Morning Brief – Monday 12th

Negative Interest Rates

 

Some of our readers have been asking what this means as they are struggling to get their heads around the concept. Essentially it is akin to a storage charge but imposed by banks for your money rather than by Big Yellow for your goods and chattels. Fortunately in the U.K. at least there are not negative interest rates-yet. However it is not inconceivable with rates falling sharply globally that at some point everyone will have to understand what the concept means. In Denmark a mortgage backed note has been issued with negative interest rates. Follow that through and instead of everyone paying to borrow to finance their homes secured by charges on their properties, in this Alice in Wonderland world, they will actually be paid to borrow money. Far fetched? Not at all and not (shortly) for the Nordic region!

 

 

Real Wealth

 

Those negative interest rates are a real headache for the world’s richest families: Walton, Koch, Mars and the House of Saud to name but four. However it’s not holding them up much if at all with the Walton family earning an extra $4 million an hour…every hour or $100 million every day. The least wealthy of the top four dynasties is the House of Saud at just over $100 billion or rather a lot more by the time that you have been reading this! Just imagine the storage charges for that kind of wealth if it was left in cash and deposited with Swiss banks- it’s not of course all in cash but it would be eye watering!

 

 

Oil

 

Russia is shortly to overtake Saudi Arabia in terms of oil wealth influence having managed to save despite spending elsewhere in that vast territory. While symbolic it is only marginal and depends on a number of factors including new discoveries, the oil price and future exchange rates. WTI at $54.50.

 

 

GBP

 

Another lurch downward over the weekend as the market concludes that PM Johnson means it when he says that Brexit will take place with or without a deal.

Meanwhile focus is on the USD and the unfolding currency war between USA and China which is impacting….everyone.

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter