Blain’s Morning Porridge – A Wicked Game

by Bill Blain | Jun 10, 2020

The Macro View

Blain’s Morning Porridge – A Wicked Game

by Bill Blain | Jun 10, 2020

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Blain’s Morning Porridge – June 10 2020: A Wicked Game “It’s strange what desire will make foolish people do..”

Where do financial markets go from here? Yesterday headlines were screaming US stocks are now positive for the year! Today it’s “Momentum stalls” as markets pause to consider just how high they’ve risen in the face of the US officially being in recession. The speed at which the 40% March crash has been reversed is “unprecedented”.

It’s not real.

We all know the rally and this market do not reflect any meaningful reality. Get used to it. This rally is not about value. It’s about day traders, get-rich-quick scams, FOMO, and, ultimately, who will be left holding the ticking parcel when it goes off…

There are new rules. Learn them. The problem is… the rules will keep changing. And the foundations of the market are also shifting. The solid bedrock of the dollar upon which markets have been founded these last 60 years could even be crumbling as a distracted America’s global leadership credentials are questioned… (I was going to write “Trumped”, but too subtle I thought.)

If the US and the dollar are being rotated out, then everything you think about markets could be about to judder. (Judder – a critical but little understood market concept: it’s the moment when tiny imperceptible shifts become amplified to the stage where they can be felt shaking markets, and folk start to wake up… )

There are multiple ways in which current markets are consciously blind to the new reality. They don’t reflect the rising coronavirus crisis now unfolding in less wealthy nations, how these could impact commodities, and stir up resource issues (including geopolitical tensions as China seeks to secure external supply lines). The market doesn’t reflect the reality of furloughed workers with limited prospects and their future consumption. It does not reflect the instability of rising debt across sovereign and corporate balance sheets, or the earnings shocks we’re going to see next month.

We know all that. So… they don’t matter?

About Bill Blain

Bill Blain is CEO of Wind Shift Capital Advisors advising clients on alternative asset investments, and author of Blain’s Morning Porridge – his say-it-like-it-is market commentary. He is a well-known market commentator, and a practising investment banker in the alternative private debt and equity sector. His clients include sovereign wealth funds, hedge funds, insurance and pension managers, credit funds and family offices.