It was a quiet week in the markets as is often the case in the week after the release of the Monthly non-farm payrolls. Many Asian markets were closed for the Chinese new year. Stock markets rose in the early part of the week but fell on Thursday due to fears of delays to a US / China meeting to resolve the two countries ongoing trade dispute.

A Bloomberg TV Headline this week was “Doves Take Over Central Bank”. This week Central Bankers made dovish noises in Australia, the UK, Indonesia and the Philippines and the RBI in India actually made a surprise intertest rate cut. The Bloomberg story was that the Fed Pause in the rate raising cycle which we noted last week (and interpreted as Powell giving in to Trump Pressure) has allowed central banks in the rest of the world including in the emerging economies to push for easier monetary policy as their currencies have rallied.

Equity Indices: Developed Markets

Index Last Change (%) 2019 YTD (%)
DOW 24915 -1.0% 6.8
NASDAQ 7241 -0.6% 9.1
S&P 500 2690 -0.6% 7.3
FTSE 100 7071 -0.3% 5.1
CAC 40 4956 -0.6% 4.8
DAX 10869 -1.4% 2.9
IBEX 35 8840 -1.1% 3.5
BOVESPA 94450 0.0% 7.5
ARGENTINA 35973 0.1% 18.8
S&P VIX 17.31 5.7%
MSCI World 2027 -1.0% 7.6


Index Last Change (%) 2019 YTD (%)
GOLD 1314 0.3% 2.4
SILVER 16 0.1% 1.7
WTI OIL 52.8 0.3% 16.3
BRENT OIL 61.8 0.3% 14.9
COPPER 6246.0 -0.5% 4.7
CORN 378.8 0.6% -0.6
WHEAT 520.3 1.4% -1.4
INDEX 80.1 0.1% 4.4

Equity Indices: Asian Markets

Index Last Change (%) 2019 YTD (%)
NIKKEI 225 20333 -2.0% 1.6
SHANGHAI 2618 1.3% 5.0
HONG KONG 27946 -0.2% 8.1
INDIA (NIFTY) 10944 -1.1% 0.7
INDIA BSE SENSEX 36546 -1.1% 1.3
KOREA (KOSPI) 2177 -1.2% 6.7
SINGAPORE 3202 0.0% 4.3
MALAYSIA 1687 -0.4% -0.2
THAILAND (SET) 1652 -0.1% 5.6
PHILIPPINES 8071 -0.4%  8.1
AUSTRALIA 3869 -0.4% 5.3
NEW ZEALAND 9177 0.5% 4.1
MSCI EM 1042 -0.6% 7.9


Currency Rate Change (%) 2017 YTD (%)
USDDXY 96.6 0.08% 0.4
EURO USD 1.13 -0.12% -1.2
GBP USD 1.29 -0.07% 1.5
YEN USD 109.7 -0.09% 0.0
CHF USD 1.00 -0.16% -1.8
INR USD 71.3 -0.20% -2.2
INR GBP 92.4 0.27% -3.6
RUB USD 65.8 -0.25% 5.4
IDR 13955.0 -0.13% 3.1
ZAR USD 13.6 0.12% 5.1
BRL USD 3.7 0.39% 4.0
ARS USD 37.8 -0.06% 0.4
CNH USD 6.78 -0.02% 1.3
EMCI 63.7 0.08% 2.4

Bonds: Developed Markets

Index Yield (%) Change (bp)
2 YR US TSY 2.45 -2.5
10 YR US TSY 2.63 -2.9
2 YR GERMANY -0.58 -0.5
10 YR GERMANY 0.08 -3.4
10 YR UK 1.15 -3.1
10 YR SWISS -0.30 -3.6
10 YR JAPAN -0.03 -2.1
10 YR FRANCE 0.54 -1.2
10 YR ITALY 2.98 2.9
10 YR SPAIN 1.23 -1.2

Bonds: EM Bonds (Local Currency)

Index Yield (%) Change (bp)
10 YR CHINA 3.11 0.4
10 YR HONG KONG 1.77 -7.9
10 YR INDIA 7.34 1.6
10 YR INDONESIA 7.88 6.4
10 YR THAILAND 2.41 2.1
10 YR MALAYSIA 3.99 -1.1
10 YR SINGAPORE 2.12 -3.1
10 YR KOREA 1.96 -2.8
10 YR SOUTH AFRICA 9.14 -0.5
10 YR BRAZIL 9.12 13.3
10 YR RUSSIA 8.22 -3.5
EM BOND INDEX 108.18 3.7

Risk markets have had a good 2019 so far. Both the MSCI World Index and MSCI EM Index are up about over 7%  while the Bloomberg Commodity Index (helped by the rebound in Oil prices) and the EM Bond Index are up around 4%.

Trump State of the Union

President Trump’s delayed State of the Union Address was in its way a Tour De Force.

It was time, the President told both houses of Congress, to “reject the politics of revenge, resistance and retribution — and embrace the boundless potential of co-operation, compromise, and the common good”. He urged the legislature to stand “not as two parties but as one nation”.

He presented America with the following choice: “An economic miracle is taking place in the United States — and the only thing that can stop it are foolish wars, politics or ridiculous partisan investigations. If there is going to be peace and legislation, there cannot be war and investigation.”

So the deal is clear – if you want economic progress please drop the investigations into the President.

On the Wall and the issue of border control, his words follow the giant faultline in America today. “the divide between America’s working class and America’s political class… Wealthy politicians and donors push for open borders while living their lives behind walls… Meanwhile, working-class Americans are left to pay the price for mass illegal migration — reduced jobs, lower wages, overburdened schools and hospitals that are so crowded you can’t get in, increased crime, and a depleted social safety net.”

These are provocative illiberal words were deliberately designed to rile the Democrats. Words designed to make the young and increasingly left wing new Democratic Representatives to respond in an aggressive and immoderate manner. Trump was securing his base and making a grab for those potential Democratic voters, in the wide political centre, who desire economic progress and are not viscerally opposed to Trump. If the Democrats abandon the centre in favour of more radical and strident polices (on wealth distribution and identity politics amongst other things),  they will leave the (middle) ground open for a Trump victory in 2020. (Assuming he is allowed to stand).

I hope to watch the new Bollywood movie Manikarnika – the Queen of Jhansi on the weekend. I pen some thoughts that occurred to me before the event.

Endless War

The National Army Museum in Chelsea in London has a display panel which is the height of a suburban house and is divided into five panels (each representing a continent) which depicts all the Wars the British Army has been involved in the last three hundred years. There are a large number of them and in strange and faraway places – a  quick, unscientific check on Wikipedia suggests there may have been preciously few peaceful years here or there in the early 18th Century but in general, it looks like the UK Army has been at war somewhere or other on the planet for almost all of the last three hundred years.

Salman Rushdie has noted that most of these wars were fought in faraway obscure places so that the British are quite ignorant of what was done in their name. The academic historians or the likes of the BBC have not helped here at all. Who in the UK today knows anything about the War against the Ashanti Kingdom in Ghana or the Maghdist War in Sudan, the various Anglo-Afghan and Anglo-Sikh Wars and Opium Wars of the Nineteenth century. Who outside India knows of Anglo-Mysore Wars or Wars against the Marathas, both of which involved Arthur Wellesley, the 1st Lord Wellington. Wellington is reported to have said the Battle of Askaye which concluded the second Anglo- Maratha War and not Waterloo was the finest battle he ever fought in.

It is said history is written by the victors. Eventually, the news of the wars came back from the far corners of the globe and was written into  the official history of the UK. Public appeals were made for Statues for the heroes. On right hand side of Trafalgar Square, as you look toward the National Gallery, is a statue of Sir Henry Havelock.  Wikipedia tells us that he was a British Army General who was associated with India and particularly the capture of Cawnpore after the Indian Mutiny of 1857.

The plaque on the plinth reads as follows “To Major General Sir Henry Havelock KCB and his brave companions in arms during the campaign in India 1857. “Soldiers! Your labours, your privations, your sufferings and your valour, will not be forgotten by a grateful country.” H. Havelock.

We can translate this as saying he massacred people who were fighting for their freedom in their own land, one far away from his own. In 2000, the maverick left-wing Mayor of London, Ken Livingstone said the Trafalgar Square Statue of Havelock and another veteran of India – General Charles Napier-should be removed from the Square as he (Livingstone) did not have any idea who they were. Such ignorance is no excuse today but maybe more  understandable in the dark and distant pre-Wikipedia days of 2000. The Conservative spokesman for London at the time, Mr Bernard Jenkin, called the Livingstone plan “another example of Left wing politicians trying to bash  Britain.” I do not know about that but Napier and Havelock definitely bashed the Indians.

Jenkin added “… Livingstone is trying to erase a fundamental part of our nation’s heritage from the heart of our  capital city”. Jenkin is right on that but I wager that he is as ignorant as Livingstone about Havelock and Napier and  their deeds.

Havelock was born in 1795 and had studied at the Charterhouse. He was not making much progress in the world and  like many at the time, decided to go to India to seek fame, glory and fortune. He fought in various wars starting in  1824 until death due to dysentery in 1857. He had married the daughter of Christian Missionaries and became a  Baptist at Sermapore in Bengal. He was known for distributing Bibles and holding Bible classes for soldiers when he  was not bashing Indians. In the Indian mutiny of 1857, he was involved in the recapture of Lucknow. He died on 24  November 1857 a few days after the siege was lifted. He lived long enough to receive news that he was to be created a  Baronet. His son inherited the latter while Parliament awarded pensions of £1,000 a year each to his widow and son.

Charles Napier was born in 1782 and had fought in Spain against Napoleon Bonaparte before going to India in 1842  at the age of 60 and fought in Sindh, Miani and Hyderabad and died in England in 1853.

Another Napier, this time a Robert Napier, who has a soldier’s statue in Kensington, West London also fought in Lucknow with Havelock. In 1858, Robert Napier replaced Sir Hugh Rose when the latter fell sick after a string of  battles including massacre of the entire City of Jhanshi though its rebel queen, the Rani of Jhanshi fled.

There are many statues of the Queen in India and her life is the subject of a new Bollywood. She had married the  ruler of Jhanshi but their only son and heir had died as a baby. They adopted a male child in front of the Resident  British officer. However when the ruler died, the Governor -General of India Lord Dalhousie (a Scot- the British  Empire was run by the Scots! ), applied the Doctrine of Lapse which essentially stated the Honourable British India  Company could seize any Princely state where a ruler died without an heir.

The Queen was loyal to the British but was outraged by the betrayal. She carried her young son on horseback as she  stormed into battle. Salman Rushdie was surely right in his observation noted above. In India, all the British wars  before 1858 were effectively carried out on behalf of a private company owned by shareholders called the East India  Company – this had been formed in 1601 by Royal Charter and given an exclusive perpetual monopoly to conduct all  of the UK’s trade with the East. Many MPs were shareholders and no doubt made enormous profits. Armies were  used to capture territory and massacre millions to expand the territory in which a private company to trade. It was  an early example of a centuries long episode of what we would now call state-supported capitalism or crony  capitalism. The wars celebrated in statues were fought almost entirely in pursuit of private profit. The East India  Company and its officers who often pursued lucrative private ventures was notoriously rapacious.

Huge fortunes in the UK were made in the East and from the evil Africa Atlantic slave trade over many generations.  The accumulated capital was used to build grand buildings, build up vast estates and wealth. The accumulated  Capital also financed the Industrial Revolution which completely transformed Britain. Such are the fruits of endless  wars and of dynastic crony capitalism. Their benefits accrue to the victors for generations and centuries.

Dynastic Crony Capitalism is hardly an issue of history and is an issue in many countries and could be an important  political issue affecting the markets in 2019 in Russia, India, the USA and in many other countries.

Latest Update: Dec 16, 2020