Figures

Morning Brief – Happy New Year

Happy New Year

 

Reminders flooded in yesterday from Chief Medical and Scientific Officers, Cabinet Ministers and the Prime Minister himself that New Years Eve will grant the opportunity for most of the United Kingdom for quiet and isolated celebration only. GBP was resilient despite some choppy and illiquid trading conditions as markets hoped that the readings of the Future Relationship Bill and briefings from Downing Street and the Dispatch Box surrounding Coronavirus would not dent risk conditions and Sterling forecasts too much. Ultimately it was the news that the vaccine created between Oxford University and Astra Zeneca had been approved for use in the UK that provided the defining upward momentum for GBP yesterday.

 

The approval created optimism in the Pound for two reasons. Firstly, it bolster’s the UK’s ammunition against the novel Coronavirus with respect to vaccination. De facto, the approval in the UK yesterday broadens the supply of inoculative doses available to the UK public hopefully, although far from certainly, ushering in a faster rollout of the vaccine. Secondly, as the result of collaboration between two UK entities, this specific vaccine also manifests as a potential UK export, the total value of which is non-negligible to the UK’s current account. Potentially real money flows therefore contributed to the demand for Sterling during yesterday’s trading session. Of course, the UK is the first nation to approve the vaccine manufactured by Astra Zeneca but the approval is presumed to be the first in the line of many.

 

Ultimately the Future Relationship Bill passed through the Commons smoothly ready for royal assent yesterday evening. On standby in Windsor Castle the Queen gave official assent to the Brexit trade deal meaning that it will be UK law from tomorrow. Condemnation from Westminster’s minor parties including the SNP failed to block the Bill with the Ayes to the Right grabbing 521 votes to 73. The reminder of the sparsity of provisions for services was unwelcome from the Pound’s perspective but the passing of the deal will provide for a better economic forecasts in years to come than might have been presumed under a no-deal.

 

 

 

Discussion and Analysis by Charles Porter

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SGM-FX London skyline

Morning Brief – Currencies

Currencies

 

Following the US moving forward with the long awaited Covid relief package and at a much enhanced $2000 per head, the USD suffered and stood at its 2 ½ year low with EUR and GBP both benefitting. The CFTC reflected bets against the USD was at a 3 month high of $26.6 Billion as at December 21. Both AUD and NZD strengthened against USD. The Chinese Yuan Renminbi also rose to 6.52 versus USD. Even the ZAR currently weighed down by Covid cases rising dramatically in South Africa was stronger.

 

A Dog is Not Just for Christmas

 

Another bi-product of the almost disappeared 2020 and its tiering and lockdowns has been the ever increasing need for emotional support especially among the younger and older sections of the population. This has resulted in the canine market experiencing a puppy premium. SGM-FX sleuth and value hound, Euan Maskell has been spending his spare time researching what’s moving in the world of dogs. Top of the tree in market movers in the UK market has been the demand for English Bulldogs that has driven the price for a pedigree puppy from GBP1600 to GBP3000; in silver medal position is the shift in demand for Cocker Spaniels which have rocketed from GBP700 to GBP2250. Funnily enough in this year of what the shortly to exit President Trump calls Chinese Covid, the Shih Tzu while in demand has “only” moved from GBP500 to GBP1400. Euan with his new found knowledge has explained that the Shih Tzu is in fact a Tibetan toy dog breed rather than Chinese. Try telling China that Tibet is not part of China. Woof woof.

 

Leaving on a Jet Plane

 

Remember that?! As we begin to say farewell to 2020 and a year of cancelled airline tickets and international travel, we look back to 1969 and not only the summer of love but the year that a very young John Denver wrote the song, Leaving on a Jet Plane. This was before JD embarked on his singing career in a meaningful way and so it was 1960’s pop group Peter, Paul and Mary (now just Peter and Paul following Mary’s departure from this world in 2009) that first made this song a Gold Hit:

 

All my bags are packed, I’m ready to go
I’m standing here outside your door
I hate to wake you up to say, “Goodbye”
But the dawn is breaking, it’s early morn’
The taxi’s waiting, he’s blowin’ his horn
Already I’m so lonesome, I could die
So kiss me and smile for me
Tell me that you’ll wait for me
Hold me like you’ll never let me go
‘Cause I’m leaving on a jet plane
Don’t know when I’ll be back again
Oh, babe, I hate to go
There’s so many times I’ve let you down
So many times I’ve played around
And I tell you now, they don’t mean a thing
Every place I go, I’ll think of you
Every song I sing, I’ll sing for you

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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SGM-FX handshake montage

Morning Brief – Finally

Finally

 

FX markets have begun their first proper trading day secure in the knowledge that the United Kingdom will have a trade deal above WTO standards with respect to the EU-27 come 1st January. So far there hasn’t been a huge sigh of relief evident within the Pound but it is evident that, in combination with Trump signing a fiscal stimulus bill to prevent US government lockdown, markets are embracing less defensive conditions this morning. The Pound did rally upon confirmation of a deal on Thursday afternoon. However, upward momentum was capped and prices ultimately rejected it seems at 1.36/1.115 versus the Dollar and Euro respectively.

 

The lacklustre move in the Pound comes down to two things. Firstly, the prospect of a deal was largely priced in with the real risks to GBP pricing lurking towards the downside should a no-deal have materialised. Despite GBP being off of its Thursday highs, in comparison with where we might have been trading this morning should a no-deal have become apparent last week, GBP is solid. The second reason is that the deal itself is a hard form of Brexit and provides for tariff free (and limits thin non-tariff barriers to) trade only. The deal does not cover services, including financial services. The deal also makes no attempt to preserve elements of the customs Union and single market that are supportive of economic growth.

 

The market this morning is also taking note of astronomically high rates of coronavirus infection in the UK and reports that hospital admissions are higher than those in the first wave. With much of the UK already in the highest tier of infection, the expectation of a bumpy road ahead with respect to the health crisis and its knock on implications upon the economy have GBP on the back foot. The deal should still, however, provide a positive backdrop for Sterling for some time to come. The deal whilst not being what all may have hoped for does provide an immensely important legal backdrop and starting point upon which to shape UK trade with respect to the Union whilst respecting the result of the 2016 vote.

 

 

 

Discussion and Analysis by Charles Porter

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team discussion

Morning Brief – GBP Market

GBP Market

 

Yesterday’s GBP performance was based on the nailed on certainty of a UK-EU deal being concluded imminently. By late last night that euphoria had leeched away to be replaced by a more jittery feeling. Result? GBP off  almost 1% across the board. Where it has opened up this morning. The sense remains however that a deal of some sort will be done and will be announced in the next couple of days.

 

Ningbo Containerised Freight Index

 

This is the index that measures shipping costs between China and Malaysia and Singapore, and why it is relevant for all of us is that it has risen 300% since October. China’s November exports have risen 21% since the same month in 2019. Shipping costs have soared across the world for the simple reason that due to the asymmetrical nature of China’s trade balance at present, there are 3 containers required for exports to every 1 for China’s imports as China’s manufacturing engine churns out a back log of PPE, electrical appliances, toys, clothes and other goods currently in huge demand globally. So the knock on effect is felt everywhere with for example shipping costs between China and the East Coast of the USA now at $4,928 for a standard 40 foot container which is up 85% since June. Shipping costs from China to Europe have risen by 142%. 60% of the world’s goods move by container and there are 180 million containers worldwide. Turnaround times are also to blame in large part: pre Covid it took 60 days and that has risen to 100 days on average. So the race is on to manufacture more containers and funnily enough almost all containers are made in…….China. Containers cost $500 each and in September 300,000 were made but that’s still not enough to prevent completed orders piling up in China’s factories. No wonder China’s economic performance is set fair for 2021.

 

Staycations

 

In the nation state of Singapore which has experienced some of the strictest LockDown conditions, the first rate hotels normally patronised by international business and vacation travelllers have kept their occupancy rates suspiciously high. Upon examination the reason for that is that those pragmatic Singaporeans have cut rates and advertised staycation deals for Singaporean residents which have been taken up with enthusiasm. In the UK the Isle of Anglesey is almost exactly the same size as Singapore at 277 square miles or 701 sq kms-in other words Singapore is small in size. But what has distinguished Singapore as a trading centre and economic powerhouse is its ability to out trade not only its nearest geographic neighbouring but many of its international competitors: no wonder Liz Truss, UK Cabinet Minister has recently been there to close a trade deal on her way to Viet Nam-another great economic success story. A quick examination of 5 star luxury London hotel prices for the week over Christmas (assuming they are still open), do reflect some discounts , but plenty of room availability, so sharper (Singaporean?) pencils required in London to up that staycation business!

 

Sage Advice: Before shouting “Hi Seattle! Make sure you’re in Seattle.

 

This was Number 8 of Sir Mick Jagger’s take outs that he had learnt from 50 years in rock n’roll, as recounted to David Letterman in 2012. One of the reasons that the Rolling Stones are worth in excess of USD 900 million is that Sir Mick in particular has an incisive business brain and has made a succession of shrewd business decisions over the years. An example of just that is Sir Mick’s Number 5 of lessons learnt: Song royalties are great, but they can’t match the guaranteed cash flow from a reverse mortgage. Whatever happened to sex, drugs and rock n’ roll?! That funnily enough was lesson Number 1, for another time…. Meanwhile, here is one of the Rolling Stones greatest songs which they have comprehensively disproved:

 

You Can’t Always Get What You Want:

 

I saw her today at the reception
A glass of wine in her hand
I knew she was gonna meet her connection
At her feet was a footloose man
You can’t always get what you want
You can’t always get what you want
You can’t always get what you want
But if you try sometimes, well, you might find
You get what you need

 

And I went down to the demonstration
To get my fair share of abuse
Singing, “We’re gonna vent our frustration
If we don’t we’re gonna blow a 50-amp fuse”
You can’t always get what you want
You can’t always get what you want
You can’t always get what you want
But if you try sometimes, well, you just might find
You get what you need
Yeah, oh baby

 

I went down to the Chelsea drugstore
To get your prescription filled
I was standing in line with Mr. Jimmy
And man, did he look pretty ill
We decided that we would have a soda
My favorite flavor, cherry red
I sung my song to Mr. Jimmy
Yeah, and he said one word to me, and that was “dead”
I said to him
You can’t always get what you want
You can’t always get what you want
You can’t always get what you want
But if you try sometimes you just might find
You get what you need
Oh, yeah

 

Have a great weekend!

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Skyscraper view

Morning Brief – What a Load of Carp

What a Load of Carp

 

Christmas is Cancelled! Well, not quite yet, but the reality for Members of Parliament is that a few days of their Christmas break could be revoked next week should the United Kingdom and European Union come to an agreement on a trade deal soon. These rumours began to gather momentum on Monday with speculations within Westminster that Jacob Rees-Mogg as Leader of the House of Commons could recall the House from their Christmas holidays to vote on the important trade deal. Cold water was quickly poured upon these rumours by Number 10 Downing Street and the PM’s office who continued to advise the House and public alike that a no-deal was still the most likely outcome and such end-game preparations were far too presumptuous, even erroneous.

 

As the week has gone on we have learned of progress on many contentious areas of a post-Brexit trade deal. European Commission President Ursula von der Leyen has briefed MEPs of the progress made on the Level Playing Field and role of the ECJ in deal-enforcement obstacles present in the potential post-Brexit trade deal. Purportedly, therefore, the one major area of a deal that remains unsupported and contentious is fishing. Mr Macron, seemingly at risk of being renamed Mr Maquereau, with his hard-line approach to fishing rights in UK waters, embodies the greatest risk to the UK’s potential trade deal.

 

The sanguine approach of Ms. von der Leyen this week has been partially met by the Prime Minister when he told MPs yesterday afternoon that there was “every hope, every opportunity” to secure a trade deal with the EU in the coming days. Initially shying away from his role in deal ratification early this week, Mr Rees-Mogg is also thought to have briefed colleagues that should a deal be agreed this week, he would pave the way in the parliamentary calendar for MPs to pass emergency legislation to approve the deal.

 

The bill that has been provisionally dubbed the “future relationship bill” would be expected to get a whistle stop tour of the Palace of Westminster. Starting with one day and one night on Monday in the Commons the bill would be whisked through the Central Lobby and onto the Lords’ chambers for a one day consultation on Tuesday to allow for Her Majesty to grant Royal Assent to the deal the following day, all in time for Christmas Eve. Sterling sits at two-year highs versus the US Dollar on the back of this positive trade rhetoric. GBPUSD has also been encouraged higher by the Federal Reserve’s dovish monetary policy announcement yesterday evening.

 

 

 

Discussion and Analysis by Charles Porter

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SGM-FX View of london

Morning Brief – GBP

GBP

 

With the UK Prime Minister warning his ministers that there is a strong chance of NoDeal and an hour later the German Ambassador to the EU announcing that there is the chance of a EU-UK trade deal by the end of the week (this week for the avoidance of doubt) it is hardly surprising that GBP/USD had a range of 1%+ yesterday. In the game of briefing and fake news, the only people who truly know just how close to there being a deal acceptable to both sides are the small teams of negotiators in the room. Meanwhile the markets are more inclined to believe the German Ambassador to the EU than the UK Prime Minister.

 

EUR

 

Steady and still at a 2.5 year high, markets looked beyond the German “hard lockdown” and other Europe wide restrictions to fight Covid, to the likelihood of the U.S. economic stimulus that will weaken the USD and benefit EUR. At the same time markets believe that the stimulus to the European economies unlike the case in the USA will strengthen the European economies still further as Europe rebounds strongly in 2021. Never mind that in the last couple of weeks both the OECD and the ECB are painting a much bleaker European economic picture for 2021 and 2022.

 

Davos

 

The annual Swiss World Economic Forum shindig in Davos normally held in January has been shifted to May 2021 to South East Asia in Singapore. Chan Chun Sing, Singapore’s Trade Minister announced the scheme yesterday which will require regular Covid Testing and bubbles of a max of 5 people at segregated facilities with everyone carrying contact tracing devices. One final Singaporean touch is that outside their own bubbles, delegates will only be permitted to meet other guests and Singaporean residents in rooms with “floor to ceiling dividers.” Hardly the stuff of the dreams of those who live for the rubber chicken circuit and all that hot air mingling!

 

How Deep is Your Love?

 

Both a rhetorical question for SGM-FX readers as well as a reminder that this was the song that went gold for the Bee Gees this day in 1977. The Bee Gees are the subject of a just released pop fans must watch Sky Documentary that follows the brothers’ lives from the Isle of Man, Manchester and to Australia before they settled with his and his and his and his (4 brothers) neighbouring Florida mansions with sufficient space for all that chest hair and those gold medallions. The only surviving brother, Barry is worth more than USD 90 million but in addition to their great commercial success, the Bee Gees’ influence and legacy has been and continues to be huge in the pop music world. Here is what is considered to be only their 6th best song, the hit,  How Deep is Your Love:

 

I know your eyes in the morning sun
I feel you touch me in the pouring rain
And the moment that you wander far from me
I wanna feel you in my arms again

And you come to me on a summer breeze
Keep me warm in your love, then you softly leave
And it’s me you need to show
How deep is your love

How deep is your love, how deep is your love
I really mean to learn
‘Cause we’re living in a world of fools
Breaking us down when they all should let us be
We belong to you and me

I believe in you
You know the door to my very soul
You’re the light in my deepest, darkest hour
You’re my savior when I fall

And you may not think I care for you
When you know down inside that I really do
And it’s me you need to show
How deep is your love

How deep is your love, how deep is your love
I really mean to learn
‘Cause we’re living in a world of fools
Breaking us down when they all should let us be
We belong to you and me

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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US banner

Morning Brief – Fetters of Gold, Paper and Blockchain

Fetters of Gold, Paper and Blockchain

 

The Dollar faces a challenge tomorrow when the US Federal Reserve releases its latest monetary policy decision. There are swelling expectations moving into the event that whether realised or undermined should spell considerable movement in the world’s foremost currency. Of course, the impact that the greenback itself has on the valuations of commodity and emerging market currencies as well as its G-10 counterparts means for those with an exposure to the market this story isn’t one to miss.

 

One of the defining features of the US economic backdrop is the lack of fiscal support and coherence. Politics is still messy and suspected to remain that way until after Biden’s inauguration with Trump and his merry band of lawyers still fighting over the outcome of the election. The US has therefore been denied the smooth transition of power and crucially a leader to build cross-party support necessary to produce meaningful fiscal pledges. Across the rest of the globe – China, the UK and Europe included – there has been an enormous public spending response to the pandemic. Trillions of Pounds have been spent in the name of sustaining economic activity but considerably less per capita in the States.

 

The next phase of a coronavirus support package is still uncertain. Whilst progress seems to be being made it is at a pace too slow to be relied upon. Yesterday Senate Majority leader Mitch McConnell called for fresh bipartisan support but an insufficient amount seems to be forthcoming. The Federal Reserve are therefore more likely to don their capes and act as Super Powel-er Rangers and seek to single handedly support the US economy. In times of such hyper accommodative monetary policy further action is sure to be USD negative and therefore further action would present a big risk to the Dollar. Some of these expectations for an over-amplified response given the lack of fiscal agreement is starting to be priced into the Dollar that remains at 2-year lows. If the Fed follows this path, there is still enough room to move lower, but if it maintains its current stance not accounting for the lack of fiscal stimulus, the Dollar could appreciate.

 

Now onto another matter. I normally resist the urge to talk about Bitcoin but something important is brewing that could have ramifications for the wider market. Crypto speculators have begun to discuss the inclusion of Bitcoin and other virtual currencies in the portfolios of major, more traditional investors and have claimed to uncover a more broad usage of the unconventional asset class. Their recent claims that many funds have begun to hold crypto is justifying inflated prices as they claim of a brand new type of demand entering the market. Those same people frequently cite Bitcoin in particular and it’s many variants as a potential safehaven asset, pointing out its positive correlation to Gold and inverse correlation to many fundamental equity moves so far in this turbulent year. That has justified near-record prices and some gold commentators have even stated that should this behaviour continue then the rise of crypto could impact the valuation of Gold and as such commodity currencies (and even the Dollar).

 

Digital currencies are a great idea in theory. They offer a potential new toolkit for economic and monetary management, lower transaction costs, consumer security against fraud and other key possibilities. But Bitcoin, Ethereum, Lite coin, and for that matter any other virtual coin you can name doesn’t harness that potential. They’re zero yielding, obscure, worthless bubbles that cannot and should not amount to a meaningful currency or medium of exchange. The very fundamental driving the rise of Crypto and the perceived threat to gold then is more likely to be a bubble that pushes money back into tried and tested havens including gold the Yen and the Dollar. The potential stockpile of bitcoin worth the best part of half a trillion US Dollars at today’s valuations, could seek value leak, in fact surge, into these more traditional havens once the bubble bursts.

 

 

 

Discussion and Analysis by Charles Porter

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UK buildings

Morning Brief – Extra Mile: EU-UK

Extra Mile: EU-UK

 

With no sense of discernible irony, Ursula Von der Leyden and Boris Johnson issued a joint statement on Sunday morning saying that while there was a long way to go, they felt it right to continue the Brexit trade terms talks and go “the extra mile.” While the British PM is known for his well honed sense of humour, the EU President is less so, but on this occasion both managed to miss the opportunity to make something or indeed anything in the statement of 1 mile=1.6 km.

GBP comfortably back over USD 1.33 in early Asian trading and also mounting a recovery from the end of last week versus EUR at 0.9070. Markets drawing more than expected encouragement from and GBP jumping on the extra mile talks.

 

 

Chinese Yuan Renminbi

 

Currently looking firm v USD as previously highlighted and opening the last full week of 2020 at 6.55 having stood at 7.15 on 28-05-20, the CNY is putting in its strongest performance since 1993. And this weekend has seen the first instance of questioning whether the CNY might break 6 in 2021.

 

 

Markets

 

EUR gave up a little ground at the end of last week but remains above USD 1.21. WTI oil at $46.57 and Gold at $1839. On the back of rising COVID infections, Germany may have now introduced “the hard lockdown“ and banned the traditional and well patronized Weinachtsmarkt or Christmas markets, but those festivity loving Germans are pushing back hard against restrictions on sales of Gluehwein or mulled wine from kiosks in town squares across the country. Quite understandably the authorities are imposing this rule as everyone knows that once the gluehwein starts flowing, there is little in the way of social distancing, never mind face masks…..

 

 

Space Rock

 

Another member of the 50+ club ie still going strong 50 years on is Dave Brock of Hawkwind. Formed in 1969, Hawkwind has had a few iterations from one of the early space rock bands to hard rock via progressive rock and psychedelic rock, so all in all it’s been a bit of a journey. When I saw Hawkwind in 1972 at the Assembly Rooms in Tunbridge Wells, they were part of the Greasy Truckers Tour. Fearful of fire the organizers with stern admonitions not to smoke, gave each of us a joss stick and an orange. Support act solo singer Magic Michael had over indulged and after a poor introduction that was badly received went and hid in Hawkwind’s drum kit. We all threw our oranges at him and lit up. The night was saved by Hawkwind’s strong performance helped by a silver stroboscope light show and two semi naked girl dancers. Tunbridge Wells never recovered. Here is the song that Hawkwind are best known for: Silver Machine:

 

I, I just took a ride in a silver machine
And I’m still feeling mean

 

Do you want to ride
See yourself going by
The other side of the sky
I’ve got a silver machine

 

It flies
Sideways through time
It’s an electric line
To your zodiac sign

 

I’ve got a silver machine
I’ve got a silver machine
I’ve got a silver machine

 

It flies out of a dream
It’s antiseptically clean
You’re gonna know where I’ve been

 

Do you want to ride
See yourself going by
The other side of the sky
I’ve got a silver machine

 

I said I just took a ride
In a silver machine
And I’m still feeling mean
It flies
Sideways through time
It’s an electric line

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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EU banner

Morning Brief – GBP

GBP

 

With a range v USD of more than 1.5 cents, GBP was skittish on the back of hopes and fears with little in the way of encouragement on progress with the ongoing Brexit negotiations. The end of the weekend ie before trading starts in Asian markets on Sunday night is now the new final time for agreement/non agreement to be reached/not reached. The implied probability of a trade deal fell from 85% a week ago to 45% now. Yields on 10 year UK government bonds fell from 0.26% to 0.20%. FTSE buoyed by Diageo as UK plc reached for strong drinks and oil stocks, Royal Dutch Shell and BP also contributed to the 0.6% index rise offsetting falls in Lloyds and NatWest Group.

 

 

European Central Bank

 

Both the figures and the ECB Governor painted a less positive economic picture for Europe. 2021 growth in the Eurozone is now forecast at 3.9%, and in 2022 up 4.2%. Another acronym to remember: PEPP or the Pandemic Emergency Programme which Governor Lagarde took the opportunity to increase as expected by EUR 500 Billion to EUR 1.85 Trillion. The scheme is being extended to March 2022 from June 2021. Liquidity and easy collateral requirements also were part of the package. Once again Lagarde stressed that the ECB would not manage the EUR exchange rate, but would rather keep a close eye on it. No doubt a closer eye at EUR/USD 1.2150 than when it was at 1.10.

 

 

The Righteous Brothers

 

Back in 1964 on this day The Righteous Brothers had a hit with “You’ve Lost That Lovin Feeling” getting into the Billboard Top 40 from where it ascended effortlessly to Number One in February 1965. BMI or Broadcast Music Inc announced in 1999 that that song had achieved the cult status of being played on the radio more than any other song in the 20th century. Bill Medley (aged 80) and Bobby Hatfield (died 2003) enjoyed great careers and Bill Medley is not only worth USD 60 million but in 2016 revived the Righteous Brothers with new singer Bucky Heard. Here is “You’ve Lost That Lovin Feeling”:

 

You never close your eyes anymore when I kiss your lips.
And there’s no tenderness like before in your fingertips.
You’re trying hard not to show it, (baby).
But baby, baby I know it…

You’ve lost that lovin’ feeling,
Whoa, that lovin’ feeling,
You’ve lost that lovin’ feeling,
Now it’s gone… gone… gone… wooooooh.

Now there’s no welcome look in your eyes
when I reach for you.
And now your’re starting to critisize little things I do.
It makes me just feel like crying, (baby).
‘Cause baby, something in you is dying.

You lost that lovin’ feeling,
Whoa, that lovin’ feeling,
You’ve lost that lovin’ feeling,
Now it’s gone… gone… gone… woooooah

 

Have a great weekend!

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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St Mary Axe view

Morning Brief – America (Thirty-) First

America (Thirty-) First

 

Those worst affected by any ailment are usually the ones who go the furthest in order to defend themselves against it. Areas prone to flooding have the greatest flood defences and those in natural earthquake zones have structurally designed buildings. Sure, there are limiting factors to this axiom such as affordability and availability but it’s still a pretty accurate rule. So why then has the United States, the country with the highest number of infections across the whole globe, secured so few doses of the vaccine?

 

In the world of vaccination it’s all about big numbers. One dose per head is rarely sufficient in order to generate sufficient immunity within a population. Nations including the United Kingdom, Canada and Australia therefore have ordered enough doses of approved and pending vaccines to inoculate their populations several times over. Canada alone has enough doses secured in its contracts to provide a dose to each of its citizens four times over – anti-vaxxer or not! The US acquiring programme on the other hand, ironically dubbed Operation Warp Speed, has only secured one third of this number of doses as a proportion of its population versus coverage leader, Canada. Despite not having approved a single vaccine in the United States, the potential shortfall could undermine the nation in achieving immunity to the virus and stunt the economic bounce back from the pandemic.

 

The US has secured 455 million doses, considerably more than its population. However, the vaccine is thought to require a boost to sustain immunisation similar to the pre-existing flu jab, meaning that the US should be closer to 1bn doses before it might be considered to have enough. Given the finite capacity of all Covid-19 vaccine production, the fact the US is several dozen the way down the global pecking order for doses means it may struggle to scale up its vaccination program in a timely fashion. Pfizer has just cut its 2020 delivery target in half due to manufacturing issues and this is a timely reminder that shocks to global supplies of any vaccine will be felt harder in lesser covered nations. The vaccination program is something that President-elect Biden has suggested he will work on with immediate effect upon taking office. If insufficient coverage of a vaccine undermines US economic performance there could be an adverse reaction in US assets.

 

 

 

Discussion and Analysis by Charles Porter

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