CRASH2: Lalalalalah on the business channels, but one bank says “Sell everything”

“Sell everything except high quality bonds. This is about return of capital, not return on capital.” RBS yesterday

Tom Orlik of Bloomberg has a piece up this morning pointing out that the Shanghai sieve doesn’t say anything about the Chinese economy, so what’s all the fuss about?
It’s insouciant pieces like this one that make me despair as to where Page One has gone. Surely, if the Shanghai has nothing to do with ‘real’ business, then the whole bourse form of capitalism is shot full of holes?
The TV version of Big B had a British asset manager – obviously a bloke with an illustrious past, so he ought to have something worth listening to – opining at the same level as Orlik….that is, ‘business as usual’. The euro, he said, was 20% undervalued against the Dollar. He didn’t interrogate why the Dollar is so ridiculously high. Nor did he venture a view as to whether the euro is worth anything – let aone 80% of the buck. But he was happy about today’s UK retail results, because the word was that the companies involved had beaten analysts’ expectations. I almost never rate such expectations, because most of the idiots involved don’t know what they’re talking about. In turn, I rarely trust ‘results’ because they are always full of massage and obfuscation. But he didn’t venture anything about why Sterling has weakened against the euro – so I will: Osborne’s scooter has lost a wheel, and has a puncture in the other one.
Finally, the Brit asset expert said eurozone equities – especially the banks – looked like “a good entry point for investors”. I’m so glad. Mainly, I’m glad he isn’t my wealth manager.
As well as chucking Yuan at the Shanghai, the PBOC, it now emerges, is upping spend on the currency to balance the onshore and offshore rates. It also intervened several times during last night’s session. But not to worry, because Tom Orlik says it’s nothing to do with business. And capital flight is nothing to do with business, and the price of the Yuan has nothing to do with exports, and the collapsing price of a Top Ten Company has nothing to do with investment in business and sexual intercourse is totally unrelated to population growth.
One of the UK retailers reporting today is Morrisons. Lots of people are jumping for joy because its like-for-like sales are positive. Put out more flags: people should look more closely at its ROI per square foot in general, and its margins in particular. You can’t have the cheapo sector storming ahead without the middle fatties suffering somewhere along the line. Only Sainsbury has given out the right message – watch the pennies but don’t compromise on quality – and it’s paid off. Tesco and M&S, by contrast, are all over the place.


The overall point I’m making here is that no major television 24/7 channel is paying any heed to the underlying causes of what’s going on: the growing dominance by, and dysfunction of, bourse globalism, the atrocious lending history of banks, the runaway nature of the UK national debt, the inexperience of the Beijing politburo, the global slump being disguised with QE, the inability of Britain’s poorest 50% to drive a consumption recovery, the overdependence of the London City on commodity trading, the planetary dependence on debt for growth, and the hare-brained geopolitics of oil overladen on an already plunging commodities sector.

The price of oil is now $30.35, and RBS thinks it could drop to $18. Rubbish Bank of Shakey is, without question, one of the most doubtful investments in Europe; but on the other hand, when it comes to being in the mire, there is the old adage that it takes one to know one. On a landscape full of people looking the other way as a mushroom cloud sprouts on the horizon, at the moment RBS is a notable exception.

“Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” said its latest client note. The investment arm expects stock market corrections of around 20%, while having the nous to note that both investment lending and world trade are way, way down. What, indeed, is the point of rising liquidity if nobody has the confidence to borrow it?

RBS has been ultra-bearish for six weeks now, and it’s hard to argue that they’ve been wrong: the markets are down roughly 6%, and as far as I’m concerned the argument that China doesn’t matter is codswallop: the economy bone is connected to the Shanghai bone, and the China bone is connected to the global bone. Any other view is just idiocy or PR.

Yesterday at The Slog: The long arm of the US means it’s game over for Brexit

44 thoughts on “CRASH2: Lalalalalah on the business channels, but one bank says “Sell everything”

  1. Problem is – no one knows who to take seriously anymore. AEP has cried wolf too often for his predictions of doom to be treated at face value. Equally, RBS have in the past been shown to either grossly deceitful or incompetent or both. The mainstream media are largely in the pocket of either big business or the government. So we wait and see.


  2. Aren’t all these newspaper headlines aimed at steering the herd? After all, as the Ghost mentioned yesterday, the salesman needs to sell himself first – to which the conclusion can only be this: that salesman can then sell almost anything to the undiscerning, After all, if they believe him first, have they the discernment to appreciate the things he’s actually selling???

    The point is that the Mainstream Media know this full well, and have established a form of (what one might call) trust in people from an early age. Thus, they will believe what they see in the press.

    Well we all know this, don’t we?

    Does it matter to the punter that AEP is crying wolf again, just as long as they can invest safely?? Only now look at the other side of the issue: imagine a world where a bank needs to make money by tossing a few bundles onto the roulette wheel of the stock markets, but the bank needs to know it can win. So: tell the gullible what they should do and the banks can move in before them and make a few bob.

    It helps the likes of Britain to maintain the illusion of an economy, becase those few bob made by the bank actually pump up their GDP figures.


  3. You know that bit were all those Religions, Christians & associated franchises for instance, start bothering their, same but slightly different, but mine is the right one, All powerful, sort of thing. I particularly like the pentecostal version, there’s true sole in that. (Mind hoped on to Crewfish Gumbo, then. (Must have been the word sole, & my Dyslexic traits, what am I like!)).

    Is all this current talk & all these news articles “The Marketeers” support base incanting & spell casting to a greater power, a bit like raising the Pentagon, but on a Global scale? Although “Bootstrap” came to mind then… sigh.

    I digress, always. Has anybody seen them cordoning off pavements around tall buildings in “The City”? There are going to be some important “Health & Safety” issues if not. It would be terrible to think of another innocent member of the public getting caught out & being sacrificed inadvertently, rather than through the correct governmental public policy route.

    I’m in equal ways cursed & enraptured with a mind that finds patterns & cognitively coalesces them in the most unlikely ways, sort of over recursive in a way. I often used to wonder why I was misunderstood?

    But on a brighter if not more personal note, this article has finally provided me with an almost complete insight of the meaning to the lyrics of a Genesis Song I first heard in 1973. For this at least, thank you John.

    “I know what I like, & I like what I know… There’s a future for you in Fire escape trade…” So not all bad, well for me anyhow.


  4. I think it’s all a part of the game, confuse as many as possible for as much of the time as you can, hasn’t that been Gideon’s game?
    As Tom says, no one knows who to take seriously anymore. Expecting a 20% correction is a bit like creating a correction surely? And when, and over what period? Should one correct now, or wait a bit? As JW has said many times before, there’s no such thing as a gradual panic…


  5. There is definitely a market for Doomsaying! I remember listening to the late Bob Beckman every morning talk down the London property market in the 1990s.To the ongoing derision of Mrs Ericle, I refused to invest my hard earned shekels in the same; similarly intoning the fundamentals to her of an inevitable crash. Everything the Doomsayers say is absolutely logical but overlooks the fundamental mover of any market: sentiment. Add to that an inbuilt market desire for a lie to be truth – a mutual fear-based investment in things are not so and the chances are that THE enduring fundamental market adjustment, that the true situation dictates, will not take place now. This may be THE moment but I doubt it – there’s enough sentiment about currently that wishes for it not to be. Will it come to pass eventually & inevitably? A ‘definite maybe’ from me on that one.


  6. Investing decisions can be like reading the throw of the bones or the tea leaves in your morning cuppa. But one thing is for sure, the spivs in the City can make money whether a stock/commodity goes up or down.So it is for sure that a considerable amount of manipulation is in play to rope in the herd of mugs who are susceptible to the ‘news and views’.
    What is not without doubt ,is that this bubble,financialized economy’ can not continue without a correction.Only a fool would predict a time, but there is a smell of sulphur in the air.
    The Baltic Dry Index chart, which indicates the freight rates for worldwide ship cargoes is at an all-time low, meaning that shipowners are transporting at a loss or laying up ships. This is a sure sign that world trade has near collapsed.
    The first US export shipment of oil in aeons has just left Houston.This when oil has hit circa $30/barrel., down from circa $120/barrel, It does not compute, unless someone is desperate for liquidity/cash.


  7. Things are bad.
    Cash in pocket.
    Look for the signs – up or down – w/c 8th February. That will be the trend for the year.


  8. It’s like “Blazing saddles! Great to see all those Ghost boys singing spirituals.

    I don’t know if it’s related, but there’s been news in about subsidence in Grand Lodge. Apparently the foundations are sound, It’s what they’re built on that’s not. Sources have said that the owners have been regularly checking them themselves with their own equipment & they have always been truly on the level. An independent inspection from a North Italian company were unable to see any problems either. At the moment it’s being blamed on a historically stuck bubble.


  9. My Parents later told me that they didn’t want me to grow up to be like the lairy barrow boys, I might have got it wrong but, I thought they meant Allen Sugar.


  10. I was watching the movie “Margin Call” last night where the bank sells all its dodgy paper in one single day shortly before it all becomes worthless. Are we heading into life imitating art territory ?


  11. “In turn, I rarely trust ‘results’ because they are always full of massage and obfuscation.”

    According to a podcast I heard yesterday, we all have our eye on the share price for the collapse, but that’s the wrong ball as this is manipulated by govts everywhere. The real unemployment figures are something like 25% and the ones in jobs are barely doing anything. The other real figures are the Baltic Dry and the VIX which I’m told are a mess via the Hedge. Jesus I wish I’d gone to work in the City in the 90s!

    “But on a brighter if not more personal note, this article has finally provided me with an almost complete insight of the meaning to the lyrics of a Genesis Song I first heard in 1973. ”

    That album (Selling England) we tend to play often in the car on caravan trips to Spain. If you listen to the atmosphere generated it’s one very sad polemic about what was going to happen tot he UK in the 70s which was so spot on.


  12. Poverty has nothing to do with benefit cuts

    Homelessness has nothing to do with no/ inadequate housing

    Unemployment is solely the fault of the individual

    Disability is all in the mind

    There’s no such thing as society

    All war is in the national interest

    The queen is innocent


  13. Thanks Desmond for providing the link,this doesn’t mean that ships weren’t unloading or reloading,only that not enough activity is taking place to keep a train of shipping moving & makes cutting steel jobs all the more dangerous to any chance of a upturn happening any time soon!since it could be months before steel arrives & when it does the markets would have traded it out of economic reality!


  14. Brilliant, GrandPa!

    Read carefully, it says:

    For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.

    Which means there’s still stuff moving towards Europe, where there is still a glimmer of an economy.


  15. The thing is: i am just about coming to the end of all the emergency supplies I bought last September. I didn’t want them to go off and we had a lot of visitors over Christmas. Should I restock? Or is this going to go on for ever?


  16. I suppose what I really want an opinion on is this : is there a serious risk of civilisation collapsing and my children going hungry? (i live in Cornwall )


  17. i live in cornwall Jackie.. my opinion has been the same for 7 years plus…. plan for the worst as best you can. food store for three months minimum. plus other things you can do… water and warmth bearing in mind we may all be required to go off grid.. hope for the best and plan for the worst… batteries , candles, electric generation whatever you can and hope that it wont be required..


  18. I suggest Marine Traffic .com and the excellent app . Shows worldwide shipping in real time ,where they have been ,where they are headed ,what they carry ,photos ,tonnage etc.


  19. Thanks, both of you, for the links.

    Jackie, are you able to grow your own? After all, we’re heavily dependent on diesel-driven transport for most of our food. So your own stuff – and Cornwall is lovely and warm, you can harvest your early tatties in April, if not earlier. That means your “hungry gap” (where the stores are running low and there’s nothing growing) will be very small. Plus all those dandelions, nettles and other things one can eat… that nobody seems interested in these days.


  20. Thanks for your replies Desmond and Gemma. I think I’ll be off to the supermarket again. We have chickens and fruit bushes but all my attempts to grow other things have been disappointing. Probably because I get bored after the first flurry of activity. Housework is enough of a daily tedium without weeding etc added into the mix. However I do see the point of survivalist rather than recreational gardening. My husband is fed up of me wasting money on plants and seeds only for them to rot. It is very wet here as you know Desmond.


  21. a bit off topic, but apropos to the baltic dry readings, railroad cargo in the U.S. dropped the most in six years in 2015.

    “We believe rail data may be signaling a warning for the broader economy,” the recent note from Bank of America says. “Carloads have declined more than 5 percent in each of the past 11 weeks on a year-over-year basis. While one-off volume declines occur occasionally, they are generally followed by a recovery shortly thereafter. The current period of substantial and sustained weakness, including last week’s -10.1 percent decline, has not occurred since 2009.”

    BofA analysts led by Ken Hoexter look at the past 30 years to see what this type of steep decline usually means for the U.S. economy. What they found wasn’t particularly encouraging: All such drops in rail carloads preceded, or were accompanied by, an economic slowdown.

    (found this on david stockman’s contra-corner site.)


  22. Jackie – get to know your local grocer and help them for free waste food. I do this and get boxes of the stuff. Also, Google seed saving and permaculture – check out Toby Hemenway’s “Gaias Garden” – it is a classic.


  23. Nik-Nak paddy wack ..give a dog bone ..and he will come rolling home.
    krap! I know.
    but too much shit flying about: Old sage say ” If you are up to your chin ..init Don’t invite more into the tub”


  24. Jackie – if it is the supermarket, tinned and bottled stuff lasts for ages (usually well beyond the ‘sell by date’). Plus it doesn’t need an electrically powered freezer.

    If you’re on a clay soil (and our soils in Plymouth were pretty claggy) composting will lighten them up a lot – as will some real manure. At the moment I’m on a sandy soil, and I’ll tell you, I’d prefer clay any day: getting a sandy soil to respond is a very slow business. But it’s nicer than housework…


  25. Jackie Growing stuff is a skill like any other , it doesn’t just happen so stick with it .Ask,watch ,look read and as Gemma said ,get your soil right , heavy ground is not easy so loads of compost. Our local tip sells composted green waste , a large trailer load for about a fiver.


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