ALY KHAN SATCHU: At a world's end?

In Summary

• There is certainly a Fin de siècle even apocalyptic mood afoot

• The Bond market is surely in a vegetative state

Cyclone Idai
Cyclone Idai
Image: BBC

“The crisis consists precisely in the fact that the old is dying and the new cannot be born” ― Antonio Gramsci,

There is certainly a Fin de siècle even apocalyptic mood afoot. The conundrum for those who wish to bet on the End of the World is this, however. What would be the point? The World would have ended.

I learnt that in the last 44 years, we have achieved what we haven’t in all this while: a mass annihilation of our fellow earthlings. Between 1970 and 2014, Earth lost nearly 60% decline of its mammals, birds, fish, reptiles and amphibians, almost all of it due to human activity. What with the biblical Cyclone in Mozambique, its all too easy to think like Pompeo that the moment of ''rapture'' might well be upon us.

WB Yeats' The Second Coming

Turning and turning in the widening gyreThe falcon cannot hear the falconer;Things fall apart; the centre cannot hold;

The ceremony of innocence is drowned;The best lack all conviction, while the worstAre full of passionate intensity.

Surely some revelation is at hand;Surely the Second Coming is at hand.

"I was the most innocent human being" President Trump told Sean Hannity. And the entire Claque [Wikileaks, Greenwald et al] did a Hamlet,

“The lady doth protest too much, methinks.”

Over in the United Kingdom The Brexit Story continues to play out longer than the longest Oresteia [The Oresteia (Ancient Greek: Ὀρέστεια) is a trilogy of Greek tragedies written by Aeschylus] and I have watched the play and its long. Mrs. Theresa May who has been previously characterised as a Bot, brought her May Deal for the third time only for it be rejected again. She is proposing to bring it a 4th time next week. Sterling re-tested the 1.3000 level. There are two schools of thought. The Majority View is that we have had an eternity to price everything into the Pound and all the bad news is baked into the price now and therefore this is a Yazz Moment and ''The only way is up'' The minority position about 20% versus 80% is saying there is a chance that what is soft will become hard [Brexit] and brittle and therefore, there is a risk the whole edifice will come crashing down and career off course. The Theatre of the UK Parliament is I am ashamed to admit rather more interesting than was the Oresteia. Further afield, The Head of the Army in Algeria is trying to remove President Bouteflika the wheelchair-chair bound who might be remembered in the history books as Bouteflika the Sticky. Article 102 of Algeria's constitution allows the constitutional council to declare the presidency vacant if the incumbent is too ill to exercise his functions, then ask parliament to declare him unfit. In Africa, in particular, a lot of Leadership is in the departure Lounge but Bouteflika is surely the most extreme example.

@SunChartist whom I follow on Twitter said this

The premise of ZIRP / NIRP was always these are temporary measures for atrial fibrillation of the economy. 10 years later same medicine in ever larger dosage to keep the patient alive. The definition of [a] vegetative state.

The Bond market is surely in a vegetative state. The Market Value of Global Negative Yielding Bonds rose +$518 Billion Thursday to $10.42 Trillion and is just $1.75 Trillion away from a record high. Japan and Germany account for 64% of Negative Yielding bonds. It is worth pointing out that Germany and Japan are being paid to borrow money. This level of dissonance in the bond market is unprecedented. Just about everything rallied in Q1. Following on from an Annus Horribilis in 2018 [where 93% of assets declined in value], Q1 2019 was a Quarter mirabilis. The Central Bankers flipped and administered huge doses of drugs. Just about everything from Crude Oil [+31% in Q1] to Frontier market Debt [Kenya +10%]. has been pumped up. This cannot last notwithstanding the fact that somehow its been going on a for a decade. Eventually this zombification will end and only the debris will be left.

The latest Signal of Stress is being emitted by Turkey where Erdogan pronounced 'I'm in charge,' the day after the overnight rate clocked an eye-popping 1,336%. He added that Turkey had thwarted “attacks” by the United States and the West on the lira and he accused some banks of playing games with the currency ahead of Sunday’s vote.

“They can’t find lira now, they are struggling in terms of payments. The tables have turned. While they can’t do this, the lira firms and the dollar falls,” Erdogan said. His [lack of analysis] of the situation is his Achilles heel.

President Erdogan will learn what Norman Lamont learned and the Turkish Lira is teetering at the precipice. Now if the Lira crashes [which looks very likely], the Infection will spread out of Istanbul. We could see a major wobble, a Flight to Quality and in that environment you might well want to own some Yen.