News Review

Green Gilts

The Chancellor is talking about “green gilts.” Gilts sound as though they should be a gold standard. If a piece of gold goes green, it’s probably because it is alloyed with copper, and you’re seeing some copper carbonate formed. This makes “green gilts” sound definitely fake. The idea is to issue bonds specifically to fund green infrastructure. I await the details, but I am not sure I’ll be buying. Gilts in general look expensive right now.

Other items

Kate Bingham is going, after it emerged that she’d spent £670K on private PR consultants, when she could have used the existing government PR machine. The fact that she’s married to Jesse Norman, and was chosen without the job being advertised is just a terrible look.

Marcus Rashford is a hero, for forcing the government into a turnaround on providing “free” school meals in the holidays. This is a PR disaster of the first water.

The UK is going to miss some sort of target for increasing life expectancy in poor areas by fifty years, according to projections. The very fact that a target should have been set at such an unrealistic value strongly suggests that the root causes of regional health and socioeconomic health disparities have been hugely misjudged.

Market

Some reversion from yesterday, although the general outline remains the same. I am pleased that the initial findings of the trial have been so promising, but the total size of the sample of those who got Covid in both the vaccine and placebo group was 94, ten percent of which got the disease. This clearly could have been by chance, but anyway may depend on the actual virus not having had enough time (or location) to mutate enough. It also says nothing about how long the conferred resistance lasts. I think whatever happens, bonds are going lower.

Banks are looking promising, at last. The steepening of the yield curve will help, the vaccine might allow them to pay divs again, the disasters of the GFC are still sufficiently recent that they haven’t yet lowered their lending standards to a dangerous level, and the peer-to-peer lenders, which were supposed to offer competition have all disappeared, along with the fintech startups, which simply having got the lobbying bucks to stop themselves being regulated out of existence. I don’t approve of banks, I just don’t want to be on the wrong side of their lobbying force.

Mid afternoon comment

This is a much less crazy day than yesterday, but there is some risk-offness about it. There is a big diversion between value and growth, with value seemingly more highly valued for the first time in a long while. Bonds have stabilized, and are pretty steady. Gold is drifting lower, but gently so. Commodities are very mixed, energy generally up, including Nat. Gas! Value stocks really seem to be about to have their day in the sun. $BYND dropped 20% on disappointing results. It would appear that Wall St. is no longer giving these profitless stocks an indefinite pass.

Closing wrap

Precious metals seem to have recovered since the note above. Otherwise, the trend continues: value trumping growth, but with most sectors other than tech and comms going up. Bonds flat, currencies more or less flat. Gold took a serious hammering over the last few days, but now seems to be on a recovery track. Barrick Gold Corp is profitable (P/E ~18) and even pays a dividend. It has modest debt ($5B in enterprise value of $50B). If gold starts to be popular as an asset class, it’s the biggest fish in a small pond, and will be the stock seeing strong buyer demand. You might want to take deeper look at it via unhedgedged , but whatever you do, don’t go out an buy any based on my random comments.