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Liontrust Dealer's Roar - 30/11/2011

“Action speaks louder than words, but not nearly as often.” Samuel Clemens, better known as Mark Twain, American author, November 30th 1835 – April 21st 1910

I travelled back into London last night with an old friend, who works for a subsidiary of Rabobank. He was telling me with great pride about their AAA rating, which made them one of the very small number of global banks still to hold such a rating…… not anymore! S&P downgraded a raft of global banks post the close on Wall Street last night, including the big boys (Bank of America, Citigroup, Goldman Sachs and Morgan Stanley) and including Rabobank. And the likely sense of gloom on opening this morning in Europe was exacerbated by a very shabby trading session this morning in China. The primary cause was growing concern ahead of tomorrow’s PMI number, with many fearing that a number sub 50 is on the way.  

Liontrust Dealer's Roar - 29/11/2011

“I am not afraid of storms for I am learning how to sail my ship.” Louisa May Alcott, American novelist, best known for “Little Women”, November 29th 1832 – March 6th 1888

The US market was barely changed between closing time in Europe and the bell in New York. After the market closed, Fitch Ratings reaffirmed the United States’ AAA credit rating, but cut its outlook to negative from stable in the wake of the super committee’s failure to come up with credible strategy, but S&P futures barely moved on the news. They gave the US until 2013 to come up with a "credible plan" to tackle its ballooning budget deficit before it downgrades the country's coveted triple-A rating.

Liontrust Dealer's Roar - 28/11/2011

“He who desires, but acts not, breeds pestilence.” – William Blake, English poet (writer of “Jerusalem”), born November 28th 1757 – died August 12th 1827

On the first really cold morning of the autumn/winter in London my inbox was full of significant stories from around the globe which, in the main, seemed likely to push markets higher as the end of the month approaches and the Christmas season hones into view. News from the US painted a very bullish picture as far as the man in the street is concerned, with news that Black Friday (the day after Thanksgiving) weekend shoppers spent $52.4bn, up by more than 16% on the same period last year. It will be interesting to see what happens today, otherwise known as Cyber Monday, as today is supposed to see the peak of on-line buying ahead of Christmas.

Liontrust Dealer's Roar - 25/11/2011

In trying to make something new, half the undertaking lies in discovering whether it can be done”-  Helen Gahagan, American actress, born Nov 25th 1900 – died June 28th 1980.

With no US to lead us Asian markets focussed again on the continued debate over the ECB. It’s clear the French would like the Bank to get on with building its balance sheet to help stabilise the broader eurozone while the Germans are vehemently opposed to this & want the bank to remain independent. We learnt yesterday that the Germans appear to have won out & in-fact (mercifully) they have all agreed to stop debating the matter in public, allowing the ECB to operate autonomously. 

Liontrust Dealer's Roar - 24/11/2011

“My definition of an intellectual is someone who can listen to the William Tell Overture without thinking of the Lone Ranger.” Billy Connolly, Scottish comedian and actor, born November 24th 1942

The major news that filtered out overnight was just the slightest hint that the German may be open to Eurozone bonds, which flies completely in the face of Mrs Merkel’s recent utterances on the subject. German daily Bild, normally well-informed on matters political quote parliamentary sources in the ruling coalition as saying various scenarios are being discussed that could make German backing necessary for the common bonds the government has firmly rejected until now.  

Liontrust Dealer's Roar - 23/11/2011

“Inaction is perhaps the greatest mistake of all” – Charles Schumer, American politician, November 23rd 1950

A story that hit the tapes almost as our markets closed last night gave the US a little fillip, and it managed to put on c 0.45% from the lows though trading was described as ‘fairly uneventful’. The IMF have revamped their credit line program to encourage countries facing outside shocks to turn to the fund & it can also be tapped by countries with strong economies currently facing short-term liquidity needs. There are two schemes, the Precautionary & Liquidity line & the Rapid Financing Instrument, but basically the maximum a country can borrow is 500% of their quota in year 1 and up to 1000% of their quota in year 2. The quota is the amount of money they lent to the IMF, so 1000% is basically 10x levered what you put in.

Liontrust Dealer's Roar - 22/11/11

“I have tried to lift France out of the mud. But she will return to her errors and vomitings. I cannot prevent the French from being French.” – Charles de Gaulle, French general, statesman and first President of the Fifth Republic, November 22nd 1890 – November 9th 1970.

The US had the chance to show the world, most notably Europe, that the lack of political will and cohesion so obviously lacking in the Eurozone is not something that they would stoop to…………..they had the chance and they blew it.

Liontrust Dealer's Roar - 21/11/2011

“An ideal form of government is democracy tempered with assassination”- Voltaire, French writer, born November 21st 1694 –died May 30th 1778

The weekend saw another new Government in the Eurozone as the Conservative Party in Spain won their general election with an absolute majority of 45% of the total votes (7 year incumbent Socialists got 29%) which was rather a landslide and the biggest majority for any party in three decades. Mariano Rajoy, the new leader said, “Difficult times are coming.. Spain’s voice must be respected in Brussels and Frankfurt…we will stop being part of the problem and will be part of the solution”.

Liontrust Dealer's Roar - 18/11/2011

“I hope that people will finally come to realize that there is only one 'race' - the human race - and that we are all members of it.” Margaret Atwood, Canadian novelist and poet, born November 18th 1939

The German word for “chicken” is “das Huhn”. When referring to the age old game of chicken, I think it is unlikely that “das Huhn” is the German equivalent, but I cannot be certain! What I can be certain about is that one of the biggest games in town at the moment is working out whether or not the Germans are playing chicken or not. Mrs Merkel was quoted as saying that "If politicians believe the ECB can solve the problem of the euro's weakness, then they're trying to convince themselves of something that won't happen". She also reiterated her opposition to Eurobonds as it would remove the incentive for governments to put their fiscal position in order.

Liontrust Dealer's Roar - 17/11/2011

“There’s no such thing as simple. Simple is hard” Martin Scorsese, multi award winning American film director, born November 17th 1942

After we pottered off home last night Wall Street fell very sharply in the final hour of the trading day in New York. The late sell-off came after Fitch Ratings warned that U.S. banks have "manageable direct exposures" to the stressed European markets, but warned that further contagion posed a serious risk. The warning sent stocks reeling. The mood was not improved by Moody’s downgrading the senior debt and deposit ratings of 10 German public-sector banks (Landesbanken) citing its assumption that “there is now a lower likelihood” that the lenders would get external support.  

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