Friday, 18 May 2012

Reality bites . . . On the road to the Giro

It was only a week ago that the talking heads of the various news channels were telling us that the Greek election outcome was priced into the market. We have a market chronically addicted to the printing of money and nothing short of a crash is going to intervene to stop that. Sorry folks, these are the facts of life.

My Australian brothers spent the day pondering the nuances in comments coming out from national champion BHP. Apparently they're waking up to the fact that India is not going to pick up the slack from a slowing Chinese economy. We knew India was in trouble when Brent first got over 80 bucks. The life is being squeezed out of the slack money in the economy there and no amount of house building by the upper classes is going to save them.

The AUD breached 98 today as it prepares for at least two 25bp rate cuts during the northern summer. I expect the currency to continue its slide until a couple of days before the Greek elections. Sometime during that period the 1%'ers will decide to either a) save the Greeks or b) print money and save themselves or c) surrender. I think they print money if the Greek elections look bad for decision making. If you're timing is good you might ride a bounce.

I feel like the only one who missed sterling's slide from 1.61 safe haven  trade to 1.575 get me out status.  David Cameron's options are looking less attractive every day. The flexibility of the UK jobs market alone is probably not enough. GBP being weaker helps, but when a conservative starts talking about increasing government guarantees for small business loans I think we need to start preparing for a plan B.

San Francisco . . .  a very nice place for dreaming. Someone asked me this week about Facebook. I know nothing about these business models. I did some work and to a degree came back more bullish than I thought. Was I being sucked into a trap? The valuations are stretched, but so is the growth profile. Once upon a time  you used to hear the phrase "no one ever got fired for buying IBM" on trading floors throughout the world. Today's version is Apple. If you buy Facebook at these levels you are putting it in that class. Is Google a better bet than Facebook? Or just a less leveraged one? 

Today I'm heading to Italy. Tomorrow I hope to be at the start of stage 14 of the Giro d'Italia. I'm staying within a short ride of Cherasco. I need a cheer up from all this doom and gloom and I think a sporting even is just what the doctor ordered. Here's the profile of the course:

I kind of wish I was waiting in Cervinia to see the a mountain finish. It should be a great party as Cervinia is a pretty upmarket ski resort that links to Zermatt. Clearly Saturday is not a day for the sprinters.

In yesterdays stage I was a bit surprised that Sandy Casar didn't win. He looked in control for much of the final kilometers. He rides a Lapierre Xelius 900, not an attractive bike, especially in this years colors:

I'll be riding my Dogma on Easton EA 90 SLX's this weekend. I just didn't want to risk a puncture on tubulars in Italy. They're not as sexy as the Campagnolos, but when I'm stuck half way up a hill in the middle of nowhere with no mobile phone reception I think I'll be happy that I can change a tube and not have to mess around trying to get some tire sealant to work.


1 comment:

  1. Mike, When in Italy it is more customary to ride the local two wheel version- the Vespa !