Forex Trading Review Guide: May 2021

Monday, May 31, 2021

USDCHF Pivots around 0.9000 at month end

USDCHF, H4

The Dollar majors have been directionally unambitious, with both UK and US markets out for public holidays today. The Yuan saw some action, however, falling back after the PBoC fixed the currency at its highest level against the Dollar since May 2017. An ex-PBoC official, in an interview with the state-backed Xinhua news agency over the weekend, said that the recent rapid appreciation of the Yuan is unsustainable.

In data, preliminary May inflation data out of German states came in higher than expected. Asian data were mixed, including strong retail sales combined with slightly weaker than anticipated production readings out of Japan, while China’s official PMI numbers were also mixed, with the manufacturing PMI disappointing, flagging a slowdown in the pace of expansion, while the non-manufacturing reading improved. As for the Dollar, we expect the prevailing downside bias will remain in force, with the USDCHF a case in point.

The intraday bias remains neutral enough to consolidate above 0.8930. Further decline will take effect as long as the resistance at 0.9046 remains intact. On the downside, a break of 0.8930 should extend the 0.9471 decline, to retest the 0.8756 low. However, on the upside a break of 0.9045 will show a short term bottom. The intraday bias will return to the upside for a stronger rebound. For now, the price is consolidating at the psychological level of 0.9000. The divergence bias is clearly visible, but the intersection of Kinjun Sen and Tenken Sen is below Kumo, not yet a positive confirmation for a valid reversal; this cross will only be positive if it occurs above Kumo. However in that direction, the price needs to go beyond Kumo, as the rebound wave that was formed last week has not completely surpassed the last bearish wave.

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Ady Phangestu

Analyst – HF Indonesia

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Dollar Outlook for the Week: More Sales Ahead of the NFP

On Monday, the dollar index struggles to maintain support at 90 points. The attempt to go up on the inflation report failed miserably on Friday:Annual inflation in the US in April was the highest in several decades - +3.1%. At the peak of the previous expansion, in 2006, it was 2.9%. Despite the fact that market forecasts underestimated inflation (2.9% consensus), the debt market received the news rather coolly. The yield of the 10-year Treasuries barely flickered on the report. It would seem that the risk of accelerated inflation rates in the US increased after the report, because of which investors should have demanded an increased yield on long-term Treasuries, but contrary to expectations, the yield fell from 1.61% to 1.59% at the close.Strong inflation readings in April-May can be explained by the low base effect - in the same month last year the US lockdown was in full swing, which dragged inflation down. Compared to that month, things are looking very good now. The second potential explanation is that investors in the Treasury market believed the Fed's words that inflation was caused by temporary drivers and would soon begin to slow down. Therefore, there is no reason to dump long-term bonds.However, if we see another increase in inflation rate in May, there will be some kind of trend, so anxiety, most likely, cannot be avoided. Therefore, bear in mind that the markets will most likely start to worry about increased inflation in the coming months.Important statistics were also released for Asia. China released a manufacturing activity index for May, while South Korea reported factory output. Key findings - costs are growing (cost of raw materials + labor), and the growth of export orders is slowly slowing down. For example, the index of the cost of raw materials rose to 72.8 points (50 is neutral) - this is the maximum since 2010. At the same time, the index of new orders fell to 48.3 points, that is, it became worse than in April. Together, these dynamics tell us that if pickup of commodity prices continue, it will likely be much slower. Rather, stabilization in the market awaits us.It should also be noted that small firms in China have probably passed the peak of growth rates - their margins are squeezed by rising commodity prices and difficulties in transferring this inflation to the consumer. The index of activity of small firms in China fell from 50.8 immediately to 48.8 points.The May Non-Farm Payrolls report is also due this week. Weak job growth in April exacerbated the negative trend in the dollar, as the chances of a Fed rate hike diminished. All May because of this, the dollar was under pressure:It is highly probable that the foreign exchange market will unravel the consequences of the May report throughout June. The thing is that in April the labor supply lagged behind the demand for labor, so few new jobs were created. Preliminary data for May (jobless claims, hiring indices in PMI reports) shows little change. Therefore, the report may again fall short of expectations. The Fed will have more time to delay with low rates, since their goal is jobs. The dollar could suffer again.On the technical side, we are using the setup from last Friday. USD index failed to settle above the upper border of the channel on Friday, so the control, I believe, rests with the sellers. Closer to the NFP release, the pressure on the dollar is likely to mount, and we will see a retest of support at 89.65.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/dollar-outlook-for-the-week-more-sales-ahead-of-the-nfp"
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Ethereum rises 5% at $2,509; bitcoin firm

from Forex News https://www.investing.com/news/forex-news/ethereum-rises-5-at-2509-bitcoin-firm-2519154
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Nikkei H1 approaching key resistance, potential reversal

Nikkei H1 is apaporaching a key resistance level at 29030 which is a 61.8% Fibonacci retracement, a strong horizontal overlap resistance and also a level where strong price action pushed price strongly lower previously.A reversal from this level could see prices make a push down to 28700 area where our 1st support is - this also happens to be in line with a major horizontal pullback support and a 61.8% fibonacci retracement.Disclaimer: Thematerial provided is for information purposes only and should not be consideredas investment advice. The views, information, or opinions expressed in the textbelong solely to the author, and not to the author’s employer, organization,committee or other group or individual or company.High Risk Warning: CFDsare complex instruments and come with a high risk of losing money rapidly dueto leverage. 73% and 65% of retail investor accounts lose money when tradingCFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You shouldconsider whether you understand how CFDs work and whether you can afford totake the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/nikkei-h1-approaching-key-resistance-potential-reversal"
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USDJPY, H1 breaking key support, potential for a drop

USDJPY, H1 has broken a key support at 109.75 which is a strong fibonacci confluence area. On a short term perspective, it is also making lower highs signalling a potential change in trend direction.A drop below 109.75 area could see prices push down towards 1st support at 109.20 area which happens to be another Fibonacci confluence level that lines up nicely will a support level where price previously rallied strongly from.Disclaimer: Thematerial provided is for information purposes only and should not be consideredas investment advice. The views, information, or opinions expressed in the textbelong solely to the author, and not to the author’s employer, organization,committee or other group or individual or company.High Risk Warning: CFDsare complex instruments and come with a high risk of losing money rapidly dueto leverage. 73% and 65% of retail investor accounts lose money when tradingCFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You shouldconsider whether you understand how CFDs work and whether you can afford totake the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdjpy-h1-breaking-key-support-potential-for-a-drop"
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USDIndex: May 31 a repeat of April 30?

USDIndex, H4

The Dollar Index’s move to close the week cooled from 90.41 to 90.00 ahead of the long weekend. This raises the question of whether this is a normal end-of-the month correction, or is the break set to continue down? The key data this week to begin the new month is the US Non-Farm Employment Change on Friday June 4.

Last week the H4 timeframe saw the price break above the MA50 and make a two-week high at 90.41, and saw a trend reversal with a new higher low in line with the MACD that broke above the 0 line and RSI stand above the 50 level. It is similar to the end of April when the price broke above the MA50 and rested there before breaking back and falling heavily on the lower-than-expected non-farm payrolls report at 266k from the 978k forecast. This Friday’s forecast is between 621k and 700k.

As Fed Vice Chairs Randal Quarles and Richard Clarida announced, the heating up of US inflation should prompt policymakers to start talking about inflation at the upcoming meeting. This is consistent with comments in the minutes of the previous April meeting.

US inflation for April jumped to 4.2%, the highest figure in 13 years since September 2008, from 2.6% in March, 1.7% in February and 1.4% in January.

As for the technical trend this week, H4 has a chance of price circling within the MA50 and MA200 frames in anticipation of the hiring figures this Friday. But given the trend that the MACD is cutting the signal line down and the RSI is falling at the 51 level, if the price breaks below the MA50 the first support is at the latest low at 89.50.

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Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand

from HF Analysis /240958/
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Should you move your business to a four-day week?

Businesses in Scotland will have the opportunity to trial a four-day working week following the re-election of the Scottish National Party. The SNP has promised a £10m fund to help businesses explore four-day working amid claims that such a shift could boost economic productivity and support the wellbeing of staff.

Four-day weeks are not as revolutionary as they might sound. Large organisations such as Unilever are already trying out the idea in parts of the business, while a number of high-profile smaller enterprises have also made this move in recent years.

Some economists also back the initiative. The think tank Autonomy has urged the UK government to support a move to a four-day working week in an attempt to combat potential rises in unemployment following the pandemic.

Such moves could prove popular. In 2019, when Jeremy Corbyn’s Labour Party suggested reducing the standard working week to 32 hours – the average Briton currently works 42.5 hours a week, some of the longest hours in Europe – research found that 63% of Britons supported the idea.

Businesses that currently operate with four-day weeks do report significant advantages. A trial at Microsoft, for example, found moving to four days at one of its operations had boosted employees’ productivity by 40%, more than making up for the 20% reduction in their hours.

Other firms have reported significant reductions in absenteeism, with the extra time off boosting the physical and mental health of their staff. The charity Advice Direct Scotland, which now operates with a four-day week, says its sickness rates have fallen by 75%. Recruitment and retention have also improved.

However, introducing a four-day week is not without its practical challenges. And smaller businesses, which often have less flexibility in the way they can operate, may find these particularly complicated.

In France, for example, the launch of a shorter working week in the late 1990s prompted some employers to increase the size of their workforces, but the state had to subsidise the recruitment and training costs incurred by the smallest firms.

A three-day weekend?

Another key question is which day employees would drop. Some firms experimenting with a four-day week have tried rotas, so that their office is still staffed for five days, but organising this with a smaller workforce may be more difficult.

Other firms with experience of four-day working warn against just operating with a three-day weekend. Customers are often eager to do business on Mondays and nervous about deadlines and delays on Fridays, they suggest, so a day off mid-week may be a better bet.

There are also likely to be some difficult conversations with staff, both about when they work and broader benefits. For example, while the basic idea of a four-day week is that staff would still receive the same levels of pay, they might see holidays reduced in line with their shorter working hours.

Nevertheless, Scotland is far from alone in considering making such fundamental changes. Spain, for example, has already begun trialling similar reforms. And if businesses decide they like the idea, they may move more quickly than governments. The authors of a new book, The Case for a Four Day Week, say the benefits are so compelling that employers will want to make the move of their own volition.

from Moneyweek RSS Feed https://moneyweek.com/economy/small-business/603307/should-you-move-your-business-to-a-four-day-week
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Three companies that are building a better world

How we live our lives and how we choose to invest our savings have typically been worlds apart. Happily, it has recently become possible to bring these two elements much closer together. There’s a growing number of listed companies that are working hard to understand their place in the world beyond simply generating profit.

Business leaders have a better chance of building strong foundations for equity returns when they understand that they can only deliver sustainable profits in the long term by respecting the environment in which they operate and the people their organisations affect. Positive impact as an investment strategy builds on this growing corporate self-awareness by championing companies that provide fixes to problems that will cost the planet more dearly in the future if left unattended.

Excitingly, opportunities to make such an impact are not limited to the well-known areas of green energy, but instead cover a broad spectrum of industries, including healthcare equipment, safety certification, education, infrastructure and agriculture. This breadth of opportunity gives impact funds an evergreen quality, making them an ideal building block for any long-term investor.

The leader in LED lighting

We often find attractive opportunities in established companies that are culturally pivoting towards the beneficial outcomes generated by their products. One example is Signify (Amsterdam: LIGHT) – the lighting giant spun out of Philips in 2016. The company combines industry leadership in the global shift to LED lighting with a corporate strategy focused on net-zero carbon emissions, zero waste to landfill and a portion of employees’ pay related to sustainability targets. This refreshed corporate culture has already generated impressive financial results, with the company developing an ability to surprise the market positively. While no longer as attractively valued as it was, Signify still offers a decent 3% dividend yield.

Greener ventilation

Another company enjoying rejuvenation by combining strong leadership with a deep focus on sustainability is Trane Technologies (NYSE: TT), which was spun out of Ingersoll Rand last year. Trane focuses on ventilation and refrigeration systems, which represent a combined 25% of global greenhouse-gas emissions. With the US government’s focus on better ventilation in public buildings, it’s seeing strong demand for its products. Trane now partly bases compensation of its 2,300 top executives on sustainability indicators. It has set a target of saving its customers a gigaton of carbon dioxide by 2030 through the use of its products.

Muck to brass

Recycling is a growing source of value for investors as a circular approach to natural resources displaces our traditionally linear model. This opportunity extends far beyond civic refuse processing. One example is Befesa (Frankfurt: BFSA). Its business is focused on the industrial recycling of hazardous waste generated in steel and aluminium manufacturing. Befesa’s process diverts toxic material entering landfill and its end products can be used in place of virgin ingredients in cement, ceramics and insulation. With a 50% market share in Europe and Asia, it is well set to dominate this area of industrial-waste processing.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/share-tips/603305/three-companies-that-are-building-a-better-world
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Strive Masiyiwa: the philanthropist who connected Africa

When Strive Masiyiwa fought in Zimbabwe’s highest court for the right to launch a mobile telecoms business – an application contested for five years by the then Mugabe government – he was armed with a “killer” stat, says the Financial Times: “70% of Africans had never heard a telephone ring”.

That was in 1993 and the rest, as they say, is history. By 2010, Masiyiwa was reporting that nearly 70% of Africans own a telephone – many of them tapping into networks provided by the company he founded, Econet Wireless.

A portfolio of directorships

The growth of Econet and its offshoots across Africa made Masiyiwa, now 60, very rich. When the FT caught up with him a decade ago, the stake he held in his Zimbabwean holding company was, at $345m, worth more than 10% of the local stock exchange.

A long-time exile from that country – he settled first in South Africa and then in London – Masiyiwa was last week named as the first black billionaire to make The Sunday Times’ Rich List, notes The Times.

But one suspects that officially joining the ranks of Britain’s super-rich is the least of his preoccupations. As the African Union’s special envoy on the pandemic, Masiyiwa is “trying to fix one of the planet’s most pressing problems”: sourcing vaccines for Africa’s 1.3-billion-strong population.

As one of Africa’s most prominent businessmen (albeit from afar), Masiyiwa is also much in demand on the boards of Western companies – his portfolio of directorships includes Unilever and Netflix. But it is his single-minded focus on improving individual lives on the continent that has set him apart.

As Fortune noted in 2017, “few people have shaped modern Africa as much as Masiyiwa” – whether battling to bust corrupt state monopolies or funding the education of Aids orphans. The thread that runs through his whole career is a deep-seated belief that “entrepreneurs like me… can use business to do good”.

Born in 1961, in what was then Rhodesia, Masiyiwa and his parents fled Ian Smith’s white-minority regime to neighbouring Zambia when he was a child. But from the age of 12, he was educated in the UK, says The Times. His “lioness mum” – whose business funded his school fees – had heard good reports of the Holt School, near Edinburgh, from a British neighbour.

After school, Masiyiwa studied electrical engineering at Cardiff University. In his 20s he returned to Zimbabwe, to take up a post at the state-owned telco ZPTC, but was quickly disillusioned by the bureaucracy and cronyism he found there. Ironically – given its implicit support of apartheid South Africa at the time – the institution that backed his first solo business in 1988 was Barclays.

An undeserved reputation

A clubbable man, Masiyiwa has always been adept at nurturing connections in high finance. Together with his absenteeism, and vast wealth, that has often proved a recipe for distrust in his native country. When President Emmerson Mnangagwa took power after the 2017 coup that overthrew Mugabe’s dictatorship, notes the FT, he pledged to be “open for business”.

But repeated abuses of power and corruption scandals have returned Zimbabwe to “international pariah status”. Inflation, which hit a peak of 837% in July 2020, is still running at around 194%. Masiyiwa points to his business investments in the country as evidence of his patriotism.

But, as journalist Hopewell Chin’ono reported on Nehanda Radio this week, news of his elevation to the UK Rich List prompted “the usual dark and unrestrained vitriol against him”. The message to Zimbabwe, he added, is that Masiyiwa is not the problem. “Give the brother a break!”

from Moneyweek RSS Feed https://moneyweek.com/economy/people/603312/strive-masiyiwa-the-philanthropist-who-connected-africa
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Russian Ruble is on the Rise

Good day,Russian ruble has closely approached the supporting zone formed between the levels 72.30 and 73.00. In principle, asset might gain quite strong support in this zone. However, the asset’s price might approach the level of 72.30 first, and then jump. All in all, the Russian ruble is on an upward trajectory. But it could be worth waiting to see what will happen to the asset’s price in the supporting zone.Having formed the long-legged doji last Friday, the EUR/USD pair is currently touching the uptrend. It might signify potential price growth. The asset might jump at the market opening.Oil is targeting the level of 71.30. The asset might potentially pull back from this level without breaking it.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/russian-ruble-is-on-the-rise-31052021"
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Dollar near 2-month high vs yen, Chinese yuan scales 3-year high

from Forex News https://www.investing.com/news/economy/dollar-near-2month-high-vs-yen-us-inflation-beats-expectations-2518988
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Market Update – May 31 – USD Holds gains

Market News Today – UK , US closed today. USD holds gains following Fridays PCE and PMI data. USDIndex closed Friday @90.00 down from 90.41 high and –1.34% for the month. US stocks closed flat on Friday (For April USA30 +1.94% & USA100 -1.53%) Global stocks start muted to the new week. Most Asian equities retreated after signs China’s econ recovery may be leveling out (PMI dipped) and JPY data was mixed, global inflation risks a concern. Bonds steady w/US 10y yields at 1.59%. Gold reclaims $1,904 and USOil trades at $66.65.

This week – Heavy dose of global data – top of the shop is US NFP, Eurozone Retail Sales, GDP and CPI & a rate decision from the RBA and monthly PMI data – The data could reveal the acceleration in annual inflation growth for major economies.

European Open – Virus developments remain in focus as recovery broaden but against the background of rising cost pressures. On the data front, the focus will be on preliminary inflation data for Germany and Spain, which are likely to show a further acceleration in headline rates. The German number is already above the ECB’s definition for price stability and likely to rise further, although for now base effects from energy prices remain the main driving factor, which allows the ECB to see through what it still expects to be a temporary overshoot.

Today – German regional & national CPIs.

Biggest FX Mover @ (07:30 GMT) AUDUSD (+0.26%) up from Friday’s low at 0.7676 to move over 0.7000 into close and now trade at 0.7725. MAs remain aligned higher, RSI 55.25 and rising, MACD histogram & signal line aligned higher and testing 0 line from below. Stochs. rising and in OB zone from earlier. H1 ATR 0.0007, Daily ATR 0.0063.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

from HF Analysis /240934/
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Dollar Down, Signs of Slowdown in Chinese Economic Recovery

from Forex News https://www.investing.com/news/forex-news/dollar-down-signs-of-slowdown-in-chinese-economic-recovery-2519027
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Sunday, May 30, 2021

Key Economic Events and Reports for the Week Ahead

The Federal Reserve’s key inflation measure, Core PCE, surged to 3.1% in April, raising concerns in the foreign exchange and equity markets. The dollar index rose briefly to the level of 90.40 on Friday, but could not sustain the level. Obviously, there is a clash of opinions on the market about the nature of the increased inflation that is now observed in the United States. Some investors believe that the effect of last year's low base and temporary inflation growth drivers will soon cease to impact and inflation will normalize, returning to the 2% area. Others believe that the Fed is missing some points and the movement of inflation higher can provoke a preventive QE tapering, so they are trying to price in this still tail risk.The tug of war will continue next week. In this regard, in the first half of the week, the markets will be focused on such reports as Chinese PMI in the manufacturing sector on Monday, the US PMI in the manufacturing sector on Tuesday. The inflation component in these reports will receive special attention from the markets.Markets will be busy preparing for the May NFP report in the second half of the week. Job growth is expected by 700K after the dismal 200K in April. If we see strong numbers for job growth, inflation expectations will intensify, as will pressure on the Fed. Bonds may start falling again, while the dollar rallies, while US stock indices are likely to come under pressure due to increased risks of early withdrawal of Fed support measures.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/key-economic-events-and-reports-for-the-week-ahead-30052021"
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UK-Australia trade deal could mean a shopping spree for British companies

Despite fierce resistance from the agricultural lobby, the UK looks set to sign a substantial free-trade agreement with Australia, and one that should be a template for deals across the rest of the world. Once that is completed, we should see a lot more trade between the two countries. But we might see something more important as well: a round of takeovers of Australian companies by British ones – because there are lots of tempting targets.

Snap up an airline or a bank

An Australian trade deal won’t, of course, be transformational. Its economy is not huge. With a GDP of $1.4trn, it is about 40% of the size of the UK, and far smaller than either the EU or the US. It is unlikely Australia will be selling us vast amounts of stuff, given the distance it will have to travel. Nor will we suddenly be selling vastly more products to them, for the same reason. It will be a decent market for British firms, yet hardly likely ever to be a crucial one.

Except, that is, in one sense. Right now, there are restrictions on foreign ownership across a range of industries, mainly because of worries that China might buy up the whole country if it was allowed to. A trade deal should remove all of those (if it doesn’t, it should be renegotiated). British businesses should therefore not just be looking at selling goods and services into the market, but at taking over companies there as well. There are five obvious targets to start with.

First, airlines. In line with many other countries, Australia places ownership restrictions on its main national airline. Perhaps that was understandable in the past. Countries used to think it was important to control routes into and out of the country and, in the wake of Covid-19, it is unlikely they will give up on that completely. Even so, a free-trade deal should make a takeover possible. If so, Qantas would surely be a natural target for IAG, which already owns British Airways and Iberia. That really would be a global airline.

Second, banking. Both Lloyds and Barclays need to find a way to grow and Australia has a successful but mainly local finance industry. National Australia Bank could potentially be a great fit for either of those, although HSBC might find its links to China made it an unwelcome suitor no matter how much it might like a base in Australia. Third, in infrastructure, Sydney Airport Holdings, with a value of slightly over £8bn, would be a great fit with BAA, with its airports across the UK: plenty of people would be flying from one of its hubs to the other. Fourth, in retailing, Woolworths might have long since disappeared from the high street on this side of the world, but it is still a huge business in Australia, where it is mainly a supermarket grocery chain. It would surely make a tempting target for Tesco, now that it has recovered sufficiently from its problems in the UK market for it to start expanding again, or even for Sainsbury’s or M&S. Finally, Australia has a surprisingly strong local pharmaceuticals and biotech industry. CSL might well prove a natural fit with GlaxoSmithKline or AstraZeneca.

Expect two-way traffic

There might well be some traffic in the other direction too. Lots of Australian entrepreneurs have built major businesses in the UK over the last few decades – Rupert Murdoch, for example. Its retailers and banks may well want to make acquisitions here. The important point is that the Australian and British economies are natural partners. They have similar legal structures and, perhaps more importantly, commercial cultures. British companies are likely to understand instinctively how an Australian business works and vice-versa. For a business from the UK looking to expand, Australia is a natural base and a springboard into the fast-growing Pacific. For Australian firms, the UK is a far bigger market than their own and while it is not the starting point for the European market it once was, it is still a hub for the Atlantic. Trade deals are often thought of as improving the flow of goods and services. The relaxation of ownership restrictions can often be far more important.

from Moneyweek RSS Feed https://moneyweek.com/economy/uk-economy/603302/uk-australia-trade-deal-shopping-spree
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Saturday, May 29, 2021

Bitcoin falls 5.2% to $33,849, Ether down 6.3%

from Forex News https://www.investing.com/news/forex-news/bitcoin-falls-52-to-33849-ether-down-63-2518735
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BofA: Demand for Safe Heavens Grows as Inflation Fears Persist

Investors boosted exposure to safe heaven assets in the week ended on Wednesday, including cash and gold funds, showed BofA flow data on Friday. The move could indicate growing concerns about early asset purchase tapering by global central banks and runaway inflation.Money market funds saw inflows of $68 billion - the highest weekly inflow since April 2020, BofA reports, citing EPFR data. Gold inflows totaled $2.6 billion which is the highest in 16 weeks.Nevertheless, equity demand remained relatively high as respective funds saw inflows of $17.9 billion. However, BofA warns that peak positioning, monetary policy and financial performance of companies could lead to low or negative stock returns in the next 3-6 months.Equity funds have raised about half a trillion dollars since the beginning of the year - more than the aggregate over the previous 12 years, BofA added.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/bofa-demand-for-safe-heavens-grows-as-inflation-fears-persist"
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The charts that matter: gold back on the rise as the dollar continues to slide

Welcome back.

This week, we’re looking at renewable energy. It’s all the rage – and that, perhaps, is the problem. It might be the future of power generation, but right now, it’s getting expensive to invest in, says John. Nevertheless, “cleantech” is not something that’s going away. And whatever type of green energy prevails, it’s going to be built on metal – lots of metal, with lithium and copper chief among them. And that bodes well for Latin America. James McKeigue looks at how you can buy in.

This week’s podcast sees Merryn joined by Simon French of Panmure Gordon. He’s got a bit of a contrarian take on inflation. As you may be aware, we’re pretty much of the view that we’re likely to be seeing some sustained inflation coming our way. Simon, however, thinks it will just be a short-term phenomenon as we recover from lockdowns. He tells Merryn why – listen to the podcast here.

This week’s “Too Embarrassed To Ask” looks at “gearing” – also known as leverage. It’s another of those complicated-sounding terms which describes a very simple concept – and one that is very important in investing. Find out more here.

Here are the links for this week’s editions of Money Morning and other web stories you may have missed.

Monday Money Morning: Bitcoin’s crash wasn’t about Elon or China – it was about inflation
Web article: How rising Covid cases in Asia spell higher inflation in the US
Tuesday Money Morning: Why we’ll all be better off when the commodities curse is dispelled
Merryn’s blog: Why an ageing population is not necessarily the disaster many people think it is
Web article: Elon Musk brings some joy to bitcoin hodlers, but will it last?
Wednesday Money Morning: Bitcoin is in a bear market. So what should hodlers do now?
Web article: Is Marks & Spencer finally starting to turn around?
Thursday Money Morning: Central banks are starting to raise rates – what does that mean for your money?
Friday Money Morning: Big oil is under pressure to cut production – what does that mean for investors?

Now for the charts of the week.

The charts that matter

Gold kept on climbing. It’s still a long way off its peak, but it’s pretty much back where it started the year.

Gold price chart

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) just keeps on falling.

US dollar index chart

(DXY: three months)

While the Chinese yuan (or renminbi) is getting stronger (when the red line is rising, the dollar is strengthening while the yuan is weakening).

USD/CNY currency chart

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond is treading water.

US Treasury bond yield chart

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond seems to be drifting down after looking like it might perk up last week.

Japanese government bond yield chart

(Ten-year Japanese government bond yield: three months)

And the yield on the ten-year German Bund, dropped suddenly, after a couple of months of solid rises.

German bond yield chart

(Ten-year Bund yield: three months)

Copper paused for breath, but it’s still in demand.

Copper price chart

(Copper: nine months)

The closely-related Aussie dollar continued its volatile sideways drift.

AUD/USD currency chart

(Aussie dollar vs US dollar exchange rate: three months)

And bitcoin failed to immediately bounce back from its huge selloff the previous week. It stabilised a little, but where it goes next is anyone’s guess, says Dominic.

Bitcoin price chart

(Bitcoin: three months)

US weekly initial jobless claims continued to fall, down 38,000 to 406,000, compared to 444,000 last week. The four-week moving average fell to 458,750, down 46,000 from 504,750 the week before.

Weekly US jobless claims chart

(US initial jobless claims, four-week moving average: since Jan 2020)

The oil price recovered from its previous week’s drop.

Brent crude oil price chart

(Brent crude oil: three months)

Amazon is trading sideways.

Amazon share price chart

(Amazon: three months)

And Tesla made something of a recovery.

Tesla share price chart

(Tesla: three months)

Have a great weekend.

Ben

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Friday, May 28, 2021

Weekly Live Market & Trade Analysis

Weekly Live Market & Trade AnalysisIn this week's live market and trade analysis session, we assessed the technical price patterns of over 20 charts including the DXY, FX majors, global equity Indices, Commodities, Bitcoin. We discussed the potential for a position shakeout in a number of risk sentiment instruments XXXJPY and equity Indices in the early part of June You can watch the recording here.If you are available 1pm UK time join us every Thursday for actionable market analysis, register here!Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/weekly-live-market-and-trade-analysis2805"
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FOMO Friday: NZDJPY Breaks Out

NZDJPY Looks Upward Another week comes to an end and it’s been a much quieter week in all. However, despite the lack of volatility, especially when compared with the moves seen over recent weeks, there have still be some great opportunities. Unfortunately for some, these opportunities might not have been realised and chatting with other traders this week it seems the trade that people are focusing most on in FX is the break higher in NZDJPY, which has rallied almost 3% this week (over 200 pips). So, let’s take a look at what happened and why this was a great trade.What Caused the Move? As we’ve seen with other XXXJPY pairs recently (specifically CADJPY), the main driver behind the break higher is the growing central bank divergence. The BOJ has consistently reaffirmed its commitment to keeping easing in place while the country continues to battle the fourth wave of the virus and has said that it remains willing to increase easing if necessary. With the country still caught in the grip of the pandemic and still having to use lockdowns and travel restrictions, the near-term outlook remains fraught with downside risks, keeping the BOJ’s policy outlook firmly tilted towards maintaining easing.Hawkish RBNZ Statement On the other hand, the RBNZ this week came out with a much more hawkish statement in which it now projects lifting rates as early as next year. Along with the BOC, the RBNZ is now forecasting one of the earlier rates increases among G10 central banks. While the RBNZ notes that uncertainty and risks remain it said the economy if rebounding steadily and is expecting much faster growth over the remainder of the year.Better Risk Appetite So, a simple case of central bank monetary policy divergence once again. The move has also been helped by the much better risk appetite this week. With equities trading back to highs, JPY has seen reduced buying as a result of weaker safe haven inflows while the higher yielding NZD, which tends to track risk assets, has been lifted. As always, if you caught the move, well done! And if not? There’s always next week. Let’s now take a look at the technical picture.Technical Views NZDJPYThe breakout in NZDJPY has seen price move above the 79.19 level, as per a recent Market Spotlight. While above here, with MACD and RSI both bullish, the focus is on a continued push higher towards the 81.53 level. Should price slip back below the level, the rising trend line will be the first main support to note.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/fomo-friday-nzdjpy-breaks-out"
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Simon French: why post-pandemic inflation will be short-lived

Merryn talks to Simon French, chief economist with Panmure Gordon, about why he believes inflation will be transitory and the world will be back to the old normal more quickly than many people think; plus the value in the UK market.

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Latin America leads the way in the raw materials for clean tech – here's how to invest

Many analysts think that the pandemic is accelerating the shift from fossil fuels to clean energy. It’s too early to say if that’s true, but it has certainly increased the green grandstanding from politicians and CEOs. BP aims to be “carbon neutral” by 2050, while Toyota, the world’s biggest carmaker, will no longer make internal combustion engines from 2040. The UK was the first major economy to make a legally binding commitment to “net-zero” greenhouse gas emissions and similar pledges are now being announced by governments across the world. With Glasgow hosting COP 26 – the World Cup of environmental shindigs – this November, expect plenty more ambitious green commitments.

The problem? Most of these promises are impossible to deliver. Take electric vehicles (EVs). Replacing today’s global fleet of internal combustion engines with EVs would require mining every single pound of copper in all of the world’s copper mines (EVs use four times as much copper as traditional cars).

Another solution could be biofuels. Yet even in BP’s most optimistic scenario, bioenergy will only make up 10% of demand for primary energy (natural resources that have not been converted into other forms of energy) by 2050. And that’s with billions of dollars of investment and massive increases in biofuel production. It’s a similar story for hydrogen, which under BP’s most radical assumption would provide just 18% of primary energy supply in 2050.

I am not belittling the efforts to fight climate change, just highlighting how difficult it will be to wean ourselves off oil. Simply meeting the legally binding pledges already made will radically upend natural commodity markets. Still, the energy transition will continue to pick up speed. For politicians, fighting climate change helps to win votes, while touting a company’s green credentials helps CEOs boost the stock. The energy transition bodes well for one part of the world in particular: Latin America. The region is home to the world’s largest reserves of copper and lithium. It is the biggest biofuel producer and is also emerging as a leader in green hydrogen (hydrogen created with renewable energy, not fossil fuels).

Commodities are still cheap

Clean energy is already a crowded trade. Copper is at record highs, while shares of EV manufacturer Tesla have tripled in the last year. Yet despite all the talk of a commodities supercycle, the prices of key natural resources are still well below previous peaks. The Commodity Research Bureau index, which tracks 19 raw materials, is currently at less than half of its 2008 peak – lower than at any point during the last supercycle, from 2004 to 2014. Rising inflation should also boost natural-resource prices. Last month’s 3% rise in US core consumer prices was the highest monthly increase since the mid-1990s. With the Federal Reserve seemingly unperturbed by rising prices, we’re likely to see higher inflation. Commodities are one of the few asset classes to thrive in an inflationary environment.

Michael Scherb, the founder and CEO of Appian Capital Advisory, a private-equity mining investor that owns mines in Latin America, believes clean-technology metals will go higher. “Mining companies are classic ‘lag’ businesses with long lead times for mines to get into production, so they were slow off the mark in responding to demand for clean tech. That’s reflected in the current prices for copper and nickel. People realise that there is going to be a supply and demand mismatch. However, I don’t think that even current prices reflect the full extent of the gap between supply and demand, which will become more apparent in the future.” Another factor is the declining quality of ore, says Scherb. Companies will have to “mine deeper for poorer-quality ore, which will increase costs. That will feed into the industrial production chain, which will push inflation in the sector”.

So the world will need immense amounts of copper. And that’s where Latin America comes in. Chile and Peru are the world’s largest copper producers, accounting for 44% of global output. Yet their neighbours have more exciting exploration potential. Miners up and down the Andes believe that Ecuador and Argentina have as much copper as Chile and Peru. Wojtek Wodzicki is the CEO of junior explorer NGEx Minerals and has overseen three massive copper discoveries in Chile and Argentina. “All along the Andes you see incredible deposits. Chile and Peru have exploited that, with their long history in mining, whereas Ecuador, Argentina and Colombia probably have much more to be found. An area with promising geology but little exploration equals opportunity.”

Nickel, cobalt, manganese and lithium are also clean-tech metals used in EV batteries. All four are abundant in the region, but Latin America is particularly dominant in lithium, where the “lithium triangle” of Bolivia, Argentina and Chile holds 55% of global reserves. Latin America also has advantages above the ground. The forces calling for the energy transition are part of a wider move to improve environmental and social governance (ESG). The money in global funds targeting ESG-friendly investments grew by 50% in 2020 to $1.7trn. So new mining projects will henceforth have to explain their social and environmental impact.

And that will favour Latin America. For example, its main competitor in cobalt production is the Democratic Republic of the Congo, where child labour is rife. Another advantage is electricity. Thanks mainly to massive hydroelectric plants, Latin America has the greenest power grid in the world, with around 60% of the region’s electricity coming from clean sources. Being able to hook up to a green grid improves the environmental profile of Latin American mining projects, which will help them attract more investment.

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Share tips of the week

Six to buy

Coca-Cola HBC

(Shares) Coca-Cola HBC has lagged the wider stockmarket this year. But there is plenty of upside for the soft-drink bottling group as the global economy reopens. A first-quarter trading update showed that despite Covid-19 restrictions continuing, sales were up by 6.1% year-on-year. The company’s “geographic diversity” also allowed it to benefit from “accelerating sales in emerging markets”, with Russia and Nigeria both posting double-digit growth. 2,509p

Marks & Spencer

(The Sunday Telegraph) Marks & Spencer (M&S) has had a series of “turnaround” executives who have failed to tackle the “deep-seated decline in its fortunes”. Its record pre-tax profit of £1.2bn was achieved in 1998. Last year’s figure was just £67.2m. But new executives Archie Norman and Steve Rowe could turn that around. Norman grasps what customers want: “a clearly understandable product range that offers reliable quality and value”. Concentrating on a smaller range of products is easier to manage and costs less. M&S is also renewing its online presence better to compete with rivals. The group could soon be “materially more profitable, and the shares could be materially higher”. 153p

AT&T

(Barron’s) AT&T has now slashed its payout to $8bn from $15bn. Investors are understandably concerned, but over time the smaller dividend is a “reasonable price to pay for a company that has less debt and more cash to spend on its core mission around 5G and broadband”. That business could enter a whole new growth phase as the 5G-rollout gains momentum. The firm is also “reversing course” on its $106bn purchase of Time Warner. The latter’s spin-off and merger with Discovery should help AT&T regain its “telecom leadership”. The stock is “a sound investment”. $29.93

Card Factory

(The Times) Card Factory has been profitable since its flotation in 2014. It began offering personalised cards last year to compete with newer online rival Moonpig, which benefited from shop closures while Card Factory “lost out” on Valentine’s Day and Mothers’ Day sales. The group has announced a £225m refinancing and will raise £70m to repay debt early. Recent sales were “a touch below” those in April and May 2019. But Card Factory is “well-run with a profitable business model… it may be a long road ahead, but there is optimism”. 73p

BT

(The Mail on Sunday) BT’s share-price performance has been “execrable” recently; “even the dividend gravy train dried up last year”. There was no final payment for 2020 or for the year to March 2021, when turnover fell by 7% to £21bn and profits slumped by 23% to £1.8bn. The group is spending billions on upgrading its fibre-cable network. But CEO Philip Jansen is optimistic: he purchased £2m worth of BT’s shares last week. Although turnover for the year will be flat, profits should rise and dividend payments will resume. Over the next few years they “may increase substantially”. 178p

Experian

(Investors’ Chronicle) Data-services specialist Experian’s organic revenue increased by 4% for the year to 31 March, thanks to a 17% increase in consumer services, which helped offset a “flat performance” from its business-to-business arm. For the current year the company is expecting sales to grow by between 7% and 9%. “Experian’s record of growth through adversity, with a notable acceleration as economies emerge from the pandemic, sets it apart.” It is currently trading at 31 times consensus 2022 earnings, but the valuation isn’t unreasonable when considering its high margins and the “long-term structural demand” for its services. 2,544p

...and the rest

The Daily Telegraph

The pandemic has boosted online shopping and hence Royal Mail, with parcels’ revenue eclipsing sales from letters for the first time. The shares look cheap. Nonetheless, it is not yet clear if those earnings can be sustained as the pandemic winds down. Avoid for now (519p).

UDG Healthcare’s shares have gained nearly 50% since we tipped it in July 2020 and the latest surge has come following a bid from a private-equity group; “others have noted the value we saw” in the company. Sell now to lock in a “handsome profit” (1,023p). Alcoholic drinks giant Diageo has continued to perform well, and it is now benefiting from the reopening of bars, clubs and restaurants in Europe. A positive recent trading update makes the stock a buy (3,365p).

Investors’ Chronicle

Housebuilder Countryside Properties has been “lifted by a booming housing market”, but its partnerships division, which works with local authorities to deliver a mix of private and affordable housing, has been hampered by pandemic-related costs. But there are reasons for optimism: the forward order book is 16% ahead of March 2019’s level. Hold (469p).

Motley Fool

Cloud business Zuora’s revenue growth has “decelerated sharply for three consecutive fiscal years” and despite high hopes for a recovery “it will be hard [for the stock] to keep defying gravity after another uninspiring quarter this week”. Avoid ($15.25). Grayscale Digital Large Cap Fund, a cryptocurrency investment vehicle, lost a third of its value last week as digital currencies plunged. There could be a long-term opportunity here, but for now avoid it ($27.23).

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The bitcoin market is refusing to mature

There comes a time “in the life of every cryptocurrency investor… when they watch a significant amount of their money disappear in the span of a few hours”, says Jen Wieczner in New York magazine.

Bitcoin fell by 30% last week and is down by more than 40% from its mid-April highs. The past week has seen a stomach-churning series of rallies and reverses, including a 30% fall in a single day on 19 May.

Bitcoin is a poor store of value

At the time of writing bitcoin was still well short of $40,000; it traded as low as $31,970 at the weekend. The price has been hit by news from China, where regulators last week banned banks and payment companies from accepting cryptocurrencies. Elon Musk’s Tesla also says it will no longer accept payments in bitcoin because of the environmental impact of bitcoin mining.

Even after this fall, a person who bought the cryptocurrency five years ago is still “sitting on gains of over 6,000%”, says Aaron Back in The Wall Street Journal. The “libertarian cryptoevangelists” hope digital currencies will one day replace government-issued money. But this bout of extreme volatility is a reminder that bitcoin is a lousy store of value or means of exchange.

If bitcoin isn’t a currency, then what is it? asks John Authers on Bloomberg. Perhaps the best analogy is with big tech stocks such as Facebook or Google. At a market capitalisation of more than $800bn, bitcoin is comparable in size to some of these firms. Bitcoin often mirrors their price movements too. If anything, the cryptocurrency resembles an early-stage tech company, with “promising but unproven technology that people are prepared to buy”.

Blue-chip bitcoin?

The bitcoin market is refusing to mature. As Avi Salzman notes in Barron’s, the market capitalisation of bitcoin has risen almost 100 times since 2016, but it “is just as volatile as it was five years ago”. That is “almost unheard of in other markets”. Usually “an asset becomes less volatile as its value grows and its investor base widens”.

Big institutional investors had driven much of the enthusiasm about cryptocurrencies this year, but they could be getting cold feet. JPMorgan reports that “professional investors have been shifting their crypto assets to gold”, the first time that has happened for several months. Long reluctant to dive into unregulated assets, the big investment banks have been forced into the crypto market by “obsessive interest from some customers”, says The Economist. Goldman Sachs recently relaunched its crypto desk, while BNY Mellon is working on rolling out bitcoin exchange-traded funds. Wall Street’s financial “muscle” will be vital if bitcoin is to flourish, but a “prolonged rout could…scare off prospective converts and trigger a regulatory crackdown”.

Bitcoin has been declared dead after previous crashes only to “pick itself up and start again”, says Authers. It helps that it inspires “cultish devotion”, with buyers resembling “believers rather than investors… was this the top of the bubble? It might be, but it probably isn’t”.

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Look beyond Japan’s Olympic omnishambles

Welcoming “90,000 visitors from all over the world during a pandemic” to a “densely populated city where vaccinations trail Bangladesh… gee, what could go wrong?” asks William Pesek in Nikkei Asia. Japan insists that it can safely hold the Olympic games in July, but opinion polls show that more than 80% of the country’s citizens are opposed. Pressure is growing on the prime minister, Yoshihide Suga, who has backed the games. The head of e-commerce giant Rakuten, Hiroshi Mikitani, has dubbed the Olympics a “suicide mission”.

Japan has so far done a relatively good job at containing the virus, but was forced to declare a state of emergency last month in response to a new wave of cases. Uncertainty about the Olympics has weighed on markets. The Topix index has gained 7% so far this year, making it a global laggard.

Overseas investors dumped a net ¥1trn (£6.5bn) in local stocks during the second week of May, says Hideyuki Sano on Reuters, the biggest outflow since March 2020. The economic costs of cancelling the Olympics would be limited as Japan has already barred foreign tourists from attending. The games look set to deliver a stimulus equivalent to just 0.3% of GDP. That is a poor return given the risk of importing “multiple Covid-19 variants”.

Still, the long-term case for Japan is encouraging, says Simon Constable in The Wall Street Journal. The market was once shunned for its poor corporate governance, but reforms have forced Japan’s boardrooms to take shareholder value seriously. Schroders reports that the market’s average return on equity, a key gauge of profitability, has risen from 5% in 2013 to 6%-7% in 2019. That should spark more interest from global investors once the Olympics omnishambles has been sorted out.

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Look for bargains in European stockmarkets

The euro area is “nearing escape velocity”, says Christopher Graham of Standard Chartered. Economies have been gradually easing restrictions. France and Austria reopened restaurants last week, while Portugal and Italy are welcoming tourists from certain countries. The continent should enjoy a “robust recovery” now.

European vaccination rates picked up rapidly in April, says Ian Shepherdson of Pantheon Macroeconomics. More than half of the population should have had at least one jab by the end of June, only a month behind the US. Data from Israel suggests that “cases plummet… when vaccination rates exceed about 50%”.

Analysts turn positive

Germany’s Dax hit a new all-time high this week. Wall Street analysts are growing positive, says Sam Meredith for CNBC. Morgan Stanley thinks “Europe is well-placed to outperform all major regions this year for the first time in more than two decades”. With inflation anxiety affecting US markets, more US money managers are looking to the old continent.

The MSCI EMU index has outperformed the MSCI USA index since “vaccine Monday” on 9 November 2020 (the date when news of the Pfizer jab broke), says Franziska Palmas of Capital Economics. While Europe’s recovery will be weaker than America’s, its shares should keep outperforming.

US earnings forecasts are already very bullish, so a lot of good news is already priced in. In Europe a slower reopening has made analysts much more conservative, leaving room for positive surprises.

European markets are also far cheaper than their US counterparts. As of the start of this quarter the US market was trading on a cyclically adjusted price/earnings (Cape) ratio of 36.1. By contrast, Germany was on 19.9, France on 22.6 and Spain on just 14.7, according to Mebane Faber of Cambria Investment Management. That discount partly reflects compositional differences. The US has more fast-growing tech firms, while Europe has more value shares, such as banks and industrial firms.

Yet composition doesn’t explain the whole story. As Simon Edelsten notes in the Financial Times, even firms operating in similar industries are cheaper in Europe. Shares in German sportswear giant Adidas trade for “35 times this year’s earnings, but Nike in the US is on an eye-watering 42 times earnings”. The same is true of banks.

But “before dashing across the Channel like an excited shopper hunting for duty-free Gitanes and Château Plonque”, remember that cheap shares are sometimes cheap for a reason. Europe’s very best businesses – those that operate in sectors such as luxury goods and green energy – are rarely the cheapest. “Don’t be afraid to compromise on price in favour of prospects.”

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The stockmarket's Spac frenzy is cooling

SEE MORE Too embarrassed to ask: what is a SPAC?

The special purpose acquisition company (Spac) boom is cooling. Spacs are shell firms that list on the stockmarket in order to raise cash. They then use the money to merge with another company.

For start-up founders, Spacs offer a route to a public stockmarket listing that is less bureaucratic than the traditional initial public offering (IPO). They have been used to launch everything from electric-vehicle (EV) makers to space tourism business Virgin Galactic.

Around 250 Spacs launched in America last year, raising $83bn. Between February and March, 69 companies agreed to merge with Spacs, but that number has fallen to just 30 since the start of April, say Echo Wang and Anirban Sen on Reuters. Dozens of firms have ditched merger plans of late.

No wonder, says Heather Somerville in The Wall Street Journal. Flotations have started to flop. An analysis of tech firms that have gone public with Spacs since the start of 2020 found that share prices have since fallen by an average of 12.6%. Public markets demand quarterly updates and ask tougher questions than venture capitalists, who are more willing to take a punt.

These signs of “market discipline” are welcome, says The Economist. Some Spac deals have been driven by “extreme delusion”. Five EV firms that went public via Spacs last year say they can go from “making no [sales] to $10bn... in under five years… Not even Google [did] that”.

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Curtain up at Cineworld as lockdown ends, but threats remain

Cineworld’s shares, which have already more than tripled from a low of 25p last October, jumped by another 4% early this week, says Naomi Ackerman in the Evening Standard: box-office receipts for the first weekend after cinemas were allowed to reopen in the UK “smashed expectations”. Not only has attendance “soared”, but revenues were increased further by punters “splashing out on popcorn and other treats”. All this raises hopes that the chain can recover from a disastrous 2020, when it suffered an “eye-watering” £1.7bn loss and was forced to seek a £900m bailout from investors.

It’s not just the UK powering Cineworld’s recovery, says James Warrington in CityAM. The reopening of 167 cinemas in the US means that 97% of its screens are now active, while restrictions are due to be relaxed in Poland and Israel. CEO Mooky Greidinger expects a “good recovery in attendance over the coming months” thanks to a “full slate of films” including action-thriller F9, which has already had “record breaking” success in Asia. While cinemas face intensifying competition from the rise of streaming services, Cineworld has signed an “exclusive deal” with Warner Bros securing a 45-day window of exclusivity following films’ release from next year.

The streamers strike back

Still, the threat from Amazon and Netflix isn’t going away, says The Wall Street Journal. Amazon is nearing a deal to buy the Hollywood studio MGM Holdings for almost $9bn. If the tie-up goes ahead it “would mark Amazon’s second-largest acquisition in history after its $13.7bn purchase of Whole Foods in 2017”. It would also highlight “the premium that content is commanding” as streaming wars “force consolidation and drive bigger players to bulk up with assets that help them compete”.

Amazon’s shareholders should beware, says Nils Pratley in The Guardian. It’s true that any Amazon takeover of MGM will “probably get a regulatory thumbs up”, as owning the film studio behind the James Bond franchise “does not create a licence to kill when the competition includes beasts the size of Comcast, AT&T and Disney”. However, Amazon now runs an “astonishing” span of businesses, including computing and supermarkets, so there is a very real risk that its “many adventures in unrelated fields” means that it “ties itself into knots” and ends up as a “confused conglomerate”.

The size of Amazon’s $9bn offer for MGM has “astonished” many rival studios, say Brent Lang and Cynthia Littleton in Variety. The problem for Amazon is that while MGM has an “extensive library of over 4,000 film titles”, including classics such as Four Weddings and a Funeral and The Silence of the Lambs, many of the most popular ones have already been heavily “exploited”. Worse, MGM’s deal with Barbara Broccoli and Michael Wilson gives them “final say” over marketing and distribution decisions related to the Bond franchise, complicating any plans to debut Bond films on Amazon Prime or create spin-off series.

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Nvidia – The Earnings Preview

from HF Analysis /239093/
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Investment Bank Outlook: 28-05-2021

RBC Capital MarketsDay ahead: The data in focus today are Sweden Q1 GDP, US University of Michigan sentiment survey, and US personal income & spending. The US income & spending data will include the Fed’s preferred PCE inflation indicator.USD: Following the prior month's surge in incomes thanks to stimulus payments, an unwind on-the-follow will make for as nearly dramatic a slowing in the April personal income indicator as was the increase in the prior month. With a “disappointing” retail sales report already in hand, the personal spending estimate should really help round out service consumption, where we expect most of the momentum on spending will emanate over coming months. The prior month's growth in overall spending was significant, and while we don’t expect a repeat, our forecast at just below 1% is still rather robust.Elsewhere: The G7 finance ministers’ virtual meeting today could see the announcement of an agreement on a minimum corporate tax rate, likely to be 15%. In other developments, the UK’s planned reopening in June could be in jeopardy if Covid-19 cases mount further in the next couple of weeks. What is especially worrisome is that the majority of new cases appear to be of the “India variant”, which may be more contagious.CitiAs we head into the long weekend in the UK and US, we expect current market themes to remain intact. Month-end noise is likely to provide limited directionality while we may see some positioning adjustments into the weekend. Nevertheless, USDCNH looks to confirm the technical breakout of key support levels around 6.40 on a weekly basis, while USDJPY should complete a bullish outside week if it closes above 109.50.It’s been a lacklustre week for EURUSD and we don’t expect data in the form of economic confidence to change that. The next week brings a significant amount of US data, cumulating in the NFP print next Friday. For today, we have personal income and spending, as well as core PCE. Note that US President Biden is expected to present his budget, where we wouldn’t worry about the numbers which are subject to significant change. US equities are likely to pay the most attention, though futures are modestly higher here.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-28-05-2021"
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Wine of the week: a Marlborough sauv with a haunting appeal

2020 Bob Short for Kate, Sauvignon Blanc, Glover Family Vineyards, Marlborough, New Zealand

£16.99, bancroftwines.com

Winemaker Ben Glover’s sister Kate passed away, after a long battle with cancer, in 2018, and this wine is a wonderful homage to her. The “Bob Short for Kate” label is a reference to a TV show she loved, Blackadder, and it is fitting that this is an energetic, organic, expressive, uniquely fascinating and memorable wine. Ben has been making stunning wines since 1998 and is responsible for hundreds and hundreds of labels, but this is, not surprisingly, his most sincere and considered wine.

On the surface, it might look to the casual observer like just another New Zealand sauvignon blanc, but no. Made from 88% sauvignon blanc and 12% semillon, and sourced from three of the oldest and most famous organic vineyards in the region, these two grapes are co-fermented to combine their aromas and flavours from the very first moment possible. The depth of flavour of the semillon brings gravitas to the sauvignon’s levity and the result gives us a Marlborough “sauvignon” with remarkable textural appeal under its haunting citrus and fresh herb perfume.

Fabulous value for money and utterly delicious to boot, I would urge you to taste this wine because it is a pioneering style that, with a handful of other creations, is charting a new course for this region.

Matthew Jukes is a winner of the International Wine & Spirit Competition’s Communicator of the Year (matthewjukes.com).

from Moneyweek RSS Feed https://moneyweek.com/spending-it/wine/603297/wine-of-the-week-a-marlborough-sauv-with-a-haunting-appeal
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Ferrari Roma: taking us back to the Sixties

The “newest stallion in Maranello’s stables” is “the most beautiful Ferrari built in decades”, says Jared Zaugg on Maxim. The Roma represents “a return to the elegance of the 1960s grand tourers”, whose original purpose was to “embody elegance, luxury, power and performance in the most balanced way possible”. There is nothing “brutal” about the Roma’s design: it’s smooth, but evocative, indicating “reserved aggression ready to be unleashed if necessary” while remaining “incredibly harmonious to the overall sophistication”.

On the road, the Roma’s 4.0-litre, twin-turbo V8 delivers 611 bhp and jolts you from rest to 62mph in just 3.4 seconds. But unlike with previous Ferraris, “you only get 560 torques. That’s still a lot, but it’s not so much that you immediately hit a tree,” says Jeremy Clarkson in The Sunday Times. When you put your foot down “there’s a combination of sound and torque-driven fury, it’s like you’ve dived head first into a vat of dopamine after drinking three pints of serotonin”. For years Ferrari has made cars that have been “way too big, way too powerful and really only suitable for the rich and famous in Saudi Arabia”. Driving one in Britain “is like trying to ride a cow through your local antiques shop”. Not the Roma. “It’s elegant and subtle and pretty and fast and surprisingly practical.”

The seats are “all-day comfortable” and the interior is “an easy and pleasant place in which to while away the miles”, says Ben Miller in Car. The ride is “surprisingly sweet for such a poised, responsive car” too. It’s easy to push the car to its limits, “safe in the knowledge” that the it “won’t be skittled off-line or caught out by mid-corner bumps”. And in race mode, “the Roma covers ground at a breathtaking rate… Gearshifts are complete before you know you’ve asked for them”.

The Roma is not as fast or ferocious “as a “proper supercar”, says Sam Sheehan on Piston Heads. But it still delivers “many of the same sensations… it remains a mesmeric super-GT”.

from Moneyweek RSS Feed https://moneyweek.com/spending-it/cars/603296/ferrari-roma-back-to-the-sixties
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Properties for sale with good connections to London

Stubwood Granary, Hungerford, Berkshire.

Stubwood Granary, Hungerford, Berkshire. Two converted grain silos with a bespoke curved kitchen, a steel-and-glass winding staircase and a modern-style wood-burning stove. The house is two miles from Hungerford, which has direct trains to London Paddington. 5 beds, 3 baths, 2 receps. £1.95m Knight Frank 01488-688539.

Coggeshall Hall, Kelvedon, Colchester, Essex.

Coggeshall Hall, Kelvedon, Colchester, Essex. A Grade II-listed house in 12 acres of gardens bordered by the River Blackwater and close to Kelvedon station, which has direct services to Liverpool Street in under an hour. It has exposed wall and ceiling timbers and an open fireplace. 7 beds, 3 baths, 4 receps. £2.95m Strutt & Parker 1245-254618.

Great Offley House, Offley, Hitchin, Hertfordshire.

Great Offley House, Offley, Hitchin, Hertfordshire. A Grade II-listed house in Great Offley, just 3.5 miles from Hitchin, which has frequent trains to London St Pancras and Kings Cross that take around 33 minutes. The house has wood floors, elegant fireplaces and a large breakfast kitchen with an Aga. 8 beds, 3 baths, 3 receps, study, conservatory, 2-bed cottage, heated outdoor pool, gardens, 2.73 acres. £2.6m Strutt & Parker 020-7318 5025.

Greenways, Princes Risborough, Buckinghamshire.

Greenways, Princes Risborough, Buckinghamshire. Three 16th-century cottages have been combined to form this thatched house, which sits on the edge of the Chiltern Escarpment, with direct rail links to London in around 43 minutes. It has beamed ceilings, an inglenook fireplace, a contemporary orangery and a separate one-bedroom annexe that opens onto a patio. 3 beds, 2 baths, 2 receps, gardens, 0.3 acres. £1.5m Hamptons 01494-355341.

The Pagoda House, Winchester, Hampshire.

The Pagoda House, Winchester, Hampshire. A restored, Grade II-listed house built in 1848 for the mayor of Southampton in the centre of Winchester, which has direct trains to London Waterloo in 60 minutes. It has sash windows, an elegant drawing room with a balcony, period fireplaces, landscaped gardens and a courtyard with a water feature. 6 beds, 3 baths, 3 receps, breakfast kitchen, music room, orangery, study, summerhouse, 0.67 acres. £2.95m Savills 01962-841842.

The Manor House, Thurning, Northamptonshire.

The Manor House, Thurning, Northamptonshire. A 15th-century stone cottage in landscaped gardens with a stone smithy and a heated outdoor pool close to Huntingdon, which has direct rail links to Kings Cross. 4 beds, 2 baths, 3 receps, swimming pool, paddock, 10.7 acres. £1.2m Woodford & Co 01832-274732.

Court Lodge, Church Path, Deal, Kent.

Court Lodge, Church Path, Deal, Kent. A Grade II-listed, 16th-century house with later additions in a private location surrounded by large gardens. It is just a few minutes’ walk from the town centre, beach and train station, which has direct trains to London St Pancras. The house has beamed ceilings, sash windows, open fireplaces and a large kitchen with an Aga. 5 beds, 2 baths, 2 receps, separate studio/home office. £1.395m Bright & Bright 01304-374071.

Wineham Place, Henfield, West Sussex.

Wineham Place, Henfield, West Sussex. A country house with Elizabethan origins and later additions in over 78 acres of grounds close to Hassocks and Haywards Heath, which have regular trains to London in under an hour. It has a galleried reception hall with wood panelling, flagstone floors and a central staircase, an inglenook fireplace and a large kitchen with an Aga. 9 beds, 4 baths, 3 receps, swimming-pool complex, 2-bed flat, 2-bed lodge, pond, tennis court, 78.88 acres. £3.95m H.J. Burt 01903-879488.

from Moneyweek RSS Feed https://moneyweek.com/spending-it/houses-for-sale/603295/properties-for-sale-with-good-connections-to-london
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A cruise to Antarctica, the last pristine wilderness

“Sailing to the pristine White Continent is a privilege,” says Mark Stratton in Wanderlust magazine. But as demand to visit Antarctica grows, the number of cruises visiting this wilderness is only set to increase, perhaps putting a strain on its value as a wilderness in the future. “Attempting to add value to my voyage, I joined an Antarctic Whale Safari… operated by Polar Latitudes, a company committed to supporting scientific research.” Passengers engage in citizen science over the 14 days onboard the small ship Hebridean Sky. Seawater was analysed for temperature and salinity and a seabird survey took place astern. “It wasn’t long before albatrosses were trailing the ship, swaying side to side like kites.”

Passengers are also encouraged to send their photos of whales to marine conservation website happywhale.com, so that the whales can be identified and tracked. But is citizen science really of use to conservation efforts? “For sure,” onboard marine mammal expert Annette Bombosch tells Stratton. “[Scientists] benefit from this data, because they cannot always be in Antarctica due to its remoteness and cost.”

Responsible tourism

And the passengers benefit too. “It’s extremely rare, as a tourist, to gain access to a pristine region that’s been set aside primarily for science and conservation,” says Emma Gregg in National Geographic. “It’s equally rare to experience a place where wild birds and animals, instead of fleeing, surround you – on land, while you’re walking, or at sea, while you’re kayaking or in a Zodiac dinghy.” To minimise the damage to the natural environment, there are strict conservation protocols in place when visiting Antarctica, set by the International Association of Antarctica Tour Operators (IAATO). “Modest yet comfy” expedition ships, for example, carry no more than 200 passengers. That makes “it easy for green-thinking individuals to make their visit as eco-friendly as possible”. And by and large these vessels are stripped of their luxury amenities, such as “swimming pools [and] glitzy eating”, so as to keep their carbon footprint as low as possible. But it’s the knowledgeable guides that really set them apart.

From the “tourist-friendly” port of Ushuaia, close to “South America’s gracefully pointed toe”, the cruises take in “some of the best coastal sites on the Antarctic peninsula and South Shetlands, before returning via “the teeming penguin and seal colonies of South Georgia”.

A glut of animal life

Despite what some passengers may expect, the return journey via the British Overseas Territory of South Georgia is not an anti-climax after a visit to Antarctica. In some ways, it’s the best bit, says Jamie Lafferty in the Financial Times. The island is, for one, “more diverse”. “From afar, tussock grass gives the South Georgian foothills an alpine appearance, and along with 25 other native plants… this comparative lushness allows for species of birds to thrive here which would perish further south.” The king penguins, which number around half a million, are smaller than their Antarctic emperor cousins. But they are “more colourful, more numerous, and far more accessible… The continual jostling of black and white and gold is occasionally interrupted by the hulking brown mass of adolescent elephant seals”. There are few other places where you could hope to see “such a glut of animal life”.

Antarctic ambassadors

Those who make it to Antarctica, “one of the most remote, pristine and inhospitable places on earth”, are among an “elite group”, says Elizabeth Heath in The Washington Post. Some come for the intimate wildlife encounters, others to see calving glaciers and climate change in action. But whatever the reason, expedition teams hope passengers will return home as ambassadors for Antarctica – “messengers for the need to arrest climate change and save not just Antarctica, but the rest of the world’s wild places”.

“Tourism doesn’t ‘benefit’ Antarctica,” Sven Lindblad of Lindblad Expeditions, the carbon-neutral cruise operator set up by his father, tells Heath. There are no local communities who can hope to benefit economically. Rather, the benefit derived from tourism to Antarctica is in helping people to “understand the implications of climate change”. The animals of Antarctica play their part too, says Heath. “Unscripted interactions” with penguins and whales tend to “make a big impression” on visitors.

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