Analysis: An opera of canaries

Although they have been treated by many market participants as isolated and unrelated shocks, three recent episodes – the collapse of the cryptocurrency exchange FTX, the failure of Silicon Valley Bank and the UK pension fund crisis in autumn 2022 – should more realistically be seen as accidents waiting to happen and harbingers of more market disruption to come – what I call “canaries in the mine”. In this latest article I explain what binds these three episodes together and why they won’t be the last such disruptive events investors will face before the “Everything Bubble” finally deflates. The collective noun for canaries is an opera, hence the title. This is the link to the article.

Analysis: Are we there yet?

My view is that the bear market in equities is through the first phase of its decline but the most recent rally is not sustainable and there will be at least two more phases before it is over. Persistently poorer economic news is likely to emerge in the second half of this year, leading to a marked deterioration in investor sentiment. The emergence of this kind of gloomy sentiment and commentary will be a classic signal that the trough of the bear market may finally be imminent. As we work our way through what will be a difficult market environment, policy will in due course be loosened, but a time lag will again come into play. Here is the link to the article.

Q and A: Crunch time for policymakers

Sandy Nairn discusses the fallout from the global financial crisis and how governments have responded with one of Britain’s most distinguished civil servants, Lord Macpherson, the former Permanent Secretary at the Treasury (2005-2016) and as such a a key player in guiding policy through the global financial crisis (GFC) and helping to ensure that the crisis did not spiral downwards to precipitate a rerun of the depression of the 1930s. But has the initial success of the policy response to the crisis been undermined by the reluctance of policymakers subsequently to end the exceptional easy money/fiscal stimulus that followed? This Q and A (link here) explores the issues and the mis-steps that have led to today’s siding financial markets.

Q and A: Cybersecurity – risks and opportunities

In this extended interview with Sir David Omand, a former Permanent Secretary of the Home Office and Director of the Government Communications Headquarters (GCHQ), I discuss the threats companies face from cyber-attacks. I found it reassuring and disturbing in equal measure. The reassuring elements included examples of just how much the security services do to protect the public both individually and collectively in the form of public services and corporates. The disturbing elements included the sheer scale, geographic dispersion and state support for the range of nefarious activities that threaten companies and individuals. Understanding cybersecurity is a must subject for any investor. This is the link to the article.

October 15 2022

Q and A: Is Covid still a threat to growth?

In late December 2019, the World Health Organization (WHO) was notified of a cluster of pneumonia cases in Wuhan City, China. Although it took some months for the significance to be recognized, this proved to the emergence of Covid 19, the virus which triggered a global pandemic and forced entire economies into lock-down, unemployment to soar and GDP to slump. In this updated Q and A (link here) Sandy Nairn discusses what we now know (and also what we still don’t know) about Covid 19 – its causes and effects – with Professor Gerry Graham, an expert advisor in the area of biological sciences.