Good morning

Good old Greece will just not go away. The Greeks said they are making progress and a deal in forthcoming, Troika replied that was not the case and negotiations were still on-going. Like I said before, there is negotiations behind the scenes and kept quiet and negotiations in front of the camera and reported in the news. Ignore the latter completely and concentrate on the former because that is all that counts. In my humble opinion an agreement WILL be reached in some form which will allow the markets, Greece and the ECB/IMF/Creditors/Troika to breathe a sigh of relief, if only for a a short time until the next repayment is due. 5 June is the next deadline for the repayment to the IMF so the pressure is non stop. The USD gained over the past week mainly on the back of (1) Higher US CPI (2) Improved US data and (3) Greek woes. I think if a deal is reached and is to the satisfaction of all parties, there is a likelihood that the EUR will enjoy some respite and rally. However this rally will be short lived considering EVERYONE is talking the USD higher on the back of the imminent (September) FED rate hike. That I believe is a BIGGER story than the Greek solution given the message it portrays to the market that the US IS BACK IN BUSINESS!!

I wanted to highlight one piece of data that came out this morning. For anyone that purchased a property in Spain 2000-2008 they have seen the value of their property collapse (apologies). However over the past year the local agents have reported a surge in foreign buyers (including KKR and Soros) of Spanish property. Taking a step back, Spain realised back in 2008 that they too had overspent and austerity was the key. Suffice to say I am pleased to report Spanish GDP came out splendidly reporting 0.9% Q1 and 2.7% year on year. They endured tough times, they cut back, they cut red tape and property bribery, and most importantly they became financially savvy. Great news for the Spanish economy and better news for Spanish property owners who are now seeing their properties rising in price. So Mr Tsipras and your Syriza party, time to get your ducks in a row because a return to the good days is possible and within your grasp. Time to take the bull by the horns and make it happen. The hard part is selling the idea to those people who voted for you. Perhaps you can mention without the ECB/IMF loans and bank prop up, there will be no money full stop. No guessing what the right choice is.

What this space because there is still a great deal to write about.

GBP – Revision GDP to be published for Q1. 0.40% Q1 and 2.5% year on year expected. The GBP has lost its shine over the past week falling from over 1.58 to 1.5320’s. Mostly on the back of the stronger USD overall and the loss over the euphoria gained from the elections. Parliament is a go and cuts are on the horizon. For those 200 people that protested yesterday in Parliament square, GET A JOB!!

Overall I think the GBP will continue to suffer at the hands of an ultimately stronger USD. People are talking about EURUSD PARITY sooner rather than later (Q3-Q4). If the US surprise and hike you can bet your bottom USD we WILL hit PARITY!!! So for all you UK IMPORTERS, best you HEDGE YOUR FOREIGN purchases now because the GBP is expected to trade below 1.50 again (when I can’t say, but it is NOT far away I think). Great news for EURGBP – your holiday remains and will remain cheaper than this time last year (12%) and I expect this trend to continue (GBP >EUR).

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