If you thought 2018 was bad, just wait until next year
- Richard Harris gets a review of the year from Santa himself, who made it clear the continuing bad news over trade tariffs, data breaches and slumping stocks, among other challenges, mean the ‘year of consolidation’ will last beyond 2018
I bumped into Santa in a local hostelry in Wyndham Street. Head in hands, looking morosely at his pint of Old C Y’s Finest Bitter, he was mumbling about what a bad year it has been.
Santa has a lot of time on his hands – most of the year in fact, and I often drop in to pick up ideas about markets. Of course, there was one thing on his mind…
“Trump’s trade tariffs have been a nightmare,” he said. “Whenever I ship from China to the US, I have to pay the tariffs, but the boys and girls don’t want to pay the difference. I could move my production from the North Pole to Alaska but then my costs go up. I’m stuck in the middle.”
Santa warmed to his theme: “It’s getting harder to travel round the world; what with immigration issues, Trump’s big beautiful wall intruding into my flight path, and his sanctions mean that I can’t go into Iranian airspace at all. Trump is so naughty that he owes me presents … and he’s not the only one, Brexit means that my deadlines will be blown by being stuck in France for hours.”
The theme was fast becoming a rant. “And another thing. My database of nice boys and girls was hacked this year and it took two months for the programming fairies to close the breach. No one complained as much when Yahoo or Marriott lost hundreds of millions of records. The politicians and lawyers won’t take any action. That’s because there aren’t many of them on my list – they’ve all been naughty!”
He took a large draft from his brew. “I started paying the Elves in bitcoin last year – they were happy at US$17,000, but now it’s at US$3,600, the little beggars are revolting. They are wearing yellow high-visibility vests and chanting “Santa Santa Santa, Out Out Out”. Guess who’s getting tear gas for Christmas … Little rotters; don’t tell them but I’m investing in robots for next year.”
I tried to lift his spirits by moving to the stock markets. Santa first waved to the barman for another pint of CY. “It looks as if global growth may be slowing – not much; just enough to spook them. My retirement fund is a good 10 per cent less this year.” He didn’t look up when I suggested that history showed he’d never retire.
“Do you know the best investment in 2018?” I shook my head, “US cash. At these pathetic interest rates. US shares are next; way back are US bonds, and lastly commodities.” The US stock markets are down a few per cent, but Europe’s are down over 10 per cent and China over 20 per cent. Over 26 per cent, if you include the fall in the renminbi. At least global equities were up 23 per cent in 2017 – so you are still in the money on a two-year view. We were hoping this was the year of consolidation but next year doesn’t look good either.”
I was looking for some good news and pointed out that being pegged to the US dollar in Hong Kong has given us a lot of protection this year. “Us! Only if you left your investments in dollars … if you didn’t, you lost at least 6 per cent.”
I suggested that the fall in the oil price might be helpful. “Not to me!” he snapped. “Government wants to phase out my sled even though they’ve removed the electric sled subsidy,” Santa growled, “I’ll have to make Dasher and Dancer and whoever redundant. Then again, about the only commodities to rise this year were oats and wheat – over 20 per cent. So, it might be a blessing in disguise!
“The oil price might be supportive; Brent crude was US$86 in October and it is US$56 today – that’s a whopping great fall of 34 per cent in just two months. Those big-present orders from Russia and Saudi Arabia will dry up next year but hopefully China and India will pick up.” He guffawed: “And that’s only 40 per cent of the world’s population!”
He paused. “You know, from 1962 to 1982, the annual return of the S&P 500 was zero after inflation. From 1983 to 1995, it was 12 per cent. Since then, markets have risen roughly 7.5 per cent each year after inflation. The long-term norm is 4 per cent. We are ahead of the curve and sooner or later will have to give something back.”
Santa got up unsteadily. “Care to join me for a free pint of Views in the FCC?” I remonstrated; saying, surely, he had a lot to do at this time of year? “No, dear boy,” he said, “I’ve outsourced all my deliveries. This year, all the presents will be delivered by drones. Santa Claus© is the best brand in the world – we’re getting everyone else to do the work. He waved. “Hohoho, Merry Christmas!”
Santa was speaking to Richard Harris, chief executive of Port Shelter Investment, writer and broadcaster, and financial expert witness