Friday, May 11, 2012
"The world was darkling. The very air seemed brown, and all things about were black and grey and shadowless; there was a great stillness. No shape of cloud could be seen unless it were far away westward, where the furthest groping fingers of the great gloom still crawled onwards and a little light leaked through them. Overhead there hung a heavy roof, sombre and featureless, and light seemed rather to be failing than growing" J.R.R. Tolkien
Despite the sun finally appearing over London today (actually as we write it's gone again) the financial scene does feel very Tolkienesque especially in Europe where, if they were to reshoot the film, we would suggest the following cast :
The Ring - the Euro
Sauron - Weidmann
Saruman - Scheuble
Mordor - Germany
Mount Doom - Bundesbank
The Nazgul - Bond Vigilantes
Gollum - Greece
Gandalf - Draghi
Frodo - European Economy
Bilbo Baggins - Trichet
Gimli - Merkle
Pippin - Hollande
Elsewhere, we really couldn't decide which picture of an exploding whale to paste in so instead pick your favourite here.
Once again we wheel out our favourite trading aphorism "If you want a hedge, go to a garden centre". $2bio is really not a lot to a bank of their size and though the world's media, Volker advocates and all of JPM's competition are expressing a level of schadenfreude that is verging on Milibandesque, unless there is a systemic threat to the system - which we really don't see despite the disasternista's "but what ifs" - this is localised issue and not worthy of shellacking the whole US market and certainly not global stocks.
There is one upside to the event - the resurgence of the word "Egregious" According to the OED, "Egregious" is defined as "towering above the flock", "Prominent, projecting", and yet it can mean "remarkable" in a good sense or "remarkable" in a bad sense. We look forward to this word rocketing up the management bullshit charts as it basically means "wow that's big" but with no admission of failure.
TMM have to rush off now, but leave you with some questions for the weekend -
Can the catch all "unwinding inflation hedges" be used to describe recent market moves, especially in commodities and gold?
Gold. 1480 or 1680 first? We have learned not to mention this relic and have stayed clear of its debate for the last 18 months having found the subject more touchy than Great Aunt Maud's crack habit. So lets just ask - 1480 or 1680 first?
Are Greek politics modelled on Monty Python's "Life of Brian"? We've already had the "what did the
Romans Europeans do for us?" scene and have now moved on to the confusing list of popular people's parties.
What yield would you have to be offered to eagerly buy Spanish 10yr basef on current information? (Expecting more than "any price lower than market bid" thank you)
Is "Sum of the Parts" analysis more relevant now as this isn't a global crisis but a set of local issues that can be arb'ed on the global stage. Eg.TEF?
Are we mad to think the best fx trade here is to buy aud/jpy?
Will Spanish banks morph into a single EIB/EFSF backed people's popular post office?
Should TMM walk away from the 20% deposit they paid on their Greek summer holiday? Yes, Greece again. The family like it.