Not shaping up to be a good day
October 2, 2017

Mint - Blain's Morning Porridge

Reputations changeable, Situations Tolerable.. Baby you're adorable.

For the avoidance of doubt – the Morning Porridge is unrestricted market commentary, it is not investment advice…

(This is not shaping up to be a good day. Train massively delayed, and emails not working. Getting a bit peeved. But...the show must go on…)

It's the start of Q4 and October, always the most volatile month of the year – and it's started with shock and surprise. Just a few years ago it would have been inconceivable that Spain's vibrant democracy might stumble towards the verge of dismemberment. But this morning…Spain bonds are under pressure. Anyone who thinks populism is dead is profoundly wrong. If it can happen in Spain…it can happen elsewhere. Big and small political surprises define markets..

What did happen yesterday? It's about how the story is told.

Maybe the Catalans got lucky, or maybe they planned it this way, but whatever, they just pulled off a stunning success in terms of managing the narrative and setting the agenda. The world heard and saw exactly what they wanted us to see: the Spanish Government defining democracy by denying people the right to express their desires with violence, guns and tear gas.

In a single day the rebels made previous legitimate constitutional and political arguments irrelevant. It looks like they drove Madrid into and through this crisis - giving them no options or opportunities for dialogue, forcing them to react and successfully painting Madrid to the world as the dictatorial baddies. Now, no one is even remotely interested that the economics conclusively demonstrate what a spectacularly bad idea an independent Catalunya will be. The rebels have reset the whole debate in their favour - polarising domestic and international opinion while seeding their revolution with a couple of million votes.

The referendum was always irrelevant - although we'll hear plenty about its legitimacy in coming days. The only thing the rebels haven't done yet is leave even a very small window open for the Spanish to start negotiations on.

It was a textbook media win. It's an issue for markets. The critical thing for markets is the Catalan separatists have turned what was initially a very small likelihood risk of Spain's wealthiest region decoupling into a relatively high probability event.

What are the likely implications for markets? Does a butterfly fluttering its wings in Barcelona cause a cyclone in Milan? Italy remains front and centre our biggest European risk!

And British politicians should be very careful – I'm thinking you BoJo (foreign secretary Boris Johnson)! Keep foot out of mouth. Don't rule out the populist wee Nicola North of the Wall in Edinburgh declaring her solidarity with the oppressed Catalans, and announcing another neverendum as Theresa May lurches from one disaster to another.

Opportunism and politics go together. Populism gives hope to all kinds of nutters clinging to nonsense hopes - like a former grandee of the Conservative Party declaring "it's not too late to undo Brexit and remain in Europe.."

Meanwhile...Spain is not so far away… unless you are trying to fly there on Monarch or RyanAir…

As Monarch goes down the tubes, how does that affect the growing market in aircraft-linked bonds. As readers will be aware, it's a sector we're involved in, and I'll be scribbling up some details later this morning. Let me know if you're interested. I don't think it's a game changer in aircraft values, but identifies a weakness in some airline models.

And it's the first trading day of October. I'm sticking with my prediction that long-term it's an equity positive market, but short term complacent markets will get a corrective spanking this month. Vix is too low, complacency is too high. When it corrects – get yer buying boots out..

Finally, it was an incredibly busy train this morning. In the ten years since we bought our house in Hamble, the trains from Southampton to London have been getting busier every year despite rising ticket prices, patchy service and the overcrowding. What does it mean? Is it because the economy is heating up, or that more and more folk working in London can't afford to live there? I suspect the latter.

Sadly, the crowded trains bring out the worst in people - like the prat who barged his way in front of the queue of people politely waiting their turn to get on the packed train this morning. Well spoken chap but not an ounce of remorse about his actions. Sat down, put on headphones and pointedly ignored everyone fuming at him. He was bald and wearing a blue Rab jacket, Chinos and brown brogues. Complete and utter bottom.

Back to the day job…

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners





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Mint - Blain's Morning Porridge

Reputations changeable, Situations Tolerable.. Baby you're adorable.

For the avoidance of doubt – the Morning Porridge is unrestricted market commentary, it is not investment advice…

(This is not shaping up to be a good day. Train massively delayed, and emails not working. Getting a bit peeved. But...the show must go on…)

It's the start of Q4 and October, always the most volatile month of the year – and it's started with shock and surprise. Just a few years ago it would have been inconceivable that Spain's vibrant democracy might stumble towards the verge of dismemberment. But this morning…Spain bonds are under pressure. Anyone who thinks populism is dead is profoundly wrong. If it can happen in Spain…it can happen elsewhere. Big and small political surprises define markets..

What did happen yesterday? It's about how the story is told.

Maybe the Catalans got lucky, or maybe they planned it this way, but whatever, they just pulled off a stunning success in terms of managing the narrative and setting the agenda. The world heard and saw exactly what they wanted us to see: the Spanish Government defining democracy by denying people the right to express their desires with violence, guns and tear gas.

In a single day the rebels made previous legitimate constitutional and political arguments irrelevant. It looks like they drove Madrid into and through this crisis - giving them no options or opportunities for dialogue, forcing them to react and successfully painting Madrid to the world as the dictatorial baddies. Now, no one is even remotely interested that the economics conclusively demonstrate what a spectacularly bad idea an independent Catalunya will be. The rebels have reset the whole debate in their favour - polarising domestic and international opinion while seeding their revolution with a couple of million votes.

The referendum was always irrelevant - although we'll hear plenty about its legitimacy in coming days. The only thing the rebels haven't done yet is leave even a very small window open for the Spanish to start negotiations on.

It was a textbook media win. It's an issue for markets. The critical thing for markets is the Catalan separatists have turned what was initially a very small likelihood risk of Spain's wealthiest region decoupling into a relatively high probability event.

What are the likely implications for markets? Does a butterfly fluttering its wings in Barcelona cause a cyclone in Milan? Italy remains front and centre our biggest European risk!

And British politicians should be very careful – I'm thinking you BoJo (foreign secretary Boris Johnson)! Keep foot out of mouth. Don't rule out the populist wee Nicola North of the Wall in Edinburgh declaring her solidarity with the oppressed Catalans, and announcing another neverendum as Theresa May lurches from one disaster to another.

Opportunism and politics go together. Populism gives hope to all kinds of nutters clinging to nonsense hopes - like a former grandee of the Conservative Party declaring "it's not too late to undo Brexit and remain in Europe.."

Meanwhile...Spain is not so far away… unless you are trying to fly there on Monarch or RyanAir…

As Monarch goes down the tubes, how does that affect the growing market in aircraft-linked bonds. As readers will be aware, it's a sector we're involved in, and I'll be scribbling up some details later this morning. Let me know if you're interested. I don't think it's a game changer in aircraft values, but identifies a weakness in some airline models.

And it's the first trading day of October. I'm sticking with my prediction that long-term it's an equity positive market, but short term complacent markets will get a corrective spanking this month. Vix is too low, complacency is too high. When it corrects – get yer buying boots out..

Finally, it was an incredibly busy train this morning. In the ten years since we bought our house in Hamble, the trains from Southampton to London have been getting busier every year despite rising ticket prices, patchy service and the overcrowding. What does it mean? Is it because the economy is heating up, or that more and more folk working in London can't afford to live there? I suspect the latter.

Sadly, the crowded trains bring out the worst in people - like the prat who barged his way in front of the queue of people politely waiting their turn to get on the packed train this morning. Well spoken chap but not an ounce of remorse about his actions. Sat down, put on headphones and pointedly ignored everyone fuming at him. He was bald and wearing a blue Rab jacket, Chinos and brown brogues. Complete and utter bottom.

Back to the day job…

Bill Blain

Head of Capital Markets/Alternative Assets

Mint Partners



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