Blain's Financial Porridge December 6th, 2019

Dec 06, 2019, 12:12 PM

Bill Blain is an experienced market commentator with 35years in the markets behind him. His daily market comments can be found on www.morningporridge.com. He also does daily Porridge Lite-bites for his firm, Shard Capital, which can be found on the site.

In this edition of the Financial Porridge Podcast, veteran Market Commentator Bill Blain examines some of the critical market themes driving markets. 
 
If you simply invested fully into stocks and bonds, then 2019 was a great year. As markets wind down, investors are largely concerned with holding onto their gains. Higher stocks and bonds is  unusual – normally a strong bond market suggests a lack of inflation and a weakening economy, while a strong stock market suggests a very buoyant growth scenario. What’s happening is that central banks are still boosting markets through cheap rates. The big themes of 2019 were i) trade wars, ii) recession/downturn, iii) the end of the unicorn era, iv) the rise of ESG investment rules, and v) politics.  They will likely continue to develop over the coming decade. 
 
UK Property markets have been shaken by the gating of an M&G fund. The problems of the commercial property market are very specific – its about the death of the high street, empty shopping malls and credit concerns on lessees.  However, the real problem with funds is liquidity – its madness to expect daily liquidity on property investments.  Commercial property is an attractive real asset, its not a listed stock or bond. 
 
Corporate debt is another sector that could experience a liquidity trap. The market has evolved and grown dramatically, but has become less liquid and less credit worthy with far more issuers on the very cusp of junk. What happens if there is a downturn or interest rate hikes could trigger a wave of contagion crisis on the corporate bond market. 
 
Politics has been the biggest force moving markets through 2019. Another French revolution is brewing. Hong Kong remains a powderkeg. The UK election is the nastiest on record, and Donald Trump will face an impeachment trial – which he will win.