J.P. Morgan learned about this case only recently, according to a person with knowledge of the matter.” As an old Hedge Fund PM friend of mine texted me: “Oh poor senior management not knowing about it, those commissions must have come from nowhere”. Nothing ever changes in Wall Street as Jesse Livermore once said.

But it is in China, – which not so long ago was the agrarian utopia of the Mao peasantry- where the joys of the middle-income trap and property speculation are now arriving with aplomb. As Bloomberg reports:

Imagine a nation with 50 million empty apartments, yet young people still struggle to get on the property ladder. China’s mantra that homes should be for living in is falling on deaf ears, with a fifth of all apartments lying unoccupied. 

20% of Chinese apartments are empty! That’s impressive considering it is the world’s most populous nation that ever existed. Thank goodness price discovery was abandoned over there a long time ago. At least there are checks and balances and an independent judiciary to assist once the write-downs will come…

Not that we can be so smug in the West.

Thanks to the Daily Shot for this. It’s pretty shocking. Rates rising, a huge tax rise to pay for and the slow, gradual crumbling of a system that previously was the exemplar of checks and balances on power. Sorry to sound grouchy, but with a plethora of political farces playing out I do sometimes despair. One can see why safe haven buying is on the move again. Not for many years have we had so many “leaders” unchecked by the previously powerful force of shame. Calls to violence, to lie, to undermine institutions and norms have rocketed since the 2008 crisis, especially in the last 5 years. Spread by social media companies with zero editorial oversight the public domain is a cesspit of nonsense and fiction, with little civility in debate.

But anyway, there must be something positive around to cheer us all up. Ok, well market is up – is that enough? “NOOOO – we want more” I hear you scream. A picture of a kitten and a puppy as best friends? “NOOOOO – we get enough of those on Facebook (sell)”.

If this guy can pull this off, then there is hope for us all: Man, 69, who identifies as 20 years younger begins legal battle to change age.

Enjoy the weekend and see you next Friday!

The Alion Team.

 

Important noticeCopyright Alion Partners Capital LLP 2018. Not for reproduction or retransmissions without written consent from Alion Partners Capital LLP. This is a Market Analysis and Commentary and not an official research report and the views expressed in this document are those of the author(s). The author(s) are not registered research analysts and there is no assurance the trends mentioned will continue or that the forecasts discussed will be realised. Past performance may not be indicative of future results. Alion Partners Capital LLP is authorised and regulated by the Financial Conduct Authority with number 540688.

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