Tag Archives: Charles Porter forieng exchange

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Morning Brief – Tuesday 9th

Omnishables:

 

Taking the acclaimed title of Oxford Dictionaries word of the Year 2012, “Omnishambles” is a word which is normally deployed in relative proximity to a photograph of the former Foreign Secretary and Vote Leave figurehead, Boris Johnson. To my mind today, it’s an appropriate one-word encapsulation of global politics. The general decay in health and cooperation on the global stage frames the wider picture that we see in markets: highly valued safe haven assets, cheap emerging markets, amidst rising volatility.

 

The bleak impression created by the world’s political economy is undoubtedly down to a core set of big issues, let’s call them magnashambles. The first that springs to mind is the Trump administration’s war on trade. Overnight the White House upped the ante on trade, proposing a series of tariffs on $11bn worth of EU exports. Whilst the value of EU goods in the firing line of Trump’s protectionist politics is only a fraction of the value of Chinese goods already experiencing the tariffs, the White House’s move threatens a European Union struggling with Brexit negotiations, weak growth and forthcoming elections. What happens when you threaten a cornered animal..? I suppose it depends upon the beast.

 

The proposals overnight hurt risk sentiment, exacerbating the trends of overvalued safe havens, cheaper emerging markets, and rising volatility. Defensive Dollar demand in reaction to the threat to global trade has remained limited in good part due to the limited value of goods affected and sanguine words of US trade representative Robert Lighthizer who was forthcoming in suggesting the United States’ aim was sustainable resolution. Treading lightly is perhaps the best policy given that the EU’s subsidies to aerospace champion Airbus were the centre of attention and a primary justification for the move despite and only last month the World Trade Organisation reiterated that the States’ own subsidies to Boeing were similarly illegal.

 

If the tariffs gain traction, we could reasonably expect a weaker Euro, increase in defensive US Dollar demand and further weakening of emerging market assets. More magnashambles for another day.

 

Back to Westminster, where the House of Lords yesterday passed Yvette Cooper’s deal, reducing the risk of a no-deal Brexit on Friday. The three Ms, May, Merkel and Macron, will meet later today ahead of tomorrow’s European summit where they will discuss the UK Prime Minister’s request for a Brextension. Sterling continued to rise against the Dollar overnight with limited progress against the Euro while investors wait to see what life-lines the summit might bring an ailing UK premier.

 

 

 

 

 

 

Discussion and Analysis by Charles Porter

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Morning Brief – Monday 8th

Italy

 

At the end of 2018, Italy agreed a budget with Brussels and that sorted things out right? Wrong. Italy has debt of EUR 3 Trillion or 3 thousand billion. According to the OECD the Italian economy will contract in 2019 and Italian debt will grow to between 2.5 and 3% of GDP in 2019 despite agreeing a 2% limit with Brussels. Unemployment is forecast to reach 12% in 2019 and public debt will reach 134.8% of GDP. In a nutshell Italy is not making enough money-economic growth is negative- and is spending too much thereby increasing the deficit. Unlike Greece which is a small economy, Italy is the fourth largest European economy and is 30% larger than Russia. Italy will be back at the very top of the agenda in Brussels this year. Expect Italy to weigh heavily on the EUR.

 

 

 

Markets

 

Focus on the oil price with WTI sharply up at $63.08 on the back of civil war threat disruption to the supply in Libya. USD remains a better performer against developed market currencies and weaker against emerging market currencies. In the case of GBP on the back of PM May asking for a 30/6/19 extension and little cross party progress on Brexit over the weekend, GBP weakened in early Asian trading this morning.

 

 

 

Bad news for cat owners including moggy loving James of sgm-fx

 

Cats according to a study released last week recognise their own names but often ignore their owners when they call them, out of sheer bloody mindedness. It also turns out from a separate study that came out over the weekend (they are like number 11 buses these cat studies) that cat owners are significantly less happy than dog owners. Cheer up James it’s only Miaouw-day !

 

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Friday 5th

Mexico

 

Another week, another on off threat from President Trump: this time to close the US border with Mexico. No avocadoes is the least of the problems faced by Texas and California which would be hardest hit. The aim is to stem the flow of illegal drugs and immigrants from Mexico but while it may impede the former, it will do little to achieve the latter and in addition will be both complex and very costly. Meanwhile our own SGM-FX “Tex Mex” Charles Porter is polishing up his Spanish and getting ready for those Taco trades.
Sombrero on, Carlos!

 

 

 

Markets/Mercados

 

German factory orders were poor as signposted yesterday and for good measure German growth forecasts were also cut. Despite this the emerging US China story about successful trade talks was enough to outweigh that poor news and the Dax rose. Asian stock markets are little changed this morning. Oil firm with WTI at $62.14. Currencies flat except for GBP slightly firmer on slightly better mood music on a deal between Westminster’s warring factions. All eyes on this afternoon’s US payroll figures.

 

 

 

Crossrail Frustration

 

It will no doubt be amazing, but for long suffering Londoners this week’s report brings no relief at all on when Crossrail will be opened; the best that they can do is say that the earliest will be in 2020, which is no doubt code for the end of 2020, which is 21 months away from today or 630 days or 1260 journeys or quite enough to get very cross given the money spent, the cutting edge tech and the Bombardier rolling stock.
For all you train spotters including SGM-FX’s Euan, the trains will be 200 metres long with a capacity of 1500 passengers. So that further 21 month delay equates to 1,890,000 passenger journeys. Grrrrrrrr. Calm down, Euan!

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Thursday 4th

Markets

 

Apparent good progress on US Sino Trade talks but not on US European trade with France exerting its ability to prevent talks starting with the US: a risk strategy given the tariffs that are threatened for the Euro car industry. Bitcoin is on a high for the year now above $5000. Stock markets mixed in Asia with European markets due to open a bit lower. Today the focus will be on German factory orders and the fear form the EUR is that they will reflect the same flat to negative growth that we have been seeing in the past 2 months. Oil a tiny bit lower at $62.31, gold flat at $1297. Markets are awaiting the US employment figures tomorrow. GBP firmer on the vote last night in favour(just) of ensuring a Brexit deal as opposed to a NoDeal and rallying further first thing this morning.

 

 

 

POTUS and Inappropriate Touching

 

Not acceptable at all and definitely creepy, but USA Democrat candidate Joe Biden managed in 2014 to steal a march on Donald Trump in what is now termed to be Inappropriate Touching: Approach a woman from behind, put both hands on her shoulders, inhale her hair and plant a long kiss on the back of her head. This on many levels deems him apparently unacceptable to hold the highest office in 2020. On that basis as we all know, at least four of the past ten US Presidents would never have been nominated let alone elected. Fortunately there are as many Democrat candidates for 2020 as Tory hopefuls in 2019 to become the next leader of the UK Conservative party.

 

 

 

George Clooney

 

The coffee capsule promoter and Monuments Men actor (sic) has entered the Brunei gay sex debate by calling for a boycott of the Sultan’s Brunei Investment Authority’s holding of 9 luxury hotels including London’s Dorchester and The Beverley Hills Hotel. Stand by for some discount offers and then get packing?

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Wednesday 3rd

Titanic Time?

 

SGM-FX veteran Graham exhausted with trying to explain Brexit to his clients over the past 3 years has asked me for 3 examples of things that had taken less time to accomplish (NB accomplish….!) and here they are:
Building the Titanic( 2 ¼ years)
Flying the 35 million miles from Earth to Mars ( 10 months)
Building the Eiffel Tower (2 years)

 

 

 

Markets

 

Crude oil increased in price to the high of the year at $62.58 on the back of power cuts in Venezuela affecting output, reduction in supply from Saudi Arabia and lower US production. News in that China and the US have resolved most issues in the way of a trade deal sent Asian stock markets higher. US Treasury bond yields rose to 2.5%. The USD weakened marginally against all currencies and the EUR index strengthened 0.2%. GBP weakened initially on further uncertainty and Theresa May agreeing to meet Jeremy Corbin to try and find a way through the impasse. The European response? A NoDeal Brexit is more likely than THAT making progress. Gold little changed at $1292.

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Tuesday 2nd

Ukraine and echoes of Ken Dodd

 

Congratulations to Presidential hopeful Volodymyr Zelensky, a professional comedian with no political experience at all, who won the first round on Sunday. Reminds me of George Carman QC who while seeking to explain to the judge in 1989 that his client Ken Dodd should be acquitted, said: “Accountants often believe they are comedians, but comedians never believe that they are accountants.”

 

 

 

 

Markets

 

Better than expected China and US manufacturing data. Dow jones had a good day up 329 to 26,258. FTSE flat at 7317. WTI oil higher at $61 and gold lower at $1285. Here in the Uk the stalemate in Westminster over Brexit resulted in GBP weakening against ZAR, EUR and USD.
The AUD weakened against the USD on the back of hints of easing by the Central Bank. With Saudi Aramco’s forthcoming IPO, for the first time market watchers were able to see just how super profitable this franchise is: net income of $111 billion!
In the midst of hedge funds saying that GBP is simply too hard to trade with the brexit uncertainty, Goldman Sachs have come out this morning to say that GBP is the single greatest buying opportunity as despite the House of Commons being locked with no clear direction, GS believe that they are about to agree on a soft Brexit plus a second referendum plus a customs union, so pretty much everything that constitutes a hard Brexiter’s worst nightmare!

 

 

 

 

Lastly

 

The Rolling Stones are postponing their tour due to ill health…must be Keith Richard you might think but no it is time for hugely fit and energetic frontman Mick Jagger to undergo heart surgery even as he sings;

 

If you start me up
If you start me up I’ll never stop….

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Monday 1st

On 29-03-1912…..Captain Scott, Antarctic explorer made the last entry in his diary:…”The end cannot be far..For God’s sake look after our people.” Both frustrated Bremainers and Brexiters know how that feels!

 

 

Currencies and Markets

 

Those impacted by the Pink Pound should give Brunei a miss: the Sultan has now made gay sex not only illegal but punishable by death and dismemberment. Stick to Brighton-it may be chilly but it’s closer and safer!
GBP has staged a modest recovery over the weekend with markets concluding that a much watered down Brexit is now the most likely outcome. Quite why that would be UK positive is a mystery: surrendering present advantages to be locked in disadvantages a positive? Markets as ever will, once realisation sinks in, reverse that positivity. This morning Asian equities have all rallied on stronger Chinese economic numbers. WTI Oil remains over $60 and Gold is at $1293. Government Bond Yields have firmed marginally but remain close to their recent lows. AUD strengthened against the USD as did the EUR.

 

 

UK Politics

 

With last week’s events, the odds on the next PM are now showing some interesting pricing: Whatever your voting proclivity and reflecting what a strange world Westminster represents for the rest of us, Boris Johnson and Michael Gove and Jeremy Corbyn are all joint favourites at 4-1. Followed by a clutch of Sajid Javid, Jeremy Hunt, Dominic Raab and David Liddington at 7-1.
At the other end of the spectrum Piers Morgan and Tony Blair are both 500-1. Mid fielders Andrea Ledsom, Amber Rudd and Jacob Rees-Mogg (the Hon member for the Nineteenth Century) are all at 20-1. Like the Grand National it is a very large field with plenty of likely fallers especially when one remembers that 60% of the UK public would like to see a new face as everyone is fed up with the present Tory front bench.

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Friday 29th

Starship Enterprise

 

 

William Shatner or Captain Kirk of Star Trek has turned 88 and the UK Parliament were last night looking to him to lead them to boldly go where no man has gone before-i.e. conclusion of Brexit.
Nearer to Planet earth, but only just, was the following exchange in the European Parliament where it was the last full session for the UK marked by our very own Nigel Farage slugging it out with the Belgian ex PM Guy Verhofstadt:
GV: “You remind me of Field Marshall Haig in Blackadder.”
NF: “It was Field Marshall Haig who saved your Belgian town of Ypres from the Germans. He should be a great hero to you.”

 

 

Markets

 

Globally Government Bond yields firmed from their recent 15 month lows.
The UK Government faces another Brexit vote tonight. GBP weaker in anticipation of it being voted down and also with it now being 14 days until the NoDeal Brexit date and with the UK Parliament still evenly split.
The US Dollar steadied after three days of small advances. Asian equities all stronger this morning and today being the last day of Q1 will show a rise in the MSCI Asian Index of 8.7%.

 

 

Happiness Index

 

Life expectancy, crime, health services, carbon emissions and wellbeing is what makes us happy(apparently). Top English Cities include: Winchester(1) and Epsom and Ewell(10) while in Scotland it’s Stirling(4) and Shetland Islands (10). For Wales it’s Bridgend(6) and Cardiff (8).

Pharrell Williams has fewer home comforts in mind:
Huh, because I’m happy
Clap along if you feel like a room without a roof
Because I’m happy
Clap along if you feel like happiness is the truth
Because I’m happy

Have a great (and happy) weekend!
 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Thursday 28th

France and President Macron

 

Some headline numbers: Public spending is 57% of GDP. 35 hour working week. 1.1 million civil servants of which 310,000 work less than those 35 hours. In Brittany civil servants are allowed 6 days off per annum to attend…car boot sales, in Deux Sevres, council workers get 10.5 weeks per annum holiday plus 2 extra days to compensate them for working in winter. President Macron is seeking to insist on the 35 hour work for everyone. By law employers have to compensate workers who work more than 35 hours by between 10 and 50% additional salary. SGM-FX South Africa specialist Richard thought these amounts of hours and holiday were right up his strasse until he found out that Deux Sevres was quite a way away from his braai pit in Putney. Dream on Rich!

 

 

 

Turkish Delight(not)

 

Markets marooned with little overnight net movement: Oil slightly lower, Asian stock markets a little lower on the back of Japan selling off for the first time this year. Turkish interest rates rose to over 1000%(not a typo) to prevent banks selling the Lira. For seasoned Turkish traders, this is a regular phenomenon and they will already know that Turkey is convulsed pretty much every 5 years-this time in the lead up to the election and questions on President Erdogan. Meanwhile do not be short Lira unless you have s strong stomach and…deep pockets!

 

Beverley Knight, soul singer 46 last week who we remember for her 2002 hit
Shoulda Woulda Coulda
No doubt about it, the UK Parliament will have been humming that tune as they embarked on the “Indicative Voting” rounds last night. MPs should most definitely remember the map of the Leave Remain Referendum Result from 2016 if they decide to ignore the electorate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Wednesday 27th

Australia

 

Numbers have dropped markedly for Brits emigrating to Australia down from an average of 49,000 a year to 30,000 -which is still approximately twice the number emigrating to Spain each year. Despite the AUD being weaker, this is blamed on GBP having weakened versus AUD from 2.50 to 1.85 and the Oz housing market not being such a bargain for British emigres as it once was. However for those many thousands still heading Down Under, the need to get the timing and execution of their currency conversion has never been greater.

 

 

 

UK

 

For those of us who are attempting to make some sense of the markets that in the case of GBP continue to be moved mainly by news headlines more than economic fundamentals, yesterday was another febrile day in Westminster. GBP unsure what to do decided that a possible longer extension and the DUP not agreeing to support the Prime Minister was better than vice versa. While others looked on this as merely a postponement of the reckoning, traders shrugged and GBP strengthened against ZAR, USD and EUR.

 

 

 

Globally

 

Commodities: WTI Oil still a shade under $60 having enjoyed its strongest month for some time. Gold steady at $1320.
Currencies: NZ Dollar: The Kiwi fell sharply following the NZ Central bank governor joining other central banks in a dovish shift.
Equities: FTSE 7220, Dow 25657. Equity markets marking time awaiting news on a Sino-US trade deal..
I0 year Govt Yields: US 2.39, Germany- 0.04, UK 0.99, France 0.47, Italy 2.45, Japan -0.06

 

 

 

 

China +Artificial Intelligence +5G

 

China sees the AI industry as the next great opportunity and has estimated its size as $1Trillion. Additionally China is leading the race in 5G technology. 5G is not just faster than 4G which it definitely will be(!) but will have much greater capacity for data, much reduced lag times and will affect every aspect of our lives in cars, factories, smart homes and robots and consequently vast strides in Artificial Intelligence.

Timing wise next month April 2019 sees the first release for commercial deployment of 5G and a year later in April 2020 will see it starting to be rolled out for wider usage. What does this mean to all of us? Well 4G has latency ie time to send a message from sender to receiver at 30-70 milliseconds while 5G will be less than 1 millisecond!

 

 

 

 

 

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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