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Insight - Making Sense of the Narrative


Recency bias might lead us to think that the weakness in October was all about Gaza, but there were clear signs of fragility already appearing in bond markets as the mark to market impacts of the bond bear market continue to lead to forced selling, particularly in Japan. The key to stability is for cash to move out along the bond curve in fixed income even though we would not expect cash rates to fall much. however, the narrative will likely turn to slowdown to support the bond narrative, and we suspect the cash pile destined for equities will go to high quality dividend yield stocks offering the prospect of quality compound real returns. We thus expect a flip in Asset Allocation - from Long Duration Equities and short duration bonds, to Long Duration Bonds and Short duration equities

“China has a tendency to ‘test’ new policies on certain regions before going ‘nationwide’ with them. Thus, it is entirely possible for, say, the Greater Bay Area, including Hong Kong, to see an earlier easing of Covid restrictions than other parts of the country. Indeed, watching the recent spike in the prices of Macau casino stocks, the locals are clearly looking at things this way.”

The return to Hong Kong has finally arrived, after the HK authorities dropped their ridiculous three week wash-out plus three week hotel quarantine requirements, that had made a ‘desk to desk’ transition period of six weeks.

As COP26 turns into a sort of Glastonbury for ESG funds, nobody seems to have noticed that all the big energy users have already committed to ‘new nuclear’ already and thus it is the collection of Robber Barons from Finance, tech, industry and the Green Industrial Complex who are all busy lobbying government ministers for a share in the huge Green Tax revenues that should be coming under scrutiny for their sustainability.

As I sit here in my ‘bijou’ residence at Hong Kong airport for my ninth day of ‘totally necessary and not at all pointless’ Quarantine, (TNANAAPQ) with nothing to do but write blogs (!)