Market Commentary

“Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled” – Michael Crichton Without much fanfare, last month the IMF announced that it would be including the Chinese Renminbi in its SDR (Special Drawing Rights) currency basket for the first time, in doing so adding a fifth currency to the mix. It is the confirmation of the rise to global status of the Chinese economy (and by extension, the rise of Chinese political power), and has been hailed by them as them arriving on the world stage.As shown below, the SDR has been falling versus the US Dollar over the last 2-3 years, prior to the Renminbi’s inclusion.

In the early hours of Friday morning, Sterling fell from $1.26 to $1.18 in five minutes. It had already fallen from $1.295 at the start of the week, as “Investors” (1) took fright at Theresa May’s weekend comments about a “Hard Brexit”, suggesting that we might actually leave the EU (Shock,horror). The post- mortem has already begun, but it likely that we will never find out the real reasons behind the fall; so conspiracy theories will no doubt fill the void, especially as, unlike the Swiss Franc crash on January 2015, there doesn’t appear to be any “news” associated with last night’s carnage.

“When Cash is outlawed, only Outlaws will have cash” Bill Bonner (Bonner and Partners)

“The difficulty lies not so much in developing new ideas as in escaping from old ones.” – John Maynard Keynes…

A new phenomenon of the 2000s and beyond has been the rise of Financial Television. As the markets have soared, so has interest in them, to the point where even Channel 4 news (not an outlet known for its pro-capitalist views), now feel compelled to announce how stock markets have done that day. Meanwhile, at Bloomberg TV, CNBC, Fox Business News etc, they maintain a hectic pace, often spending as long as 3 minutes covering in depth the latest news stories of the day (hour?), and discussing economic issues with all the gravitas they can muster. One of the first casualties in all this is thought, which they replace with cliches of varying vacuity. Below are some of the best (or worst, depending on your view). 1): “China will have a Hard/Soft landing”. It is by no means clear how a country can get airborne in the first place.

“If you want to know what God thinks about money, just look at the people He gives it to.” – Dorothy Parker [This post was prompted by a discussion with an Oil- industry employed client, who was speculating on the motivations behind the Saudi policy on production etc. and what it meant for the future price of oil. We thought it worth weighing in on the subject, as the oil market is still one of the most important cost inputs into economic decision-making, and thus growth] The oil market continues to confound expectations. Since the low point in mid-February, it has risen nearly 40%, leading some to call the oil bear market over. This may prove to be premature however.

[Update: in a further sign of the Elite trying to “steer” opinion, the British Chambers of Commerce have announced the suspension of it’s former Director General, John Longworth after he voiced pro Leave views. The Government have denied putting pressure on the BCC to remove him. When an official denies something, it is normally a sign that it is true]. Your imagination is your preview of life’s coming attractions.

Monkey killing monkey, killing monkeyOver pieces of the ground.Silly Monkeys, give them thumbsThey make a club and beat their brother down.”Right in Two”- Tool Things appear to be hotting up in the Middle East once again. The European refugee crisis has focussed attention on the on-going civil war raging in Syria, and the potential for escalation in fighting if the Turks and the Saudi’s get drawn into the battle for control of the country.