Lord Rothschild has taken a near-£130m bet against the euro as fears continue to
grow that the single currency will break up. --- If Lord Rothschild doesn't
know what is going on, well, then nobody does..... As a wise man once said
"watch where the wise money goes".The member of the banking dynasty has taken
the position through RIT Capital Partners, the £1.9bn investment trust of which
he is executive chairman. The fact that the former investment banker, a senior
member of the Rothschild family, has taken such a view will be seen as a further
negative for the currency. The latest omen follows news in The Daily
Telegraph late last week that the government of Finland is already preparing
for the euro’s break-up. RIT, which Lord Rothschild has led since 1988, had a
-7pc net short position in terms of principal currency exposures on the euro at
the end of July, up from -3pc at the end of January. Given a net asset value of
£1.836bn at the end of July, the position is worth £128m. Sources close to RIT
suggested that the position was not a dogmatic negative view on the euro as a
currency, but rather a realistic approach on a currency that remains relatively
weak....Meanwhile, Germany and France, the eurozone’s two biggest economies,
did better than expected, even if their second quarter performances were far
from being success stories. Germany’s GDP grew by 0.3%, beating its own forecasts,
and France flat-lined at 0% growth, but avoided slipping into a much feared
recession…..On news of Germany and France’s numbers, stock markets bounced up
and share prices rose across the continent. Britain’s FTSE 100, Germany’s DAX
and France’s CAC-40 all finished with slight gains on Tuesday. According to Jeremy Batstone-Carr, director
of client research for Charles Stanley, a financial advising firm, the figures
as a whole should be a cause for worry. “According to further looking
projections, data for Germany suggests the next six months will be just as bad
if not worse,” he said. The data also
showed a clear divergence between the region’s northern core countries and
weakness in the southern periphery countries, which threatens to exacerbate existing
problems. Hard-hit over the past three months were Italy (-0.7%), Finland
(-1.0%) and Portugal (-1.2%). On another
gloomy note, Britain’s economy shrank by 0.7 percent, according to Eurostat.
That compared to .03% negative growth for the first quarter of the year, which
meant that Britain has been in recession for the last nine months. Recession is
defined by economists as two consecutive quarters of contraction. During the same three-month period, GDP increased
by 0.4% in the United States and 0.3% in Japan - Europe’s main economic
partners.
Access Investments-Building Awareness - European Union-ROMANIA
Sunday, August 19, 2012
Smoke and mirrors...
Lord Rothschild has taken a near-£130m bet against the euro as fears continue to
grow that the single currency will break up. --- If Lord Rothschild doesn't
know what is going on, well, then nobody does..... As a wise man once said
"watch where the wise money goes".The member of the banking dynasty has taken
the position through RIT Capital Partners, the £1.9bn investment trust of which
he is executive chairman. The fact that the former investment banker, a senior
member of the Rothschild family, has taken such a view will be seen as a further
negative for the currency. The latest omen follows news in The Daily
Telegraph late last week that the government of Finland is already preparing
for the euro’s break-up. RIT, which Lord Rothschild has led since 1988, had a
-7pc net short position in terms of principal currency exposures on the euro at
the end of July, up from -3pc at the end of January. Given a net asset value of
£1.836bn at the end of July, the position is worth £128m. Sources close to RIT
suggested that the position was not a dogmatic negative view on the euro as a
currency, but rather a realistic approach on a currency that remains relatively
weak....Meanwhile, Germany and France, the eurozone’s two biggest economies,
did better than expected, even if their second quarter performances were far
from being success stories. Germany’s GDP grew by 0.3%, beating its own forecasts,
and France flat-lined at 0% growth, but avoided slipping into a much feared
recession…..On news of Germany and France’s numbers, stock markets bounced up
and share prices rose across the continent. Britain’s FTSE 100, Germany’s DAX
and France’s CAC-40 all finished with slight gains on Tuesday. According to Jeremy Batstone-Carr, director
of client research for Charles Stanley, a financial advising firm, the figures
as a whole should be a cause for worry. “According to further looking
projections, data for Germany suggests the next six months will be just as bad
if not worse,” he said. The data also
showed a clear divergence between the region’s northern core countries and
weakness in the southern periphery countries, which threatens to exacerbate existing
problems. Hard-hit over the past three months were Italy (-0.7%), Finland
(-1.0%) and Portugal (-1.2%). On another
gloomy note, Britain’s economy shrank by 0.7 percent, according to Eurostat.
That compared to .03% negative growth for the first quarter of the year, which
meant that Britain has been in recession for the last nine months. Recession is
defined by economists as two consecutive quarters of contraction. During the same three-month period, GDP increased
by 0.4% in the United States and 0.3% in Japan - Europe’s main economic
partners.
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3 comments:
Currency markets
Let's take a look at currency markets. Michael Derks, chief strategist at forex broker FxPro, says while volatility in currency markets remains muted, some interesting cross-currents have been emerging.
The yen has been quietly sliding in recent trading sessions, and thus far in August it is the worst-performing major currency. At the other end of the league table is the Canadian dollar, which has been helped by both higher interest rates and the rising oil price. The latter is likely to stay elevated given the growing tensions in the Middle East, and so we can reasonably expect the CAD to retain a healthy bid in the near term.
Elsewhere, the pound is looking a little more solid this week after some perky pieces of economic data. Cable traded above the 200 day moving average yesterday, with the 100 day moving average not that far away at 1.5756. It will be interesting to see whether cable can sustain a move above the 200d – this will be the fifth test in the past three months. On the previous four occasions, cable failed to penetrate in a meaningful way and subsequently fell back.
Finally, the euro had a remarkably good day yesterday, at the same time as the Aussie fell back through 1.05. Evident over the past couple of days has been some liquidation by EUR/AUD shorts – this cross is now up at 1.18, a three-week high. This cross has been a popular one amongst the hedge fund and trading community; as such, it could be that some are deciding to take their winning chips off the table after a stellar run over the past three months
Europe will thrive. But we could be doomed to a life on the fringes
seems about right. The Euro will survive, I'm pretty sure. The jetting about of various eurozone leaders in the next couple of weeks shows that the political will is still there.
It will be battered. The Social Model of various EZ countries will have to be greatly weakened. Germany will have to weaken its desire for it to be a hard-currency, a worthy successor to the D-Mark. There may quite a few bank failures, lot of write-offs, and a Greek default (and exit) now looks pretty certain. It's not going to be pretty
But they'll get through, if the political will holds up.
He's wrong about one thing, I think:
I also bet that the next Greek government will cut a deal to allow it to stay in the euro with less austerity.
I wouldn't take that bet. But on the big picture?
Devaluation, touted as a panacea across the British economic and political spectrum, certainly works for an individual country if it can devalue against others that hold their currencies stable. But as Keynes argued so effectively, if devaluation becomes the default policy for the entire system – the temptation in a world of floating exchange rates – then the consequence is disaster. It is an invitation for everyone to engage in beggar-my-neighbour economic policies by trying to rig their currency to boost their exports and minimise their imports
Spot on.
Financial regulation will be organised in Brussels for the benefit of euro member states. If we don't like, we can lump it. It will be across the board, from economics to climate change.
Yes, exactly. But don't worry, the opt-out will be given with no arguments.
Britain stood aside from the euro crisis. It will stand even more aside from what follows, leaving us not just economically diminished but culturally shrunken.
Yes, also quite right.
The headlines seem more than little overblown. ANY EZ government without the kind of planning suggested by Tuomioja would be grossly negligent in its duty of care. The three politicians are all stating the obvious and the well known.
I only wish that the duty of care had been present earlier and more broadly.
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