Post referendum recovery to be tested

I find it hard to get excited about the pound and consider a lot of the headlines to be either sensationalist or writers making up taglines to fit stories written by the market.

I have just read that Sterling had its best quarter since a year before the Brexit referendum. Do I care? No.

I am much more interested in what the next quarter will bring.

Sterling rallied in January basking in the glow of capitulation over the stage one agreement. It has basically consolidated for two months as the dollar has gyrated.

Theresa May has been on a tour around the UK to confirm that the Union will be strong after Brexit. It all looks a little like she is gearing up for the “border bombshell” she is about to drop.

Sterling now has a medium-term top in place at 1.4250 following this week’s price action and considering the “Goldilocks scenario” that developed last week with Brexit, the economic data and a prospective rate hike all coming together, the follow through has simply not happened.

After the Easter holiday it all starts again!

Perhaps the Eurozone isn’t Utopia!

Yes, the ECB President is receiving accolades. Yes, inflation is low. Yes, the weaker economies are starting to show green shoots of recovery.

But and it’s a Kardashian sized but. Is that simply because the major issues have been avoided in the hope they will simply go away?

The revelation of a further ten-billion-euro bad loan discovery this week highlights that while the ECB has been cleverly apparently doing nothing to allow the effects of QE to be fully realized, it could be said that in fact they have been avoiding the big questions.

The banks haven’t really repaired their balance sheets and there are huge bad loan portfolios waiting to rise and bring chaos and another downturn. The figures are staggering. In Greece, non-performing loans (NPLs) make up 46% of banks total book, in Cyprus 32% and even Italy still has 12% despite a 25% improvement over the past twelve months.

This is going the be major drag on any the continued recovery since banks will, at some point, have to open their doors again to fresh lending but, the depressed state of asset values means that the NPL’ s just sit and fester.

The Bears are in control.

What is the true value of a bitcoin?

I suppose the answer is actually zero.

Whether valued in dollars pounds or Euros it is still zero. The reason for the latest fall in its price (price being different to value) really does demonstrate the “thin ice” on which it exists. It seems that the decision of Twitter no longer allow cryptocurrency advertising has driven Bitcoin to lows not seen since early February.

When an asset doesn’t have bullish supporters or bearish detractors but “players” who basically believe it is worthless or the sky’s the limit, it becomes almost impossible to make any sense of the price and charts become nothing more than recordings of past performance which has no basis for analysis.

I am a believer in the concept of Bitcoin as an unregulated method of transfer of value another ICO’s as a new method of raising capital, possibly replacing, in time, small cap IPO’s, but whether Twitter (or Facebook) allow advertising should be a determinant of either value or acceptability.

As I write this Bitcoin has just regained £5k and the “promoters will start coming out of the woodwork to say how cheap it is. I saw a post on social media yesterday in which the writer produced a graph of the Bitcoin price since 2011 in which he had placed several milestones. He only showed the positive moves in what was a clear and obvious ploy which said, “hey look it was $1 in 2011 and $ 19.5k in 2017”, without mentioning any pullbacks.

Such blatant propaganda does a disservice to the entire industry and will do nothing to attract the mainstream to the revolution.

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