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Insight - Making Sense of the Narrative


One of the big problems in this information age is the use of heuristics, or short cuts (a point made very eloquently by Daniel Kahneman in Thinking Fast and Slow) which can lead us to make decisions on what is very often low information data dressed up as the opposite.

The US Election is now a little over 2 months away and as traders and investors slowly return home from their holidays (or with undue haste if they are trying to get back to the UK) it will increasingly be the main focus of discussion.

In a post early in the Covid saga, we drew attention to the potential parallels with the Stamford Prison experiment, a true story of a psychological experiment that went badly wrong.

The S&P continues to grind higher, while the Shanghai Composite remains supported on its short term indicators, up 20% over the last three months. The offshore Yuan (CNY) is at its lowest (strongest) level against the US$ since March, while the trade weighted $ continues to drift steadily lower – reinforcing our view that there may be a deliberate devaluation policy coming.

August is normally the start of the quiet period in western markets with many investment managers working from home for a few weeks while the families enjoy a break from school.