Minutes to win it...

Buying equity anticipating post-meeting minutes to reflect one or two words in the right order is just about as useful as learning to balance 5 ping-pong balls on your nose. Failing to appreciate that the odds are stacked against the trade is similar to a bout of inconsolable hysteria after failing to bounce a dime into an open-necked bottle at 30 feet.

Hoping against hope that Germany will fund delinquent excess whilst Merkel teeters on the political abyss presumes that PIGS will fly in the middle of July..

There are some fearsome odds we seemingly ignore. $600 trillion approx. is the size of the global derivatives market. Romney vs Obama for the world's most important economy is a David vs David contest. Where's Goliath? Companies have retrenched, are retrenching and will continue to retrench extraordinarily large percentages of their work force. Consumer spending resilience under those conditions is probably ephemeral at best. Internal controls at the world's largest financial institutions are either lax or deliberately misleading. Global youth unemployment, the Arab spring and the Asian Tiger struck low with cat-flu virus are fairly strong signals that all is not well. When 27000 words of legislation regulate the planting of a cabbage, who can honestly claim surprise when the Europeans disagree to disagree?

If Buffett's form holds true, 'risk-on' is just around the corner; the music's stopped and the exit is jammed. Ping-pong anyone?

Out of Ashes, An Opportunity!

The rate-fixing scandal is quite simply a systemic cultural failure. London burns and the ramifications are difficult to quantify. Even so, you cannot deny the gift-wrapped opportunity for the US. Opportune US regulators can now, at last, justify / demand or fix associated trade in US dollars. The expected shift in trading and jobs away from London to New York should, if nothing else, convince the global community that Europe's star has waned.

As for the individuals specifically implicated in the so-called rate-fixing scandal, whether they emanate out of Whitehall, the BOE or from the formal financial community only, there are a range of criminal sanctions and punitive guidelines covered by legislation. Deliberate attempts to rig or manipulate interest rates allow for little justification and although there is evidence of unsubstantiated mudslinging, the ramifications for the individuals so implicated, are dire.

In a remarkable quirk of timing, today's testimony by a US-born ex-CEO of a UK bank could denote a banking shift away from London to the US. Free at last?

Wishing our US friends a safe and Happy 4th of July. 

Europe's next World War is one of ECONOMIC relevance

Speak to an educated, politically astute European and don't be surprised when he / she tells you that Europe is embroiled in a war so bitter that subsequent social divides will take generations to bridge. 

An influential colleague contends that Europe is in a fight to the death and the enemy is none other than Britain and the United States! 

Why have the Europeans been so slow to respond to the EU crisis?  It’s a function of an outdated institutional structure and cumbersome Legislative, Judicial & Administrative bodies.

These are just a few of the institutional bodies / individuals responsible for the well-being of the European Union:

1. Ministers and parliamentary secretary generals.
2. Commissions / Committee of regions, economic and social council-BEI (European Bank of Investments)
3. FEOGA-(European Agricultural Guidance and Guarantee Funds).
4. (EMCF) -European Monetary Cooperation Funds.
5. Secretary General of the Council of Europe
6. Parliament
7. W.E.U (Western European Union)
8. EUROCORPS 
9. E.C.B (European Central Bank)
10. O.E.E.C (Organisation for Economic Co-operation and Development)
11. The Council of Europe
12. NATO (North Atlantic Treaty Organisation)
13. CSCE (Commission on Security and Cooperation in Europe)
14. The legislative council has powers.
15. The commissions and the legislature and the executive for the E.C.S.C. 
16. E.I.B (European Investment Bank)
17. E.B.R.D (European Bank for Reconstruction And Development) 

It’s understandable why Europe has responded so slowly to a deliberate, well-coordinated economic attack and why the consequences have been devastating. Germany has alluded to this fact and is demanding structural reforms.

Britain is the enemy… 

(A simple example) - Britain proposed the purchase of significantly subsidised New Zealand sheep in exchange for British-made vehicles offered cheaply. The sheep are sold to France at excessively inflated prices and the commission shared…It's open to scrutiny and is a tangible and deliberate attempt by Britain to collapse the EAGGF. 

The United States is the enemy… 

(A simple example) - European banks have been driven to the cusp of bankruptcy by a co-ordinated attack by US banks intent on creating problems where there are none in an effort to destroy the Euro. Interbank rates are open to scrutiny and confirm the intent.

Whichever way you look at it it's certainly a refreshing take on the European Crisis and perhaps an opinion we should not dismiss too lightly. 

You, me, a German & an economist walk into a bar...

Buy a German a drink and you'll be told that the economy is wundenbar, prices are robust and unemployment is at a generation-low. Change seats, if you have the stomach for it, and do the same for an economist and he'll be squealing like a bag-full of pigs... You could argue that the economist is highly-skilled, well-educated and therefore worth the price of a beer but more often than not you'd be wasting your money..!

The disconnect between the economy and stock-market performance is not always fully understood. The supposition that the stock-market reflects the economy is false, palpably so! If anything, the stock-market tries to predict the future, usually one year out, which is why traders and professional money-managers will talk about the '12-month economic lag' on current pricing. That means current stock-market prices reflect the predicted conditions 12 months hence... The variables we scan from which we make our predictions are mostly the subjective interpretations of the current circumstances we find in 'the real world'. Euphemistically, these predictions elevated in status to FORECASTS by analysts or economists are nothing more than, well, predictions and unless the forecaster has divine authority it's nothing more than, yes you guessed it, a prediction! Extrapolating this theory in the media, a Bloomberg or a Reuters or any other similar financial-media company would then collate these FORECASTS (ie: predictions), calculate the middle-ground (an insipid concept at best) and elevate the average FORECAST (ie: prediction), to unimaginable status by renaming this number the CONSENSUS FORECAST (ie: the average prediction). In reality that's the same as buying lukewarm tea because half the world likes ice-tea and the other half like their tea hot. 

These CONSENSUS FORECASTS (ie: average predictions) are applied to a company specifically, a sector broadly, an economy generally and in recent times to the global economy as a whole. Investment strategy is a discussion for another time. Even so, applying CONSENSUS as reality to your personal investment strategy is, quite simply, intellectually poor... You'd be selling yourself short. 

Returning to our two lechers above, whilst the German lives in the now, the economist lives in the future. One lives in ignorant bliss and the other is blissfully ignorant for everybody knows that today's reality is not always tomorrow's certainty. The same applies to markets, today's prediction is not always tomorrow's reality. One more thing, three years ago the US financial crisis heralded the end of America and by implication the rest of the world. Surprisingly then we're still here. We'll say the same about Europe...

Europe awake!

For the attention and consideration of Europe's leaders

What has happened to Europe?

You've told us that the EU stands as a select body of nations believing in social and economic freedom. Circumstances have proved that the interests of individual nations are not identical. At the same time the separate identities have, until now, been seen as a strength rather than weakness. With the region's experience and expertise now is not the time to hide your heads in the sand....

New problems are looming.. Live not under any illusions. You cannot opt out of the world!

Your capacity to play a constructive role in world affairs is related to economic strength. If you hope to guarantee your way of life, the question you must ask yourselves is whether the present leadership is fulfilling their duty. The battles are being fought in your territory, not ours.

This is the moment - a moment when your decisions will determine the life or death of your kind of society; - and the future of your children.*





* With apologies to Margaret Thatcher whose words roused the nation's collective spirit. Will Chancellor Merkel be hailed as Europe's new Iron Lady?