Scream long and hard enough and spoilt children learn they will get what they want . . .

I was just prepping the Pinarello for a lunchtime ride, but while doing so I opened up the FT to see something I've highlighted before as being necessary. It looks as though governments and regulators have rolled over on the Basel III rules and decided that it's in no one's interest to have banks actually secure an adequate capital base in the short term. The hypocrisy and realism this implies would have been totally untenable only last summer when Greece was on the verge of civil disorder, but now as the real state of bank balance sheets comes into focus the once emboldened politicians meekly go to ground and retreat from their "line in the sand" approach to Basel III. Banks will now only have to meet 60 per cent of the Liquidity Coverage Ratio (LCR) requirement in 2015, and not fully by 2019. You can read about the LCR in the BIS press release and annexes thereof, where importantly the type of "liquid" securities allowable has been expanded thus relieving the market of a continuation of de-leveraging in the short term. This is great news for European banks and I would now add to my portfolio Deutsche Bank and even some of the French majors. Happy New Year from the BIS!

There's still plenty of good things that come out of my old shop UBS and this morning I took note of their increased tactical weighting in US equities. It was a very cautious note, but worth reading if you get your hands on it. While we're at it UBS also said that Asian equities now traded on 11.46x Fwd P/E, 1.63x P/B. Now given the valuations we've seen in the region in past years this doesn't seem too stretched and probably goes to the reason we're seeing a rotation into high yield credit names in the region. The bond guys obviously think the yield gap is still too big and in my my mind as long as they're willing to push it then the equities are likely to follow. I don't know what a reasonable P/E is in Asia now that GDP growth rates seem ed to have steadied so much in the former market leaders China and India. Korea probably has the best safest leverage to global growth, but I'd advise caution as the Kospi rally has already been significant. Check your valuations with your own sources.

Having said that it still lags the SP500 significantly. Maybe the real cyclical switch will be out of the US into EM's?

One thing that does worry me is the opacity of debate surrounding the debt ceiling. Apparently the US Treasury has advised Congress that the country hit its $16.4tn debt ceiling on December 31, but the department is now taking “extraordinary measures” giving it extra funds to service US debts probably until late February. What extraordinary measures are these? Surely the department needs to list this out for the public to see. You can't keep playing with people like this . . . if you do you only give credence to the Tea Party and other libertarian groups.


The Australian summer heat wave is about to hit Sydney and the extra water bottles are filled and in the refrigerator ready for my rides. I decided to celebrate the real summer by getting out the Pinarello. Luckily i had recently cleaned the bike up and since then it's been hung from my new ceiling storage pulley system. When you haven't ridden for a while I suggest if can that you put the bike in a service stand and test the gears and brakes. As I ride the Pinerello on a full Campy Bora One wheel set I like to take off the wheels and wipe the braking surface with a clean cloth. A few guys have suggested wiping the brakes and wheels with a little rubbing alcohol as the liquid is a good cleaner and it evaporates away so as you're not surprised by brake failure. The Bora's are of course mounted with tubular tyres. Tubulars are magical. A tubular tyre can be safely ridden at 130psi or more. The ride this gives is fantastic, not so much in terms of comfort, but rather in terms of rolling resistance. Compared to the Mavic Cosmic Carbones that I have on the Cannondale the Boras have this amazing ability to roll away the effort in climbing the numerous short hills of Sydney.


If you do decide to try tubulars you'll need to get some form of back-up. I carry a canister or two (depending on the distance from home base) of Vittoria Pit Stop tyre sealant. Luckily I've never had to use this, but I have used a similar product on a car my father owned.


The most important point in the video is spinning the tyre after adding the sealant. This allows the latex to coat the inside of the entire tyre. Obviously if you don't do that the latex will settle on one side of the tyre and probably fail to seal the puncture. The idea then is to use a CO2 cartridge to top up the tyre to the desired pressure. You need to be careful topping-up because too much will leave you walking home.

Ciao!