High Low High Low
EUR/USD 1.0594 1.0531 USD/ZAR 12.1681 12.0762
GBP/USD 1.4693 1.4337 GBP/ZAR 17.84 17.71
EUR/GBP 0.7214 0.7181 USD/RUB 53.39 51.36
USD/JPY 120.19 119.62 USD/NGN 199.3 199.0
GBP/CHF 1.4366 1.4298 S&P 500 2,100 2,092
USD/ILS 4.0093 3.9736 Oil (Brent) 59.74 58.93


Some positive macro-economic data out this morning, with: Spanish deflation not as deep as expected; excellent retail sales data in the UK; and stronger than expected GDP growth in Singapore. Of all the aforementioned data events, the one that I find most constructive is the Singaporean economic growth. When you consider that there are growing concerns that emerging markets could be the weak link in the global economy, if East Asia is able to hold up its end, then perhaps things aren’t as dire as some would have us believe.


I note, with interest, that the strong dollar is the number 1 concern of US companies reporting Q1 earnings. As many as 70% of companies which have reported have identified currency as a major issue going forward (http://uk.businessinsider.com/sp-500-companies-citing-negative-impact-2015-4?nr_email_referer=1&utm_source=Sailthru&utm_medium=email&utm_term=Markets%20Chart%20Of%20The%20Day&utm_campaign=Post%20Blast%20%28moneygame%29%3A%20The%20No.%201%20thing%20companies%20are%20complaining%20about%20right%20now&utm_content=COTD?r=US). That has to be significant. As I’ve noted before, the Federal Reserve has to be concerned about this, and only strong wage growth can counter-balance this, otherwise it’s tough to see how the US central bank will be able to start the hiking cycle. Granted these companies are large capitalisation companies and are less important to the US economy in terms of employment growth than one might think, but it is an issue.


As I mentioned in yesterday’s blog Hillary Clinton has put her name forward to run for the US President. I read an interesting article yesterday in the Financial Times which argues that Mrs Clinton would be wise to harness the female vote during her campaign. I believe this is correct. Women in America get a very raw deal in terms of state support to continue in employment, but here’s an excerpt from the article which I found quite astonishing, I’m sure you will too…


There are few worse countries to be a woman than Saudi Arabia. Yet the kingdom’s recent adoption of four weeks paid leave means Saudi women now have better maternity benefits than their US counterparts.” (http://www.ft.com/cms/s/0/cc676678-df8b-11e4-a6c4-00144feab7de.html#axzz3XBZTTYpU).

This leads me to one of my great concerns over the last decade. The percentage share of profit growth has swung more dramatically towards corporates than at almost any other time in history. Workers have seen their share diminish as they are forced to compete globally for jobs. This has to be seen as a failure of globalisation. Unless something is done to swing the pendulum in the other direction it is hard not to imagine dire political consequences. A century ago the solution to this problem, or at least the attempted solution, was communism. No one wants that, but what’s to be done? A big part of what should be done has to be enabling women to get a greater opportunity in the workplace, and if Hillary Clinton is able to raise the profile of this issue in the coming campaign it will be hard for the winner not to try to move in a positive direction. It’s not just the United States, emerging markets are surely (and understandably) behind on this issue as well, and I would guess (although I admit I haven’t checked this) Japan as well. It is simply untenable that workers continue to get a smaller share of global profits, I mean.. think about it.. they are the consumers! There has to be a tipping point and the chaotic protests of the Occupy movement some years ago should have served as a warning that this is an untapped political issue. Better it be resolved by mainstream politicians than political revolutionaries somewhere down the road.


A quick update on the oil markets. Using my technical spectacles, I see a market which remains in corrective mode after the precipitous fall from the middle of last year. It would be easy to be complacent about this, and make assumptions that a recovery is underway. While I concede that this is a possibility, what seems far more likely to me, is that we are in the last phase of the corrective process, but this could persist for another month or so. If this view is correct, then we could see the oil price (Brent), move back up to the low $70s before another test of the lows occurs. Be warned.


We have some important macro-economic data coming out of the US later on this week. Inflation data and Michigan sentiment data. These will be welcome additions to our understanding of what’s happening in the macro-scope. For now, and despite all the evidence of US dollar strength, I remain sceptical that the bigger picture bullish greenback trend has re-asserted. But plenty of damage can be done even if we remain in trendless markets….




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