U.K. Chancellor Quits Unexpectedly
A headline like that would in former times have prompted a fall in GBP of at least a cent and definitely more at times of financial crisis. Yesterday of course GBP firmed sharply against EUR and USD in particular, which just reflects that Sajid Javid was considered damaged goods by the market.
The Baltic represents the best bellwether for the health of world trade since it reflects the volume of dry goods such as metals and grain that are shipped. Exactly 1 year ago in February 2019 the Index stood at 570 but by September 2019 it had climbed to 2,500. In the past two months it has tumbled to 418. Both copper and oil have also fallen sharply in the wake of the economic slowdown in China and the consequent drop in consumption. Markets are so far working on the theory that central banks will counter balance the Chinese economic effect so traders have not donned their tin helmets-so far. But that’s the thing with traders: the human nature factor and right brain v left brain-on the one hand traders say that they always doubt the accuracy (diplomatic speak) of the official Chinese economic stats, but in the same breath they admit that they slavishly follow and depend on the Coronavirus statistics that are provided by…..the Chinese!
There are now 2 distinct groups: the back markers: Joe Biden and Elizabeth Warren and the race leaders: Bernie Sanders, Pete Buttigieg and Amy Klobuchar. Andrew Yang-“the numbers guy” in his own words, did his sums and recognised that he could not win. Michael Bloomberg ( 78th birthday today) another numbers guy but with the added benefit of multiple billions, is undeclared but is still expected to join the race in the next 2 weeks as we get closer to Super Tuesday 10 March. So far markets have remained impervious to the possibility of Bernie Sanders winning both the Democrat race and the White House later in the year. The USD is markedly stronger against EUR as we explained yesterday and is seeing a flight of capital particularly from Emerging Market currencies in its capacity as safe haven currency of choice.
Earlier this week Sally Bundock the respected BBC business journalist asked for views as to why audience figures for entertainment industry awards dinners had fallen to all time lows. SGM-FX duly obliged by explaining that they were no longer relevant and boring to boot. Then it all kicked off at the NME-New Musical Express- Awards Dinner on Wednesday night with Rapper Slowthai first being nominated for a clutch of awards including Hero of the Year for his song Deal Wiv It, mooning the audience and then throwing a drink at someone before “fighting the crowd.” Phew. Quite takes us back to 1970’s soirées and being “entertained” by Punk Rocker, Sid Vicious and his squeeze Nancy Spungen- look it up! Sadly however the SGM-FX house (no pun) view on those dinners remains unchanged: Booring!
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Eurozone That was a surprise: yesterday the EU announced that inflation had fallen to 2.4% which was considerably better than the 2.7% that markets had expected. Despite the ECB saying it was far too early to cut rates, the market has pencilled in the first cut for April. Before getting carried away it should be […]
Data Day Despite salient data already having been published in China and France so far this morning, we are far from finished with the deluge of data due to reach the market today. The most important of which will be those that we have signposted in earlier briefings: Eurozone and US inflation figures. Given just […]
UK Labour market The Bank of England yesterday broke cover to drive the message home that due to the UK’s labour market remaining tight, it was premature to start talking interest rate cuts and it was not just Governor Bailey who was calling for higher for longer interest rates but also his MEPC colleague Jonathan […]