SNB's Ark

A reading from the Book of Genesis, Chapter 7, Verses 1-24:

7:1 And the European said unto SNB , Come thou and all thy house into the ark; for thee have I seen righteous before me in this generation.
7:2 Of every clean currency thou shalt take to thee by sevens, the cash and the debt: and of currencies that are not clean by two, the cash and the debt.
7:3 Of foul peripheries also by sevens, the cash and the debt; to keep them alive upon the face of all the earth.
7:4 For yet seven days, and I will cause it to rain upon the speculator, forty days and forty nights; and any value in your currency that I have made will I destroy from off the face of the earth.
7:5 And SNB did according unto all that the European commanded him.
7:6 And SNB was two hundred billion short when the flood of CHF selling was upon the earth.
7:7 And SNB went in, and his sons, and his wife, and his sons' wives with him, into the ark, because of the flood.
7:8 Of clean currencies, and of currencies that are not clean, and of foul peripheries, and of all the debt that creepeth upon the earth,
7:9 There went in two's and ten's unto the SNB ark, the cash and the debt, as the European had commanded SNB
7:10 And it came to pass after seven days, that the flood of CHF were upon the earth.
7:11 At six hundred billion short, the SNB, in the second month, the seventeenth day of the month, the same day were all the rules of monetary policy broken up, and the taps of QE were opened.
7:12 And the rain of CHF was upon the earth forty days and forty nights.
7:13 In the selfsame day entered SNB, and Hildebrand , and Jordan, and Danthine, the sons of SNB , and SNB's wife BOJ, into the ark;
7:14 They, and every Central bank after his kind, and all the policy makers of their kind, and every creeping regulator that creepeth upon the earth after his kind, and every foul politician after his kind, every bid of every sort.
7:15 And they went in unto SNB into the ark, cash and debt and two of all the structures, wherein is the breath of life.
7:16 And they that went in, went in cash and debt of all ratings, as the European had commanded him: and the European shut him in.
7:17 And the flood of CHF was forty days upon the earth; and the levels increased, and bare up the Ark, and it was lift up above the earth.
7:18 And the flood of CHF prevailed, and were increased greatly upon the earth; and the Ark went upon the face of the world.
7:19 And the flood of CHF prevailed exceedingly upon the earth; and all the high debts, that were under the whole heaven, were covered.
7:20 Fifteen trillion upward did the CHF prevail; and the mountains were covered.
7:21 And all debt died that moved upon the earth, both the foul periphery, of Greece and Italy and Spain, and of every creeping crisis thing that creepeth upon the earth, and every speculator.
7:22 All in whose balance sheets was the leverage of shorts, of all that was in the deflationary land, died.
7:23 And every bearish substance was destroyed which was upon the face of the ground, both hedge funds, and day traders, and the creeping blog things, and the foul bears; and they were destroyed from the earth: and SNB only remained alive, and they that were with him in the ark.
7:24 And the CHF prevailed upon the earth a hundred and fifty days.

Swiss Jeez

We were going to write something on Dax. But the Swiss move has buried us with related stuff.


Here's the SNB statement:

The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.

The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.

Even at a rate of CHF 1.20 per euro, the Swiss franc is still high and should continue to weaken over time. If the economic outlook and deflationary risks so require, the SNB will take further measures.


TMM translation -  If you dare to try and trade EUR/CHF under 1.2000 you will be made to sit on the naughty step.

Some quick TMM thinking aloud -

SNB just announced that they are the World's issuer of currency and liquidity provider of last resort.

This is the boldest response we have seen from anyone during this crisis. They must have been watching Crocodile Dundee .."That's not an intervention.... THIS is an intervention"

SNB have handed monetary control of Switzerland to ECB

SNB have lost control of their balance sheet.

SNB may also lose control of their mandated responsibility towards price stability

Is pegging yourself to a currency that may split in two the wisest thing to do?

Is the act of pegging to euro to be read as a huge vote of confidence in it?

Swiss rates "should" converge with Europe if currencies are pegged.

BUT If you have the choice of buying CHF or EUR assuming that they are pegged, then on a "will it be there tomorrow" front you always buy CHF  

So  that means that interest rates CAN be different and will solely reflect Euro blow up risk plus SNB failure risk.

So that means that the EUR spread over CHF is now the new bench mark of Euro blow up risk. ( CDS like)  

The difference between the market price of  Eur/chf  volatility and zero  should be seen as the Market perception of the risk of the SNB failing.

EURCHF 1 month Vol though off 8 vol is still at 14%

This meant to be unilateral, but is it a clue of G7 intent?

Whether it works or not, this may well be the sentiment turn trigger we need to turn current uberbearish mood.

That move must have been RV hell.

Can all Eur/Chf spot traders please report to HR to arrange more time with their families.

And finally -- Pegs can always be moved !

Rapberry Jam

TMM thought they would make raspberry jam over the weekend but due to a typo ended up with a rapberry jam (having failed to make a rose hip-hop syrup). So with apologies to the Sugar Hill Gang we share what we came up with.

I said a dip, dub the QE the QE
To the double dip, a you don't stop
The print it to the bust bust boomie say up jumped the boogie
Of the unemployed numbers on the street.

Now what you hear is not a test, I'm gamblin' with the bet
That me, Barry and QE will move that GDP
See I am Wonder Ben and I like to say hello
To the poor, to the rich, in the red, the black, feeling blue or mellow
But first i gotta bang bang that boogie, oh that boogie
Unemployment that bangs the economy
Let's hope, that it does stop
It's a riddle that will make the US crack.
Well you've heard my voice and I brought two friends along
And next on the mike is my man Jean
Come on, JC, sing that song

Check it out, I'm the E. C. B. not the I. M. F.
And I target C. P. I.
Ya see I go by the name of the doctor of the tricks
And these are the reasons, I ll tell you why .
Ya see I got more bonds in the periphery and most of em are in BTP
I got rules I break, I got two big mates
That no one would dare to whack
I got a French continental and German temperamental
So after you sell, I can come in and buy
And ban short sellin', to make you cry.
I got big deep pockets that no one can see
And if they ain't that big I can use QE,
Hear me talkin' 'bout bailouts, credit lines
More money than the p'riphery could ever spend
But I wouldnt give the p'riphery , or those bums from the others
Not a dime til' they sort themselves out.
They got their hotels, motels but what they gonna do today? ( Say what?)
Ya see i can buy their debt, but that don't count
No mark to market you see?
So I can go down to the wire
But in the end it just dont matter
'Cos I am the ECB!

Well, it's on n on n on on n on
The bet don't stop until it all breaks down
I said I'm S A F E, a PB with another OC
I said I go by unforgetable name
Of the man from China you see.
Well my name is known all over the world
By the FX laddies and the mining Bruces.
I'm going down in history
As the baddest raper there could ever be
Now I'm selling the highs and ya feeling the lows
As I stamp all over your toes.
Ya start popping your jibes and stomping your feet
And moving trade bodies to me defeat
And there damn you start doin' that freak
I said damn, right, outa your seat
Ya throw your hands high in the air
Ya rocking at my FX piss taking affair.
Well ya can ruck, but I just don't care.
About your losses that I'll never share.
Now, I'm not as tall as the rest of the gang
But I rap to the bet just the same
I got a little face and a pair of brown eyes
All I'll do to the markets is hypnotize
singing on n on n on n on
The bet dont stop until we all break down

Everybody go hotel, motel, Holiday Inn
'Cos your home ain't yours, it's reposessed in the end
It's a skip, dive, what can I say
It's the only place you can afford to stay
So I take a cut in pay and shell half it out
I give the rest in my pay to master Bee so he could shock the house
It was twelve o'clock one Tuesday night
They were rockin to the beat and up for a fight
Everybody was dancin' on the floor
Doin' all the things they never did before
With this high high debt, with no ceilin'
The amounts they talked were just obscene
As the bill passed further into the house
All the Reps checked out the tax baloons
It came to my table, looking for a rise
So i said to myself, it's time for me to release
My policy mix, I call my masterpiece.

And now people in the house this is just for you
A little rap to make you boogaloo
Now the group ya hear is called "phase two"
And let me tell ya somethin we're a helluva crew
Once a week we're on the street
Repo-ing bills and making em sweet.
For you to party ya got to have the move
So we'll get right down and give you the groove
For you to dance you gotta get growth
So we'll get rates right down, and we're on oath.
Now the system's on, though the jobs aren't there.
Ya definitely having a rocky affair
But let me tell ya somethin though I'm loath,
That to have a party ya got to have growth
So when the party's over you're makin' it home
And tryin to sleep before the break of zone
And while ya sleepin' ya start to dream
And thinkin' how ya danced on the borrowing scene
My name appears in your mind
Yeah, a name you know that wasn't right this time
It was "phase two" just a doin' a do
Shakin' ya down 'cause we could screw you
To the rhythm of the bet that makes ya freak
'Cos you know that soon you ll have nuthing to eat.
To the rhythm of the bet to the bet the bet
To the double dip dip that it makes ya freak
To the rhythm of the bet that says ya go on
On n on into the big break down
Now I got a man comin on right now
He's guaranteed to throw down
He goes by the name of Wonder
Come on Wonder Barack do what ya like

Like jobs for all, that's sweeter than honey
Like make us millionaires with all the money
Like tax rates that WE will set
Like inventing a bank that does not bet
Like a healthcare system that pays its way
Like giving the poor a proper say
Like exporting goods to the rest of the world
Like giving us worth that isn't Gold.
Like trying not to cast your wordy spells.
Like trying not to invade anyone else.

'Cos it goes on n on n on on n on
We ve had it up to here when we hear your song
The world is bust, what you do is wrong.
The CB boys have had their fun
It's now up to you, the POLITICIAN.

Tayloring a Pantomime Bear

As TMM noted yesterday, a new month brings new appetite to shoot for one's favourite trades, and given that most folks still view the past week's bounce as primarily the result of month-end re-balancing (whether flattered by expectations of Fed easing or otherwise), the default response is to "sell". The TMM IB sentiment meter is still firmly entrenched in bear-mode, with not even a reasonable ISM print able to turn things around, with many using the spike as an opportunity to sell against the 50% Retracement level of the SPX move down from late-July to mid-August. Indeed, this morning, there is no shortage of emails in TMM's inboxes expressing the view that "even if payrolls do surprise to the upside, risk won't be able to rally" and the sheer glee with which punters IB-blasted "*DJ Troika Suspends Greece Inspection Visit" accompanied by bellicose statements relating to the fact that Greece is a mess, and the periphery is a mess, but carefully ignoring to report the later *GREEK EU-IMF REVIEW `NOT SUSPENDED', GREEK OFFICIAL. TMM once again ask "But is that REALLY 'new' news?". Of course not: the European situation is, at best, a muddle through and it is hard to credibly argue that anyone was expecting anything but negative news-flow to emanate from the region. TMM are nonplussed.

Back to the ISM data. TMM have learned over the years that punters never let the facts get in the way of a "great" trade, and yesterday was no different, with bears arguing that even though data surprised to the upside, the trend is down and therefore "down we go". The trouble with this view is that ISM does not point to a recession, and even though there has been a sharp bounce in equity markets, they are still pricing a material probability of either recession or a permanently lower-P/E ratio. Now, to the first point, assuming the consensus are correct with respect to next week's Non-Manufacturing ISM print, TMM's survey-based model would imply GDP growing at around a 1.75% annualised rate (see chart below). Not great, and certainly below stall speed but under such a scenario, earnings are certainly not going to be falling. The blended 12m EPS forecast on Bloomberg of $107.88 for the S&P500 implies just under 17% earnings growth, but even if one assumes something more conservative like 9% EPS growth would put the S&P500 at 1313 with the current P/E of 13.17.

To the second point, TMM have more sympathy. The recent volatility in both financial markets and in macroeconomic volatility have certainly lowered the "fair value" for the valuation multiple in recent months. And while P/E models based upon macroeconomic and financial inputs are highly sensitive to the regression period, for the record, TMM's version (see chart below) is pointing to a multiple over the next 6months of around 12.3x, which would put the S&P500 at something like 1285 (using the blended past 6months/forward 6months EPS). And if applied purely to trailing earnings (i.e. - assuming zero earnings growth, something that appears very unlikely given the above growth points) would still only put the index at 1125. Of course, should volatility fall - something that TMM expect given policymaker actions both at national and supranational levels - then this macro model-implied P/E ratio will move higher again. TMM thus find it very hard to argue that the market is anything other than cheap and, at worst, only slightly overvalued.

And now, to a final point. TMM are often greeted with the statement that if the data is bad that means we're going into recession, but if the data is good that means there won't be any QE3. The trouble with this argument is that the actual reality is far more subtle. To see this, think about what a Taylor Rule actually means in qualitative terms: it tells you what the policy rate should be based upon the inflation gap and the output gap. In English, that means "If growth is below trend, then policy should be eased provided inflation allows it". The worrying point, in this respect has been that core CPI has been rising. However, this is likely to peak this month as the low base effect from last year's deflation scare drops out of the calculation. Regardless of overshoots in both directions and base-effects, a simple old-fashioned output gap model (see chart below, brown line) of core-CPI (white line) has been pretty good at getting the broad trend in core inflation right since the mid-1990s. To the first point, the "good" data still implies below-trend growth, and unless the data improves to the point of implying 3% growth, then orthodoxy would imply that monetary policy should be loosened to offset the widening of the output gap. Simply put, unless the data is *very* strong, QE3 is coming.

And with that, TMM wish their US cousins an enjoyable weekend but not before leaving you with TMM's analysis of the NFP numbers later today.

P.S. - And finally, TMM must extend their heartfelt sympathies and best wishes for a speedy recovery to MacroMan who, we have just been informed, has blown apart his Anterior Cruciate Ligament in his OTHER knee.

New Month, New Euro Break-up Talk.

A new month has brought on renewed thoughts of Euro break-ups. We have been asked in our comments column what we think and rather than just replying in the comments column and having nothing else to say today, we thought we would make a post of it. Most of what we feel we have expressed before but to recap -  





TMM think, like most, that this is now a political problem requiring political solutions but one must bear in mind that the whole Euro project is the politicians most precious baby with so much dependant politically on its success. The clues we have had from previous high ranking statements are along the lines that they would do "EVERYTHING" (and read "anything" within that) to protect their baby. TMM suggested sometime back that this could include short selling bans and though comments pointed out this would be useless, they have indeed embarked upon direct controls, even though the market sees them as futile. The big difference between this sovereign crisis and the banking crisis is that the sovereigns are in charge of the rules and can change them to suit themselves (as we have seen throughout the unwinding of the Euro dream). The debate should be just how "Gadaffi" the Eurocrats go in defending what they see as theirs. They may well end up holed up in Brussels (like Sirte) denying the obvious and fighting to the death.  





If there is to be a Euro break up we see it coming not from the ejection of the PIGS by the core but by "voluntary" resignation by individual countries, much in line with the "decided to spend more time with their families" resignations we see in our world. But this is all a long way off, for as many point out it would be short term disastrous for any indebted nation to step out from under the umbrella of European protection they are currently enjoying during this storm. More likely is the pressure from the core on the periphery to "do something" will increase to the point where the periphery nation has a stark choice. Do what the Eurocrats demand or voluntarily walk the plank. A tough call, when the cutlasses of the Eurocrats are being sharpened but the periphery can see the sharks below.





The real problem is social strife. The tightrope of acceptability in the relevant countries is the riot line, but of course the locals, instead of smashing up their own countries in anger, should go to Brussels and Frankfurt and protest there. TMM have long expected farmers from the periphery to take their muck spreaders North for a day out of graffiti  work. We suppose one extreme action that may "focus the minds" would be for the whole populations of the periphery to move into Germany, pitch camp and build homes in their countryside and claim minority rights.





In the short term the ECB have actually been very effective at controlling the speculators main tool of attack by shutting out the periphery debt from play. The CDS market is left for the speculators to beat up on but we think that CDS is a mugs game and really should not be cited as a true example of reality. TMM feel that this attack by the market will be repelled only to be fought again another day.





...................



P.S. TMM have just seen the light - There IS an answer and it lies neither with the politicians, nor with the central bankers. It's simple. Just call in the Human Resources department! They ALWAYS know the best way to arrange a "voluntary" redundancy.



P.P.S. What ever happened to their proper titles of "Staff Department" or even "Personnel"? And who in God's name ever allowed them to wield more power than the business managers they are meant to represent?

Nothing Exciting Happened Today

TMM get the feeling that the market is very well positioned for more bad news, which in the big macro scheme of things is just fine. The US economy is pretty screwed and until the great reckoning of wealth and cost rebalancing between East and West occurs, it will continue to be so. But we can't play a 10yr view everyday or this blog would become very dull with daily posts just saying "Still f**ked". Perhaps we should have a system of long term macro flags along our banner showing the 10 yr view which we hoist and rarely change.

But in the shorter term run of things, where we have to earn a dividend to pay the costs of our daily lives, we can't afford to just sit and wait for the great "F**ked trade" to pay off and that is actually the problem with playing the markets. The table is not level and the need to make a daily crust just to survive, or even to pay for all the infrastructure needed to trade makes the whole game biased against the player. As costs of entry are going up through taxes and regulation whilst the pot of returns is falling - dividends and bond coupons are effectively the only money coming into the game when interest rates are effectively zero with other returns just one side of a zero sum game. With this happening perhaps we should look for the amount of life that the financial ecosystem can support to fall, which is just what you want if you are a western government determined to rebalance power away from the evil banker and speculator. But as the financial pond dries up the fish within it start flapping and thrashing trying to survive. The UK banks are today protesting against being allowed to die (or be sliced up alive) and smaller investors are desperately looking for yield on their investments. In the big picture this is probably a good thing. You can't have a country running on the gains it hopes to make at a Casino despite the Equity bubbles and Housing bubbles doing their best to prove otherwise. Of course owning the Casino is a different matter altogether, and the major financial centres of the world have brought disproportionate wealth into their domicile economies. Unfortunately in London's case Vince Cable doesn't seem to see it that way and is determined to go Holy and upset the tables of the money lenders, no matter what revenue they may bring into the local economy.

The financial blogosphere is also doing its best to whip up action and, similarly to the main stream press, appears to thrive most on sensationalism and bad news sensationalism in particular (Hero Zedge - looking at you). The same signals are being picked up in TMM's IB chat indicator, with banks providing about a 20/1 ratio of bad news headlines to good. And that isn't just because there ARE 20 to 1 bad to good news stories out there. We mention this because we have noticed a trend in this blog's comments. Currently if we mention anything bearish the comments are alive and buzzing and article referral is rife. If we mention anything bullish and the markets then fall the comments are again rife (normally with goading). However if, like yesterday, we mention a bullish tone and the markets stay flat or creep up, then their is relative silence. Now is this an indicator of market positioning or not? Or just a reflection on the lack of any mention of anything frighteningly terrible?

So here is today's news:-

• UK August weather was unsettled and the coolest since 1993.
• No riots in the UK today, despite no action yet being taken to change society.
• Seismic activity around the world didn't cause any disasters.
• Italian unemployment came out at 8% exactly where forecast.
• The equity markets moved a little bit higher.
• The Eurocrats have not issued conflicting statements today.
• Libya is about to be reunified under a new leadership.
• The London Olympic construction is ahead of plan and on budget.
• Bill Gross didn't surprise the market when he used nonsensical and factually inaccurate analogy.
• No Republican contender has vowed to open a can of whoop ass on the Beard.
• The Oil price is virtually unchanged from where it was the day the FOMC announced QE2.
• Arsenal are still useless.
• Pro Farmer came out with a constructive 148 bushels per acre for this years corn crop. bang in-line with what was the most accurate reflection of their ear counts in the seven states they covered.
• TMM have a nice cup of tea, with a biscuit.

And finally, news from a year ago. 30th August was the start of a 6 month equity rally.

Lets see if that lot lights up the blogosphere!

Checking Our Bearings

Amazing how quickly time goes when you are on holiday isn't it? Also amazing how exhausting a "holiday" can be. Of course returning after a long break involves vast amounts of deck clearing as the x grillion emails and Bloomberg messages need deleting. TMM have long believed in the "composting" method of email management whereby they are all transferred to a "compost heap" folder and left to rot. Those that were important are bound to be followed by urgent chaser reminders which can then be actioned, otherwise if nothing results after 2 weeks the whole lot can happily be cleared out.

As an aside TMM are hugely in support of an idea once floated by AOL suggesting that emails are priced. Just a cent or so each, with the money paid by the sender going to the account of the recipient. For most usual users this should net off pretty flat but it would be enough to make folks think twice about the value of the mail or copying in the whole world. It would put an effective end to spammers and limit most of the crap we receive.

Anyway, back to less mundane issues. The markets.

It feels as though the past 2 weeks have been a rumour-fest with journalistic pieces running the show and markets following. Our long held view that 2011 is a rerun of 2010 with respect to sentiment and topical focus is still on track with the US having overtaken Europe as the focus during August and the expectation of more US QE rife. Our thoughts earlier in the summer were that the difference would be that this time there would be no further stimulus and, though that is looking less likely, we may still escape direct QE as we are now expecting something from Obama on Sept 6th. Having taken on Krueger there may well be some clever micro reform package on the way.

But the sentiment remains very similar to 2010 and that sentiment does seem to still be firmly parked in the bear camp. With equities having put in a potential double bottom and the carry monkeys coming out of their cages again it looks like the credit markets are the current banner being waved by the bears. In fact if we look at equities through SPX and carry through AUDCHF and credit through the European Itraxx Crossover, we can see how the last 2 weeks have seen some massive divergence.

But TMM feel that the credit markets are dominated by CVA desks and spec players with no hedging vehicles to play against in the summer months. In other words, we think that the credit squeeze is the part that is out of line and is just as much a function of a feedback loop in negative sentiment as are some of the effects we are seeing through sentiment driven data such as consumer confidence, Philly Fed, PMIs, ISM etc. So where as this soft data may be just that... soft, the hard data is beating it. Yesterday's consumption data was actually very strong and we think that US GDP forecasts are about to be lifted by about 1%.

Europe is on an edge still but the ECB does appear to be holding back the speculative hordes by forcing shut the BTP-Bund spread through artificial means. But with Jackson Hole behind us and a relative lack of Eurospeak for the last 2 weeks (August beach inspired STFU policy), we can't be far off another Euro tape bomb. However it does feel as though the market is already positioned for renewed strife (EURUSD with the risk reversals still hugely skewed to the downside) so any shock may well not see the calamitous price action many are hoping for. Of course we have month end madness ahead and it would appear that EURUSD selling is the bias for the fixings, so it may be hard to separate noise from news.

As for China, We were surprised at the (unannounced) change to their Reserve Ratio Requirement definitions. IT seems to have knocked onshore A shares but H shares and the Hang Seng have rallied with the rest of the risk-on move into Labor day. TMM can't really work out why. This change in RRR requirements is tantamount to forcing Chinese banks to bring a bunch of off balance sheet stuff onto their balance sheets and then reserve for it. We may be mad, but that does sound like credit tightening and might let the air out some of the letter-of-credit metal financing schemes that have been very fashionable as of late to say nothing of all other forms of sketchy trust (rhymes with SIV) structures. Add to that a whopping CB issue by Sinopec for... Um... Yeah, nothing in particular and TMM feel that anyone looking at Chinese equities as cheap needs to take a closer look.

In fact the move to push this stuff on balance sheet seems to come right out of Fitch's playbook, written by the way-too-smart-to-work-at-a-ratings-agency Charlene Chu. Here is a snap from her outline of how Fitch calculates total credit vs the PBOC. It appears the PBOC has just decided to adopt the Fitch approach now.

To that end TMM are casting their minds back to the last time a bunch of stuff got pulled back on balance sheet and end up find ing it hard to buy the dip here in China. Particularly as companies are doing a pretty solid job of blazing forth their capex in the face of collapsing returns on capital. TMM's Bete noire of the Hang Seng, Chalco and Suntech Power below. When TMM think of what they would say to Chinese corporates facing chronic overcapacity, declining margins and rising interest costs continue to invest, then the line "If you want to get out of a hole, stop digging" comes to mind.

TMM don't deny that hot money flows might keep liquidity loose onshore but that is hardly a good reason to buy their equities - it seems everyone is just hoping for RMB appreciation given that property is being persecuted by the government and companies cannot invest profitably anymore. We are inclined to think that something has to give here - companies have to stop investing thereby slowing growth before they bankrupt themselves and Chinese banks are going to have to raise a shed load of equity soonish. It's hard to love the HSCEI at 1.5x book when a lot of that book value in banks is inflated and the capacity for industrials is likely loss making.

And finally a quick word about the UK. Today's uber-flap is over how the % of ownership of homes has collapsed and how that must be terrible. We would like to point out that SOMEONE must own the houses that people are living in. Now it may be an example of the rich/poor divide getting wider with the rich owning more houses at the expense of the poor, or it may even be a sensible majority choosing to rent over own as house ownership is not the sure fire road to riches it was, or, more ominously, this is the UK selling off its final asset to the foreign investor. Will the UK be a nation of tenants to overseas landlords? If so the dividend flow of rent moving overseas will be a slow blood letting death. Perhaps the UK should introduce laws whereby only permanent residents can purchase or do what Singapore has done leaving the foreigners to fight over a Mickey Mouse condo market. And lets be honest its those inner city one bed flats that need the biggest lift.

God its just so great to be back. Greece, all is forgiven!