If you thought that Bitcoin had had its day, think again: a month ago it stood at £4000 having spent the previous 3 months stuck at £3000. And now? £6000! While in no way advocating crypto we do spend some of our time asking why such a move has occurred? The answer is in good part due to Chinese Yuan investors not liking those Trade winds and obviously having found ways of getting money out of China into crypto.
Second part of the picture is oil price volatility where there are significant short positions. Clever money says there is about to be a monster short squeeze on oil volatility.
So crypto up and commodity volatility up: that looks like USD strength and see saw markets. It’s more than sell in May stuff; Euro elections, Gulf tensions (see below) and of course US Sino talks and Trump. A potent mixture. No news of any Brexit progress in the cross party talks except for PM May announcing earlier on today that she will bring her exit deal back to Parliament ahead of the summer recess which effectively means June. The Market is unconvinced judging by GBP this morning.
With political temperatures rising amidst rumours of an Iranian strike against US interests in the Gulf, it is well to be reminded of the fact that Iran has just over 500,000 soldiers on active duty plus a further 125,000 in the National Guard who are the most loyal to the regime. It is to be hoped that the flying in of supplies plus the deployment of warships and in particular a Patriot battery will serve as a sufficient disincentive to the increasingly economically beleaguered Iranians to mount attacks. Expect as ever during times of uncertainty such as this for the USD to strengthen(further).
Conscious that I may be walking into a minefield here as this is a private matter and the right answer is of course that it will depend on how flush you are feeling and upon the context of the occasion. Statistics reflect however that the average Brit spends a max of a fiver on wine in a shop. Now what is not widely appreciated is that the cost of the bottle, the tax, the labelling and the marketing costs are pretty much the same so in exchange for five quid, you get just 47p of wine. For a tenner that goes up to £3 of wine or 6 times as much quality. That increases to £7 of wine should you part with £20 or nearly 15 times as much quality for 4 times the price. But bang for your buck, loony, euro, yen or pound GBP10 equiv represents the best price point. As we contemplate the prospect of GBP 1 buying less than EUR 1, that arithmetic will go out of the window, so time to do two things: Buy EUR and pour yourself a (large) glass of the best.
Discussion and Analysis by Humphrey Percy, Chairman and Founder