SGM-FX View of london

Morning Brief – Friday 29th

Starship Enterprise

 

 

William Shatner or Captain Kirk of Star Trek has turned 88 and the UK Parliament were last night looking to him to lead them to boldly go where no man has gone before-i.e. conclusion of Brexit.
Nearer to Planet earth, but only just, was the following exchange in the European Parliament where it was the last full session for the UK marked by our very own Nigel Farage slugging it out with the Belgian ex PM Guy Verhofstadt:
GV: “You remind me of Field Marshall Haig in Blackadder.”
NF: “It was Field Marshall Haig who saved your Belgian town of Ypres from the Germans. He should be a great hero to you.”

 

 

Markets

 

Globally Government Bond yields firmed from their recent 15 month lows.
The UK Government faces another Brexit vote tonight. GBP weaker in anticipation of it being voted down and also with it now being 14 days until the NoDeal Brexit date and with the UK Parliament still evenly split.
The US Dollar steadied after three days of small advances. Asian equities all stronger this morning and today being the last day of Q1 will show a rise in the MSCI Asian Index of 8.7%.

 

 

Happiness Index

 

Life expectancy, crime, health services, carbon emissions and wellbeing is what makes us happy(apparently). Top English Cities include: Winchester(1) and Epsom and Ewell(10) while in Scotland it’s Stirling(4) and Shetland Islands (10). For Wales it’s Bridgend(6) and Cardiff (8).

Pharrell Williams has fewer home comforts in mind:
Huh, because I’m happy
Clap along if you feel like a room without a roof
Because I’m happy
Clap along if you feel like happiness is the truth
Because I’m happy

Have a great (and happy) weekend!
 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

SGM-FX View of london

Morning Brief – Thursday 28th

France and President Macron

 

Some headline numbers: Public spending is 57% of GDP. 35 hour working week. 1.1 million civil servants of which 310,000 work less than those 35 hours. In Brittany civil servants are allowed 6 days off per annum to attend…car boot sales, in Deux Sevres, council workers get 10.5 weeks per annum holiday plus 2 extra days to compensate them for working in winter. President Macron is seeking to insist on the 35 hour work for everyone. By law employers have to compensate workers who work more than 35 hours by between 10 and 50% additional salary. SGM-FX South Africa specialist Richard thought these amounts of hours and holiday were right up his strasse until he found out that Deux Sevres was quite a way away from his braai pit in Putney. Dream on Rich!

 

 

 

Turkish Delight(not)

 

Markets marooned with little overnight net movement: Oil slightly lower, Asian stock markets a little lower on the back of Japan selling off for the first time this year. Turkish interest rates rose to over 1000%(not a typo) to prevent banks selling the Lira. For seasoned Turkish traders, this is a regular phenomenon and they will already know that Turkey is convulsed pretty much every 5 years-this time in the lead up to the election and questions on President Erdogan. Meanwhile do not be short Lira unless you have s strong stomach and…deep pockets!

 

Beverley Knight, soul singer 46 last week who we remember for her 2002 hit
Shoulda Woulda Coulda
No doubt about it, the UK Parliament will have been humming that tune as they embarked on the “Indicative Voting” rounds last night. MPs should most definitely remember the map of the Leave Remain Referendum Result from 2016 if they decide to ignore the electorate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

Contact

Morning Brief – Wednesday 27th

Australia

 

Numbers have dropped markedly for Brits emigrating to Australia down from an average of 49,000 a year to 30,000 -which is still approximately twice the number emigrating to Spain each year. Despite the AUD being weaker, this is blamed on GBP having weakened versus AUD from 2.50 to 1.85 and the Oz housing market not being such a bargain for British emigres as it once was. However for those many thousands still heading Down Under, the need to get the timing and execution of their currency conversion has never been greater.

 

 

 

UK

 

For those of us who are attempting to make some sense of the markets that in the case of GBP continue to be moved mainly by news headlines more than economic fundamentals, yesterday was another febrile day in Westminster. GBP unsure what to do decided that a possible longer extension and the DUP not agreeing to support the Prime Minister was better than vice versa. While others looked on this as merely a postponement of the reckoning, traders shrugged and GBP strengthened against ZAR, USD and EUR.

 

 

 

Globally

 

Commodities: WTI Oil still a shade under $60 having enjoyed its strongest month for some time. Gold steady at $1320.
Currencies: NZ Dollar: The Kiwi fell sharply following the NZ Central bank governor joining other central banks in a dovish shift.
Equities: FTSE 7220, Dow 25657. Equity markets marking time awaiting news on a Sino-US trade deal..
I0 year Govt Yields: US 2.39, Germany- 0.04, UK 0.99, France 0.47, Italy 2.45, Japan -0.06

 

 

 

 

China +Artificial Intelligence +5G

 

China sees the AI industry as the next great opportunity and has estimated its size as $1Trillion. Additionally China is leading the race in 5G technology. 5G is not just faster than 4G which it definitely will be(!) but will have much greater capacity for data, much reduced lag times and will affect every aspect of our lives in cars, factories, smart homes and robots and consequently vast strides in Artificial Intelligence.

Timing wise next month April 2019 sees the first release for commercial deployment of 5G and a year later in April 2020 will see it starting to be rolled out for wider usage. What does this mean to all of us? Well 4G has latency ie time to send a message from sender to receiver at 30-70 milliseconds while 5G will be less than 1 millisecond!

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

EU banner

Morning Brief – Tuesday 26th

La Belle France:

 

It may be a long time ago, but it just goes to show that at the time of (the last real as opposed to Le Petit Emanuel) Napoleon, some good sense did come from France:
Burgundy makes you think of foolish things, Bordeaux makes you talk about them and Champagne makes you do them.
(Jean A. Brillat-Savarin 18th century gastronome.)

 

 

If only the politicians of today could call on M. Brillat-Savarin…..
This week has started with market sages scratching their heads over in no particular order: President Trump- his own interpretation of the Robert Mueller Report plus the ongoing Sino-US trade talks; PM May finding a way to describe the same deal differently for the third time to the UK Parliament having last night lost control of the Brexit Process last night; President Macron and the Gillets Jaunes ( CAC selling off sharply-finally); Chancellor Merkel with the German economy falling to a 79 month low.

 

 

Talk is increasing about the possibility of a global recession exacerbated by the US Treasury Bill Yield now higher at 2.46 than the 10 year US Treasury Bond yield 2.43. An inverted yield curve reflects expectations of flat/negative growth. Equity markets having sold off sharply yesterday recovered last night and that has followed through this morning: Dow ended slightly up at 25,516; FTSE at 7177; CAC 5260; DAX 11,346; Hang Seng 28,534. Oil WTI at 59.39 on further Venezuela tensions; Gold at $1321. Very little movement in global currency markets with GBP flat against USD and EUR but slightly lower against ZAR. 10 yr Govt Bond yields see UK at 1.00; Germany -0.02; US 2.43; Japan -0.06.

 

 

 

Lastly news just in from the World Metal Congress on another sort of Heavy Metal: it turns out that Jeremy Corbin’s favourite song from the 70s was Steppenwolf’s Born to be Wild famously used in Easy Rider…must make him all misty eyed over having Diane Abbott on the back of his motorbike!

 

 

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

SGM-FX View of london

Morning Brief – Monday 25th

Président Charles de Gaulle: Hard cheese.

 

Was he right? He blocked the UK’s first attempt to join the European Community in 1963. “Too maritime, too insular, too original in its traditions and too tied to its distant markets to become good Europeans.” Just to remind you he also explained his own domestic difficulties as follows: “How does one govern a country with 246 types of cheese?”

 

 

 

Global Markets

 

Commodities: Gold at $1318, WTI Oil at $59.04.
Currencies: GBP confused: NoDeal Brexit looming but GBP rallied late Friday and firmer especially against AUD and ZAR. Expect fluctuations this week. Already weaker this morning. EUR weaker at the end of last week on economic growth picture. USD stronger.
Equities: Bad day Friday: FTSE 7202, Dow 25,502
I0 year Govt Yields: US 2.44, Germany 0.015, UK 1.01, France 0.35, Italy 2.45, Japan -0.07. Last week’s Fed dovish stance has fed through to all global bond markets.

 

 

 

China set to lead the world in scientific research

 

In 2014, China awarded 34,000 PhDs in the natural sciences and engineering, as compared to 40,000 in the United States. Notably China awarded 1.4 million undergraduate degrees in the natural sciences and engineering, almost four times as many as the 377,000 awarded in the United States. In ten years, PhDs awarded in China have increased by 146 percent as compared to 55 percent in the United States. Extrapolating these numbers results in the conclusion that China will overtake the USA as the world’s leading country for scientific research and development-and soon.

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

SGM-FX keyboard montage

Morning Brief – Friday 22nd

Viva Espana

 

Despite having one of the largest EU unemployment numbers at 3.3million, Spain is continuing to post the highest growth rate in the EU at 2.5%. Next year Spanish growth is forecast to be 2.2% far ahead of the rest of the other largest countries -France, Germany and Italy in the Eurozone. Ole ole! Olé, Olé, Olé!

 

 

 

 

 

Global Markets

 

Commodities: Gold at $1310, WTI Oil at $59.98,
Currencies: With global interest rates having moved sharply lower following the Fed’s announcement on no rate rises this week, expectations are now for lower interest rates in the next two years than previously envisaged. Currency markets calm this morning despite GBP volatility overnight. EUR flat , USD 0.2% lower and GBP up 0.3%.
Equities: FTSE 7355, Dow 25,962.
I0 year Govt Yields: US 2.52, Germany 0.04, UK 1.06, France 0.40, Italy 2.46, Japan -0.07. All 10yr Govt yields on lows.

 

 

 

 

Melting your Popsicles?!

 

Last week Mike Love of the Beach Boys celebrated his 78th birthday and here’s part of California Girls from 1965- honestly you had to be there…but if you were, the chances are that you will not remember!

 

California girls
We’re unforgettable
Daisy dukes
Bikinis on top
Sun-kissed skin
So hot
We’ll melt your popsicle
Ooh oh ooh
Ooh oh ooh

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

EU banner

Morning Brief – Thursday 21st

Global Markets

 

Commodities: Gold at $1318, WTI Oil at $59.83, Both up more than 1%
Currencies: GBP weaker following the PM writing to Eurozone applying for an extension yesterday. A rally in GBP only likely if the PM gets her deal through; right now with the PM’s late night speech, a NoDeal is back on the table as being a possibility and GBP reflects that. USD weaker.
Equities: FTSE 7291, Dow 25,745. Both down 0.5%.
I0 year Govt Yields: US 2.53, Germany 0.08, UK 1.16, France 0.46, Italy 2.53, Japan -0.04
Fed Chairman now sees NO rate rises in 2019 and Treasury yields fell to the lowest in the past year.

 

 

 

We will always have….Paris?

 

(But at a cost-see below) In case you missed this statistic: last Saturday was the EIGHTEENTH consecutive Saturday that Les Gilets Jaunes demonstrated in Paris marking this by burning down a restaurant, causing much damage by rioting in the Champs Elysees and not showing much sign of changing their plans for this coming Saturday. All this within a couple of hundred metres of the Elysees Palace, home to Le President himself, Emanuel Macron-surely just a little embarrassed by his ineffectualness to stem the hurt to the capital and its inhabitants? Still at least Eurostar is working….uh oh …..!

 

 

 

The 10 Most expensive Cities in the World

 

If you are an ex pat living in one of the world’s ten most expensive cities, you probably know how expensive your chosen city is already. Interesting though to see how those cities stack up. Here is the list and of course as with all statistics, when the list says the top 10, there are of course 11!

 

1= Singapore, Paris, Hong Kong
4= Zurich
5= Geneva, Osaka
7= Seoul, Copenhagen, New York
10= Tel Aviv, Los Angeles

 

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

St Mary Axe view

Morning Brief – Wednesday 20th

Global Markets

 

Commodities: Gold at $1305, WTI Oil at $58.97, Palladium through $1600 for the first time.
Currencies: Swedish Krona weakness unnerving markets. Indian Rupee gone from worst to best performing currency. GBP while weaker following Westminster’s events yesterday, is attracting increasing interest and more expectation of a rally. USD weaker versus EUR.
Equities: FTSE 7324, Dow 25,887.
I0 year Govt Yields: US 2.61, Germany 0.10, UK 1.18, France 0.47, Italy 2.49, Japan -0.05

 

 

 

FUNEX? S, V F X. -Must be said out loud in the accent of a German in a disaster movie

 

Just in from the Swiss gnomes at Zurich University: in the past several thousand years as our diets have improved, so has our ability to enunciate certain letters and in particular F and V. Lots of Swiss science behind this one but when you say in your best Swiss accent: “SVFX” it is down no doubt more to your 5 a day than your battered Mars bars:

Meanwhile…..S, VFX……Yes Ve Haf Eggs …………and nice the way that FX features!

 

 

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

Contact

Morning Brief – Tuesday 19th

Eurostar

 

If there are any Remainers out there who are trying to take Eurostar this week: in the event that there is R2 or a second referendum (unlikely in our view) my hunch is that they will vote Leave this time! 

Apart from wanting more money(so?) French customs officers are striking to “demonstrate the chaos in the event of a NoDeal Brexit” You have just got to love those French! Meanwhile Eurostar is experiencing 5 hour delays (if travellers are lucky.)

That’s why the Swiss should run ALL railways… always!

 

 

 

 

Global Markets

 

Oil WTI at $59 was another firm day for Oil traders. Gold back over $1300- just. GBP weaker on the back of the UK Speaker’s decision not to permit another Parliamentary vote on the same motion. While Remainers cheered that that reduced the chances of the UK leaving any time soon, there is more of a whiff of panic on the part of those who voted down the motion and now want to change their minds. FTSE liked all this and closed at 7300. Dow stronger at 25,914.

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter

US banner

Morning Brief – Monday 18th

Et tu Brute?!

 

Friday of last weekend was the day 2062 years ago in 44BC that Julius Caesar was murdered by a conspiracy of senators. Theresa May must have heaved a sigh of relief that she survived Friday and no doubt was thinking that a modern day JC opposite her deserved the same fate!

 

 

 

Global Markets

 

Last week in the Currency Markets was a lot about GBP which after last week is at the top of the leader board of the world’s performing currencies although it is also a leading contender for the currency with the largest moves due to the agonizing progress(?) of Brexit.

 

The Japanese Yen was at the other end of the performers partly as a function of recovery in general market risk sentiment.Bank of Japan kept policy unchanged as expected but downgraded its economic assessment as a result of the slowdown in the global economy. After all this time, the policy makers at BOJ must be racking their brains to find new ways to describe how the measures taken have produced so very little for the Japanese economy!
 

 

 

UK Politics and GBP

 

Prime Minister May will be wishing she had this many declared Parliamentary supporters. Meanwhile GBP has been marched up and down the hill this past week as markets have reacted to the twists and turns of the on off Brexit process:

 

 

Oh the Grand old Duke of York,
He had ten thousand men;
He marched them up to the top of the hill,
And he marched them down again.

 

And when they were up, they were up,
And when they were down, they were down,
And when they were only half-way up,
They were neither up nor down

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter