Trump’s victory and Brexit continue to make headlines across the globe. Both are sparking protests, despite both decisions being made via a democratic system. One feels the best time to protest is before the vote, not after. All the Brexit high court ruling has done is add more confusion into an already complicated process, beyond that probably not a lot. The consensus opinion seems to be that this ruling will not de-rail the triggering of Article 50 in March.
One could make the analogy to a household divorce, usually the only party that really gains is the legal fraternity, and the same is probably true of the Brexit court case. The pound which had a good start to the week, took a bit of a knock on the ruling.
The recently appointed President of the United States is wasting no time implementing some of the populist anti trade agenda that appeared to catapult him into the Oval Office. So far equity markets in the US have not been fazed by this more confrontational stance, with the rest of the world.
Developed equity markets around the globe have had a muted start to the year. The NASDAQ (up 4% YTD) index leading the charge. The S&P 500 index has traded in a tight range, and is currently close to where it started the year. Likewise, after a small uptick in yields US treasuries are flat on the year so far. Possibly the most noticeable has been in the dollar. There was no shortage of dollar bulls at the start of the year, however so far, this year the dollar has been losing ground.
One movement that may be worth watching is the relationship the US dollar has with the Japanese yen. The yen is considered a haven in times of stress, as Japan is one of the few nations with a net credit balance sheet. The yen has gained about 5% against the US dollar since mid-December, whilst risk assets have remained stable.
Tuesday’s Financial Times reported that hedge funds have increased their bets on rising oil prices to the highest level on record. If memory serves it was about this time last year when the price of oil was approximately half its current level, we reported that hedge fund managers were running record short positions. What ever happened to buy low sell high?