After a week's break, and a detour, I am back in the saddle for a busy run-in to Christmas. The main market mover of note, while trawling the museums and bars of Paris, was that global equities finally showed a bit of weakness. The MSCI World slid 1.8% last week, down 4.8% from its peak in August, which means that the index is flat as a pancake year-to-date. A belated reaction to the recent mini tantrum in bond markets, or a knee-jerk reaction to tighter polls across the pond, are probably the lazy strategist's reason for the sell off. But it has been coming regardless.
Read MoreIn equities, the headline indices were largely directionless last but there was a lot of action underneath the surface thanks to firms in the U.S. report Q3 earnings. On that note, the season has so far been unkind to your humble scribe; indeed it seems that I have managed to get myself stuck with nothing other than the old maid this quarter. There can be no better way to re-introduce the Mark to Market section than to report how yours truly was in front of the queue at the proctologist last week. The portfolio was thoroughly rear-ended by the calamity of Syntel Inc earnings.
Read MoreLast week was docile compared with the fun and games we were treated to earlier this month; no imminent Lehman moment at a major European bank and no flash crash in the GBP or other G4 currencies. Still, we had a number of interesting moves in the major asset classes and indices. The continued squeeze in yields probably was the stand-out move. Starting with the benchmark, the U.S. 10-year yield broke range and a move to 2% is starting to look like a good bet in my view. For once, it appears that can we apply relatively plain-vanilla macroeconomic narrative here. Inflation in the U.S.—and indeed globally—is nudging higher and the Fed intends to act accordingly. The slightly more cynical interpretation is that the Federales are desperate to get another hike in before the end of the year, but that underlying fundamentals haven't really changed that much.
Read MoreWhat a week it has been here in the U.K. The turmoil at Deutsche Bank was set to remain the topic du jour. But Prime Minister May's promise to trigger Article 50, and the remarkable party conference in Birmingham, took centre stage. Another Bashing Betty session ensued, which reached its zenith overnight Thursday as GBPUSD was pushed to 1.14 on some platforms before recovering to about 1.22-to-1.24. A fat finger, corporate hedges hitting "stops", or a systemic lack of liquidity; take your pick in terms of rationalisation. I think the whole thing is absolutely ridiculous, given that this is a G4 currency. The rhetoric by the new Tory doyens was startling, and as I type this, the back-pedalling has already started. In any case, I have a podcast about the whole thing, which you can listen to in this post. Elsewhere, the carnage in sterling is a nuisance to me. I am a GBP earner, and my portfolio is held in GBP. In short, foreign assets now look dreadfully expensive unless you start trawling for the turds of the turds.
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