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.

Right, hello there! Let’s get straight to it.

I bet you can guess where we are going to start today! Yes, that’s right…the Mighty Deutsche Bank! What a week! (again)…

And if you want to read more about it what’s going on, here you have a couple of interesting links:

Too Big to Fail: Deutsche Bank’s Deepening Dip Sparks Bailout Chatter

Police spend second day searching Deutsche Bank headquarters

For the bears, this stock is the gift that keeps on giving.  Who knows what lies beneath this former behemoth but it looks like the authorities are determined to find out.  In the meantime, the equity continues to get pummelled and once again rumours of bailouts are starting to rear the ugly head.   This company has a “self-fulfilling prophecy death spiral” written all over it.  Beware though!  The balance sheet remains huge and loaded with God-knows-what while the company itself fights legal battles on a number of different fronts.  As Jonathan Ferro mentioned on Twitter:

“Deutsche Bank legal problems. DB market cap = about $19.5 billion.  Fines/disputes since 08 = $18 billion”. Just.  Stay.  Away.

In other news, Microsoft passed Apple as the world’s most valuable company – yeah I don’t care either, but it certainly generated a fair few headlines – such is the state of market commentaries (ourselves excluded, of course!).

And in terms of real news, the market perceived a “reversal” by the Fed and hence the relief rally this week.  As I tell myself repeatedly: the way to make money in the market is not to seek the truth itself, but to seek the truth others are seeking.  Powell played a bad hand (bad numbers, political pressure) very well and gave the masses the headlines that they craved.  Ultimately though, the global economy is slowing down, as seen by the raft of awful economics numbers these past few weeks. This one stood out for me:  China factory growth unexpectedly stalls in November

This is a PMI of 50 which is literally on the line between expansion and contraction and yet we are supposed to believe that we’ll get GDP growth of 6-7%.  Be lucky!

Nothing to see here folks!  As I mentioned a few weeks ago, plenty of China bears have ordered plenty of humble pie, ate it, ordered it again and repeated the process.  That’s the great thing (or disaster) about the inherent lack of transparency in such a system and this is why such systems are always far more fragile than they appear to be.  Having said all that, fragility certainly doesn’t appear in this article, which while it is not market-related, it is another glimpse into the darker side of things on that side of the world: Tracking China’s Muslim Gulag

Worth a read and even to appreciate that despite our own systems looking under pressure, we really don’t face anything like this.

But hey, at least our “super-pure” Western Tech companies (remember the mantra “Don’t do Evil”) aren’t desperate to back into that market……..oh, WAIT!:  Google shut out privacy and security teams from secret China project

I am beginning to think that privacy is going to be a huge battleground soon.  Facebook, already facing immense pressure from regulators around the world will not be the first or the last one.  In the end, search engines like DuckDuckGo -which promise privacy-, will become much more popular and after all, search engines are just another website, aren’t they?.  Indeed, Apple has added DuckDuckGo to its search engine option list. So that’s one to watch…

Of course, it’s only recently that the bad guys were tech companies.  The now-forgotten and super-fined banks (see DBK above) are still trying hard to continue their old ways.

This GS story has been a slow burner but is really worth delving into Goldman Sachs could wind up paying twice for 1MDB

Hardly surprising given the evergreen formula that is HUMAN NATURE + FREE MONEY = DODGINESS. Does anybody wonder why faith in institutions in the West is just crumbling? Indeed, we now have this beauty, thanks to the other side of government intervention (MiFiDII)…Equity research paid for by the companies being analyzed is a big beneficiary of new European regulations

File that in the column I couldn’t make it up.  The word  “Sponsored Research” is a proper oxymoron along the lines of “Deafening Silence”, “American English”, “Apple Tech Support” and “Crypto Currency”.  Not that it matters anyway since nobody owns the stock market anymore.

Oh, well!  Right, that’s us done for the week.  I ’ll leave you with two things that caught my attention this week.  First, the classic “LET’S BUILD SOMETHING OBSCENE AND GAUCHE AND WATCH WHEN NOBODY BUYS IT” article – I think these are good for the soul every now and then: Builder of $200 Million Turkish Chateaux Project Goes Bankrupt

Have a great weekend, beautiful people!

*shhh: don’t expect anything of substance from the G20!

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.