The trend is my friend

In November of last year I attended a meeting with some independent consultants employed by my firm to analyse US politics. It’s no exaggeration to say that they were ecstatic with joy at the prospect of a trump presidency. These were intelligent, accomplished, educated people with a strong grasp of the facts of world affairs and US domestic politics. Whilst they undoubtedly leaned to the right politically, their arguments were one of the principal reasons I was moved to examine my own thinking and write my grounds for optimism piece in early January. Since then, Equities have rallied, gold ( a traditional measure of risk appetite) has failed to perform, and an atmosphere of feverish expectation has gripped financial markets. Over the Christmas period, I thought long and hard about European fixed income markets – and came to the conclusion that for logistical (running out of bonds) and macroeconomic reasons (inflation normalising), the market would soon price the end of European QE.

Having banged the long equities and short European fixed income drums since the start of the year, I now find myself with the right kind of problem – how do I ride my winners? The principal justification for both trades has now come to pass. I had two ideas that seemed at variance with the rest of the market as of December – the first being that whilst any right thinking person might baulk at a reality TV narcissist running the worlds biggest country like a tinpot dictator, the fact of a businessmen in charge presiding over a cabinet of fellow billionaires, Goldman Sachs creatures and former corporate raiders would probably be really good for earnings. The market has now fully embraced that narrative, to the extent that even pouring money down the drain to build a wall with the US’ third largest trading partner is grounds for optimism. The market has indeed begun to look past the end of European QE, helped along by a generous slug of supply from every issuer under the sun in Europe as governments and agencies use the remaining support provided by the ECB to jam as much long term debt down the markets throat as it can handle.

Normally when one’s perception as at odds with the market – there is opportunity. Now that my ideas are more in line I am taking stock and considering what to do next. Broadly, I have decided to stick to my guns. I still believe that being short European fixed income is set to pay off handsomely this year. The main danger to this idea is the market getting a little ahead of itself, curves are already steep and I have from the horses mouth that this is not a deliberate or desired outcome of the recent changes they made to their buying program. They may seek to talk long end rates lower – especially as political uncertainty in France and Italy widens spreads between the bonds of different countries, which typically the ECB does not like. A resurrection of language about the possibility of re-increasing purchases would certainly hurt shorts – but such talk is largely empty considering the constraints the ECB faces buying more paper and should be faded. To that end, I am shifting my small PA short on long end European government bonds into the 5y paper, and recommending similar to my clients. I believe that most of the move in bonds so far has been about the large amount of supply- not the market looking toward the end of QE and normalising of rates.

In US Equities, I think the only sensible course is to stick with the trend. Despite an almost doubling of US equity indices over the past 5 years, pension funds allocation to stocks have barely increased. This to me says that large investors who ultimately drive the returns available in different asset classes have not been participating in the move – and will be acutely sensitive to further moves higher. People often talk about positioning in financial markets in terms of who is long and who is short- but for me that’s an incomplete view. To me – short means “someone who might have to buy” and long means “someone who might need to sell”. By that metric, no one is long. The speculative community who I am intimately involved with professionally – ie big hedge funds- are long via options and not in big size- so their sensitivity to moves lower is low, they’ll likely add. Pension funds and asset managers don’t own anywhere like enough equities. Retail investors are not buying on margin yet – which is the only time those guys are really long. Positioning therefore supports a continuation of the trend.

However, with some gains in hand, it makes sense to look for a hedge to lock in a bit of profit and, well, justify all this smart stuff I’m supposed to have learnt about financial markets by overcomplicating things a bit! I had a go at hedging my views by buying 30y tips – but fluffed the timing badly and got stopped out. Now I think I’d rather just pay some premium. Whilst I’m bullish on stocks because of earnings and positioning – I see no good reason why the various lunacies of the current administration should be any good for the US economy, neither do I believe that the Fed’s undoubted obsession with financial markets cuts both ways. Stocks down is definitely a reason to baulk at hiking rates – but stocks up is certainly no reason to raise them. Stocks up is just a good gosh darn thing. Why spoil the party. I don’t believe that the FOMC with all their collective wisdom actually think that, but the smart things they do think probably cancel out, so one is left with the cognitive biases – few of which are as powerful as the “good begets good” heuristic. Hey, our easy policies are generating good outcomes economically -and given that boor in the white house, we ought to be careful, right? I think so. The US curve is steep enough here to justify paying up for some call spreads on Eurodollars – or some wide 1×2 receiver spreads in swaptions if you’re feeling fancy, as a hedge for a slightly more bearish scenario.


Reasonable grounds for optimism

It’s fashionable to be gloomy  – from the opinion pages of The Economist, to the major newspapers that endorsed brexit and are now acting salty about its consequences, to my own dear friends and co-conspirators on twitter, everyone agrees that 2016 was awful and 2017 is likely to be too. As ever – I want to strike a more optimistic tone. I not only agree with Chris Dillow that the long term consequences of the supposedly awful things that happened in 2016 (Trump, Brexit) will be less severe than people imagine – I believe there are sensible reasons for optimism.

Firstly, if we’ve spent the past years complaining about the economy ruining, stultifying effects of ever more “creative” monetary policy – we have to be optimistic that this influence is now waning. QE seems unlikely to be extended in the UK. In the US, we are informed that rates will rise several times. In Europe, QE is being tapered and for various wonkish reasons I suspect will be so again sooner than expected. Japan may be the fly in the ointment here – as higher global rates increase pressure in the BoJ to buy bonds to maintain it’s 0% peg on 10y yields, but it’s reasonable to expect that rather than sitting idly by – policy would change if needed. Capital markets less dominated by central bankers are a source for optimism. There are some substantive misallocations of capital going on in the world – with “safe assets” seemingly attracting an endless bid whilst countries where productivity growth is high struggle to attract it. In this vein, emerging market central banks feeling able to cut rates is a good sign.

Secondly, if you are a believer in democracy, 2016 may have seemed tough but the schedule for 2017 looks good. French elections should see a comfortable rebuke to fascism.  German Federal elections in october are a long way away and hard to call, but in spite of hysterical media reportnig around the world, opinion polls indicate no material increase in support for far right parties either. This should give leftists and liberals some breathing room. Trump will take many objectionable executive actions simply by dint of his erratic nature – but the actual workings of the presidency are complex – and he is both stupid and sorrounded by stupid people – so I’m cautiously optimistic that his presidency will turn increasingly farcical as time goes on. I guess as someone who beleives that Americas democratic institutions are thoroughly captured by elite interests anyway, i don’t see all that much harm in having him in charge. Granted, he will definitely use his power to try and enrich himself, possibly to gargantuan extents – but in the grand scheme of that the US government can afford to make him richer than any man has ever been and still function ok. Then specifically in the UK – Labour are making a sensible move by making Jeremy Corbyn’s genuine anti establishment credentials part of their core strategy rather than trying dress mutton as lamb and trying to make a normal politician out of him. This is a welcome step towards a coherent message. Media scorn and derision is inevitable and not neccesarily a bad thing.

Thirdly and much more specifically to the UK, we won’t know the shape of Brexit now for over a year. In no EU negotiation on anything has there ever been a situation where their position is clear – and in advance of German Federal elections it’s unlikely to be clarified until 2018 in any case. That gives us a year of relative political stability. UK data is extremely encouraging – and whatever you believe about the merits or otherwise of brexit – that situation ought to carry on for at least the next 12 months whilst it takes form.

Since the dawn of time – commentators have argued that the world is getting more complex and harder to predict. In my world of financial markets, I have never once heard anyone say that it is a good environment for trading. The environment is always “challenging” – the outlook is always “uncertain”. Anyone who opens a new year griping along such lines should be ignored. I say get stuck in and be hopeful.


There are two types of people…

I have a simple theory of interpersonal relations that I want to share, thanks to a tweet by @allthatissolid

In it – he, a portfolio manager, asks whether he ought to take views and research etc from a young salesperson at a new bank. To explain how this works for those not versed in markets, banks or “the sell side”, provide market making services. They intermediate buyers and sellers, either by directly matching them up, or holding an inventory of positions in financial instruments that they can sell to their customers. They are engaged in the business of providing liquidity. The “Price” of this service is generally set in an oligopolistic way, ie, a small and slightly differentiated pool of firms compete to provide the same services – but the price tends to be set in a kind of dynamic game rather than in a marketplace. The price of liquidity can be either a fixed fee to do a certain kind of transaction, as with exchange traded products, or the bid offer – ie the distance between the price at which one can buy and sell, as in the OTC market. Whatever the market though, the point of the salesperson at a bank is to get him or herself in front of those who need to trade in financial markets – and have them trade with them rather than the competition. In order to bring in business, salespeople offer as much as they can in terms of information, research, pricing tools, market colour and anything else they can do to differentiate their bank from the competition – a task that given most banks have roughly the same capabilities, mostly comes down to a kind of pseudo intellectual beauty contest. In some cases, with more old fashioned male end users, and cynical sales managers, it can be an actual beauty contest.

That explanation furnished, let me lay out my theory. It’s simple enough. There are two kinds of people. “big world” and “small world”. Big world is my approach. I believe that the world is big  – full of unknowns and unknowable things, and with vast numbers of people, all of whom have some knowledge and understanding. In a big world, you don’t know who has access to what kind of information, and how useful it is, you can only find out via trial and error. You can apply some sensible filters based on peoples likely motivations and incentives, but by and large its important to be open and receptive. Furthermore, if someone close to you does well because of your actions – that’s good – because there is a big world out there, and it’s better to have the parts close to you doing well. Small world is the approach of most people in banks. Small world thinkers see a series of zero sum games, following well known rules, in a world where those beyond their immediate connections are basicaly irrelevant. They seek to understand things in a limited framework, and limit that understanding to a limited network. If someone does well, that’s advantage that they left on the table – and they won’t get caught out again.

A big world person encountered with someone offering up information and ideas sees another potential piece of the puzzle. Wherever this person is coming from, unless they have obviously ulterior or sinister motives, they represent another link, another angle on the world, another unique perspective and set of facts, beliefs and ideas. A small world person sees a fixed set of zero sum games. Time spent with this person is time not spent elsewhere –  on things that are known to work. There is a fixed pie of attention, or money, or time, and it must be doled out accordingly. For each kind of person – the reaction to a chirpy young salesperson calling up offering to give stuff away for free in the hope of being given the opportunity to trade – the response is obvious.

In my own personal experience I’ve been lucky enough to make calls in to many big world thinking people. Those people have given me time, feedback, information, and all kinds of new perspectives on the world. I’ve generally found that they are receptive to new ideas and information – and dismissive of flattery, puff and nonsense. I’ve also had the misfortune to had to deal professionally with small world people. Such people demand their own prejudices and idaes reflected back at them, and offer nothing – focussing instead in maximising their own gain from any interraction. I’ve not been around long enough to credibly say which group succeeds in the long run – but the attrition of the former is certainly lower than the latter.


The next impossible

Today, in an effort to punish me for musing that a short squeeze might be on into the weekend, the worlds G10 fixed income markets sold off all pretty much in parallel. Treasuries, Bunds, Gilts, JGB’s… It didn’t matter. Everything came off, both real (inflation adjusted) and nominal rates rose across pretty much ever market. Except the front end of the Euro curve – where whilst nominal rates rose a bit, real rates fell. I’ll come back to this. Remember that a few months ago – this was impossible. Rates were never going up anywhere.

Why are real rates rising across the world at the same time that stock prices are going up?  All other things being equal, higher real rates should mean lower stock prices – but the bullish sentiments unlocked by the “Trump = Reagan” narrative mean that this relationship has broken down. In fact, to say its broken down gives it a false credibility – it’s a relationship that’s more theoretical than practical. Investors don’t look at bond prices and use that to discount the future earnings of the companies they’re buying in order to assess whether equities represent good values or not – they simply buy into and out of narratives – “Risk on” means you need to sell bonds and buy stocks OBVIOUSLY – and no, it doesn’t matter whether you have a fundamental rationale to do either trade-  you just have to because the inverse correlation is self fulfilling – if you own stocks, you’re vulnerable to a rally in bonds. If you own bonds, you’re vulnerable to a rally in stocks. The market doesn’t know what’s driving the “animal spirits” of risk on risk off -but its damned if it’s taking its time to find out.

But whilst today we saw that the risk on narrative is raising real rates everywhere in the world, it can’t seem to touch the front end of the European market. “Ah but QE!” – yes I know that – but as you surely know, dear reader the ECB is running into a brick wall in terms of bonds to buy soon and anyway, the market is so desparately short of collateral that they’re mooting (and banging newswires with) schemes to lend out the bonds they bought. But wasn’t the point of QE to swap bonds for money to help the economy???? Quite. Anyway you can’t do impossible things for ever and the ECB will not – and who remembers what happened when the Fed tested the waters about tapering bond purchases back in 2013 ? Clearly not many people. 5y bunds are trading at -40bp – which is the same as the ECB’s deposit rate.

Now is the ECB going to withdraw asset purchases overnight? no. But is the market going to believe that they’re going to keep monetary policy accomadative when they inevitably have to change the rules either in December or January? History implies not. The ECB is an institution riven with conflict, the market is pricing the next 5 years with policy as loose and accomadative as is mathematically possible. All it takes is that probability distribution to shift and those holding 5y paper yielding the same as the overnight deposit rate are going to be 5years worth of worried all at once. That’s the magic of fixed income markets. God I love them so.



How long before “Trumpenomics” is a thing…

In the strapline of my blog I claim that I’ll write about money, markets, people and power – so it’s high time to write somethig about a rich man, dominating the hivemind of the markets – driving people’s sentiments without purpose, and thereby exercising incredible power. I don’t need to tell you about the Donald Trump’s manifest unsuitability for any kind of elected office. His crassness , contempt for women and sexual boorishness, inability to run his businesses, and thin skinned temprament are well documented. What I do need to tell you about is how the men and women of the financial sector have welcomed the donald into their lives.

You see, when pressed for an answer as to where markets would go if he were elected – most people, including me, would say that it was impossible and that he would be a disaster for stock prices. Well, the first part is true of me. But as a Socialist I recognise that fundamentally, the value of finanical assets is determined by the confidence of market participants in the ability of those assets to generate cashflows – ideally in a currency people want to have – and that this is effectively done by creating systems of property rights, laws, norms and values that entrench the interests of the powerful and wealthy. Whilst I couldn’t have and didn’t predict the magnitude of the move in equities or interest rates, the direction was and remains obvious.

It is a phenomenal thing to see the formerly impossible become accepted and normalised by intelligent people. The human mind is a rationalising engine – capable of accomadating anything and everything in order to get on with the job of self preservation. Things decried as impossible become the new normal – and narratives are spun. Before Trump’s ascendancy – the atlanta Fed’s wage growth tracker had been telling us quite inescapably that wages were going up. But no one was clicking that link prior to the narrative kick provided by what I’m going to unabashadly call “Trumpenomics” because why not – it’ll be retrospectively applied anyway to whatever garbled mix of “pro business” policies emerge from the eclectic mix of individuals comprise his regime. I put pro business in inverted commas not because I think that Trump is bad for businesses, but because I think that “bad for business” is a nonsense statement. Businesses –  companies -corporations – are abstractions, legal vehicles of convenience for the accomplishment of things that people need. “Pro Business” actually means “Pro Profits” – or rather, pro a bigger slice of purchasing power left over for the owners of capital to enjoy after labour has been paid. I suspect that – quite by accident – Trumps administration will prove enormously succcessful at increasing the profit share of american companies. In this sense, I am as invested in the narrative machine as anyone else. Trumpenomics FTW!

But in many important senses I am not and neither should you be. Policies and institutions that are “pro business” are not neccesarily “pro wealth”. Increasing the slice of the purchasing power pie that capital gets is only good for the holders of capital if the pie is made of something tasty – and hasn’t gone off. To extend the metaphor arguably too far – leavnig the pie outside of the refridgerator to make it easier to grab slices will shorten its lifespan. Decreasing the workforce, entering into trade wars, wasting resources on preventing imaginary threats, increasing wasteful subsidies for fossil fuels etc constitute things that fit that stretched metaphor well. For now I’ve moved a portion of my meagre savings into US Equities because I believe there’s a lot of ruin in a nation (as an economist once said) and the power of the narrative machine is in full swing. But it won’t stay there long. As soon as “Trumpenomics” becomes widespread in popular culture and imagination I’ll take my position off as at that point, the narrative will have been spun – but behind the scenes, an ignorant, self serving, venal man will have been destroying the very basiss of wealth in the US and world economy. No narrative will be able to overcome the fact of that.



Arbitraging Japan – Some Reflections

This week I was encouraged to read “arbitraging Japan” – an ethnography of a group of arbitrage traders working in a Japanese securities firm in the late 80’s when Japan experienced something loosely equivalent to the UK’s big bang, through to the early 2000’s. I wouldn’t unhesitatingly recommend it to all – but it raised a few topics that I wanted to reflect on briefly because I’ve also wondered about them professionally and personally – if you have too you should read it.

The key concept of the book is arbitrage. In financial markets, this generally refers to the practice of going long and short very closely related instruments which are fundamentally economically related. One aims to buy a cheap version and sell a rich version of the same thing. The main example covered by the traders in the book is the practice of buying and selling stock index futures against the component stocks of the index in the expectation that the prices of the two will converge. As a fixed income market guy by trade the main similar activity I see in this vein is trading the government bond futures basis (see footnote). However whilst the instruments that are subject to arbitrage are normally related fundamentally – they can diverge in price (hence the possibility of arbitrage) – and the extent to which they diverge is arguably simply a matter of speculation. It’s hence my belief that so called arbitrage traders are engaged in a form of meta speculation – effectively selling options on structural breaks.

By this I mean, if there’s some event that perturbs prices such as it can be argued there’s an arbitrage opportunity – there’s no guarantee the phenomenon that displaced them won’t carry on. A classic recent example in markets has been the persistent richness of German government bonds relative to interest rate swaps, and government bond futures. The cause is simple enough – the EcB has pre announced that it will buy bonds regardless of price. Even though other instruments exist that do the same thing (ie, get euros in the future rather than now via interest rate swaps or futures) – they aren’t buying those – so the relative value of these bonds has become a thing that rv funds use to hedge their macro exposures, and macro funds use to take outright speculative, not arbitrage positions.

The point generalises – any difference between comparable securities that can be effected by ‘macro’ factors can go from an arbitrage trade to a macro trade. This phenomenon can of course become self fulfilling as markets are forward looking by nature. Some but not all of this is addressed in the book – which presents the tension between arbitrage (rv) and speculation (macro) as a kind of existential question that the traders involved grapple with. I think both the author and the participants interviewed come across as naiive when discussing this – it’s much more a practical distinction than an abstract one – but it is well worth a skim read to decide for oneself. I am a self declared arbitrage/rv sceptic – so i am biased. This book is an interesting perspective.

The other interesting part for me was the perpetual discussion of exit strategies by the subjects of the book, derivative traders who looked at their work as an engineering problem. As they could see that theirs was an engineering problem that didn’t solve any identifiable real world one, they were all anxious to make an impact on the real world by quitting and doing something proper. This is well worth reading for any of who who wonder what city folks sit and think about when they, as all of us, ponder there place in the world and the meaning of their work. These Japanese securities traders worry about exactly the same mix of existential angst about the usefulness of their work combined with the visceral fear that others are being paid more for the same work that pervades dealing floors across the world to this day. I encourage you to sift the book for these sentiments.


No one is allowed to talk about costs without asking me first.

No one is allowed to talk about costs without asking me first. That is the new rule. I hereby enact it. Legally, it is higher in status than common law. Enforceable by the highest court of the land – my tiny readership’s exceptionally well informed opinion – clear, unbiased and objective. No one is allowed to talk about how much things cost without asking me first to check they are not talking total jibberish.

I’m prompted to enact this important new piece of legislation by an exceptionally awful piece written by the normally pretty decent @Capx. For died in the wool lefties such as I, its important to cultivate sources of well informed, articulate right wing opinion and most of their output is interesting in substance and in spirit. However one of their latest pieces is so naive and economically illiterate that I feel the need to lay down the law. Here it is in all its glory. Feast your eyes. Let’s lay some cards on the table. Yes I’m left wing. Yes I’m largely pro corbyn (in the same sense that I’m pro the England football team – tribally and noisily aligned but not entirely confident in). I still feel I’m absolutely qualified, in an objective sense, to declare this criticism of Labour’s economic policies as total and utter nonsense.

Followers of the inimitable @GeorgePearkes and hopefully many others will be familiar with the concept of chartcrime. I hereby introduce a related offence – table crime. This effort from Capx will be  a landmark stated case in establishing tablecrime legal precedent:

Pure, untramelled criminality.

It’s really difficult to know where to start with this so I’ll take one of my absolute pet peeves first. If you’re talking about macroeconomics, and this guy alleges to be, don’t talk to me about a billion here and a billion there. I sit in my comfy chair on the dealing floor and watch the UK Government merrily issuing, and also buying back through the bank of englands asset purchase program, billions of pounds worth of gilts every week. I have personally traded bigger notionals of UK Government bonds in one clip than some of the line items in this table – and it won’t surprise you to learn that I’m not that big of a player in the UK Gilt market!

Now let’s discuss an absolutely bog standard economic pet peeve – mixing up stocks and flows. I really can’t emphasise enough that this is just utterly unacceptable if you purport to be a serious person and talk about economics. “Capital cost of infrastructure borrowing” is a weird doublespeaky way of saying “This is how much extra borrowing there will be”. And what’s the next line item? The cost of servicing that borrowing. You cannot add those two things up. Whatever calculation your table is trying to get at, adding up the stock of new borrowing and the cashflow associated with that borrowing is not going to get you there. Unless the purpose of your calculation is “write down all the biggest numbers i can think of associated with policies I dislike” in which case – bang on.

However, the main and most galling and infuriating thing about this whole exercise is the attempt to apportion these costs to households. Let’s ignore the stocks/flows/conjectures etc and assume he’d done the exercise honestly and uncovered labour plans to spend £17500 per household across the next parliament. How, in the name of all that is holy, is that a “cost per household”? Most of the actual policies tallied in the table that involve actual government spending involve the state paying costs that are currently paid by households. If we’re to adopt the frankly ludicrous language of reintroducing the spare room subsidy – or as one might more honestly put it, “not fining people any more for living in houses that we’ve decided are too big for them” , this makes it even more glaringly obvious. How can a subsidy that is explicitly paid to households be counted as  a cost to households? It is so absolutely nonsensical and absurd that I can’t understand how it can have been written down by a thinking, feeling human being. But it was. I can almost forgive more the bizarre idea that the government issuing extra bonds is a cost to households, because on some level, it’s reasonable to assume that someone has to lend the government money and that households are the ones ultimately doing it. It’d be wrong to assume that – but it’d be reasonable. Declaring a government subsidy to households as a cost however is so stupid it needs some sort of new and special word to describe it.

Frankly, I think  there’s a much bigger issue in terms of people’s understanding of what “cost” means – and the problem, as so often in life, comes down to money. It is worth remembering that money is the one thing of which there can never be a shortage, unless deliberately orchestrated. Parliament could pass an act tomorrow giving every UK citizen £1000 in cash. We could do a special syndicated £64bio gilt issue – which for a modest fee I would be very happy to assist in arranging in my capacity as a market maker. I’d advise the UK government to issue a new 75y inflation linked bond – on which it would pay a real yield of around -1.8%. Ok, maybe they’d have to pay more like -1.6% to give it a bit of new issue premium – but given that the long end of the real yield curve is downward sloping I’d say there’s good demand for convexity out there so why not give it a go! Anyway I digress. The point is – money is not the problem. The problem is always how we allocate real resources. Houses, people, computers, copper, grain, pins, blue tac, prawn mayonnaise sandwiches – these are what matter. Their cost in £ is only relevant in so far as if it changes too much or too quickly – people get confused and spooked and might produce or consume less of them because they’re used to a certain structure of nominal costs which guides their decisions about how to allocate real resources.

So in reality, my policy idea of a special one time bonus of £1000 for everyone might have some real costs – because it might lead to some pretty wacky behaviour on the behalf of “real economic agents” – i’m sure my local corner shop does not have enough craft beers to cope with every area hipster being given a £1000 windfall. Things could get ugly. But the point is it’s just not good enough to note that some amount of money x has been borrowed by the government, or spent on something (especially if you’ve double counted it!) – you have to be able to explain why it’s going to be a cost in real terms. Even if you’ve gone one stage beyond who wrote this Capex piece and put some serious thought into how labour’s policies might affect economic aggregates – which he hasn’t at all – it’s not good enough. People deserve better. One has a responsibility as an economic commentator to explain to people what the impact of policies will be on their lives.Econmoic aggregates don’t tell you much about that at all. I personally guarantee you that in their current state, issuing an extra £70bio of gilts a year into starry eyed yield hungry financial markets will make feck all difference to the welfare of ordinary people. But repealing cruel and vindictive benefits reforms that have barely any impact on economic aggregates will have a massive effect on the financial and psychological wellbeing of thousands.

There’s a lot of ill informed and spurious nonsense in the piece that I’ve left untouched – but one final point needs addressing. I quote the bloke directly:
“However, today’s record-low bond yields are unlikely to stay for long. Yields have typically been between 2 per cent and 5 per cent in the recent past, and inflationary pressures mean that yields will likely return to these levels by 2020.”
The market unambiguously disagrees with him . He may well be right – but I don’t think so, and I’m happy to take his bet. If 10y UK Nominal Yields are above 3% on the 31st of October 2020, I will buy him a steak dinner if he agrees to buy me one if they’re below. I’m sure we will have a lively discussion on the day either way!