Today is August 1, the Swiss national holiday. Need I say more? I will, in any case.
The celebrations pertain to the foundation of the confederation in early August 1291 – the 1st was subsequently selected as the key date although it is unlikely that the representatives of the original three forest cantons did actually swear their oath of allegiance on this very date – from which would grow the country as we know it today. The Switzerland we see now, with all of its direct democracy, is based on the original constitution of September 1848. Although revised in 1866, again after an operetta-style civil war in 1874 and finally brought up to date in its current form in 1999, the basic 1848 structures are still in place and these were modelled on the principles of the 1787 US Constitution, which brings me neatly to Washington DC, which is where I really want to be.
Joker
We all like a bit of West Wing to brighten up our days and take out minds off splitting Madame Yellen’s rhetorical hairs or spending days trying to uncover in company reports what its accountants have spent months trying to hide. Politics is always a great excuse to push markets around and to have a bit of free fun. And then comes the Trump administration.
Suicide Squad
I know that the mention of one Adolf Hitler cause most people, especially editors, to get palpitations, but as an historian and a student of the pre-war period from the seizure of power to the outbreak of the war, I have learnt to separate pre from post-1939 and to look at the administrative chaos that reigned in Berlin in the mid- to-late 1930s. The hiring and summary dismissal of Anthony Scaramucci – the Mooch – and the putting in place of General John Kelly as White House chief of staff reminds serious students of Germany in the 1930s and highlights some similarities between this administration and others around the world.
Two-Face
Hitler’s Berlin was plagued by the political cat-fighting for direct access to the chancellor and this is not dissimilar to the current situation in Washington. Scaramucci fell victim to a concept that in German is known as “zuvoreilender Gehorsam” – pre-emptive obedience - and it was his attempt to be more Trump than Trump that brought him down in just a tad under 10 days. Thus, within the past 24 hours, the dollar has lost yet another cent to the euro and we open today at around US$1.1820. Is this a staging post in the inevitable decline of the greenback or have we hit a low point from where the recovery can be plotted?
Riddler
The first question is whether the appointment of Kelly, reputedly a no-nonsense disciplinarian, is a turning point in the farcical comedy show that the White House has become, or whether he too will throw in the towel in the face of rampant Oval Office sycophancy. We can only hope that the Scaramucci incident – I already see the scriptwriters of Hollywood chewing over the potential – acts as a wake-up call to the Donald and his cohorts. You can’t drain a swamp by banging away with a pair of gold-plated Colt 45s.
Firestorm
Trump is discovering – whether he is learning or not is a moot point – that America is not a constitutional dictatorship that is run from the White House and that having hosted The Apprentice on TV is not quite all it takes to run the country. Faced with the potential of a Clinton administration, many Americans opted to hand Trump the keys to the White House along with the benefit of the doubt. The benefit is rapidly evaporating while the doubt is increasing. Don’t get me wrong; Washington had become a corrupt swamp where trading vote-winning favours for pork-barrel politics had become more important than creating a government for the 21st century. Fart-arsing around trying to work out how the 1787 wording of the Constitution can be applied to the modern day is fine and dandy but what the country needs is fundamental constitutional reform.
Justice League
If the electoral system, now centuries out of date, can’t be reformed, what hope for the Constitution? On the other hand, perhaps it is because and not despite of the navel-gazing of Washington that business and entrepreneurial spirit can thrive. The weakness in the dollar, often blamed on the shenanigans at the kindergarten that is the White House, has done stocks no harm at all and while they make new all-time highs, corporate spreads have now compressed back to pre-crisis lows.
Watchmen
The iBoxx High Yield index is ripping ahead, closing last night at 267.22. The VIX, though trading back above 10, is still two points below its 12-month average. WTI is back above US$50 per barrel and the Dow - need I even mention it? - is at a new record high. Money is going one way, and one way only, and that is into anything with a bit of return. That’s no way to invest but for the while the alternatives remain limited. Summer lull or drôle de guerre?
It’s not easy to say “I hate this market but there is nothing other to do than to stay long” and maybe, just maybe, to get long of the dollar again.
Krypto
Finally on Bitcoin – the threatened split in the virtual currency has been averted. Although the news has only just come out, it would appear the cognoscenti never doubted it. Otherwise it would barely have traded yesterday to its own all-time high of US$2,886.70.