Monday, 28 November 2016

Less of moor, more of less.

I've returned from my self-imposed solitude in the wilds of England. If you want to find a place in the world where normal physics doesn’t seem to work, other than the Japanese economy, try the moorlands of England where water resolutely refuses to run downhill, instead producing hanging gardens of bog. I always thought that bogs occurred in hollows, not on 30% inclines on the sides of mountains. But I have found that setting off into the wilds in drizzle and mist is more invigorating to the soul than a sun lounger on the beach of a tropical 6-star resort. And a damn sight cheaper. But the moorlands and ancient stone pubs with fires that haven’t been extinguished for 160 years, that reek of apple-wood fumes, ancient ales and a long dead wet dog, have left me cleansed of the ways of the markets. I have had the metaphorical biro of destiny inserted into my reset button of reality. I have been left off for five minutes and then restarted. I have had my factory settings restored. I have been machine rebooted, had my hard-drive reformatted and even had my screen returned to an Apple store in Exeter, only to find it still in Exeter due to an Apple policy of not being able to know how to use a post office.

Sorry, my lyrical metaphors were starting to show signs of the return of my core operating system of bitterness and resentment there. I must be getting back to normal. Yes Apple store in Exeter, your cheery and right-on tee-shirted beardy youthful front-end enthusiasm has failed to cover the fact that you are run by a despotic corporate megathon and you are unable to act as independent agents to the great machine by popping down to a post office and sending my repaired machine the 200 miles to where I now sit having failed to have it ready by the promised time.

Oh well. Markets. What’s been happening then? Let's start with my cheeky short in the Dow. Stopped at the highs. Don't you love it? Right and what about all those positions I closed. USDTRY, much higher. damn. USDJPY much higher damn. FTSE - higher good. BTPs - was stopped on the pop higher. Damn but no worries really. GBP - hasn’t really done anything. Oil - one of the few I kept . .Up! Thank goodness we have a winner. The others were opportunity cost rather than real cost and a profit is a profit as we used to say. Though nowadays a profit is something that is worth staying very quiet about or someone else will want it.

I remain pretty clueless as to what to do at these levels. I'm sure that if I dig deeper tomorrow into the minutiae I will find something to get overexcited about and end up losing money on, but the bigger picture seems pretty balanced. As balanced as a marble on a pyramid. The feeling I expressed in my last post is still applicable. The market thinks it knows what will happen next though, in reality, we are at one of the greatest unknowns we have had for a while.

Brexit - Unknown. In fact, it reminds me of how I used to study. Have a vague idea of what I was going to do but get a little bit worried that I didn’t know where to start and that then built into a rising panic of time constraints that made it even harder to start until all of a sudden there I was in the exam not having done any work and not wearing my trousers. Or was that a dream I had last night? Either way, it’s the same madness.

Trumpton - Unknown, but probably pretty clear to me that he is going to be much more moderate than at first feared. Probably the biggest threat to his welfare won’t be from the liberal lot protesting his extremes, but right wing extremists protesting his liberal betrayal.

Frankreich - That Fillon fellow is a right Thatcherite isn’t he? I almost choked on my croissant when I read about his proposals. Cop a load of THIS. It's straight out of current Tory party policy, though I am not quite sure how his wishes for French immigrant limitation fits with his eager support for the EU. I thought that was the major sticking point on Brexit. I’m none the less having my fiver bet on him in the next elections and though I have done well on my Brexit and Trump bets I am not going for the Le Pen triple. But whoever wins it looks as though there will be more pressure on the old EU guard to change. I wonder if the UK can procrastinate long enough over Brexit to see the EU change into what the UK wanted in the first place, so we can then stay.

Italy - Nothing to add on the referendum. It’s been well discussed.

Japan - running according to plan. Waiting for the fiscal stimulus to hit via the pegged JGB door. Funny how the market reacts completely differently to the chances of Trump going big on fiscal stimulus than they do to Abe.

Emerging markets in general - It's traditional that January sees an irrational fear that emerging markets are going to blow up for them only to rebound in March. The Trump effect has brought this somewhat forward. The impact of strong dollar, trade barriers and a potentially rising USD interest rate have seen this trusty triumvirate of woes cause a slide in EM bonds, equities and FX. However, two things. First, I doubt that the reality of Brexit and Trumpism is going to be as bad in reality as currently feared and second, more importantly, no matter how protective a policy is designed to be it will not make the cost of labour cheaper in the DM countries relative to the EM ones. In fact, in restricting immigration, those who would have moved from EM to DM as smart labour are now going to have to be paid to remain in their country of origin to produce that good that your local folks really can’t do without but are too proud to make themselves for 50c an hour. I am looking to buy EM again. I haven’t done enough work on it yet, having only just returned, but probably anything other than Turkey.

Cuba - '90-year-old man dies of old age’ is hardly much of a headline, but once again everyone appears to wait until someone dies before outpouring their feelings towards them. Why? I’m sure the person who is dead would have benefitted more from hearing them when they were alive. There is no trade in Cuba other than buying everything they are allowed to sell you before they are allowed to sell it to you.

Other stuff - I’m only just getting back up to the slow speed I normally run at, give me a chance, but overall I am still looking to fade the Trump bump. And, as usual, I've committed the trading crime of repositioning my last stopped trade. Short Dow.

Right, I'm down from the moors and back to the big smoke of London and all them there bright lights and fancy folk with their fancy ways...

Monday, 14 November 2016

Positional update. Closing down sale.

I don't know if it's the weather, a streaming cold or my disdain at the bipartisan rantings everywhere that have me pretty depressed today. I have been lucky in the markets but I am getting to that point where  I can't outguess what everyone else is trying to outguess. Because guessing is a lot of what it is. Uncertainty is what we have, not certainty.  Yet much of the market is trading as though the future is certain.

My only conviction is that the path for bonds has finally cracked. It won't be a straight line path so there is still room for pain, but Trump has nudged them over an edge they were already standing perilously close to. How that pans out for everything else though is dubious. A controlled slide, as part of a reflation adjustment, is one thing, but my fear is that this goes all rather nasty in a hurry and acts like a cluster bomb in the market triggering unpredictable secondary explosions all over the place.

But, for now, as I am cold, shivery, annoyed and generally in a confused and foul mood I am shutting things down.

Update on the last 'positional' post ->

Long USDJPY - instigated at the end of September after the markets had decided to buy yen post-BoJ when perhaps it should have been selling as described here Happy to run this. CLOSED IT. +6.5% is enough, for now, it's getting mainstream.

Long USDTRY- Long since the coup after the initial pull back to 2.96 area. My core beliefs that Turkey is in trouble re regional positioning and FDI flows vs trade deficits is unchanged. Seeing it break up through the post-coup highs to now trade around 3.12 looks like we are finally on the move. That 'CB may not cut' move from 3.10 to 3.06 was indeed just a buying opportunity.  CLOSED IT. 

Short BTPs - Short since the ECB in September and going well in the run up to Italian referendum and a general rally in global bond yields. the 50yr BTP auction appears to have been a watershed moment for them. I go along with the general concern that bond markets are the nuclear waste of monetary policy and their toxic legacy is not easily disposed of. RUNNING FOR A LITTLE LONGER, BONDS ARE BUST, BUT LEFT TIGHT TRAILING STOPS NOW.

Long Oil - Its had a good run and is now languishing around the 50 area and I am not so sure about another up leg but I am still biased for higher as no one really seems to believe that OPEC can get its act together. Whilst developed markets demand may be substituted with renewables I can’t forget the exploding global population in the poorer countries who as they emerge from abject poverty are going to be buying a moped, cultivator, generator or old car before they get wired up to a renewables grid. Oil burning is still the first step out of poverty.
RUNNING IT, could hurt and looks rubbish, but oil always does before it turns. 

Now the messy bit - Long GBP via EUR and USD. EURGBP is onside and less of a worry than the cable part which has been whipping around like a cow’s tail in a fly infestation. I am one of those flies trying to hang on to longs but it is hurting. I am spending far too much time watching price action and willing to cut sub 1.2050. 1.2250 has been behaving as a very difficult area to break and some of the short-term price action on any approach had that feel of ‘someone is working a lot to go over time at that level’ feel to it. CLOSED IT. Bored and it's priced for Trump. Will look for dips to rebuy but will depend upon news at the time.

Short FTSE - It’s been correlating well inversely to GBP, which was the original plan to be short it and long GBP, but it’s now underperforming the GBP moves looking weaker on its own. Which can be read a couple of ways. First, its global equity weakness coming through in general not helped by bonds are looking iffy (higher bond yields, higher borrowing costs for highly leveraged debt etc). OR and this is confirmation bias at it’s best in my brain, It's showing that the belief in GBP weakness is fading otherwise everyone would be buying FTSE, No actually, I don’t think I can bend that one to fully fit. CLOSED IT.

Meanwhile in commodities, though I haven’t been talking about them, some buried deep long-term structural positions are heavily weighted towards commodities, mostly through producer stocks. Rio has done well and the rapid rally in coal prices has caught a lot of folks out as coal had been pretty much written off as having any use in the new energy world. But Chinese stockpiling must have breathed new life into the east coast of Australia to the point that the AGDF ( Aussie Goes Down forever) trade may be worth playing against. Copper has been pretty much range bound and though I tried buying bounces 6 notes ago it won’t be on my radar until it breaks properly. Supply side seems to be driving price more than demand. But overall I am happy to run long commodity position sin the deep dark recesses of guy bottom drawer trades. STILL LONG IN THE DEPTHS OF THE PORTFOLIO but after the recent run its become more lottery than pure conviction. I'll close the drawer and ignore it all. 

Trump to win bets. I'm very happy to let them expire worthless, and hope that they do, but still think that prices may well rise during the election themselves which ill give an opportunity to sell DON'T NEED TO TELL YOU WHAT HAPPENED TO THESE.

So that’s it. I'm going to vanish off to wild and windy solitude for a few days to regain my soul. 


PS.. As a parting lottery ticket I have shorted dow at 18907 and put a stop at 18985. Pure lottery and I won't take a look until I'm back. 

Sunday, 13 November 2016

It’s all about the branding.

I went to the Hoxton Hotel (Hipster Centerville, London) the other day to interview new creative staff. The whole area has changed dramatically since my first student holiday job there for a spivvy life insurance company that I thought was a proper City job. It wasn’t, it was branded as a city job because it involved money, insurance and was on the edge of the City of London. However, the clients who were sold life insurance were also fooled by the branding and presentation of a product that, though wrapped in original and genuine bullshit spun from tobacco aged insincerity, were, in reality, being sold a handful of cheap ingredients priced at a very high margin.

Which means that Hoxton really hasn’t changed very much. The place is alive with wooden stores lit by retro-filament bulbs selling things at a high margin. Artisan burgers, bread, gin, beer, more gin, coffee, gin, sandwiches, wood things, furniture, clothes, more wood things and bicycles oh, and gin. Though the UK is fast heading towards a gin-based economy, there is a limit to how much gin a population can drink. Hogarth has already shown us where this ends up.

But if I were to join the fad of converting any old space into a gin distillery, I would probably do so in one of the now deserted old trading floors in the City and start producing my own product - MarGin. Such astute branding would lay open all sorts of witty strap lines to woo in the financial punters:-

MarGin call? Yes please, with tonic.
MarGin on the rocks.
MarGinal returns.
If 25% of your property portfolio is MarGin, make sure the other 75% is F’ever t’REITS. (OK, that’s a bit stretched)

Anyway, enough of the next business plan, as I walked back towards Bank from Hoxton, swiftly crossing from the land of wood and filaments to that of glass and LED, I was wondering if the methodology employed for selling bread at five times the normal price could be the saviour of banking, where margins have been crushed and profits fined away. I have written before about how finance, in its way, already relies on hints of artisanal methodology, comparing complex financial products to Himalayan Pink Salt (here) noting that building expensive complexity out of basic products is at the heart of financial engineering.

Yet that is where the artisanal similarities currently appear to stop. Perhaps it would be a perfect time to try to employ more of that feel. Walking into a banking hall full of bearded, skinny jeaned, check-shirted folk selling loans piled up and mispriced from tables hewn from living trees may be a little too optimistic but bringing back banking halls of marble and brass with clerks wearing waistcoats and sleeve garters may be more the thing. With fear of cyber crime being such a reality, especially after the Tesco Bank raid, why not go the whole hog and introduce rows of clerks with hand-written ledgers and get rid of the computers altogether.

This could be the new Barclays Hoxton Branch (rather than being the old Barclays Norwich branch)

If people are willing to spend £49 on a bottle of artisan gin or £6 on an artisan loaf I am pretty sure that they would be happy to pay 50% APR to borrow £100,000 using a handcrafted loan based upon a bond used by the Medici’s in the Renaissance. Never mind the APR, appreciate the timeless quality!

There are plenty of brands that are currently considered so unfashionably difficult to handle they could do with the same treatment. Artisanal estate agents (I am told that in Italy they do exist) or Artisan Call Centres where an old yokel with a rich rural accent tries to get you to claim for whiplash you didn’t suffer from your gin still.

But it’s the darker side of politics I am now going to move on to. The root of this post came from my annoyance at the biases that are inherent within Twitter. Not that the individuals I follow are biased, well they are, everyone is, but the way one ends up following or being followed. I really want to follow people I completely disagree with and probably disagree with me so that I can get a balanced feel of the opinion of the world. But they obviously won’t follow me, unless they are also following my thought process. How do I find them? Most of the people I follow will have been biased for the same reason but  one degree of separation further on. If you don’t believe me, look at your twitter feed and tell me that the views expressed there are a fair representation of the 50/50 split that is the reality of the Trump/Clinton outcome. If they aren't then some natural biasing has occurred. This biasing is, I detect only getting worse, the number of folk I know leaving Twitter because they are fed up with the self-righteous abuse they get for expressing their views is rising. They just can't be bothered and their views will never be heard. Twitter has become a Petri dish of society where different bacterial colonies fight it out trying to colonise as much of the space as possible.

So I have a twitter stream that is mahooosively upset that Trump got in, HOWEVER, they also get very excited about gin, overpriced olives, new restaurants and Borough Market (for non-London readers Borough Market is a place vendors manage to sell smelly food for the cost of small houses). So would it not be an idea for Trump to rebrand himself as an artisan to curry some favour back from this group? In many ways he is already artisan, he is a genuine throwback to the olden days. But in many others, he is not.

The rise of non-centre politics, in general, is an interesting exercise in branding with far left and right already adopting the nationalistic tendencies that prefer to project clean and wholesome living and, dare I say, artisan ideals. Putin’s bare-chested mountain man, the left’s wholesome, rugged jawed steelworker and the right’s check-shirted lumberjacking Arian. In some respect, both extremes are selling the return to old-fashioned glory days. Putin has done it win Russia and Trump is doing it in America. Both are calling for the return to the good old days when their countries were great. The only problem is that time was when both of them were only a gnats crotch away from loosing nuclear armageddon upon the world.

The world may want change, but unfortunately looking backward and trying to recreate the sunny days of our youth is just not possible. Yet the selling of the artisan dream is based on that projection and caters for our deep desire for security. As the world starts to look less secure, the draw of the artisan is heightened yet the only things artisans secure are the wallets of artisans.

Thursday, 10 November 2016

A Narrative narrative.

It’s been a week since I last posted,  a post provocative enough to even inspire the mighty Paul Krugman to comment upon it. As one kind soul suggested to me ‘Sir, that, I assume, is your first cited reference from a Nobel Laureate’. Indeed it was and will probably be my last and, though only featuring in his twitter stream, I will bear it with pride and add to my CV.

My flippant reference to the dire consequences of a panel of economists writing a letter of support being the kiss of death for the supported, was part of a similarity I was drawing between Brexit and the election and this is what Mr. Krugman disagreed with. His argument was that the US election was about personalities, not a rejection of authority. Whatever. Trump won and the parallels are now being drawn more than ever over the rejection of authority. Indeed most notably by those who lost as they can think of no other logic for them losing because, as with the basis of the economists' argument, there is no logical reason for anyone to act otherwise.  So this leads on to the greatest parallels between Brexit and the election - the demonstrations on the street rejecting the democratic outcome and the hand-wringing from the journalists, pollsters and economists who got it wrong. I mention economists in there because though they are totally and utterly useless at politics they were still out there making the calls.

What do economists, journalists, pollsters and fund managers have in common? The answer is ‘herding’. Not wanting to be seen to be out of line with their peer group is common amongst all. Fund managers don’t want to deviate too far from their benchmarks in case they are wrong and economists don’t want to make wild forecasts in case they are so wrong and deemed maverick and unreliable. Pollsters? I just haven’t a clue how they can be so wrong, but Rory Sutherland made an interesting observation I hadn’t thought of involving telephone polls - "Having caller ID (like carrying stamps in your wallet) correlates with conservatism". And if you have caller ID you are less likely to pick up the phone to an unrecognised polling company. However, amidst the grief thrown at the pollsters, I doff my cap to Nate Silver at FiveThirtyEight for steadfastly refusing to be browbeaten by everyone attacking him for his Trump leaning predictions. And then finally there are the liberal journalists who are paid by organisations with causes to back and also, as the career of a journalist is secured as much by peer-review as readership numbers, want to appear as one of the in-crowd.

Peer-review encourages herding. Whilst peer-review may be a worthy ideal, after a few generations of it, you have the equivalent of six-toed inbreds running the show as their self-selection weeds out new genetic material and we end up where we are. Elites, cabals, clubs, packs, societies, clans -  all happily reinforcing their own beliefs by only talking amongst themselves and not to the rest of the world. Indeed, as in many clans, conversing with others is to be discouraged as it may threaten the core beliefs. Here we can widen the example to include any religion.

So, in summary, it would appear that once again those who thought they knew better didn't. Too many smart people believed that stupid people wouldn't be stupid. Which was stupid. A basic distribution curve should tell you that if you think you are smarter than average then the volume below you will be greater. Insular thinking is not representational. You may be smart but if you don't understand those around you then you are going to be screwed by democracy. Of course, if you don't then want democracy you are welcome to open up that can of dictatorial worms.

So where do we go from here? As @StockCats tweeted "The sad thing is that the media is going to to ask the same people that got everything completely wrong what they think happens now”

This is probably just as apt in financial markets. At 4.55am London time on Wednesday morning things changed. The Dow futures were down around 700 or 800 points and then started to climb up 1200 points.

In that time we have swung from set of beliefs A

- It’s antiglobalisation - sell stuff
- It’s globally destabilising - sell stuff
- He’s barking mad - sell stuff
- US is screwed - sell the dollar
- He’s racist, sexist, deceitful, abusive uncontrollable and unpredictable - sell stuff
- The wall, Mexico - Sell Peso!
- It’s the end of the world as we know it - sell everything, but buy Yen, CHF and gold

To - (as the rest of the day saw prices scream higher) set of beliefs B

- Infrastructure spending - buy construction.
- It’s inflationary - sell bonds
- He’s going to have to borrow - sell bonds.
- He’ll go after the tech crowd who opposed him - Sell tech stocks.
- It’s deregulation for corporates, - Buy mainstream stocks ( dow)
- It’s eco-dirty, - Buy dirty stocks
- it’s anti-price control, - Buy pharma
- he’s going to bin Yellen so rates more likely to go up - Buy USD
- Europe is going to be hoisted upon its own protective petard - Sell Euros
- Other trade tariffs - Buy Manufacturing USA
- He likes the UK - Buy GBP
- Mexico , actually, nah, that won’t be great - keep selling Peso.

 In the space of 36 hours the markets have swung from “Trump will destroy stock markets” to “Trump will be great for stock markets”. Yet nothing has changed apart from narrative and there is no better growth hormone for narrative than price. Prices have rallied so the narrative is proven.

If you want a visual representation of financial market participants you can't do much better than this

So I am left here looking at the trading psychology of it all. The move from A to B has been dramatic and though I am not saying that I disagree with the belief B (I don’t, hence fading the sell off) I do think that it has become too easy. We are 36 hours into the selection of the President elect and the financial world believes the script is written and there to follow. The Trump story has trumped all other concerns, faded are the headlines for GBP which is now trading at 1.2550 and 0.8680, Brexit has been out Brexited ten-fold by Trump. All the other gnat bites in the market have had their itches eclipsed by the comparative pain of having your leg eaten by a lion. Even Deutsche bank shares have managed to sneak off under the cover of Trump to rally over 14 Euros and copper looks as if it is really breaking out to the upside. The only asset that hasn’t moved, having been frozen in the headlights, is oil.

I am therefore awaiting the markets to realise that we are only reading the preface of the narrative at the moment and whilst we may think the work is factual, there is nothing to say that we haven’t embarked upon a work of fiction where guessing whether there will be a happy ending is far too premature.

This isn’t a Disney story, it’s Game of Thrones.

Wednesday, 2 November 2016

The Economists' Letter Indicator.

As Phil Collins sang a long time ago, "There's something in the air tonight"

I think I‘ve scared myself today. I have long thought that my bets for Trump to win were plays on probability where I was looking to get out of the trade on the approach to the result as things turn out to be closer than first thought. But today, for the first terrifying time, I am thinking that he will actually win. Now I know I am not an electoral college expert, nor a five38 stats-genius, but the way Clinton has handled herself since the FBI decided to open her files has been less than stateswoman like.

This may not seem like much to base my prediction on but for me to be particularly unimpressed, to the point of thinking I want neither of them to win, I should imagine that the Republicans who have switched to Clinton may well flip back for the same ‘they are as bad as each other’ reasons. Basically, those who have decided to vote Trump despite all his extreme err.. extremity, are not going to be swayed to leave by much else. On the other hand, those who are behind Clinton seeing her as a trustworthy pair of hands will be more inclined to switch their way. Voting Trump may appear insane to the intelligentsia but the base of the intellectual pyramid is a lot wider than the top. And, as I have said before, a lot of clever people are relying on a lot of stupid people not being stupid, which is stupid.

When Trump says or does something stupid the noise volume of objection and horror is deafening, which gives the impression that the majority have shifted. But the noise tends to come from those who have decided not to vote for him anyway and are doing their best to detract. The shock and horror noise does not give that clear an indication as to how voting intentions have actually changed. I know that the similarities to Brexit are being debated with respect to poll underestimation, narrative following and herding, to the point that it is fashionable to dismiss it, but I do believe there are huge similarities. If asked which way you are going to vote there is a bias to appear caring, and hence a bias to the Democrats, creating an artificial swing in polls. It’s different in the booth.

But probably the most frightening similarity and, indeed, most important indicator is 'the letter'. It appears to be de rigueur for all polls now to be accompanied by a blessing for one side or the other from, rather than a religious body, a conclave of economists. The latest proclamation is finally here

Prominent Economists, Including Eight Nobel Laureates: ‘Do Not Vote for Donald Trump’
Some 370 economists sign a letter slamming Trump for promoting 'magical thinking and conspiracy theories'

Well that’s it then. Trump is going to win.

As we learned from Brexit (here), a letter of warning to voters from the cardinals of economics is the best possible news EVER for whoever or whatever they are warning against.  It's the black smoke to to those they support and the white smoke, champagne and party hats for those they decry. I am sorry economists, you may well be absolutely right in the long run, but the population gets too big a kick toking on the weed of Trump to care about warnings from Dr. Economics that it's bad for them. It's why people buy overpriced diet products, pay £750 for an i-Thing, buy popcorn in cinemas or small bottles of water for £1.50. It makes no economic sense at all, but they do it. And this is what happened with Brexit.

Even if economists are to be listened to, does that mean they will be followed? If we stripped down the election to, say, a call on whether you want the stock market to stay the same or dump 20% the outcome is very dependent upon if you own stock or not and what your opinion is of people who do own stock. I would imagine that the non-stock owning poor may well outweigh the stock holding rich  and vote for a dump just for some schadenfreude equality leveling. Twitter seems to agree.

And are economists really the right people to use? When did an economics Nobel Laureate ever cut the mustard with your average Trump voter? Now, get a letter together from a bunch of Nascar champions and you might be on to something, but an economist's letter is doomed to failure.

So I am left more concerned than ever that a Brexit-like cold realisation that the unthinkable is thinkable is about to cause a schism in the markets. That WTF moment. We had glimpses of it today and some key Trump-o-meters were on the move. Odds in the bookies for a Trump win have moved up from 15% to around 25%, which isn’t much really, but it's the rest of the financial markets where I am looking for the trade. USDMXN has been pretty much at ground zero and started to move last Friday, but as the collapse widens other assets should start to get sucked down the sinkhole. US equities, oil, USDJPY, the usual safe haven trade of USD trades are on the move.

This leaves me with four choices

1- I run after and jump on the trade train that has already pulled out of the station hoping it doesn’t reverse back in,
2- I wait, hopefully, for the train to reverse back in before jumping on.
3- I realise the train has pulled out so instead leave some ridiculously low bids in some stalwart stocks much further down the line waiting for the algorithmic trade programs to wet their pants, cause a massive selloff and then look for the dust to settle and everything to recover in the medium term.
4 - I look for an asset that is tethered to the train by a coiled rope that will soon snap taught catapulting said asset after the leaving train.

Options 3 and 4 are the most tempting and can be used in tandem.

But What? The VIX really doesn't look that expensive and I'd prefer to buy puts than buy VIX as VIX will probably settle down after the event though the underlying price is a lot lower (see GBPUSD volatility post-Brexit). I am also looking at Bonds. The bĂȘte noire of this season’s asset show. No one really likes bonds at the moment, but give the equity market a big enough shove and there is going to be some interesting safe haven seeking going on. USTs are already on the move but where I am most interested is in Gilts. everyone and their dog knows that inflation’s coming to the UK, global yields are going up, and of course that GBP is a basket case. So on that basis, they are probably the best buy out there if we get a Trump dump.