Beware of Greeks Wearing Lifts

by | Feb 20, 2015

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Sign outside a chiropodist’s: “Time wounds all heels.”  David Cowell of Myddleton Croft Investment Managers hopes Achilles isn’t tendon toward bankruptcy. 

Greece formally requested a six-month extension to its euro zone loan agreement ybankingesterday as it rushes to avoid running out of cash within weeks and overcome resistance from sceptical partners led by Germany. With its EU/IMF bailout programme due to expire in little more than a week, the government of leftist Prime Minister Alexis Tsipras urgently needs to secure a financial lifeline to keep the country afloat beyond late March. As I have said all along, there will be a last-minute fudge. After all, Monday is a bank holiday in Greece….



myddleton croft

Quotes from the England 1-day cricket captain after their annihilation by the Kiwis: “Guys are very disappointed,” Morgan said. “Over the next day or so they will look at themselves individually and see what they can do to improve against Scotland. Collectively we are going to have to get tighter as a group and produce collective performances that we have been searching for.” He’s a shoo-in for a job as FCA PR man. Collectively as individuals: there’s a new management concept.

 Retail sales in the US fell in December, according to the latest figures from the Commerce Department. Sales fell by 0.9% which was the biggest monthly decline since January last year. In the past year, sales have risen by just 4%, which was the lowest growth rate since 2009. Spending by consumers accounts for 70% of US GDP. 10-yr Treasury yields have started to tick up as have 10-yr gilts. Perhaps the Fed can afford to be behind the curve for a little while.


$3.6trn of government debt, or in other words nearly a fifth of all global government debt, is now trading with a negative yield, and yet last week EPFR data showed inflows to all fixed income funds of $16bn – the highest on record going back to at least 2008. €1.5trn of euro area government bonds over one-year maturity have negative yields, and yet Mario Draghi thinks if he can just get interest rates down a bit further, he can turn the European economy around. It’s time they wised-up to reality; the banks already have plenty of money to lend, it’s just that businesses ain’t borrowing it: a) because unnoticed by the ECB, the whole world is suffering from low- or no growth; b) borrowing is already back to pre 2008 levels and that was too high anyway, and c) businesses actually don’t trust banks (or governments – especially the French) anymore and why should they? Companies would rather raise capital by borrowing it directly through issuance of their own bonds or equity.

The relative lack of volatility in the Tactical Growth Portfolio has been remarked upon. Perhaps the chart below will help to explain:

mc tactical 1


One can therefore see that increasing exposure to cash at material times damps down portfolio volatility quite successfully. However, because of the stilted methods risk profilers use the portfolio doesn’t fit into any of the boxes. It is possible – indeed desirable – to use TGP as a profitable addition to overall investment portfolios by running it alongside a risk-profiled set without increasing the overall volatility. Contact us for more information. One other thought: As volatility doesn’t matter if the objective is long-term, this should form part of a long term growth strategy. Anyone disagree?

The yield on Portugal’s 10-year bond fell 14 basis points to 2.32 per cent last Friday, below the previous lows touched earlier this year and down from almost 5 per cent a year ago – and a peak of over 16 per cent when investors feared the eurozone was unravelling. Portugal has been one of the good boys of the eurozone so it will be interesting to see what happens with the Greek settlement. Although they don’t have an election this year, unlike the Spanish, the contagion could spread rapidly.

The combined eurozone economy expanded 0.3 per cent in the fourth quarter. This was powered by a much better than expected output reading from Germany but look at the Irish recovery:


mc tactical 2


Dorothy and Edna, two “senior” widows, are talking. Dorothy: “That nice George Johnson asked me out for a date. I know you went out with him last week, and I wanted to talk with you about him before I give him my answer.”


Edna: “Well, I’ll tell you. He arrived punctually at 7 pm, dressed like such a gentleman in a fine suit, and he brought me such beautiful flowers. Then we went downstairs and there’s a limousine, uniformed chauffeur and all. Then he took me out for dinner; a marvellous dinner with lobster, champagne, pudding, and after-dinner drinks. Then we went to a show. Let me tell you Dorothy, I enjoyed it so much. So then we went back to my flat and he turned into an animal! Completely crazy. He tore off my expensive new dress and had his way with me three times!”

Dorothy: “Goodness gracious!… so you are telling me I shouldn’t go?”

Edna: “No, no, no…I wouldn’t dream of interfering in your social life. Just wear an old dress.”


Have a good weekend.


David Cowell


For and on behalf of Myddleton Croft Investment Managers

1 Woodside Mews

Clayton Wood Close


LS16 6QE

Tel:        0113 274 7700

Fax:       0113 274 7711


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