Friday, June 03, 2011
But first the NFPs - If we say that growth stocks are going to get hit on slowdown concerns and that feeds on as a theme into global commodities and assume that the USD will get hit vs neutral bases on a "USA is Toast" theory, then surely the neutrals will end up doing best against the commodity currencies (EUR/AUD GBP/NZD, CAD/JPY for example). Stocks should also get carbonised and if they don't, we know that the QE3ers are running the show. If THAT is the case then we should sell anyway because, as we said yesterday, we aren't playing the 2010 QE end game. Phew .. And on to lesser things.
TMM have just had an email from their very nice fitness trainer suggesting that they add a pinch of Himalayan Pink Salt to their water bottle for best rehydration results. Himalayan Pink Salt? What the heck is that? Having checked it out and found that it is just 96% normal NaCl, the rest being gypsum and homeopathic quantities of other pollutants, we really wonder why people peddle this stuff as a cure-all. Whilst we understand the benefits of electrolyte balance to rehydration, TMM will just be adding a pinch of cheap supermarket table salt.
TMM are sure they are not alone in noticing a huge assumed correlation in the health benefits of foodstuffs to the remoteness of their source. The efficacy of such remedies is also assumed to dramatically increase if it can be shown to have been consumed by a small poverty-stricken population of organic tribesfolk. It obviously works in reverse too, as when you actually get to some of these places you find said tribe wearing jeans and smoking Marlboros probably having been sold them by some enterprising villager pushing the unique health benefits. The novelty of such strange products also implies superiority in ownership in belonging to a small club of cognoscenti (which of course is how handbags can fetch $3000+).
So Himalayan Pink Salt ticks the boxes on all levels. The Himalayas are obviously a long way away, both horizontally and vertically, the population roughly fits the profile needed and the bonus is that it's pink, which carries caring references. But most importantly it has a HUGE profit margin for the supplier.
TMM wondered further if this marketing trait occurs in the world of finance. Well yes, of course it does, the financial industry's profits have had their versions of Himalayan Pink Salt at their core throughout history. Successfully finding the next exotic, new and uncommoditised product allows financiers to reap huge profits before the world works out that the product has no benefit or that its active ingredient is available in a much cheaper generic form. We have all seen these things in the past, be they leveraged products that are a sum of vanilla options, or tax structures that use your counterpart's balance sheet or of course all the toxic waste that brought the house down 2 years ago.
What is noticable to TMM is the struggle banks are having to go through to invent and sell its next new version of the Himalayan Pink Salt. The number of term sheets hitting TMM's desk over the past year having all but gone down to zero. Now we know that reams have been written about banks having to scale back risk and we know how the regulator is trying to regulate taking risk out of sight, but without the structured high margin business we wonder how the investmment bankers are going to make their livings as more of them are turning back to selling high volume vanilla products. Basically turning back into brokers from being "investment banks". In a way this lack of the "next big thing" is pretty synonymous with the West's problem vs the developing world. What is the West going to invent next to regain its wealth gradient against the rest of the world which is winning the competition for jobs and income (hello there today's NFPs). In particular the US fast needs its own new Himalayan Pink Salt to peddle to the world. The Apple version, though a damn good effort, just isn't enough.
We dont know what the answer is but we have just worked out that Himalayan Pink Salt is pretty important in making our society tick. We better crampon up and head east.