Black Friday and lots of other improbable events – what would surprise us most?

Blain’s Morning Porridge – Nov 25th: Black Friday and lots of other improbable events – what would surprise us most?

“When Black Friday comes, I’ll be on that hill, you know I will….”

This morning: We’ve all been scammed into believing Black Friday is a boon for consumers – it’s a marketing scam. What else might lurk around the corner in terms of free stuff? How about abundant and free energy. Careful what you wish for…

Delighted to have made it through another week! Lots of stuff going on – little of it good.

If you are looking for evidence of how inflation impacts the economy, there is a great quote from the FT: “The car industry is utterly reliant on people buying cars they don’t need with money they don’t have”. Higher interest rates and diminished discretionary spending will crush demand for PCP finance deals as consumers realise just how mired they are in debt. The UK autosector employs over 780,000 workers, contributes £20 bln per annum to the economy, and represents over 10% of UK exports. When autos catch a cold, the whole economy comes out in festering pustules…

The same factors are crushing the hospitality chains where customers simply don’t have the discretionary income to blast £100 quid a head on a Friday night on a mediocre meal and over-priced wine. Anecdotally, folk are back to entertaining at home where £25 will buy a superb bottle of fine wine and a chance to show off cooking skills to friends. (What Mrs Blain doesn’t know about serving Lamb and Port is irrelevant, while I’m a dab hand on the Big Green Egg and Paella pan, and stacking the dishwasher!).

There will always be a smattering of the uber-wealthy to keep the top end of the fine dining venues open. At the other end, chains like Spoons will continue to sell cheap and cheerful pub-grub. Small, local pubs struggle to get the same economies of scale, and to retain staff. I suspect the increasingly squeezed middle classes will leave an enormous high-street hole of closed mid-range restaurant chains.

This morning I was on the Radio talking about sterling – where UK political volatility remains an issue, but was listening to some executive from white goods retail chain Curry’s talk about Black Friday as if its customers demanding it. Bollchocks – it’s the last days of Rome stuff for big retail – desperately marketing otherwise unsalable goods at suspicious mark-downs, and arranging consumer loans so they buy it.

Black Friday is an enormous marketing scam! Avoid it and shop local!

On a happier note, Christmas in the City of London starts with the US Thanksgiving Holiday! We had a rather pleasant Teenage Scribblers lunch yesterday; a mix of city types including some independent analysts, stock pickers, journalists, fund managers and other undesirable types – including Russel Taylor who scripts the Alex Cartoon in the Torygraph. We share the common purpose of writing about, and trying to explain, markets. Every year we meet to celebrate the peace and quiet that only a US holiday can bring to markets.

One of the topics discussed at this year’s lunch was the always excellent Saxo Outrageous Predictions (still waiting for the 2023 edition). We looked at last years and half of them pretty much occurred:

• The plan to end fossil fuels was somewhat undone at the Egypt COP27
• Facebook planted on its Metaverse plans rather than youth exodus
• The US midterms did not trigger a constitutional crisis – but did see Trump humiliated
• US inflation hit double digits and a wage-price spiral is developing
• India didn’t join the Gulf Cooperation Council, but did align itself with Saudi and the UAE
• And, Hypersonic missile tech is a race.

Just how close these outrageous predictions came close to hitting the mark shows nothing should be assumed as impossible. No-See-Ums lurk under every rock

I have an outrageous prediction, an Unexpected No-See-Em (UNSE) of my own to consider this year….

There is a truly ridiculous programme on Netflix at present called Ancient Apocalypse.

I’ve been mildly amused by it – forced to watch because she-who-is-Mrs-Blain actually does have a degree in archaeology. She’s intrigued – but broadly speechless. It’s basically Erick Von Daniken for the 21^st Century, a travelogue of the presenter in out-of-the way places, looking quizzically at rocks and piles of stones as irrefutable evidence of his theory Atlantis was destroyed at ice caps melting under a blitz of meteors at the end of the last Ice Age 11,000 years ago.

He claims to have proof civilisation has been guided by survivors of that lost civilisation ever since. The only reason we don’t know is because the Archeological Establishment – the “Them” of the story– have quashed the evidence..

Your hatstand, conspiracy bullshit klaxons sound be deafening you at this point, but worryingly, a number of my chums think it’s a very, very good programme, and nod sagely at his suppositions – but to be fair some of them also thought the Covid Jab contained small nuclear bombs funded and controlled by Bill Gates.

I reckon its harmless TV pap, giving “investigative journalist” Graham Hancock, who has made lots of money writing about his theory, the opportunity to give lots of elderly grizzled tin-foil wearing man-childs the opportunity to say “cleary” at lot.

“Clearly” and “irrefutable truth” is applied quite a lot to random piles of stones as proof absolute global civilisation is much older than we thought. They are terribly enthusiastic in a way that calm, considered professional archaelogists are not. A classic line is: “just because there isn’t any evidence, doesn’t mean it’s not true..”

Anyway…. I was thinking about the sheer banality of the programme, and one of his key propositions – that every civilisation has a Prometheus Myth: that a very wise immortal being gives the gift of fire to mankind, which is the factor behind all of human civilisation. (He doesn’t discuss the archeological evidence that ancient Neanderthals were apparently baking proto-breads over 700,000 years ago.)

Let’s call Fire a proxy for Energy… (Ah, do you see where I’m heading with this yet?) My Unexpected No-See-Em for 2023 is as follows:

A modern Prometheus arrives on Earth  in the shape and guise of an alien or whacky scientist who demonstrates a simple, safe easy way to build a cold nuclear fusion device, where you pour water in the front and get unlimited power out the back. Fantastic! Tremendous! Or it might be a simple box that creates hydrogen, again directly from water via some kind of apparently magic catalyst or membrane that causes water to break into hydrogen and oxygen. (I know there are projects actually trying to do both..)

Basically, the device would become the engine that solves absolutely everything regarding Energy – the key ingredient of growth and global prosperity! Yay!

Imagine it! Cheap, unlimited electrical energy for ever with zero bad environmental consequences.. How would that change the world?

Duh! Wars, Chaos and Destruction… obviously.. 

First, the Middle East and Norway (yep, don’t trust them as far as you can throw ‘em), immediately drop Nukes on where ever the Alien Scientist might be to project their current energy monopolies. China immediately claims the Alien is actually Chinese and tries to kidnap him.  The Americans – bound to be the Americans – whisk him off to Area 51 somewhere in the desert.. when a rich Texas oil baron forces him to sign over the IP, which is sealed in a lead box and dropped into the lava pit under Mt Doom.

Meanwhile, Chaos erupts as oil and gas workers, coal miners, renewable power funds, and Big Energy, storm parliaments around the globe demanding a halt to the technology to protect their jobs and wealth, arguing the safety angles need further checking, and how the dangers of unconstrained electrical energy need to fully identified and tested over the long-term.

Texas declares the technology illegal.

Russia panics on the threat of Europe achieving instant energy security and therefore maybe invading the Rodina, causing Putin to order a simultaneous nuclear strike against every European capital city and to invade Europe. Russian rocket troops largely refuse the order, but one missile is launched, being the one targeted at San Marino. Although it turns out to be a Fizzler – a dud, it causes the Americans, the French and the Brits to launch a devasting counterstrike which reduces Russia to ashes. Unfortunately the wind is blowing fron the East that day, and the whole of Europe dies horribly of radiation poisoning – including the Nogs.

Meanwhile, Elon Musk unkidnaps the Alien from Area 51, shoots him, and claims it was himself all along as the new saviour of humanity. The Chinese disagree and nuke Texas and are bombed back into the 1960s in retaliation.

Or something like that..

Think I shall go for a swim…

Five Things To Read This Morning

FT                     Collateralised fund obligations: How Private Equity securitised itself

BBerg               China Investors Look for Turning Point After $370 Billion Rally

Businessweek   Apple’s Reliance on China Grows Perilous With Chaos in iPhone City

Times               £15k grants to help middle earners insulate their homes and save on bills

WSJ                  China’s Zero-Covid Reckoning

Out of time, back to the day job, and have a great weekend!

Bill Blain

Strategist – Shard Capital