Market update: British Pound unstoppable on soft-Brexit hopes, even Ford goes all-in on electric cars

16 Jan

by Mihály Tatár

 

Good Morning!

 

  • As always, market movements were muted with the US holiday: The DAX finished at -0.34% on the strong Euro and on coalition talk worries, while Asian stock markets continued their stellar rally (Nikkei +0.97%, Hang Seng +1.07%, the former the highest since 1991, when everyone thought Japan will be the dominant economy of the world, and the latter the highest since the 2007 pre-crisis record). Oil prices remained glued to the key levels mentioned last week (WTI 64.40, Brent 70 USD), attributed by analysts to the rising US rig count (jumping to a four-month high), while the EURUSD consolidated at 1.2270, with traders both wary of an angry ECB intervention and the US debt ceiling deadline. The star of the day has been the British Pound, continuing its soft-Brexit rally and appreciating over 1.38 against the Dollar – despite the news that British construction and public services company giant Carillion collapsed under 2.2 billion USD of debt, taking everything with it from maintaining prisons to supplying school meals. (As one trader noted, even with the Pound appreciation of the last three months, his travel to Thailand is hindered by the  fact that one Pound equals only 44 Thai Bahts, from 76 in 2002.) Even in the weak-Dollar-environment, the Turkish Lira found a way to weaken (3.82, with 4.00 being the record low from November), with the 3M Libor reaching 1.72% and with Turkey amassing tanks and armored carriers on the Syrian border to ’clear the southern border from terrorists’. (This is of course the US-supported ’Syrian Border Security force’, manned mostly by Kurds. Washington won’t be happy.)

 

  • Finally, even iconic US automaker Ford gave in, and announced that it would invest USD 11 billion on electric vehicles by 2022, and electrify all its classic brands. (This sounds quite dramatic in the light of that almost all of the 90 million vehicles sold globally are gasoline or diesel powered. One has to wonder if US costumers will find the electric car models as attractive as regulations- and media hype chasing automakers, by then.)

 

  • While cryptocurrencies kept falling (Bitcoin -6.5%, Ripple -10%, Ethereum -6.3%, but hey, the Fed and the ECB haven’t even been really hostile yet), fears grew in Asia over online financial firm Qbao.com. This site has around 200 million registered users (!), who had invested about USD 11 billion (!), for the phantastic, 80% returns of the company. Of course, the enterprise turned out to be a common pyramid game, with the Chinese police taking the founder into custody and now looking for the money. This could be the largest investment fraud in China’s history (and one of the largest globally), and demonstrates yet again that 1. global finances are still dominated by huge surplus funds anxiously chasing returns 2. Asian private savings grew so large that they make supposedly large issues like European bank capital shortfalls phatetic in comparison.

 

Have a nice day,

Mihály

 

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