Bank of England

May 20, 2015May 20, 2015 Hamilton

The name is a bit of a misnomer. The Bank serves England, Ireland and Scotland and , at one point, the entire Commonwealth, that is about 1/2 the world. Furthermore the bank was actually created by an initiative of the Dutch King William and his spouse, the Scottish Queen Mary Stuart in 1694. It’s purpose was to raise 1.2 million pounds for the war against France , this when a million was still a million. It was a private company un till 1946. What it does today is described in a series of “postcards” that are on its website http://www.bankofengland.co.uk/education/Pages/resources/postcards/postcards.aspx here are two examples;

The postcard on QE is, of course, factually incorrect by a very serious omission, which is that bank reserves do not automatically lead to “money” as it is normally defined i.e. in the hands of the public. Life at the bank, also known as the Lady of Threadneedle Street, could be rather hectic as this cartoon attests to;

The man in the cartoon is Pitt The Younger, trying to convince the Bank to do some more QE. Pitt had become prime minister in parliament at the ripe old age of 24 and always behaved as a gentlemen. Some might argue that at age 24 that is not credible. In any event it is clear that the job at the bank requires not only brains but a lot of social skills. A search a few years ago in England for such a person came up blank but a Canadian was quickly found to fit the bill. This, after all, is what colonies are for. Mark Carney, who is an alumni of Goldman Sacks, Oxford University and runs the full marathon in 3 1/2 hours or so is now the Governor of the Bank of England. He is doing this for a relative pittance of , by coincidence, roughly 1 million , for now at least. We think it will age the man so we show the now and tomorrow photos;

We hope that Mark’s brother Sean can convince him to leave his negotiation skill tools in the City by the time he returns.

MCK, done

May 19, 2015 Hamilton

MCK update

May 18, 2015 Hamilton

MCK has, more or less, reached our suggested target of about $240 (see previous blog). In the mean time the RSI is getting overbought. Perhaps there are a few dollars left to the upside but this stock should be sold and sold short.

SENSEX, India (Bombay) index a.k.a BSE.

May 17, 2015May 18, 2015 Hamilton

Remember YUM, it had this expanding diagonal a.k.a. wedge that has to be a 5th wave of something. Well the SENSEX has a similar structure which also tells us that we are at the end of something, perhaps something big.

In the Bigchart we have drawn a circle that contains the cluster of numerous different targets obtained by using differing EW counts or other coincidences such as symmetry. Up to the middle to late nineties there was simple no interest in buying investments based on India, nor where there any vehicles to do so. Then that changed and together with many other emerging market funds or ETFs we, here in Canada, we got funds like Excel. As is usual, most actively managed funds did not beat the SENSEX, nevertheless that (say 2000) would have been a perfect time to buy into these funds as they were being “discovered”. Today, after going up tenfold in twelve years, that just might not be so perfect.

The very bullish outlook could be that we are presently in wave 4 of 3 of a super bullish up move. That could ultimately take the index to something like 60.000 or even higher. We simple lack the imagination to believe that that is actually a serious possibility and would rather stay a little more anchored in what we think is going on in most of the rest of the World. The two counts that seem most plausible then are a. we had a big triangle with a 5th wave thrust that has travelled a distance that is compatible with the mouth of the triangle, and b. we just completed a very big b-wave (which is at the edge of acceptable proportions!) and are presently in a C wave of a 10 year irregular flat. The circle contains at least 6 different points using these two counts. The targets for both these counts are not substantially different and point to 8000 or lower.

For the lazy reader we have repeated the YUM chart of the expanding diagonal, for comparison purposes, below. The jury is still out. Also we added the performance record for the Excel India Fund since inception in 1998. There is a pick-up on the hedge into C$ against rupees, but the MER for front end is 2.5%;

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