Author Archives: ewilcox

Eurocrisis 21/11/11

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Well looke here – we have ourselves an old fashioned Mexican standoff.

  • On the left we have the markets selling every Euro bond it can find driving yields higher and higher, reinforcing the debt death spiral until it gets what it wants – a guarantee the ECB will be a true lender of last resort.
  • On the right we have the ECB and most of Germany refusing to budge an inch, paralysed by the idea of hyperinflation on the one hand but equally unable to propose anything serious as a viable alternative to releasing the Krakken (in the form of the ECB).

FIGHT!

Well this is getting really really nasty now – a true risk off day. Not helped at all by the “super” committee in the US failing to agree – well anything. The only “super” thing about it was how “super’ bad it was at doing its job.

It strikes me that on all fronts at the minute – in the US, in Germany, in Greece, Italy, Spain and possibly even the UK politicians are acting solely to save their own asses instead of doing their jobs and considering the people they represent.

If Merkel relaxed about voters she’d print – or at least have an adult conversation about a way out of this endless depression cycle of negative events driving sentiment and markets lower. Just saying “nein” to everything is not a solution. And neither is hoping against hope the markets will suddenly relent or forget or move on. It won’t. Markets don’t work like that.

If the USA senators cared at all about the USA’s reputation at all they would sit down and have an adult conversation about how to balance a budget (an activity I hasten to add a reasonably intelligent 10 year old could do) and relax about getting voted back in next year.

In the UK Cameron might just admit he made a mistake in cutting quite so fast and come up with a plan B. Yes he can call it A2, or A Plus or whatever. Just get with a plan.

In Greece Samaras could get his head out of his arse and consider he is driving his country into oblivion all for the sake of thinking voters will be stupid enough to forget it was him wot did it and vote him into power next year. Shame on him.

In fact shame on every single one of these politicians.

I am not saying it is perhaps right ECB prints but its _just essential_ they come up with a credible plan in the next few days or weeks. Catastrophe is just a few yield points away.

Sale of Northern Rock to Virgin

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A few things I’ve read over the weekend gave me pause for thought on the sale of Northern Rock to Virgin for £750m.

  • Its emerged that the UK government was working to a deadline with the EU whereby it had to sell the Rock before 2013. So given by selling for £750m it is incurring a £300-400m loss on its investment this only says to me one thing; that it expects market conditions to materially worsen in the next year. If they thought conditions were going to materially improve then it would make no sense to sell at such a loss now. This is an important statement of how the UK government perceives how the economy is going – badly and going to get worse.
  • One of the investors providing the cash for the purchase for Virgin has made the point the Virgin brand has a 100% brand awareness set against a 83% disapproval rating for banks in general. This means one of two things; if successful Virgin will make a killing here. If it isn’t it will mire the Virgin name in the same way as RBS, Barclays or Lloyds has for retail banking. I suspect Virgin will only be modestly successful. Personally I associate Virgin with megastores, records and airlines. Why I would entrust my money to Virgin I’m not quite sure.

CAA Christmas Exhibition 2011

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Went up to visit CAA today to see their christmas exhibition. The visit was a tail of two halves. Lets start with the positive – the Christmas Exhibition is fun, varied and full of things you might want to give at reasonable prices. I particularly enjoyed the christmas tree decorations hung from the ceiling. They worked particularly well if you really got amoung them and walked through them. Go and try it –  you’ll see what I mean! Sadly the one decoration I would have given a home to – a really nice decoration by David Clarke – had already sold so I came away empty handed.

To whats the other half then? Well the other half is CAA is not the same CAA I have grown to love over the years. The sulky girl on the front desk barely  acknowledged me walking in and even less so when walking out. The girl downstairs, a bit more friendly, but (possibly worst for a craft gallery) seemingly clueless about a new artist I was interested in finding more about (and she has yet to send me any details even though I left my details). Finally the standard of work, particularly on the ceramics side, is just so weak and disappointing. I know my standards are fairly high but even so a few years ago I could be guaranteed to see at least one world class work there every time I visited. Its been months if not years this has been the case. I can’t help but feel with the departure of Sarah Edwards some months ago the gallery has somewhat slid on many fronts. If current management or any of the trustees read this then can I ask you to think about the following:

  • Staff must be friendly and welcoming with any visitors coming through the door, if you know them or not. A smile, or hello, costs nothing but silence just says you are not welcome and reduces the likelihood of any sales.
  • Staff must be interested and have, at the very least, a passing knowledge of the craftwork they are selling. To look blankly and say “I don’t know, I’ll look it up” doesn’t inspire confidence.
  • Work must not just be continually recycled for sale. I saw today a Takeshi Yasuda large open bowl that has been in the gallery for whats got to be about 5 years and yet, mysteriously, seems to only increase in price each time I see it. If it isn’t sold after six months return it to the maker and get in new stock. If I wasn’t going to by this bowl at £800 I am certainly not going to at £1,300.
  • While most of CAA’s sales will come in the £100-300 range its important to cater for the more serious collector and have occasionally some really interesting new work by established makers to show at higher prices. With no other serious galleries of contemporary craft left in London this is, to me, a clear example of an area in which they could re-establish their credentials as the best craft gallery in the UK.
  • Finally if you’re going to sell books then don’t let your bookshelf resemble the local library.

Eurozone crisis (18/11/11)

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So another day another step towards the cliff. Developments of the day:

  • Mario Draghi scolded EU leaders for the lack of implementation of the decisions taken at last months summit. This is important only in that it shows Draghi is acutely aware that the ECB is already acting as lender of last resort. He also understands, as per my post yesterday, that the devil is in the details to solve this crisis.
  • Merkel and Cameron clashed over financial transaction tax, use of the ECB and EU treaty changes. Merkel is right to say the UK should either be fully in or fully out. We don’t really deserve to have any say if we are not willing to join up fully to the euro club. On the financial transaction tax I have a suspicion that at best it could be seen as an altruistic tax that is instantly transferred onto the banks customers while at worst it could seal the fate of London as a financial centre. I certainly think it is right Cameron defends the city on this front (but I would say that I work there!)
  • Finally we have reports of an interesting development that German bunds are no longer falling in line with rising Italian and Spanish debt yields. This implies that sellers of these bonds (almost certainly to the ECB) are instead of reinvesting in “safe” bunds are repatriating their money into US Treasuries, UK Gilts or just keeping the cash under the mattress. In some ways this could be the stick that the market needs to persuade Germany to begin to act with a bit more haste in solving this crisis. If they genuinely began to see the knock on effect of the crisis on Germany (which up to now has been the sole beneficiary of the crisis!) I would expect them to move very schnell.

On an unrelated eurozone note I was disappointed to see continued negative comment about Chevron in the states – one of my oil stocks. It seems to me as though they are getting into an argument with Brazil about a spill in one of its test drill sites and oil spills are never good news. They lead to environment damage, litigation and being bared from the country. Far better for the company to cooperate, fix the issue and move on rather than rate it a small issue then get fried by the government that clearly doesn’t believe it. Brazil will be an energy hub in years to come and it would serve the company well to have strong ties with the country.

I’m looking forward to this weekend if only to have the markets closed meaning I can’t lose any more money. I’d like to think next week will be better but at the minute I see no positives on the horizon so I expect next week will be more of the same. At least monday week I can sell if I have to!