We just can’t let it go…

  • What next for the PR machine?
  • Ignorance strikes
  • Our choice of money
  • Final note

Sitting in our hotel in the West End of London, near the ‘border’ with the City of London, we contemplate the following story from the Financial Times:

Prices in prime central London have dropped 12.5 per cent since their mid-2014 peak, according to Savills. Ms Earley said the total number of homes changing hands there was down by about one-third from a year ago.

And from the Financial Times last week:

On a monthly basis, prices fell by 0.2 per cent, following on from April’s 0.4 per cent drop — the first time in eight years that prices have declined for three months in a row.

The figures are the latest contribution to mounting evidence of a slowdown in the UK housing market. The Halifax house price index recently posted its first quarterly fall since November 2012, while forward-looking data from the Royal Institution of Chartered Surveyors reported declining sales and new instructions and interest stagnating among buyers.

It’s entirely possible that it’s a coincidence. But a topping out of UK house prices in 2007 occurred at almost the same time as the topping out of the UK stock market. You know what happened shortly thereafter.

In the US, after rebounding from the 2009 low, the NAHB Housing Market Index is towards the top of its long-term ‘trading range’, as you can see from the chart below:



chart image

Source: Trading Economics
Click to enlarge


That’s not to say the index can’t go higher; of course it can. The index moved sideways from 2004 until 2006, before the slump began. Who’s to say the same thing, or something similar, won’t happen again?

(Controversial economist Phil Anderson certainly doesn’t believe prices will fall yet. You can find out why here.)

But we look at it this way: Stocks are near record highs in the US and UK. Property prices have begun to fall in the UK, and are near a peak in the US. And despite continued record low interest rates, it seems that borrowers have reached their borrowing capacity.

Again, from today’s Financial Times:

British consumers are feeling the pinch and taking further steps to moderate their spending, according to several surveys published at the start of the week.

Yesterday the Society of Motor Manufacturers and Traders reported a sharp fall in private car registrations in May — down 14 per cent compared with the same month a year earlier — while a survey of activity in the service sector dipped unexpectedly on the back of lower growth in new orders and weak consumer spending. Consumer data, published today, show that spending on the high street ground to a halt last month as higher prices resulting from the weak pound deterred shoppers from buying non-essential items.

We admit we could be way off the mark here. But when something doesn’t feel right, we see it as our duty to say so. Now we’ve said so, on with the show…

Markets

Overnight, the Dow Jones Industrial Average closed down 46.74 points, or 0.22%.

The S&P 500 fell 6.77 points, or 0.28%.

In Europe, the Euro Stoxx 50 index ended the day down 25.37 points, or 0.71%. Meanwhile, the FTSE 100 fell 0.01%, and Germany’s DAX index lost 1.04%.

In Asian markets, Japan’s Nikkei 225 index is up 0.74 points, for no discernible change. China’s CSI 300 is up 1.09%.

In Australia, the S&P/ASX 200 is down 0.30 points, or 0.01%.

On the commodities markets, West Texas Intermediate crude oil is US$48.03 per barrel. Brent crude is US$49.96 per barrel.

Gold is trading for US$1,292.05 (AU$1,713.78) per troy ounce. Silver is US$17.67 (AU$23.44) per troy ounce.

The Aussie dollar is worth 75.41 US cents.

What next for the PR machine?

Speaking of not letting it go, our nemesis stock, Tesla Inc. [NASDAQ:TSLA] continues to roar higher. At today’s close, it was up another 1.59%.

What’s the deal? Today is Tesla’s annual shareholder meeting. Perhaps the share price rise is a combination of Tesla devotees hoping for exciting news and panicking short-sellers fearing exciting news.

What do we expect from the meeting? Little else but more PR. But what the heck — the share price keeps going up. So what do we know?

Ignorance strikes

On an entirely different note: Bitcoin. Crytocurrencies. Blockchain.

Your editor will concede from the get-go that we have absolutely no clue about any of these things.

We will therefore save our own embarrassment by not even attempting to explain or analyse anything on the topic.

However, while we may know literally nothing about the subject, we’re fortunate enough to employ folks who do know something about this whole new business.

One of those people is our resident tech guru, Sam Volkering. While we’re in London, we’re due to catch up with Sam on another matter. But we’ll be sure to touch on the subject for a couple of other reasons.

One of those reasons is an idea Sam has badgered your editor about for some time. We finally succumbed to the idea last week. We’ll release details soon, once we’ve ironed out a few things. But, in short, if Bitcoin, cryptocurrencies and the blockchain excite and interest you, then good news awaits.

Stay tuned. Hopefully, you won’t have to wait too long.

Our choice of money

Our level of ignorance on the whole Bitcoin thing reached a new level today at the conference we’re attending here in London.

We listened in on a conversation taking place next to us, where the protagonists explained how they had bought several cryptocurrencies, how they were ‘investing’ in them for the long term, and how the number of cryptocurrencies seemed to be growing by the day.

They’d made money on them too. Decent money.

We saw the list of these cryptocurrencies as they scrolled through them. There were 80 or more, by our recollection…perhaps many more than 80.

We were also struck by the extraordinary price movements of these things. Many appeared to have gained by triple-digit percentages within a week. At least one (we know not its name) had gained more than 500% in seven days.

We look at these things, and we wonder if we see a bubble. Maybe it is. Maybe it isn’t. Perhaps it’s just our own ignorance about the subject that makes us want it to be a bubble.

But what if it isn’t a bubble at all? What if the world is genuinely on the cusp of creating a whole new and widely used form of currency? And what if we, from our position of ignorance, are just a modern-day King Cnut, trying to hold back the tide of progress?

It may be so. But when it comes to currencies, we prefer the hold-in-your-hand kind. Especially the gold hold-in-your-hand kind.

Final note

Tomorrow, the UK goes to the polls to either re-elect the current Conservative government or to elect a new government.

The Prime Minister, Theresa May, called the election six weeks ago, when polls gave her party a commanding 22% lead. In recent polls, that lead has been cut to as little as 1%.

Surprisingly, the election doesn’t appear to have been fought on the Brexit vote at all. Yet the fate of Brexit surely rides on the result of the election. We’ve said all along that the bureaucracy in Whitehall and Brussels will find a way to stop Brexit from happening.

Even if the Conservatives scrape home in tomorrow’s vote, our money remains on the bureaucrats finding some way of making sure Brexit never happens.

Cheers,
Kris