Morning Brief – Wednesday 22nd

PM May’s Gamble

GBP liked the idea of a second Referendum rumoured to be what PM May would announce yesterday afternoon. The actuality sent GBP lower. FTSE steady at 7328. Rather than give credence to the market rumour, PM May painted a picture with multiple and in many cases contradictory possible outcomes of not backing her deal which goes to the UK parliament in the first week of June that included the rumoured Second Referendum, a General election, a NoDeal Brexit and the withdrawal of Article 50. In response her Tory colleagues are mulling a Vote of No Confidence which we suspect is more to do with her pandying to the Labour Party in her speech yesterday.

Fintech: Peak? Bubble? Consolidation?

A wave of investment has been made in this sector and while valuations have in many cases soared, companies have not demonstrated net profits but instead racked up sizeable losses. Monzo, Revolut and Transferwise all fall into this category. All I should make clear are also competitors of SGM-FX. But that is where the similarity both begins and ends since their business models are targeted to appeal to a mostly young client base eager to take their products and services and then once the “land grab” is taking place, to raise further tranches of capital at increasingly inflated valuations. Assuming that investors continue to “feel the joy”, this can continue….…for a time, but just as Metro Bank has found out, once investors ask the questions as to when these companies will in fact make money and how they will realize their investments, cracks begin to appear in that business model. It will be interesting to see what proportion of their clients these companies not only “excite” but more importantly retain after the current part of the cycle comes to an end.

One thing (at least) that cannot be blamed on Brexit

Tomorrow Thursday is the day that the Prospect Union has decided to flex their muscles and as a result 6 Scottish Highlands airports will be closed. Never mind UK inflation ticking along at about 2%, the air traffic controllers are demanding 10%. So no flights, hotels cancelled and unquantifiable loss to the Scottish tourist industry of visitors scrapping their plans for the long weekend. Still, when and if Scotland secedes from the Union they can award themselves above inflation pay rises as they like over tea and shortbread with Nicola Sturgeon!

Spanish Sexism on the Squash court

Hard (no pun) on the heels of news that cash strapped Brits are re-thinking their Spanish holidays due to GBP lurching downwards in the past couple of weeks, is one of the more unlikely prizes for the winner of a ladies squash tournament in Spain’s Club Oviedo in the Asturias: Winner Elisabet Sado was awarded a trophy and a vibrator( not a typo). (Small) ball player and Spanish enthusiast Charles has hastily replaced his racquet in its cover here on the desk at SGM-FX and has looked to Alberto on our Compliance desk for guidance. “Wrong on every level and definitely a misplaced case of KYC”, opined Alberto. Olé

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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