From Bettys to Bunds via Leeds

Right Place wrong time

I been in the right place but it must have been the wrong time

I’d have said the right thing but I must have used the wrong line

I’d have took the right road but I must have took a wrong turn

Would’ve made the right move but I made it at the wrong time

Dr John Rabbenack

As the train pulled out of the station sounds like the start to an old blues number but when I add in Harrogate station it becomes clear that this column is not so much about Mississippi Slim but more in keeping with a singer who could be called Dales Danny. I digress. As the train pulled out of Harrogate Station on Friday evening I sat, relaxed and reflected on a good couple of days of business which included seeing old friends and the making of new friends. I checked my ticket on my I-phone and glanced at the first station and with an awful sinking feeling realised that I had got on the wrong train and was heading for Leeds instead of York where my connection to London was to be. I spent the rest of the journey to Leeds trying to work out if I could make Leeds and then head to York and still make the train which I could if I was able to sprint from platform 4 to platform 18 in 2 minutes. My decision was made when dozens of Yorkshire cricket fans, who looked like they had enjoyed their day in the sun as much as I had enjoyed my day working, boarded the train at Headingly and the arrival time was delayed by 5 minutes.

Having left my headphones in the hotel, what a great trip, I had plenty of quiet time to reflect and realised that right place wrong time is so often what happens when you trade or try to reflect on the markets. Without doubt I had made a classic market error in taking the wrong train. Over the years we had countless errors when hand signals were misread or often in my case just wrong. Red Dec would be traded instead of Dec, buy signals instead of sell signals flashed into the pit or 15 misheard as 50. To avoid the worst of these problems various tricks were used such as “that’s 15 half of 30“ and the discipline of saying that you always  “paid for and sold at” taken from “4 for 40 , 50 at 5”. Seems unimportant but if a client said “I buy at” the noise and speed of the market meant you may just hear the word “at” and execute a sell order. It happened on occasions, tapes were listened and arguments made, we would always be really tough on protecting our position. Well tough and commercial… you couldn’t afford to lose too many lines. I should perhaps explain that clients were called lines as they utilised one of our supply of direct phone lines which covered our overseas offices and clients as far afield as Bermuda and Singapore. Dialling a number was too slow. Some mistakes though were looking back just hilarious even if they did cost us six figure amounts and sometimes they settled the discussion over a person’s competence.

Back in 1990 (I am sure I will be corrected on the exact date) I was jointly running Babcock and Brown’s futures business when the powers to be decided to purchase the noble house of Fulton Packshaw who had their own headstrong futures team including some great brokers and some, let’s be honest, journeyman. The day the deal was concluded we sat in the boardroom listening to Colin “two chairs” Taylor telling us how good his team was and that he was going to take over the running of the whole business from us. Now Two Chairs, named thus because of the size of his backside, was a very bright man but even his brain could not foresee what was going to happen next. It was the Tuesday after the takeover and followed bank holiday. To give the full picture I need to add that over the previous weekend the FTSE and Bund pits had swapped position. Unfortunately the trader at Fulton’s forgot this and when he received and order to sell the FTSE, on the close, he ran into what he thought was the correct pit and hit all the bids that were showing and walked out pleased as punch. It was only when the trades were checked that the mistake was realised and as the client had to be filled he was left long FTSE and a short Bunds. Sadly for him the client was right and the FTSE collapsed overnight causing the Bund to rally. An expensive mistake but we it gave us the opportunity we needed to really take control. This we did and at the next board meeting we cemented our control with a comment was along the lines of how can you run a futures business when you don’t even know where the pits are?

Harder to make errors these days but fat fingers happen and trades still get put on back to front and with the market volatility the way it is at present that could be a painful exercise. Bonds in both Europe and the States are knocking at new levels and the key 3% yield is being tested in the 10 year USD Bond sending shivers down the spine of the equity markets. It feels that with nearly full employment and a Trillion dollars set to return home inflationary fears may be well founded and yields will climb at the same time the 2 year against 10 year Bond spread continues to narrow spreading fears of a recession in 2019. With 37% of the S&P 500 set to report next week equities could be fun.

This side of the water King Macron looks increasingly isolated in his wishes for a more federalist Europe with the power of the populist parties increasing and Merkel not appearing to be interested and his reforms will struggle. In the UK it increasingly feels like there are two hopes, no hope and Bob Hope, of resolving the intractable problem of the Irish border. Combined with the pressure being exerted by the House of Lords for the UK to stay in a customs Union with Europe the prospect of a hard Brexit is increasing which, and I may be the only person who thinks this, would be good for sterling.

To corrupt Dr John’s song at Harrogate Station I was in the right place but got on the wrong train. Not for the first time and anyone who knows me well will know that really , and I’m not joking , anything further up The  Old North Road than Whetstone I am jiggered. But did I get home before the cup semi- final? Thanks to an understanding ticket office I managed to get a connection from Leeds and arrived back in London only about 10 minutes later than planned. Next week I am going to Marbella , an area I know well, for a few days break and no doubt whilst I am there I will reflect on my days of living and working there and a another case of right time wrong place.

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