Losing our marbles?

A hung parliament……

For a political anorak such as me, Channel 4, on Monday night, served up the first ever debate between the present Chancellor, and the two who seek his job. Had they staged this in the Coliseum two thousand years ago, I suspect they all would have got the “thumbs down”, since there seemed little fight in any of them. Perhaps, secretly, none of them want the job. What did strike me is how reasonable they all seemed; some divergence of opinion, but none of the braying mob tactics of the House of Commons. You could imagine them working harmoniously together. Maybe a hung parliament would not be so bad, albeit that the currency would go through the floor whilst they tried to sort it out. However, I just wonder what could be achieved by a coalition, much as they have in many European countries.

An improving West Coast line………

To London on Tuesday. Such is the pricing system on the West Coast mainline that there is a three hour window to get in, and out, on cheap tickets. And £60.10 return, is cheap and the service is very good. I am owed this, having spent more than twenty- five years suffering the most appalling treatment, including being thrown out of my seat, as we went over a particularly bad stretch of line. Good infrastructure matters, and is important for our economic revival.

Tesco quality……every little helps!

I went to meet with Peter Geikie-Cobb (Thames River Global Bond), and Stephen Drew (Thames River Credit Select). We have entrusted more client funds to these two managers than anybody else, so it is part of the role to understand their thinking  about the present, and the possible scenarios going forward. Peter manages a fund which invests in sovereign debt i.e. that issued by governments around the world, but it also has a currency overlay. Stephen invests in corporate debt, that issued by companies. In the past, or pretty much for the whole of my career, government debt  was the safest thing, the “risk free rate of return”. Now risk free is no longer the case, and there is an intriguing crossover taking place; Tesco will soon be regarded as a better counterparty than the UK government.

Peter thinks that America is pulling out of recession much quicker than people realise, the new “emerging market”, albeit that the housing market remains fragile, and interest rates will not move significantly higher from here. So he thinks that the Dollar will make progress, especially versus Sterling, and I agree with that. We will have to think how we reflect this in portfolios. Stephen, meanwhile, is doing an excellent job on Credit Select, launched for us last Autumn.

Dollar parity and fuel prices……

It was, however, the comment on the Dollar which has stuck with me for the rest of the week. He has a high conviction that it will hit 1.20 in Q4, and parity next year. These are massive moves, but of a scale seen in the recent past. In August 2008, there were 2 Dollars to the pound, and it came in all the way to 1.37.

Where this would leave petrol prices is anyone’s guess, but with the duty increases already announced, the Dollar, at parity, would give you £1.50 a litre next Summer….

I had always thought that fuel demand was pretty inelastic, and would therefore feature heavily in future tax raising exercises. We are going to get taxed more on things we simply cannot get by without. So I am genuinely puzzled by a report from the AA which states that “petrol sales at supermarkets dipped 14.9% in the last three months of 2009, compared with the previous year. Overall, petrol sales dipped 9.9% compared with 2008.  The average price rose from 105.3p a litre to 107.9p during the period”. Happy times, just over a pound a litre!

I have no way, over the Easter weekend, of getting some verification of these figures, but given that the economy exited recession in Q4, growing by 0.3%, it seems counterintuitive that fuel sales fell by 10%. And supermarkets by nearly 15%. Just makes no sense at all. Sure, new cars are more fuel efficient, but as a percentage of the total number on the road, it is not that big a change, and it is not as though they need no fuel.

Lies, lies and statistics…….

Today, there is a spat between the Prime Minister, and the Office of National Statistics regarding immigration figures. The latter has claimed the former was lying (in the presentation of some numbers), whilst the former has admitted that they were “misused”. This is a version of the Clinton “misspeak”.

Which leaves me wondering if we are much closer to the Greek situation than we realise. In summary, that country is bankrupt. Two reasons, at least. Firstly, the statistics they were working to were complete fiction, and secondly, they don’t care anyway. Greece has been in default for 105 out of the last 200 years.

I wonder if stealing their Marbles means we have lost ours?