Cable Snaps (Again) As British Budget Goes Activist

Tyler Durden's picture


GBPUSD (Cable) just cracked back below 1.50 and is trading at its lowest since July 2010 as The FT reports that it appears George Osborne (British Chancellor) is paving the way for Mark Carney (Bank of England governor) to follow the so-called 'Merkel-Draghi wager' that Europe is dangerously betting on.

GBPUSD is now down 8.6% YTD (an annualized rate of devaluation of 40%!)


and that means GBPJPY is unchanged on the year...


Instead of following business secretary Vince Cable's proposal of a new program of spending on schools, roads and housing – funded by extra borrowing - Osborne will use his Budget on March 20 to reinforce his message of “fiscal conservatism and monetary activism” by clarifying how the government intends to use monetary policy to get the economy growing again.

Treasury officials are discussing proposals to change the remit of the bank - which could include giving the monetary policy committee greater time to bring inflation back to the 2 per cent target, giving the BoE a Federal Reserve-style dual mandate to target both employment and inflation, and even targeting cash spending in the economy rather than inflation.

It would appear our short Cable trade continues to do well as Carney's arrival heralds more aggression in the global currency wars.


Chart: Bloomberg

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Wed, 03/06/2013 - 18:58 | 3306535 WayBehind
WayBehind's picture

Budget? What budget? Here in US we have no budget. We have a magic printer! 

Wed, 03/06/2013 - 19:06 | 3306574 localsavage
localsavage's picture

A big Fuck You to the Republicans who keep enabling him to kick that can down the road.

Wed, 03/06/2013 - 19:11 | 3306600 EscapeKey
EscapeKey's picture

republicans, democrats - what's the difference. just two sides of the wall st party.

Wed, 03/06/2013 - 19:15 | 3306606 TruthInSunshine
TruthInSunshine's picture

My illustrious ZHers, this is good shit.

It may be merely one more straw on top of a rapidly growing global bale of hay, but the aggregate weight of that hay bale may just be nearing the point of slamming global markets, and unless I'm quite mistaken, there's not much that the central banks, that are not only out of much of their ammo but that are also possibly becoming more parochial rather than uniform in their policies, will be able to do about it.

The last time there was such a significant disruption of anything British was when she had to be bailed out by the IMF in order to literally avoid going tits up.

I'm not saying this by itself is a monumental event, nor even unforseeable (although the move in the GBP has been pretty remarkable), but I am saying that seeing currency markets behave the way they have over the last 3 months is giving me greater expectations that something very substantive is about to break.

But I'm sure someone will come along and rightfully tell me that The Bernank is on top of things, that The Bernanke "Put" is not only supportive of equity and bond markers forever, but currency markets globally, and that one should never argue against central banking with its (dramatically im)perfect history of success.

Wed, 03/06/2013 - 19:15 | 3306619 Poor Grogman
Poor Grogman's picture

The Bernank is on top of things. The Bernanke "Put" is not only supportive of equity and bond markers forever, but currency markets globally, and that one should never argue against central banking

There you go...

Wed, 03/06/2013 - 19:31 | 3306672 Cdad
Cdad's picture

Based on his Humphrey Hawkins testimony of last week, I rather doubt Mr. Bernanke has anything left to add to the growing currency wars.  To wit, during his testimony, the Chairman of the Fed essentially admitted that there is no market anymore.

So to all of the perma equity chasers out there, good luck with that NBBO remaining stable, and your seeming belief that shareholders are entitled to perpetually rising share prices.  

Wed, 03/06/2013 - 18:58 | 3306544 Say What Again
Say What Again's picture

I hate my cable company...

Oh wait, you're talking 'bout sumptin else.

Wed, 03/06/2013 - 19:13 | 3306609 camaro68ss
camaro68ss's picture

What, how can you hate cable? theres dancing with the starts, The Voice, The Kardasiens, Cat Fish, Buckwild, America gots talent, American Idel...O wrong blog, i was looking for the sheeple are zombies blog.

Wed, 03/06/2013 - 19:21 | 3306550 Yen Cross
Yen Cross's picture

 I'm short cable. That was a nice smackdown. Now we just need some sell the(usd/jpy) news out of Japan later, to really kill the cross.

Wed, 03/06/2013 - 19:00 | 3306551 swissaustrian
swissaustrian's picture

The UK and Japan are the two first dominoes to fall in the fiat endgame.

Max Keiser and Kyle Bass ftw.

Wed, 03/06/2013 - 19:10 | 3306596 EscapeKey
EscapeKey's picture

when they do go, don't be so foolish to think any fiat will save you.

Wed, 03/06/2013 - 19:16 | 3306620 swissaustrian
swissaustrian's picture

Surely not, but playing the insane fx volatility that is gonna come will make some people a lot of money until the last dominoe falls. The question is whether these people will convert their paper profits into real assets at the right time. I guess some insiders are gonna be able to do that.

Wed, 03/06/2013 - 19:21 | 3306629 EscapeKey
EscapeKey's picture

i don't disagree. if you can time it perfectly - and that is a BIG fucking if - you can essentially become an almost instantaneous billionaire.

it can also ruin you in 0.7 seconds.

Wed, 03/06/2013 - 20:58 | 3306973 Born into this
Born into this's picture

If "ifs" and "buts" we're pots and pans there would be a lot of washing up!

Wed, 03/06/2013 - 19:04 | 3306552 CaptainSpaulding
CaptainSpaulding's picture


Wed, 03/06/2013 - 19:11 | 3306604 dojufitz
dojufitz's picture

Billy Ray Harris is a GOD DAMN PONZI SCHEME!!!!!!

Wed, 03/06/2013 - 19:12 | 3306607 Top_Kill
Top_Kill's picture

I'm sure this will be PM negative. The only thing that could thing that could raise paper PM prices at this point would be if global paper PM QE.

Wed, 03/06/2013 - 19:22 | 3306637 EscapeKey
EscapeKey's picture

keep an eye on physical sales.

Wed, 03/06/2013 - 19:16 | 3306615 yogibear
yogibear's picture

Government wine cellar sells vintages to pay its way


The government is selling off its vintage French wine collection for £5,000 a bottle in a bid to offset the costs of its expensive wine cellar.


The government wine cellar, located in the basement of Lancaster House near Buckingham Palace, is used to provide wine for visiting dignitaries at 200 or more events a year.


It must be getting bad.





Wed, 03/06/2013 - 19:33 | 3306677 swissaustrian
swissaustrian's picture

Call me when they're liquidating the Queen's art collection and castles

Wed, 03/06/2013 - 19:44 | 3306713 bank guy in Brussels
bank guy in Brussels's picture

No doubt that will be right after the Vatican sells their collection

Wed, 03/06/2013 - 19:59 | 3306782 Jason T
Jason T's picture

all that money is flowing the hell out of the YEN and POUND and into IBM and HD for shits sake.  

Wed, 03/06/2013 - 20:44 | 3306917 Born into this
Born into this's picture

I hardly know where to begin when I consider our marvellous UK economy.

It is hard to conceive of a less appropriate policy response, but it's really too late too even say that. The time to deal with our problems was many years ago.

If I had to sum it up: "Over thirty years, the UK authorities spunked its North Sea oil wealth on a shite housing stock and a bureaucracy designed with Gramscian intent. This has left the UK singularly unable to adapt significant immigration from ethnic populations positively hostile to the indigenous culture, which it has none the less encouraged out of a missed placed sense of colonial guilt."

Since our banks' mortgage books are leveraged several hundred times once one strips Basel RWA denominator fraud, "totally fooked" is really the only way to describe our situation.

Aa1/AAA/AAA. "Go figure", as you say.

Wed, 03/06/2013 - 21:06 | 3307006 mrfreeman
mrfreeman's picture

So can somebody please explain to me why the commercials are massively LONG on the pound??  If it all looks so gloomy for the UK, what trick do the commercials have up their sleeve to catch out all of the shorts?  I suspect some kind of announcement/data release will trigger a surprise rally before too long.

Wed, 03/06/2013 - 22:57 | 3307431 medium giraffe
medium giraffe's picture

I think they're hoping for the 'run from the Euro' play.  UK is based around London, London is based around banks, bank bonds are cratering.  Can't really see the value in being long GBP, especially with Carney looking to pull the standard GS Ctrl+P.

Wed, 03/06/2013 - 22:13 | 3307273 Non Passaran
Non Passaran's picture

This is very confusing.
I bought more gold today. My second sizeable (for my budget) purchase this month. One more to follow.

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