Interdum stultus opportuna loquitur...

Monday, January 23, 2006

ParisRant: Told You - Money For Old Rope...

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

Short the SPI here... it is money for jam, and will probably end up being one that we ride all year. (Sorry to SPISpyers for leaving the good oil in a public spot, but I can't get access to my mailer from a public internet cafe).

GT - 12:55 a.m., Friday Jan 19th

Sacre bleu Batman... how easy was that SPI short? As I have mentioned to all who asked, the SPISpy has of necessity been in hiatus while we wait for the Froggish telephony companies to instal our fast internet access. As a reslt I have decided to post - in this free spot right here - some medium-term guidance for the SPI... gratis.

I made that last thing sound like it's the fault of the Froggie telephony companies that I on't have fast internet. it's not really... the place we're renting (for a lazy €2000) was supposed to have fast internet, but it doesn't. We have not yet finalised a lease on the little place in le Vesinet; you will not believe how beautiful that area is, even in winter.

over here, €29.99 a month gets you unlimited ADSL at 20Mbps, unlimited telephony (including calls to the US, Australia and the rest of Western Europe) and cable TV with 100 channels. A mobile dea lfor €32 gets you unlimited weekend and evening (after 6 p.m.) calls to fixed lines, and unlimited 3G traffic. Splendid. I especially can't wait for the cable TV - re-runs of Dallas and Love Boat are really doing my head in.

Well, the SPI at the time (12:55 a.m. Oz time, Friday) was just over 4820; as with all medium-term SPI-ing there was a requirement to ride an uncomfortable burst of enthusiasm from the nuffnuff herd... but it's all smelling of roses now (at one stage yesterday moning Oz time, the 'trade' was up 70 SPI points).

honestly, if the nufnuffs were smart enough to read this page, we could save them a lot of expenditure on antacid tablets, n'est-ce pas? instead, the nuffies of the world get their guidance from the saltimbanques who think that the market is their plaything. (Saltimbanque is a word I just learned - it has a meaning clsoe to 'charlatan' but is more perjorative... but not as bad as 'salaud', which is what brokers are as well).

You will note from the above that I envisage trading 'around' this SPI short for a good deal of the rest of the year. Note also that the high for the S&P was 1301 or thereabouts; it is early days yet, but I believe that this will be the high for the year. If I'm right (and I am pretty confidetn that I am) this year will be - as we Parisians say - un cauchemar... a nightmare. You might not know it from the slightly-crosseyed Shiny Happy Faces of the True Believers, but everything points to a great deal of agony for the Common Man.

Western economies are in disastrous financial shape - although their FLOW analytics can be disguised for a time, their STOCK analytics are woeful. By that, I mean that although GDP numbers (measures of output FLOW) can be massaged through hedonics, chain-link indexing and rent imputation (combined, these add about 1.8% to GDP growth and subtract 1.7% from the CPI), the real disaster is in the STOCK (balance sheet) numbers. Debt to income ratios - which are a measure of where consumers, producers and governments are on their intertemporal budget constraints - are at levels which historically associate with subsequent periods of economic dislocation. Forget what you hear about 'flow-flow' relationships (e.g., debt-servicing ratios) which LOOK manageable. These ratios are manageable solely because the price of credit has been aritifically suppressed for almost 6 years; when this unhinges, it will be magnificent to behold, and will probably cause a discontinuous 'change of state' in a good deal of the West - by which I mean a political wave similar to that which is now sweeping Latin America... putting anti-globalisation populists into power. think of the sweep of fascism across post-Depression Western Europe, or the creeping fascism that has permeated some of the West since 9/11... and don't think for a moment that I think political populists have all the answers... like all politicians they have NONE of the answers.