With reports of shelling across or near the Eastern Ukraine border yesterday afternoon unnerved markets with all global equity markets down between 0.5% and 1%; US 10 Year Treasury Bond yield fell back to just below 2%; EUR/USD 1.1370 and GBP/USD 1.3620, GBP/EUR 1.1980.
Those who doubt that Russia is able to withstand more sanctions should be aware that Russia’s gold and foreign exchange reserves are more than double what they were 7 years ago at the time of the Crimean border incursions. Russia’s central bank reserves stand at $620 billion. The other interesting point related to this concerns the so called de dollarisation strategy adopted by Russia: in the past 5 years the proportion of USD in Russia’s reserves has fallen from 41% to 16%-almost exactly mirrored by a commensurate rise in the proportion of EUR. A clear indication of Russia’s view on the relative toughness of the USA and the EU in their attitudes to Russia.
Russia accounts for 18% and Ukraine for 7% so in total 25% of exported wheat comes from these two countries. So which countries are the most dependent on that supply of wheat? Egypt, Turkey and Bangladesh bought more than half of Russia’s wheat in 2019. 74% of Turkey’s wheat comes from Russia and Ukraine. This cuts both ways of course: while a small number of countries are overly dependent on these two countries, equally as the largest exporter of wheat globally, Russia is dependent on that trade continuing uninterrupted to receive the currency inflows necessary to sustain its own economy. Food for thought….USD/RUB 75.78 and Wheat on the Chicago Board of Trade up 2% yesterday.
Congratulations to Lake District restaurant L’Enclume which has been the only new restaurant both inside and outside London to be awarded 3 stars. The tasting menu at GBP195 can be complemented by 3 different wine pairing selections ranging between GBP 90 for the Taster and GBP 275 for the Select. Assuming that those galloping gourmets among our readers avoid the temptations of the bar before and after the meal, it means that the full works dinner or lunch including service for you and the significant other in your life will set you back GBP1,200. Only another 361 days to St Valentine’s Day!
Not very as it turned out. This day in 1969 3,000 uninvited guests turned up to see Maurice Gibb of the Bee Gees marry Scottish chanteuse Lulu in Gerrards Cross. Billed as the true love story of the time, the marriage lasted until 1973 but the song released in 1977 lives on and on and on….:
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
Have a Great Weekend!
Discussion and Analysis by Humphrey Percy, Chairman and Founder
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