Where finance and media intersect with reality


Spot Markets Live, 17/11/23 (Finance ski challenge, EM opportunities, Pawnbrokers for all season)


Julian Rimmer

Good morning, Aloha and greetings fellow market wizards

And I am joined this morning by Izzy whom I introduce to you a little bit like when Parky introduced Helen Mirren onto his talk show. This is what I want you to imagine

10:31 Parkinson introducing Helen Mirren – Google Search
Izabella Kaminska 10:32

Not sure what to make of that

Julian Rimmer

Let your imagination run free.

Izabella Kaminska

Morning everyone. Je pense donc je suis.

How are you Julian.

Julian Rimmer 10:32

Struggling along manfully in the face of adversity.

Wine evening last night, i shall fill you in later.

Izabella Kaminska

Are you a skier Julian?

Julian Rimmer

I ski fast and badly and I learned late

like my driving

like everything else in life

Izabella Kaminska 10:33

Well I am a big skier and am quite excited this morning by SNOW.

Julian Rimmer 10:33

Where precisely? You have a little micro-climate operative in Ealing?

Izabella Kaminska 10:33

Nope apparently it’s coming to France.

Julian Rimmer 10:33

sun cracking flags in richmond

Izabella Kaminska 10:33
 10:33 More Ski Resorts Set to Open This Weekend as Further Snow Falls – PlanetSKI

News Image

It’s been a topsy-turvey few weeks in the Alps. Heavy snow then torrential rain, but now things are a bit more settled. NEW

This weekend Val Thorens and Tignes are opening some of their ski areas ahead of schedule.

The lifts start on Saturday 18th November.

They are the first French resorts to open for the season.

It’s just the higher altitude resorts for now, and anything can still happen. But fingers crossed it’s a good sign. (Though I’ve seen early snow  dumps give way to Christmas period snowless disasters. So let’s not speak too soon).

BUT! I’d like to use this as an opportunity to pitch the following YouTube series concept, which I am very much open to being funded.

Julian Rimmer 10:34

Ishall type raised eyebrow monocle emjoi coz i dont know how to do one.

Izabella Kaminska 10:34

So you know how on Top Gear they have star in a reasonably priced car? Well, I would like to start a show called: “Finance Wizz down Alpha Valley on reasonably priced skis” where I invite respective finance big wigs who ski to join me on my preferred race track in Chamonix.

Julian Rimmer 10:35

explain the mechanics pls

Izabella Kaminska 10:35

Well, first I interview my guest about finance and stuff on a selfie stick on the way up in the chairlift about finance. And then they have to beat my time going down the track. And of course we rank all the respective participants.

Like they do on Top Gear

Julian Rimmer 10:35

Sounds like YouTube Gold.

Izabella Kaminska10:35

I will be recruiting someone like Graham Bell for the STIG candidate. Or possibly Gillian Tett (also a big skier).

 Yep. So if you’re a TV executive please fund this. 🙂

Think “Ray Dalio on skis”. This is what i’m aiming for. We film it around Jan to compete with Davos.

Julian Rimmer10:36

Maybe since that exposé from his employee we can find another big wig instead.

He’s cancelled

Izabella Kaminska 10:36

I’ll take anyone from Davos actually.

Have you seen our original Blind Spot winter Davos production?

Julian Rimmer10:37

I actually did see that.

I think it was actually on at the cinema before a tom cruise film

Izabella Kaminska 10:37


But let’s move on to actual market stories.

What’s caught your eye this lovely Friday?

Julian Rimmer 10:37

yes, market miscellany

Jerome Powell struggling with the H4L narrative after Tuesday’s CPI data. No matter how hard central bankers are trying to keep FCI tight, the mkt is pricing in 30% chance of a rate cut in the spring.

H4L is nothing like HS2

Izabella Kaminska10:38

Oh is that what we’re calling “higher for longer?”

Julian Rimmer 10:38

yes, get with the zoomer lingo

Izabella Kaminska 10:38

Does indeed sound like a high-speed railway project

Julian Rimmer 10:39

The greatest risk to the Fed is done narrative is the potential buyer’s strike for treasuries owing to record issuance. Worth noting, as China seeks to establish financial independence following Russia’s isolation, China’s holdings of US Treasuries slumped by $27.3 billion in September, the most in a year.

That put the total at $778.1 billion, its lowest level since 2009. To create the BRIC currency, a long-term objective, they need to back it with something and that won’t be treasuries but it may well be gold.

Izabella Kaminska10:39

XAU testing $2000 on that note, impetus provided by continued softening in DXY, I note?

Julian Rimmer 10:40

Yes, the chinese if you recall were the second biggets buyers of gold this year after thee poles.

UK retail sales for Oct -0.3% you, worst month since Feb 2021

I wish I could say I felt this way. This is not how the high st feeels. Higher interest rates eat into household budgets despite wage growth surpassing inflation.

Izabella Kaminska10:41

should we mention crude?

Julian Rimmer 10:42

crude is the linguia franca here

Izabella Kaminska10:42

This will be redacted for the transcript for███████████████ reasons, but for those here, I tend to find out about big crude movements in that market thanks to the screaming ███████████████

Or sighs. Sometimes, less regularly, woops of joy.

Julian Rimmer 10:42

the saudis torturing people?

Izabella Kaminska10:43

So it was like a 4% move yesterday?

Sounded mad

Julian Rimmer10:43

I’m confused

Izabella Kaminska10:43


Julian Rimmer10:43

ah, now i get it

yes, crude is in a bear mkt, 4th consecutive weekly fall and looking round the world and seeing who owns most of the oil, it’s very gratifying.

Given higher rates, the consumer needs a break where he/ she can find it.

Is oil reacting to geopolitical risks having peaked? Or is it pricing in a 2024 recession? It’s a bit of both but more of the former, I suspect.

Izabella Kaminska10:45

Well, the house view is it’s all about OPEC next week, and don’t call it a bear market just yet.

Julian Rimmer 10:45

Michael Hartnett’s weekly makes a distinction between US bond yields receding to 4-5% as bullish because this is merely a function of easing financial conditions but bond yields dropping to 3-4% would indicate a recession

For now, 4.5% on UST10YR is just the right Goldilocks level

The Q3 reporting season is pretty much concluded with eps growth in the US +3% much better than Europe -8%

Although if one strips out the energy sector (2022 was an outlier) then the US is very decent @ +9% and Europe’s performance at +3% is not bad considering.

The bigger companies have clearly been very good at managing costs throughout this downturn.

This week witnessed the 2nd biggest inflows of the year into US stock funds @ $23.5bn, presumably reflecting an exodus from money-mkt funds. and that ends the market miscellany segment

Speaking of bear markets

Panda Diplomacy

Does Leia like pandas?

Izabella Kaminska 10:48

She likes them in soft toy mode. “Pandy” is her panda bear. Really imaginative naming there.

Competes for attention with Unicorny.

And Parroty

Julian Rimmer 10:48

very imaginative

I guess its easier to remember

must remember that strategy for when alzheimners kicks in

where was i ?

Izabella Kaminska 10:49

You’ll be relieved to know she opted against calling Pandy “dictator pandy”

So no Blinken eye rolls in this house.

That was very amusing no?

Julian Rimmer 10:49

what this?

I missed smthg else

Izabella Kaminska10:49

If you missed it, this broke the internet yesterday.


Click to view Blinken grimacing as Biden calls Xi a dictator.

Julian Rimmer 10:50

Most exciting news of the week is China is to renew its panda diplomacy and will start sending this most useless of primates to American zoos.

Rod Liddle of The Spectator summed up the philosophy of China’s panda diplomacy very succinctly and very presciently more than a decade ago when the Chinese were trying to fob us off with Ursus Made in China.

‘The Chinese are doing their panda thing again, buying international goodwill by depositing one of these doomed and slightly sinister creatures with any country which might otherwise have an objection to their foreign or domestic policy. Worried about human rights and prisoners of conscience? ‘Ere you go, mate, have a panda and shut your gob. Top-quality panda this is, ten years old, one previous owner, runs on bamboo, very eco-friendly. Shove it in a zoo and watch the kiddies pour in. We do a sideline in panda mugs and panda toys — all manufactured by kiddies, as it happens — and we’ll bung you some of them too for a pony.’

Izabella Kaminska 10:51

@John I think this is a really good op to make money on the presidential betting markets for sure.

Julian Rimmer10:51

Only 40% of pandas exhibit any form of sexual desire apparently. Read the whole article here:

The Spectator 10:51Let’s look this pair of gift pandas in the mouth | The Spectator

The serious point here, though, is what fools, political leaders, especially the Chinese, take people for, that the key impression that will be left in the minds of the public after this summit between the world’s two most powerful men is of cuddly bears, rather than substance.

The Chinese have form when it comes to the inauthentic exploitation of bears

the Guardian 10:52Chinese zoo denies its sun bears are humans dressed in costumes | China | The Guardian

And it’s not just limited to bears. They’ve passed dogs off as lions too.

Izabella Kaminska10:53

Well, their head of state passes as a bear too don’t forget?

(Winnie the pooh)

(The bear of very little brain)

So in other news i wanted to flag this story on the FT.

Julian Rimmer 10:55

@johnk – i agree totally. keep him shielded from maga crowd until closer the election

Izabella Kaminska10:55

Why? I hear you ask? Because – dear SMLers – you heard it here first when I went on about the importance of PMRR and bored you all to death about it a couple of weeks ago.

Julian Rimmer10:56

no, not at all, Izzy

Izabella Kaminska10:56
From the FT

“Many central banks are now facing big financial holes, which are politically uncomfortable” said Ricardo Reis, a professor at the London School of Economics. In July, the BoE forecast it would make a net loss of more than £150bn over the next decade as it unwinds QE. Although the cost is covered by treasuries, it is hardly good for the public image of the central banks. The aim of QE should be to calm markets or provide stimulus when rates are already low. If it is not unwound, central banks risk being seen as financing government deficits.

Julian Rimmer10:56

you didnt delight us anywhere near long enough with it

Izabella Kaminska10:56
They go on:

How far central banks should go depends on what is the optimum size of their balance sheets, or the preferred minimum range of reserves as the BoE calls it. “It should be large enough to satiate the demand for reserves,” Reis argues. This means central banks should not slim down to pre-global financial crisis levels — economies have grown and banks’ liquidity needs have risen (as demonstrated by the demands on Silicon Valley Bank following rapid deposit outflows that led to its collapse). That has made calculating the precise level of the PMRR more difficult. In the US, the banking system’s lowest comfortable level of reserves has been estimated by analysts to be about $2.5tn, compared with more than $3tn currently. This suggests the end of QT is still distant, particularly when factoring in the Fed’s other liquidity facilities.

PMRR – the central purr of reserves. Acronym wise. Do check out this week’s newsletter and spotlight for more on the significance of PMRR and LCLoR.

10:58In other cbanker news, I had the op to have lunch with quite an informed name, which unfortunately i can’t divulge. But they disagreed that central bank losses are a thing, and instead blamed the drama (specifically here in the UK)  on Mervyn King for giving the Treasury an indemnity in the first place.

It’s all about the optics, they say. (I’m not entirley sure about this myself.)

Speaking of Mervyn King, his pitch to move cbanks on to a “Pawnbroker for all Seasons” model is now really being picked up.

As i’ve flagged here before, the code really for PFAS (as we now call it) as any central banker talking about “pre-positioning”.

We’ve had now Andrew Bailey, Sam Woods and Andrew Hauser reference the idea of pre-positioning as an alternative to higher liquidity buffers. But yesterday this idea travelled even further.

Julian Rimmer11:00

@ johnk – agree. good strategy

Izabella Kaminska11:00

To save me some typing time, here’s the blurb I wrote for our POLITICO newsletter this morning.

‘PRE-POSITIONING’ WATCH: Former BoE governor Mervyn King’s pawnbroker for all seasons (PFAS) model may be making more inroads than previously appreciated. Here at Morning Central Banker we’ve been watching for signs that cbanks are subtly turning towards the use of extensive pre-positioning of collateral as an alternative defense against bank runs in the wake of this year’s liquidity troubles. And on Thursday there were a good few.

Preparedness is key: At the Seventh European Systemic Risk Board annual conference, Michael Barr, Vice-Chair for Supervision at the Fed, was among several supervisors who hinted the idea was being wmveaxed. “As we continue to look at how we can enhance our own operations; we are also emphasizing to firms the importance of preparedness to tap contingency funding sources which means pre-positioning collateral and testing at regular intervals,” he told the webinar.

But is the approach really new? No. Pre-positioning of collateral at central banks has been standard practice for a while now, notably at the ECB, the BoE and the Fed. But the shift in thinking comes in the scale of pre-positioning being proposed — ideally to the point that bank runs become impossible — as well as in normalizing and facilitating such borrowing.

Stifling stigma: As Barr noted “even those that had some collateral pre-positioned weren’t as prepared as they should be” this spring when troubles started. That meant that even one of the Fed’s best-established tools, the discount window, ended up being underutilized.

PFAS on Enria’s mind too. The ECB’s top supervisor, Andrea Enria, told the same webinar banks should be ready to access central bank facilities and get the liquidity they need at short notice. “Pre-positioning of collateral is an important issue on which we are now trying to focus our banks’ attention,” he said, while noting — with respect to Lord King’s proposal — “we should think about something in that direction.”

Given the above, I simply had to ask Merv if he thinks this is evidence of that PFAS is being subtly picked up.

Here’s the blurb based on what he told me:

LORD KING’S OWN VIEW? When asked if it was fair to equate growing “pre-positioning” talk in bank supervisory circles with his scheme, Lord King told MCB “I do think that the phrase ‘pre-positioning collateral’ is very much a shorthand for the basic principle of my scheme,” but added “I am confident that they will not make a public announcement that they are going to adopt the Pawnbroker For All Seasons Scheme,” even if “all recent experience will lead them down that path.”

Who’s leading the charge? “The Bank (of England) is clearly in the vanguard of work in this area (in terms of departing from the international approach to liquidity regulation),” Lord King said.

And why now? The current abundant reserve environment allows for a PFAS framework to be introduced without imposing too much of a bind on banks’ ability to accept deposits. “The creation of a clear ex ante framework for the provision of central bank liquidity is recognized by many now as essential to the way forward. I do not expect that it will be called PFAS but the principle will be the same,” he said.

 Julian Rimmer11:02

yes, it sounds like a musical

Izabella Kaminska11:02

Remember, a ███████████████ ███████████████ LCLoR level already.

But, before we move on to other interesting market curios. Julian, are you familiar with “A letter to America?”

Julian Rimmer 11:03

Aistair cook?

Izabella Kaminska11:03

Not quite.


Aka Osama Bin Laden

Julian Rimmer11:03

Ah, alistair cook was letter from america

BBC 11:04BBC Radio 4 – Letter from America by Alistair Cooke

News Image

Alistair Cooke’s weekly talks on American life, history and politics from 1946 – 2004.
Izabella Kaminska11:04

Slightly different.

OBL wrote a manifesto to America before the 9/11 attacks and called it “letter to america”. The news is that it has apparently gone epically viral on social media. So much so, the Guardian and all sorts of other media are having to actively censor it.

Julian Rimmer11:04

so not this!

I  have read about this on twitter and it is astonishing.

Izabella Kaminska11:05

Somewhat awkward for there to be a Streisend effect on this. ????

Julian Rimmer11:05

I can’t pull these emoji faces fast enough

Izabella Kaminska11:05

Anyway the tiktok videos are mind blowing, and i can’t figure out if they’re authentic or some ingenious propaganda ploy.

But these kids having an “existential threatening” epiphany because they realised that 9/11 was about palestine and not some arbitrary psycho behaviour by terrorists… is quite something to watch.

Julian Rimmer11:06

why is this market relevant?

Izabella Kaminska11:06

Because, Julian, there’s a large chunk of the manifesto that moans about profitability, capitalism and INTEREST! (Have markets priced in the risk of profits being the latest victim of cancel culture?)

So the zoomers are now all in on Shariah banking apparently as well as death to the infidels. (That will ironically delight the central bankers who we all know are working hard to displace interest-bearing deposits with zero remunerated deposits be that via MRR or CBDC).

Julian Rimmer 11:07

Sharia Bank will surely never catch on

Having said that, it must be better than any of the French banks i have used in the last 20 yrs.

Izabella Kaminska11:08

But also, there’s a big part of it that claims civilians are legitimate targets because they voted in the warmongers who fund Israel, and more than that, they pay their taxes.

Julian Rimmer11:08

(i’m just downloading the Sharia Bank App)

Izabella Kaminska11:08

Not sure how libertarians would feel about that stereotype?

Ok, but seriously, it must be propaganda. Nobody can be that dumb.

Julian Rimmer11:10

There is a law that i can’t remember which states that there is nothing so stupid or preposterous that there isn’t someone out there who wont agree with you

I must look that up

Izabella Kaminska11:10

Well, i look forward to finding it out.

Izabella Kaminska11:11

But let’s move on though.. what else have you got beyond death to the satanic western banking cabal?

Julian Rimmer 11:11

what about a stock market for a change? Vietnam

Was the focus of Chris Wood’s Greed n Fear this week.

 One central bank benefitting from benign US inflation data is State Bank of Vietnam.

SBV cut 4x ytd to 4.5% as the nation benefits from the friendly/ off/ near-shoring phenomenon that took place during the pandemic and after the Sino-American trade disputes.

Vietnam is a Marxist-Leninist communist utopia with whom the Americans can do business.

The Vietnamese index.

Izabella Kaminska11:13

What’s it called?

Julian Rimmer11:13

have a guess?

Izabella Kaminska11:13

No idea. Apocalypse Now?

Julian Rimmer11:13

The Ho Chi Minh index

Izabella Kaminska11:13

Nearly got it then

Julian Rimmer11:13

is generally doing quite well

rallied 9% ytd, driven primarily by the trade surplus.

Which, of course, also supported the dong

(my favourite locution)

But the tightening that took place last year did have an impact on the residential property mkt.

The good news for Vietnam is that its economy is nowhere near as dependent on property mkt as, say, China, for example.

The piece points out the main problem for Vietnam in terms of investability is the lack of domestic institutional investors. No pension funds exist really and mutual funds tot up to ~$5bn only.

Vietnam’s mkt is priced along similar lines to China, on 12x PE, for an economy growing close to 5% in 2023

‘Vietnam, unlike China, also continues to have a collective political leadership though, as in China, it has in recent years, under General Secretary of the Communist Party of Vietnam Nguyen Phu Trong, implemented an anti-corruption campaign to restore the legitimacy of the Communist Party and to increase the influence of the Party relative to the government. Vietnam appears to be playing a growing role as a conduit of China’s indirect exports to US following the emergence since the Trump administration of what can best be described as a trade war between the US and China’

There are 99 million people in Vietnam and it does not have the demographic problem which undermines the investment case for China.

The market looks appealing on a relative basis.

Izabella Kaminska11:17

Does seem to.

Julian Rimmer11:17

Another asset class that looks appealing….

EM local currency debt.

Beneficiaries of the softening in DXY and the decline in US bond yields is the EM fixed-income asset class. See this chart.

from Bloomberg:

Weakening off the dollar on the fed is done narrative alleviates pressure on EM fx

Plus Chinese helicoptering money in, positive for EM, especially EMBIG HY, spreads at low since 2021

Currently yielding about 7.8% after hitting a 10-yr high this spring.

The end of Fed tightening cycles can provide decent buying opportunities….

For EN fixed income

Chart here provided by Allianz:

From the note:

’ investors should be prepared for a pivot in the months ahead. US swap markets have priced in a pause in rate hikes about three months from now. History shows that Fed pivots have provided a significant buying opportunity for emerging markets (see Exhibit 3). On average, emerging market hard currency sovereign bonds have delivered double-digit (10.1%) returns for the last two Fed monetary policy tightening cycles, which ended in June 2006 and December 2018, according to our analysis of performance (proxied by using JPMorgan’s emerging market indices) in the six months before and after Fed cycles ended’

CPIs in most EMs have peaked, there is a large differentiation among EM sovereign  credits so stripping out basket-cases like Argentina for example, vastly improves returns, growth forecasts for 2024 have bottomed and overall the EMB ETF looks attractive here

Izabella Kaminska 11:21

So how was the wine evening yesterday Julian?

Julian Rimmer11:21

Ah yes, the serious part — I thought you would never ask.

Last night’s entertainment was a book talk by Rebecaa Gibb MW, who has just published https://twitter.com/rebeccagibb?lang=en ‘Vintage Crime’

About various types of wine fraud that have taken place over the millennia

Click image to view:

Very fruity, Rebecca

The only master of wine I know from Stockton on Tees.

Izabella Kaminska11:22

Where’s that?

Julian Rimmer11:23

it’s not the end of the world but visible on a clear day.

oop north somewhere.

Further north than Liverpool even

Izabella Kaminska11:23

Good to know they get wine up there. I once interviewed some guy who was pitching his business that was offering loans against wine collateral. I thought the idea of collateralised wine obligations was quite interesting. So I wrote it up straight. Turns out it was a ponzi.

Julian Rimmer 11:23

the book is about various types of wine fraud

Izabella Kaminska11:24

Like pretending Ribena is wine?

Julian Rimmer

Not far off it

Well, the crimes range from the Romans adding seawater to their most famous wine , to the champagne riots of 1911, the Austrian anti-freeze scandal and of course, the Rudy Kurniawan hoax who managed to convincea lot of people to buy expensive Burgundy that he was actually mixing in his factory in a California garage

As someone who spends his days selling overpriced wine to the unsuspecting good burghers of Kew.

I know about wine crime.

And in my days as a singleton my idea of seduction could have been classified as a wine crime of sorts.

But this was fascinating

Izabella Kaminska11:26

Well this is the issue with any private wine collection. You can’t really resell it at value because of the tampering risk, so unless it’s stored in bonded storage at Berry Brothers, it’s hard to materialise the profits.

Julian Rimmer11:27

Disclaimer: there are other bondage warehouse services available.

Not just berrys

Izabella Kaminska11:27

(Just to be clear LOL)

Julian Rimmer11:27

I have a very deep and capacious cellar on station parade in kew

And I have often thought about diversifying my income stream by renting it out to hostage takers and abductors because no one would hear the screams down there.

Izabella Kaminska11:28

Could be used as a bomb shelter too?

Julian Rimmer11:28

Definitely. You are welcome to join me – that’s where i keep all the good stuff in the event of a russian hypersonic missile

Izabella Kaminska11:28

On that note, can i leave you with something I sampled recently? It was very nice.

yum yum.

Julian Rimmer11:29

96 great year

Izabella Kaminska11:29

(Not funded by me just to be clear)

Julian Rimmer11:30

I was on vieux telegraphe last night. Exquisite stuff. It was like drinking sunshine

On that upbeat note

Izabella Kaminska11:30

I think that’s a good place to leave it.

Thank you again for joining us.

Do spread the word!

Bye everyone.

Julian Rimmer11:30

nunc tempus taciendi

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