Acorn - Short Cable
Calling Time on ‘Dishy Rishi’s Honeymoon
Originally published November 29th 2022
We touched on this first in this week’s weekly note:
“Puts on GBPUSD and EURUSD have been the biggest winners for the 🐿️ in 2022. The final tranche of GBP (parity) puts will go to option heaven in a couple of weeks. Apart from the Nasdaq puts, the portfolio currently has very limited protection against a return of the “USD wrecking ball” (particularly if we are about to add back more LatAm). Sterling is up nearly 17% since the Truss/Kwarteng fiasco in September. Look past Sunak’s sharp suits and his dapper little shoes and not much has really changed for the UK’s fragile economy.”
We are no fans of Brexit. ‘Singapore-on-Thames’ fantasists may want to skip this report. In the spirit of Qatar 2022, we are going in ‘studs up’. The TLDR is that we think the UK economy is facing a great deal of pain, Brexit makes it (a lot) worse (and (a lot) harder to fix) and we are shorting Sterling again.