U.S. trade chief voices concern to Vietnam over currency practices

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Be careful: conditions are ideal for the “bezzle”

In his book, The Great Crash 1929, economist J. K. Galbraith came up with one of the most useful concepts ever coined in finance: “the bezzle”. In short, it’s the as-yet-unrevealed inventory of nasty shocks that builds up in the economy during the good times, when “people are relaxed, trusting and money is plentiful”, only to reveal itself when tougher times arrive. While Galbraith describes this as “embezzlement”,  “bezzle” is not necessarily outright criminal. Rather I see it as being similar to the Austrian economic notion of “malinvestment”. So it’s not just about the Bernie Madoffs of this world, it’s also the overambitious founder who is better at selling his idea than turning it into a successful business. Or the blatantly wacky investment fad that nevertheless takes off. Or the once highly-profitable fund manager who just got lucky with timing or borrowed money – or both. 

What’s impressive about today’s investment environment is that it’s already been a vintage few months for revealed bezzle of all kinds, and we haven’t even had the crash yet. Here in the UK, under the likely category of overambitious founder, we have the ongoing unravelling of Lex Greensill’s “supply chain finance” group Greensill Capital, which employed none other than former prime minister David Cameron as an adviser. On the wacky investment side, we’ve seen non-fungible tokens (NFTs) – New York Times journalist Kevin Roose sold an NFT of a newspaper column he wrote on NFTs for more than $500,000 (for charity, but still – and yes, I am open to offers). And this week, in markets, we’ve seen the implosion of “family office” Archegos Capital Management, which appears to have done nothing much more complicated than borrowing lots of money from fee-hungry banks to make big leveraged bets on stocks, which then turned bad. 

What does any of this mean for your money? First, it’s a useful reminder that as an investor, your scepticism should grow in direct proportion to the levels of credulity around you. A lot of bezzle consists of nothing more than momentum and herding behaviour, as investors assume that because everyone else is doing it, it must be OK. Trust your own judgement. If you can’t wrap your head around an investment, don’t invest in it. 

Second, be especially alert for scams. The low-interest-rate era combined with Covid-19 forcing even more activity online has created the ideal breeding ground for scammers, and there are huge numbers of them about right now. The tax-year end is a particularly ripe time for financial scams – from threatening automated calls purporting to be from HMRC (hang up immediately) or fake Isa accounts with ridiculously high interest rates. Be on your guard and never fall into the trap of imagining that you can’t be fooled – that’s what they’re relying on. Third, make sure your portfolio is in resilient shape. As I said, if this is the bezzle that’s already coming to the surface, what’ll happen when the tide really goes out? The next crash will be one for the record books (admittedly, so were 2020 and 2008). 

Finally, don’t miss Merryn’s video interview with the wonderful Dr Pippa Malmgren, in which they discuss everything from Donald Trump’s next big adventure to those aforementioned NFTs to sex in a post-pandemic world. You can watch it here. 

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NFP Preview! Up, Up, Up? WHY?

The Nonfarm Payrolls number expected to reflect the growth of US economy in every aspect affected by pandemic since last year. Since last summer US labor market sparks signs of optimism, as more that half of lockdown job losses had been replaced by October and jobless claims had halved from July.  In the end of 2020 however all these reversed aggressively, with payrolls and jobless claims collapsing again on the closing of several states’ economy on rising of new virus cases, spike in hospitalization.

This time however things are different as in 2021, US economy looks to be on a point of transition with economic data supporting markets hasty optimism, backing by the ease of covid cases and the significant progress in the vaccination program which strengthens the recovery of US labor market with or without the massive fiscal stimulus pointed by President Biden.

Market forecasts have nearly doubled February’s evolvent in March as estimates raced above the 500k March Nonfarm Payroll over the past two weeks, as economists take “the over” in the face of producer sentiment gains, a tightening in claims, and room for what proved a huge February weather-hit by most measures. The forecasts ranging between 500k – 640k. The risk is upward, but the 4.3% GDP forecast is consistent with a 500k gain. Overall a larger 600k-700k payroll gains is seen through Q2, as growth ramps up. We expect a workweek rise to 34.8 and gains of 1.0% for hours-worked and 0.1% for hourly earnings, alongside a jobless rate drop to 6.1%.

Markets’ hasty optimism is further supported by President’s Biden goal to offer immunization to every American by May 1. At the current pace, doses will reach the arms of half of the US by May 9. Hence this goal looks to be feasible as more and more states have already achieved that milestone. Hence along with economic data that present US economic growth a step ahead other nations, along with fast vaccination, the cancellation of all restrictions (i.e. Texas), the drop of the weekly jobless claims have convinced investors to start pricing in the US recovery.

Hence on top of all, the overall labor market outlook for Q2 looks promising since a combination of accommodative monetary policy and the additional $1.9 trillion fiscal support comes into play, something that could produce stronger economic readings in the coming months. Hence a upwards surprise on tomorrows NFP might not be as exaggerated as initially thought, but it may spike volatility for US Dollar given the low liquidity during the Easter holidays .

Jobs data breakdown

On the flip side, the participation rate has been stable since July despite the upward-trending job numbers, likely providing some warnings that misclassification errors may be understating the real unemployment numbers. It is likely that millions of people are not actively seeking a job, and therefore are not considered as unemployed, as the uncertainty around the virus development, the disappearance of employment opportunities, and the virtual schooling, which forced some parents to stay at home, have likely pushed this group of people out of the labor force. Hence, the headline unemployment rate may be an incomplete guide to the trajectory of the labor market, somewhat explaining the Fed’s decision to maintain its policy accommodative at current levels until it meets its target of full employment conditions

The 500k Nonfarm payroll estimates assumes a 490k private jobs increase. The goods based employment increase is pegged at 100k, after a -48k decrease in February. Construction employment is seen rising 55k, after a dip of 61k in February and a 1k uptick in January, while factory jobs rise 40k, after a 21k increase in February, and a -14k decrease in January. These are based on assumptions that a private service job increase of 390k in February, after a 513k jump in February and a 10k increase in government employment.

Seasonal Trends and Weather

The graph below shows the two-year average NSA payroll change for each month, pre-2020. The seasonal impact through the year on payroll changes is mostly positive, but is negative in December, January and July. Distortions of last year’s COVID-19 hit have produced negative averages for March and April now as well. The NSA average drops to -171k in March from 859k in February, and -3,026k in January. The red bars show each month’s variance. After a first-half peak in February, variance decreases over the spring before reaching a second-half peak in September.

For disruptions to employment from weather as gauged in the household survey, the biggest disruptions occur in the winter months generally with the average peaking in February. There is an additional climb through the late-summer months due to disruptive hurricanes in some years.

Hourly Earnings

A 0.1% rise for March average hourly earnings is anticipated, after gains of 0.2% in February, 0.1% in January, and 1.0% in December, with swings that likely still largely reflect the percentage of lower paid workers in the jobs pool, as seen with the 4.7% surge last April and the 1.0% pop in December. A 4.5% y/y increase in March is seen, which is down from 5.3% in February. Growth in hourly earnings was gradually climbing from the 2% trough area between 2010 and 2014 to the 3%+ area until the economy’s plunge with the pandemic. The y/y wage gains will be distorted through 2021 via the base effect from last year’s wage spike and ensuing unwind.

ADP

The 517k March ADP rise nearly matched market’s 490k private BLS payroll estimate with a 500k total BLS payroll gain, after a boost in the February ADP rise to 176k from 117k that narrowed the gap to the 465k BLS private payroll increase. The March ADP figures revealed the largely expected 80k rise for goods sector jobs, but a hefty 437k gain for service sector jobs. The service sector gain included outsized increases of 169k for leisure and hospitality, 92k for trade, transportation and utilities, 83k for professional and business services, and 68k for education. The “as reported” ADP figures undershot the BLS payroll data in February, overshot in the prior two months, but undershot dramatically in the previous months of the pandemic, leaving a big net undershoot of BLS payroll swings over the past year. Given this tendency for an ADP undershoot, this data signal slight upside risk to the 500k payroll forecast.

Consumer Confidence

All the confidence measures are climbing into the end of Q1 alongside vaccine distributions, another round of stimulus deposits, and the easing of coronavirus restrictions, after a prior modest downward tilt into the holidays. The Conference Board’s consumer confidence index should improve to a 5-month high of 96.0 from 91.3 in February, versus a seven month high of 101.4 in October. Michigan sentiment rose to 1-year high of 84.9 from 76.8 in February, versus a 2-year high of 101.0 in February of 2020. The IBD/TIPP index rose to 1-year high of 55.4 from 51.9, versus a 16-year high of 59.8 in February of 2020. The Langer (formerly Bloomberg) Consumer Comfort index is poised for a 1-year high 49.0 average in March, from 46.7 in February. We saw a 67.3 weekly prior-cycle high in late-January of 2020.

Conclusion

The March payroll forecasts is for a 500k increase, though market estimates have spiked higher over the past few weeks, as available March data confirm that disruptions from the pandemic are diminishing alongside the boost from stimulus payments. We expect a 34.8 workweek in March with a 1.0% hours-worked figure, and an hourly earnings rise 0.1%. The jobless rate should tick down to 6.1% from 6.2% in February.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

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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The return of the 95% mortgage – what’s available and how much they cost

As part of his pledge to turn “generation rent into generation buy”, chancellor Rishi Sunak announced a 95% mortgage guarantee in the March budget, due to launch in April. The scheme, designed to encourage lenders to start offering 95% mortgages again after almost every single one was withdrawn due to the pandemic, will see the government partially compensate lenders if homeowners fail to pay their mortgage.

According to Which?, the number of 95% mortgages available to buyers fell from 391 at the start of 2020 to just three by the end as lenders sought to protect themselves as the pandemic saw many people’s incomes fall.

The new scheme is available on new-build and existing properties up to £600,000 and is open to first-time buyers and home movers alike, but second homes and buy-to-let properties are not allowed. are eligible. Yorkshire Building Society beat the government to it, announcing the relaunch of 95% mortgages through their mortgage arm, Accord Mortgages, in mid March. Major banks including Barclays, HSBC, Lloyds, NatWest and Santander have all committed to launching deals in April under the scheme, too.

Yorkshire Building Society’s loan comes with an interest rate of 3.99% and a £995 fee. It’s not available for flats or new-build houses, or for people who are currently furloughed. Chances are that, as the government’s scheme launches, more lenders will be releasing different loans, so it’s worth looking into which lender offers the rates that suit you the most. It’s also worth noting that the better rates will be available to those with more substantial deposits. But, if 95% mortgages are still of interest to you, or you’re just curious, here’s a look at what’s on offer now.

According to broker Habito, who launched 40 year fixed rate mortgages earlier this month, if you were buying a property priced at £100,000 with a mortgage of £95,000, (so a loan to value (LTV) of 95%) repaying with a fixed rate over 25 years you’d pay:

• £472 a month with an initial rate of 3.44% with The Cambridge Building Society
• £490 a month with an initial rate of 3.79% with Nationwide
• £500 a month with an initial rate of 3.99% with Furness Building Society
• £524 a month with an initial rate of 4.44% with the Teachers Building Society
• £559 a month with an initial rate of 5.08% with Aldermore

The same search on comparethemarket also brings up the Loughborough Building Society’s mortgage, with a monthly payment of £493.61 and an initial rate of 3.85%.

In comparison, with a 20% deposit, monthly repayments for Nationwide – which offers the best rate according to Habito – would cost you £358, with an initial rate of 2.49%.

There are also far more lenders to choose from with higher deposits, but as we said more lenders should be coming out with 95% mortgages as the government scheme kicks in this month, and no doubt there will be some competition among them as to who can offer the lower rates.

The lowest rate is currently 3.44% with the Cambridge Building Society, but it should be pointed out that the cheapest 95% mortgage at the start of March 2020 was priced at 2.9%. So if a 95% mortgage is on the cards, it might be worth waiting for a little bit longer for lenders to regain confidence and lower their rates.

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Why was Deliveroo’s IPO such a disaster? And what should investors do now?

Just a quick thing before I start – make sure you watch Merryn’s new video interview, fresh out this morning.

She talks to Dr Pippa Malmgren about Donald Trump’s next move, the nature of the post-Covid recovery, and the potential for a huge baby boom in the next year or so, not to mention NFTs and the threat posed by digital currencies.

Don’t miss it! You can watch it here.

And now on to today’s big story – Deliveroo’s mega-flop of an IPO.

It’s all about the price

I could start this story with a string of dreadful puns about investors suffering from indigestion. But what with this being April Fool’s day, there are way too many would-be comedians out there this morning.

So let’s just tell it straight: takeaway and grocery delivery app Deliveroo had a shocker of an IPO yesterday. The share price started out at the very bottom end of its range – 390p. And that was the high for the day. It immediately got whacked lower and ended the day trading at 287p, down 26%. It’s fallen a bit further this morning.

Apparently, this is not – as one of its bankers suggested – the worst IPO in UK history. On Twitter, William Wright of the New Financial think tank notes that, based on data since 1999, it in fact, “only ranks 1,765th out of 1,775 IPOs by UK companies in terms of its first-day performance”. So it’s only the 11th-worst IPO in UK history.

Why was it such a flop? The usual scapegoats took their usual share of pelters. As the FT reports, “several of Deliveroo’s advisers, bankers and investors were quick to blame short sellers for the opening plunge”.

I’d treat this excuse with the contempt it deserves. One iron-clad rule of investment is that when short-sellers get blamed for something, it means that someone somewhere is trying to duck responsibility, and they can’t think of any better excuses than “a big boy did it and ran away”. (I’m sure that the poor, maligned short sellers were weeping into their huge piles of money by the end of the day.)

What about the ethical issues? Before the listing, lots of City institutions were declaiming loudly about concerns over workers’ rights and also about the dual share-class structure (whereby the CEO sells most of his shares but keeps most of his votes, leaving the shareholders with no real say in running things).

But the reality of course is that they’d have happily shrugged off both of these issues if the company looked like a solid business at a good price.

Instead, Deliveroo looks like a risky business at a very high price. It doesn’t yet make a profit. It does rely on an employment model that looks open to regulatory challenge. And the big problem with the dual-class structure is that it bars it from the FTSE 100, which means you don’t get support from passive tracker funds piling into it.

On top of that, the timing was bad. The time to sell loss-making wannabe tech companies was last year. Deliveroo’s US rival DoorDash managed to get its IPO away in December last year. It listed at $102 a share, and closed at nearly $190 by the end of the session. It peaked in early February at around $215 a share, and now it’s down to around $130 (still above the IPO price, to be fair).

Have DoorDash’s prospects really changed so radically in the space of four months? Did something happen to the takeaway and grocery market in February? Of course not. It’s just that tech has been falling out of favour because interest rates are showing signs of edging higher. That means the value of today’s money relative to tomorrow’s money is rising. And that in turn makes “build it and they will come” companies less appealing, because the discount rate on dreams has gone up.

So you really didn’t need much reason to avoid it.

What happens next?

There’s a lot of talk about how this is an embarrassment for the London market. But that just seems fairly stupid. Would it have done better if it listed elsewhere at this price, at this particular point in time? I doubt it. Will it put future IPOs off London? Again, it seems doubtful, though it may deter any takeaway services from going public soon.

The obvious question for investors is this: will it bounce from here? If you did buy the shares and had them allocated to you, you can’t do anything yet anyway. Conditional trading doesn’t end until 7 April, at which point the shares can be moved to Isa accounts etc.

On the bright side, the most you could have bought is £1,000-worth of stock. If you did buy, you need to think about why you bought in. For some investors, this will be a useful learning experience. What is your rationale for owning the stock?

If you bought it in the hope that it would jump higher on the first day, then your rationale, I’m afraid to say, is no longer valid. You should use some of the time between now and 7 April to have a look at the company and consider whether you still want to own the shares at the current price.

As for anyone who didn’t invest, I suspect that Deliveroo’s short-term prospects depend more on wider market sentiment to these sorts of stocks. If the “Great Rotation” freezes up (perhaps as fears that lockdown will be lengthened in Europe in particular), then maybe there’ll be a bounce. But I’m more of the school of thought that the rotation is now in progress and that any pause will simply be a pullback in a longer-term trend.

All things considered, if you don’t own it, I struggle to see any value in putting a lot of time and effort into researching whether you should invest or not. There are more interesting sectors and opportunities out there right now – your time would be better spent with them.

What sorts of opportunities? We cover rather a lot of them in MoneyWeek magazine every week. If you’re not already a subscriber, you can get your first six issues – plus a beginner’s guide to bitcoin – absolutely free, right here.

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USDCAD Outlook After GDP and Ahead of OPEC Meeting

A positive start to the Canadian economy, as Statcan noted real gross domestic product grew by 0.7% in January. Although, total economic activity is about 3% below the February level before the COVID-19 pandemic. This comes after a 0.1% growth in real gross domestic product the previous month and marked the 9th monthly increase in a row since the COVID-19 pandemic first forced a massive economic shutdown in March and April 2020. January growth exceeded initial estimates of 0.5 percent.

The USDCAD currency pair weakened after this report. The Canadian dollar, which is one of the major commodity currencies, could return more volatile ahead of today’s scheduled OPEC+ meeting. It is expected that the group will extend its current production quota, as global oil demand remains unstable. The Saudi-led coalition was widely criticized three weeks ago, when it rejected calls to revive some crude oil production that was halted during the pandemic. Energy Minister Prince Abdulaziz bin Salman even explained that he did not believe in the post-Covid rebound predictions and would only believe in the recovery of demand when he saw it. According to several OPEC+ delegates, they predicted the group would refrain from significantly increasing production when it meets on April 1.

Cartel intervention has helped boost crude oil prices by +/- 20% this year, at a time when the global economy is battered by a pandemic. This has underpinned the revenues of members of the group as well as the beleaguered global oil industry. USOIL prices are currently trading in the range of $60.8 moving between the low price range of $57.21 – $62.21, the Suez Canal incident, only temporary, was exploited by speculators.

Back to the USDCAD, from January to March it traded down to close to 1.2248 annual key support and set a 3-year low of 1.2364, at 116 pips.

Throughout the strengthening of USOIL price and the weakening of the USD, the Canadian Dollar has benefited greatly in 2020. Recorded for Q1 this year, it still booked a strengthening against the USD of 2.8% before rebounding 1.2364. From technical perspective, by monitoring the monthly candle, we could find the buyer’s encouragement and profit taking action from retail sellers that have formed 3 candles in the form of “pinbar”. This certainly gives a hint that investor turn cautious amid the recent USD strengthening, due to the increase in global yields. The intraday chart above, shows that the price has begun to form an inverse head and shoulder pattern which could be confirmed if the price breaks through the resistance of 1.2646. In the short-term  the price is already moving above 1.2536(low of the week). While the upward movement shows a divergence against the AO that tends to thin towards the neutral line for the recent rebound correction. The Support level still puts 1.2467 as key support (61.8% Fib. retracement level). A move below 1.2460 could signal that the rebound of 1.2364 has ran out of steam and that the price mode will consolidate again, if not fall further to the annual support level of 1.2248.

Click here to access our Economic Calendar

Ady Phangestu

Market Analyst – HF Educational Office – 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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The end-of-tax-year to-do list for small businesses

End-of-financial year planning for small businesses can be difficult – not least because the date of the end of their year may vary. But with 5 April, the last day of the 2020-2021 tax year, almost here, business owners need to be on top of their affairs.

The 5 April date has particular significance for personal taxation. For many small business owners, the key consideration is often dividend payments; each tax year, you can take £2,000 worth of dividends from your business with no tax liability, but unused portions of this allowance cannot be carried over to the next tax year. So, if you can use the allowance, it makes sense to do so. Above £2,000, basic-rate taxpayers pay 7.5% tax on their dividends, higher-rate taxpayers 32.5% and additional-rate taxpayers 38.1%.

Remember staff paperwork

The other priority is sorting out pay-related paperwork for your employees. P60 forms, which summarise employees’ pay and deductions for the previous tax year, must be given to staff by 31 May for everyone who was working for you on 5 April. In addition, if you give your staff benefits beyond their wages, such as company cars, you must report this to HM Revenue & Customs by 6 July and pay any national insurance contributions due by 22 July.

As for the tax affairs of your business, the first step is to double-check when your year-end actually falls. Many sole traders and limited companies set their year-end at 5 April to align with the tax year, but you may have made different arrangements; 31 March is a common alternative.

If you are coming up to your year-end, it makes sense to review whether your business is operating in the most tax-efficient way possible. For example, making investments in the business can substantially reduce your liability to tax, thanks to the annual investment allowance. This enables you to deduct up to £1m of investment from your profit before tax is calculated; and on 1 April, the government introduced an additional “super-deduction”, with 130% capital allowances available on qualifying investments.

Another possibility is to manage your income so that some of it falls into your next financial year, if this is helpful from a tax perspective. You can delay the completion of sales of goods to achieve this effect, although the process is bit more complicated for businesses that supply services. A more radical year-end tax planning strategy is to change your accounting year-end date, which business owners are entitled to do at least once every six years. Where your profits are falling, you may be able to save tax by extending your accounting period. Or you might choose to shorten it if profits are increasing.

Finally, do not overlook additional support your business may be owed. The government offers generous tax credits for research and development work, which is defined much more broadly than many businesses realise. By some estimates there is £84bn in unclaimed tax relief currently owed to SMEs.

Businesses worried about these issues – or unsure how to optimise their tax efficiency – need advice from an accountant. The cost of accountancy services can be offset against your profits for tax purposes.

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Cazoo – the “Amazon of used cars” – comes to market

British online car retailer Cazoo will make its stockmarket debut in New York after it agreed to merge with special-purpose acquisition company (SPAC) Ajax I in a deal that values the company at $7bn, says Kalyeena Makortoff in The Guardian. The deal is a “blow” to the City and the London Stock Exchange, which reportedly “lobbied for the car retailer to list in its home market”. This also represents another victory for SPACs, which offer a “cheaper, quicker way for a private company to join a stockmarket”. 

The agreement will provide Cazoo, known as the “Amazon of used cars” with up to $1.6bn in funding, to “fuel its growth and expand its operations across Europe”. The deal is particularly good news for the Daily Mail and General Trust, says The Times. Its 20% stake in the company is worth around £1bn – “significantly more” than the £117m the Daily Mail originally invested. No wonder Daily Mail shares jumped by 9% on the news. The listing is expected to conclude by the third quarter of this year, but by then it could seem a bargain, says Tim Bradshaw in the Financial Times. Cazoo believes that Europe’s $500bn used car market is “ripe for disruption”, with customers becoming “more comfortable spending sums as [high] as its average selling price of £12,453 online”. 

Meanwhile, the greater population density compared with America could enable it to make earnings before interest, taxes, depreciation and amortisation margins of 8%-10% in the long term. Note that SoftBank-backed rival Auto1 is already a third above its initial public offering price after it went public in Frankfurt in early February to raise around €1.8bn.

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Archegos – how a massive fund bust has hit banks

Shares in investment banks Credit Suisse and Nomura sank by more than 10% this week after they warned of “substantial losses” , says Quentin Webb in The Wall Street Journal. Credit Suisse says its loss could be “highly significant and material” to its first-quarter results, while Nomura reckons it could lose up to $2bn (it made $2.82bn between April and December 2020). The losses stem from “fire sale of stocks” involving around $30bn of assets that occurred after Archegos Capital Management, a family investment vehicle managed by Bill Hwang, failed to meet a margin call. The banks, which lent the fund money to bet on stocks, had to sell off the stricken fund’s losing positions. 

Both banks should have been more alert to the risks, say Antony Currie and Jennifer Hughes on Breakingviews. While the amount of leverage Hwang used wasn’t “excessive”, there were “plenty of other warning signs”. The fund’s concentrated positions in high-risk technology stocks “such as Baidu, Discovery and GSX Techedu” were a red flag, as was the use of derivatives, possibly to mask his positions. Hwang himself was also a “walking risk factor”: he was “banned from trading in Hong Kong for four years” after one of his previous funds, Tiger Asset Management, was involved in “wire fraud”.

Who else is affected?

Nomura and Credit Suisse are unlikely to be the only banks involved, says Erik Schatzker and Sridhar Natarajan on Bloomberg. Goldman Sachs appears to have “fuelled a pipeline of billions of dollars in credit” for Hwang to make “highly leveraged bets” on tech stocks; the bank has admitted that it was involved in selling at least $10.5bn of Hwang’s portfolios last week. However, it seems to have gotten off lightly, since it has reportedly told clients and shareholders that it believes that any losses sustained as a result of the sales “are likely to be immaterial”. Whatever happens to the banks involved, the collapse of Archegos Capital Management is also likely to be bad for the shares of the companies it was betting on, says Edmund Lee in The New York Times. A case in point is the media company ViacomCBS, which fell by 50% last week after rising nearly tenfold in the past year. Part of this decline was due to the decision to “offer new shares to raise as much as $3bn”, which prompted a number of analysts to downgrade its price. But the sale of 30 million shares by Archegos Capital Management on Friday was undoubtedly key. 

At least ViacomCBS was sensible enough to use the share-price boom to raise cash before the bottom fell out of its shares, says Lex in the Financial Times. However, the collapse of Archegos Capital Management is a reminder that record stockmarket valuations mean that “altitude sickness exacerbated by leverage” is an “ever-present risk”. Investors need to ponder whether the “reckoning” over high equity valuations will spill over “into other stock and investment funds”. 

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Pippa Malmgren: Covid, NFTs and Trump’s next big adventure

• This video is also available as a podcast – listen here, or on whichever platform you get your podcasts.

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Five unusual UK holidays

007’s hideaway on the Norfolk Broads

Bond Island Windmill, a 300-year-old converted windmill in Norfolk that was once owned by James Bond actor Roger Moore, is newly available to rent for holidays, says Roshina Jowaheer for Esquire magazine. It offers panoramic views over the Norfolk Broads, fishing off the private mooring, and outdoor dining spaces, plus a bar. Inside, historic features are combined with modern comforts, and the furnishings reflect both the local area and film theme, with “splashes of 007 here and there”. All in all, “if you’re looking for a place to celebrate an occasion, this one has everything you need for a memorable get-together”. 

From £1,525 for three nights, holidaycottages.co.uk/cottage/79497-bond-island-windmill

A wildlife safari in Somerset

The Hide Roundhouse

With South Africa out of bounds for now, those looking for a stay on the wild side should head to Somerset instead, says Isabella Mackay in the Evening Standard. The Hide Roundhouse “mimics a luxury safari lodge… set on an organic farm surrounded by wildlife”. There’s a firepit for the evenings and a private outdoor bath-house that’s perfect for al fresco bathing. “Inside, there’s an open plan living space with double bed, fully equipped kitchen and luxury en-suite bathroom with clawfoot bath and large rain-head shower.” 

From £127, theyurtretreat.co.uk

Getaway from it all on a double-decker bus

Daisy Decker glamping bus

The Daisy Decker Bus, parked in the Hollym Holiday Park, near Withernsea in East Yorkshire, is “fun and different – especially if you have children”, says Jessica Lindsay in Metro. It has been fully converted into a two-bedroom holiday home, “surrounded by its own private garden and beautiful views of the countryside”. Even so, it still retains several of its original bus features, despite having been kitted out with all the modern amenities you could need. The ground floor is open plan with a fully equipped kitchen and cosy living area with a gas fire. Two bedrooms are at the top of the winding stairs, while outside, a “stylish wooden deck” wraps around the front of the bus. After months spent in our homes, “a unique getaway on a bus might be the right change of scenery”. 

From £579 for two nights, kiddieholidays.co.uk/places-to-stay/daisy-decker-bus

Get up close and personal with tigers and giraffes in Kent

Guests at Port Lympne Safari Park in Kent “will often wake up to a tiger rubbing its face against their window or a giraffe resting its nose on their balcony”, says Marianna Hunt in Spectator Life. But amenities aren’t the only consideration when choosing whether to sleep in a glamping tent, wigwam, shepherd’s hut or, coming soon, Giraffe Hall. You also need to “choose your favourite animal to decide which enclosure to sleep alongside”. Rest assured, “the tents and the tigers are kept far apart”. Guests also have access to the 600-acre park, which you can explore with a golf buggy. The giraffe lodge glamping package for two costs from £445 per night and includes welcome drinks, an African-inspired dinner cooked over an open fire pit and a full English breakfast. “All meals are enjoyed with views of the giraffes, zebras and rhinos taking their own refreshment at the watering hole.” And it’s all for a good cause. As Port Lympne is a charity, the proceeds help to fund conservation projects abroad. 

See aspinallfoundation.org/port-lympne/short-breaks

Bilbo’s Scottish retreat

Hobbit Hideaway in Moray, Scotland

“If you’ve ever wanted to experience life as a hobbit, this is your chance,” says Hannah Hopkins in The Sun. The purpose-built Hobbit Hideaway in Moray, Scotland, is an eco-home made from straw bales, round-wood, stone, earth and clay. “With its spiral roof and ramshackle interiors, it has bags of charm and things to entertain, including free unlimited Wi-Fi, a JVC bluetooth speaker, and a large selection of books and games.” Burnishing its socially responsible credentials, the hideaway provides guests with Fairtrade beverages, and reusable cups, bottles and bags. They can even “help themselves to the herbs, fruit and vegetables from the garden, where they can also dine al fresco using the barbecue and cosy up at the firepit”. 

From £29 per person per night, airbnb.co.uk/rooms/31739539

from Moneyweek RSS Feed https://moneyweek.com/spending-it/travel-and-holidays/603007/five-unusual-uk-holidays
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Daily Market Outlook, April 01, 2021

Daily Market Outlook, April 01, 2021 Asian equity markets are mostly up this morning despite a modest decline on Wall Street yesterday. On Wednesday, President Biden announced the details of his $2trn plan to boost US infrastructure spending. It will be at least partially paid for through tax increases. The Democrats hope to get a bill through Congress before the summer recess but passage may prove difficult. Meanwhile, France has announced new restrictions to combat the recent rise in Covid-19 cases.Today’s data calendar is dominated by manufacturing updates for March, although the PMI releases in the UK and the Eurozone are second estimates. The first print for the UK showed a big rise from February as the headline index moved to its highest since November 2017, look for a modest further upward revision. That rise reflected significant increases in output and new orders as both moved to three-month highs. The moves suggest that the build-up in stocks in case of near-term disruption around the Brexit leaving date has now run its course. The first estimate also showed continued evidence of supply chain difficulties and rising costs. More positively, businesses remain very optimistic about prospects for later this year.The Eurozone first reading for March manufacturing PMI posted a sharp rise to in output to a record high. The report noted that the surge in production has stretched supply chains “to an unprecedented extent”. The recent tightening in lockdown restrictions in some Eurozone countries points to a possible downward revision. However, as manufacturing is less directly impacted by restrictions than other sectors, this is probably more of a risk for next week’s services update, so expect today’s update to be unchanged.In the US, the ISM index has been suggesting for some time that manufacturing activity is buoyant. In February, it reached its joint highest level since the early 1980s, and the preliminary findings from the separate PMI survey points to a further rise for March. Stretched supply chains putting upward pressure on prices is also a significant factor in the US.Recent data have suggested that, after slowing sharply at the end of 2020, the US labour market is now picking up once again. Today’s weekly unemployment benefit claims and tomorrow’s monthly labour market report for March are both expected to provide further evidence of this. March employment is forecast to post a rise of 630k, while the unemployment rate may edge down to almost 6.0%.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby)Larger Option PipelineEUR/USD: 1.1850(E1.1bln-EUR puts)USD/JPY: 106.80-85($1.6bln-USD puts)USD/CAD: Apr01 C$1.2450($1.5bln), C$1.2600-10($1.25bln-USD puts), C$1.2660-75($1.2bln)USD/CNY: Apr02 Cny6.58($1.2bln)USD/TRY: Apr06 Try6.60($916mln)Technical & Trade ViewsEURUSD Bias: Bullish above 1.18 bearish belowEURUSD From a technical and trading perspective, the failure to recapture 1.20 on the upside leaves the 1.1830 lows exposed, through here bears will press for a test of the yearly pivot at 1.1720. UPDATE interim downside objective achieved anticipate profit taking to retest of pivotal 1.1760 from below as this contains corrective upside bears will focus on a 1.16 test. A close through 1.18 would be a bullish developmentFlow reports suggest light offers through the 1.1800 area with weak stops on a move through the 1.1820 area with limit with light offers then running through the 1.1840-60 area before stronger offers start to appear on a test through the 1.1880 level and stronger through the 1.1900 area. Downside bids into the 1.1700-1.1680 area with weak stops on a move through and then congestive bids into the 1.1650 area and continuing through to the 1.1600 where better bids are likely to be seen with weak stops through the level opening a deeper move as a possibility.GBPUSD Bias: Bullish above 1.3750 bearish belowGBPUSD From a technical and trading perspective, the loss of 1.3750 is a significant development opening a move to test a corrective equality objective 1.3550, only a close back through 1.39 would suggest the correction lower is complete.Flow reports suggest downside congestion around the 1.3660-40 area with stronger bids on any push towards the 1.3600 level and weak stops likely on a dip through opening to a deeper move, Topside offers through light through to the 1.3800 level with congestion through to the 1.3850 area before opening up to light offers and weak stops through the 1.3900 level and then stronger congestion.USDJPY Bias: Bullish above 110 targeting 112USDJPY From a technical and trading perspective, as 108.30 continues to attract demand bulls will target a test of pivotal 109.85 ahead of the yearly R1 pivot at 110. UPDATE...upside objective achieved look for any initial foray through 110 to prompt a profit taking pullback to retest bids to 108.50...UPDATE upside extension through 110.50 may prove exhaustive opening a profit taking pullback to test demand at 110.Flow reports suggest topside light congestion through to the 111.80 level before stronger offers are likely matching the highs from the beginning of the previous two years at the same period of time, a break of the 112.30 area is likely to see strong stops appearing and the market opening for further push beyond the last couple of years highs. Before running through to the 112.50 area and another set of stronger offers appearing continuing through to the 112.80 level and likely continue seeing strong offers, downside bids light back through the 110 level and likely to continue to 109.80 with weak stops likely through the level and weak through to the 109.00 area.AUDUSD Bias: Bullish above .7560 bullish targeting .8200AUDUSD From a technical and trading perspective, as .7820 contains upside attempts there is potential for a head & shoulders pattern to develop, a loss of pivotal .7560 would open a move to test trend support at .7400 nextFlow reports suggest stronger offers through to the 0.7840-60 area and then increasing offers onwards through 0.7900, with the offers likely to continue through to the 0.7950 area and likely increasing resistance through to the 0.8000 levels, downside bids into the 76 cents level with strong bids likely through to the 0.7580 area, weak stops are likely to be few and far between with stronger bids likely into the 0.7550 level and likely stronger congestion through to the 0.7500 area.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/daily-market-outlook-april-01-2021"
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Dollar Retains Strength as U.S. Economy Outperforms

from Forex News https://www.investing.com/news/forex-news/dollar-retains-strength-as-us-economy-outperforms-2463387
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U.S. dollar share of global FX reserves hits lowest in 25 years in fourth quarter: IMF

from Forex News https://www.investing.com/news/economy/us-dollar-share-of-global-fx-reserves-dips-to-59-in-fourth-quarter-2020-2462525
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