Spy was in a celebratory mood last night and along with half of Hong Kong went out to dinner to enjoy the easing of social distancing restrictions and the Year of the Ox. There was no late-night round of drinks post-supper as bars, sadly, remain off-limits. Seeing all the smiling faces, it is hard not to agree with those economists who think that pent up demand, after months of restrictions, might just lead to another roaring twenties consumer boom. The question Spy has is this: If the consumer is out spending money, enjoying herself, and not spending as much time trading stocks and options, will that be a good, or bad thing, for markets?
Spy supposes it was inevitable. It is not enough to simply sit at home watching streaming TV services, one needs to invest in them too. *Drum Roll* The Roundhill Streaming Services and Technology ETF, a new active strategy, has launched this month. If buying into Netflix on its own seems too risky or exciting, investors can you now, eh, grab the equivalent of an entire streaming box set. The ticker is SUBZ, which has a certain appeal, admits Spy. Though whether it proves more appealing than bodice-ripping Bridgerton or stylish gentleman thief Lupin, remains to be seen.
Investors are being drenched in ESG rhetoric, thinks Spy. One can hardly turn on Bloomberg TV, open a newspaper or visit an asset manager without being told (or lectured depending on your point of view) that ‘sustainability’ is the only way forward. Spy has noticed, however, that some asset managers are now going beyond pollution, governance and gender equality and are beginning to blatantly talk about human rights within their investments, too. Spy suspects that activists have spotted a chance to promote some political agendas, rather bluntly, via the ESG movement. Spy would not be surprised if sensitive governments across the world suddenly become rather wary of this unwelcome focus. Global funds may need to tread rather carefully.
Was there a moment that banks woke up and decided that managing money was not really the game they were in? Spy gets the impression that marketing departments of large wealth managers now feel they also need to be psychiatrists and life coaches, too. Spy spotted this advert from Citibank Gold in Singapore. Apparently, “It is no longer about having more, but about being more”. Spy is not even sure what that means. Really, is that the job of the wealth manager to make you “be more”? Call Spy a cynic but he strongly suspects that most people want their financial manager to look after their money well so they can make the choices for themselves unconstrained by financial worry.
UBS will make a number of managers in Asia smile this week. Adrian Zuercher, the CIO of global asset allocation at the Swiss giant, went on record saying Asian high yield bonds are one of the bank’s favourite investments in the credit space. Asian high yield funds have been sold a dime a dozen over the last few years and nobody wants that particular to trend to reverse anytime soon…
Spy is to showing his age. The jargon of the next generation, whether it’s dating via apps (ghosting, breadcrumbing, benching, curving, kittenfishing etc.) or investing inspired by Reddit, is leaving him in a sea of confusion. For those sharing Spy’s predicament, here is a handy run down of how to speak to your college age student, who is trading on Robinhood, instead of studying his economics and statistics:
- Diamond hands – you refuse to sell a security despite a pullback
- Paper hands – panic seller at first loss
- Stonks – stocks
- Tendies – profits (apparently)
- To the moon – faith a security will roar
- JPOW – The chairman of Fed, Jay Powell
- Yolo – Risking a huge bit of your portfolio, after all, You Only Live Once.
You are welcome.
It must be absolutely galling for gold bugs. They can see inflation rearing its ugly head everywhere: in liquid assets, housing, commodities and food, and, yet, gold, inflation’s traditional hedge, is off 6% this year. Meanwhile, that shiny upstart, Bitcoin continues to climb like a Nepalese Sherpa in his prime. Bitcoin is now worth, collectively, about $1tn. Apple, Microsoft, Saudi Aramco, Amazon and Alphabet, are the only securities more valuable.
Is there a Devil’s Dictionary for finance? Spy read this, this week: “Performance. (Noun). A show put on to entertain the audience and gratify the egos of the performers. Long ago, and surely not by coincidence, the investment industry chose the same word to describe what it seeks to produce for clients. Unfortunately, the members of the audience are most likely to feel entertained before their portfolios lose a ton of money. The managers’ egos, however, are unlikely to be impaired.” Cynical you say? Perhaps.
If you enjoyed the Gamestop explosion and implosion a few weeks ago and are worried that Congress might put a stop to the fun, don’t be. Yesterday’s House Committee hearing showed that US politicians, in the main, don’t have a clue about markets and have no real interest in stopping anything anyway, despite doing their best to find some imaginary problems with retail investors having their fun. You can keep the popcorn ready.
Spy’s favourite quote of the week was this. “Sooner or later the market will test the Fed. The Fed will win.” And, perhaps like Winston Smith in George Orwell’s classic book, 1984, the market will discover that it truly “loves the Federal Reserve, our Big Brother”.
Until next week…
P.S. If you are feeling some FOMO over Bitcoin, pity the chap who paid 10,000 bitcoins for two pizzas in 2010. Those coins would now be worth half a billion dollars.
