Daily Brief – Oil Price

Oil Price

Pre TT or Trump Tariffs, the oil price seesawed around but mostly reverted to its mean over a few trading sessions unless a major piece of economic, political or trade news arose. All that has gone out of the window with steady declines in session after session,  so in case you have been away/not paying attention/blocking your eyes and ears, Brent Oil has declined more than 15% in April to $59. That is a big move. So what is the outlook? Because OPEC+ are concerned about a global recession and further falls in demand for oil, the likelihood is that they will be pushing for increases in supply. So a pump baby pump approach more likely than not. And that needless to say will pile even more pressure on those marginal US oil producers who had rather assumed that the drill baby drill exhortations from POTUS would mean big pay days instead of meetings with no coffee with their bank managers.

EUR/USD 1.1328.

HSBC

Given its size, geographic reach and position in world markets, HSBC is probably a good bellwether for the global economy. That is why the lack of column inches for the bank’s results this week is surprising. The headlines are that pre-tax profits for Q1 fell but came in above analysts’ forecasts at USD 9.5 billion and provisions for credit losses were increased substantially to almost USD 900 million. Then there is the nearly new CEO’s script around the numbers: he skipped over the elephant in the HSBC room which is that the bank has put its chips on China and versus 6 months ago that looks what a legendary Deutsche Bank boss said many decades ago when he commented on a similar big call: that is brave. When Hermann Abs said that he did not of course mean that it was brave. Then the HSBC called for the USD to remain as the world’s reserve currency at his presser this week; again, the subtext of that is due to HSBC having placed still more of their chips on USD trade. All that on top of Georges Elhedery’s first bet upon taking the big job which was to axe the investment banking business that HSBC entered 40 years ago. Given the volatility in global markets during the first 100 days of Trump 2, and the stellar trading results of the global investment banks, the HSBC investment banking exit looks like particularly poor timing. So in summary, if any global bank is a lightening rod for the new US Administration and the impact of Trump Tariffs, HSBC is certainly in consideration.

USD/JPY 144.27.

Bishop of Rome

On Wednesday next week, the papal conclave gets underway and here are the key numbers to have handy in case you want to bluff your way to convincing your audience that you know about how the secret process works: 133 Cardinals eligible to vote are locked in a room and vote four times a day until a choice with a two thirds voting majority emerges who will become the next and 267th Pope. The process typically takes between 15 and 20 days and the title confers leadership of 1.4 billion Catholics globally or 18% of the world’s population. 

GBP/USD 1.3330.

Sakura

Those intrepid tourists keen to experience Sakura, or the cherry blossom festival in Japan which is in flower right now, should of course go there in the interests of the full authentic Japanese experience. However those of a Green disposition and who wish to embrace Yorkshire canniness could both conserve their money and also their carbon footprint and travel to Harrogate Yorkshire. A fabulous show of blossom on display there at the moment plus Harrogate hosts the HQ branch of Betty’s Tearooms. What’s not to like?!

EUR/GBP 0.8495.

I Walk The Line

This day 69 years ago in 1956, Johnny Cash released this number which while enjoying 43 weeks in the charts, only made it to number 17. For those music aficionados among you, Cash’s unique boom-chicka-boom sound that he created from his guitar was done by placing a Dollar bill in the neck of his guitar. That was when a Dollar was… a Dollar.

I keep a close watch on this heart of mine
I keep my eyes wide open all the time
I keep the ends out for the tie that binds
Because you’re mine, I walk the line

I find it very, very easy to be true
I find myself alone when each day is through
Yes, I’ll admit that I’m a fool for you
Because you’re mine, I walk the line

As sure as night is dark and day is light
I keep you on my mind both day and night
And happiness I’ve known proves that it’s right
Because you’re mine, I walk the line

You’ve got a way to keep me on your side
You give me cause for love that I can’t hide
For you I know I’d even try to turn the tide
Because you’re mine, I walk the line

I keep a close watch on this heart of mine
I keep my eyes wide open all the time
I keep the ends out for the tie that binds
Because you’re mine, I walk the line

Have a Great Weekend! 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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