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Adam Parry – Nightmare at 30,000 points

Monday 7th Dec 2020|London

Da da da da, da da da da…..“There is a fifth dimension, beyond that which is known to man. It is a dimension as vast as space and as timeless as infinity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man’s fears and the summit of his knowledge. This is the dimension of imagination. It is an area which we call The Twilight Zone.

Now I am a little young to remember the original television series. The 1983 film, Twilight Zone: The Movie, though became indelibly etched in my teenage brain.

The film starts with two men driving along a country road in the middle of the night. Bored, they start to talk about which episodes of the Twilight Zone they found most scary. The passenger – played by Dan Akroyd – then asks the driver “Do you want to see something really scary”. The driver pulls over, at which point Akroyd turns into a monster and attacks him.

The first story is written and directed by John Landis of American Werewolf in London fame. Time Out concerns a bigot called William Connor who is terribly anti-Semitic and racist. On leaving a bar he enters the Twilight Zone, where he finds himself in Nazi occupied France in World War 2 being interrogated by a pair of SS officers who believe he is Jewish. He escapes but falls from a ledge. He lands in the Deep South in the 1950’s to be confronted by a group of Ku Klux Klansman, who see him as African American. Again he manages to escape, only to find himself in the Vietnam jungle being shot at by American troops. A grenade explodes, launching him back to occupied France, where he is captured by the SS and thrown into a rail car along with Jewish prisoners. William sees his friends from the bar and screams for their help. But they cannot see him or the train as it pulls away.

The next story is directed by Steven Spielberg and focuses on the residents of the Sunnyvale Retirement Home. An elderly man named Mr Bloom has just moved in and listens to his fellow residents reminiscing about their youth. Mr Bloom invites them to play a game of kick the can one night, and while playing the game the residents are transformed back into childhood versions of themselves. Initially they are ecstatic, but it soon dawns on them that they will not see their families again and ask to be their true age again, with one exception, a Mr Agee who opted to stay a child. Mr Bloom heads off the next morning to spread his magic to senior citizens at another care home.

Story three is a bit silly. It’s directed by Joe Dante and is about a child with special powers who makes everybody afraid of him.

It is the fourth story, though, that we are going to concern ourselves with for today’s nonsense.

What you’re looking at could be the end of a particularly terrifying nightmare. It isn’t. It’s the beginning. Introducing Mr. John Valentine, air traveller. His destination: The Twilight Zone.

Mr Valentine, played by John Lithgow, is scared of flying and as the plane flies through a thunderstorm, he is gripped by a panic attack. The stewardesses manage to calm him down and escort him back to his seat. He looks out of the window, and sees a gremlin on the wing, sending him into a major panic. He sees the creature ripping wires from the engine and attempts to break the window with an oxygen canister, but is wrestled to the ground by a sky marshal. Valentine manages to take the marshal’s revolver and shoots out the window, causing the cabin to depressurize, and he fires at the gremlin. The gremlin rushes up to Valentine, grabs the gun and destroys it. With the plane coming into land, the gremlin grabs Valentine by the face and scolds him for spoiling it’s fun by wagging its finger at his face before leaping into the sky and flying away. Everybody thinks Valentine is insane and he is put in a straightjacket and carried off in an ambulance. The aircraft maintenance crew arrives and finds damage to the engines as well as weird claw marks.

The ambulance driver is none other than Dan Ackroyd, who turns to Valentine and says “Heard you had a big scare up there, huh? Wanna see something really scary?”

That final episode, directed by George Miller is entitled Nightmare at 20,000 Feet. But I’m using a bit of poetic licence today and raising the plane up 10,000 feet to 30,000 feet. For it is the 30,000 level that we are seeing a bit of a nightmare for one of the world’s most famous stock indices.

These days, the US benchmark index is really the S&P 500, but some old traditionalists still look at that old favourite, the Dow Jones Industrial Average.

Charles Dow composed his first stock average in 1884, and on May 26, 1896 Dow calculated his first average of purely industrial stocks, forming what is now known as the DJIA.

Having begun life in double figures, the index topped the 1,000 level for the first time in November 1972. In March 1999 it topped 10,000, closing above that level for the first time on March 29. 20,000 was broken in February 2017. But this year has been all about one level. 30,000.

On New Year’s Eve, 2019, the index closed at 28,538, a record high. That climb continued in January, and by early February, the index was less than 500 points shy of that mythical 30,000. Then came the Coronavirus crash, dropping the Dow back below 19,000 in early March. The bounce back from those lows has been remarkable, and the battle of the 30,000 level has been very much back on over the last month.

We got to within 50 points on November 16, before a pull-back. The level was finally broached on November 24, but there was not enough momentum to mark a concerted break. On Friday, though, the index closed at a new record high of 30,218.

So will the traditional end of year rally see that psychological resistance level finally comprehensively broken?

Possibly. The vaccination programs should get going across the globe from next week and a return to some sort of normality is anticipated next summer, all of which should be positive both for battered economies.

And that could see the index get up to 31,000 pretty quickly. March 2021 31,000 calls will cost you about 8 ticks at the moment.

Conversely, should we fail to comprehensively break that scary level and see the traditional February profit taking, 29,000 puts will cost you 9 ticks.

Of course, as previously stated, the nightmare at 30,000 is purely psychological and the chartist tend to be a little sceptical given that lack of any real technical evidence. As we have seen on other big psychological levels, though, it does exist and we nearly always see a battle. It will be very interesting to see whether the bulls or the bears will win that battle over the next couple of months.

Anyway, on to this week’s recipe, and unless I did a trifle with hundreds and thousands it would be quite difficult to do a tie-in to the above.

With less than three weeks to go until Chrimbo, then, I am going to give you an easy make-ahead starter. Gravadlax.

Take a large non-metallic bowl and mix together 200g of sea salt, 100g caster sugar, the zest of a couple of lemons and a large bunch of chopped dill. Mix in some gin until you get a thick slush.

Place half the mixture on a very large piece of cling film and place a pin-boned organically farmed salmon on top. Cover with the rest of the cure and wrap tightly in the cling film so that you have a neat parcel. Place in the fridge with a fairly hefty weight. Leave in the fridge for 72 hours, turning the salmon every 12 hours.

Unwrap on the day of serving and wash off the excess cure. Slice the salmon thinly and serve with soda bread and a mustard and dill mayonnaise and some lemon wedges. Lovely.

As ever, have a great week.

On the Agenda this week:

Data:

US:

  • Monday: Consumer Credit.
  • Tuesday: NFIB Small Business Optimism.
  • Thursday: Initial Jobless Claims; CPI.
  • Friday: PPI; Michigan Sentiment.

Europe:

  • Tuesday: Dutch CPI; French Payrolls; Area wide employment.
  • Wednesday: German Trade Balance; Spanish Industrial Outpit.
  • Thursday: French Industrial Production
  • Friday: German CPI.

UK:

  • Thursday: GDP; Industrial Production.

Central Banks:

Fed:

  • Thursday: Monthly Budget Statement.
  • Friday: Quarles speech on Bank Supervision at Harvard Law School.

ECB:

  • Thursday: ECB Meeting. Rates at 12.45 pm; refi, marginal lending and depo rates expected unchanged at 0.00%, 0.25% and -0.5% respectively.

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