Sunday 21st January 2018
January 19th 2018: The Deferred Action for Childhood Arrivals (DACA) programme looks to be a continuing stumbling block for Democrats who were expected to ink the US government spending bill, with an attendant effect on the US dollar. According to Miles Eakers, chief market analyst at Centtrip the dollar continues to show weakness ahead of possible US government shutdown. “Late last night the House of Representatives passed concessions on a major increase in defence spending and a hardline immigration bill. But Senate Democrats said they would likely block the measure unless President Donald Trump and Republicans include protection for young immigrants. An impasse could result in Trump celebrating his first anniversary in office with the first shutdown in four years, despite his party holding a majority in both houses. After reports of the vote, [the market] saw continued, but muted, dollar weakness, pushing the GBP/USD pair back above $1.39 and EUR/USD nearer the $1.23 resistance level.” The question is now whether a short=term patch will be agreed today, or whether the Republicans and the White House will be compelled to get serious about a longer-term solution. The last time a short-term bill was passed was December last year, which passed by a grand majority of 66 votes to 32. This time round it looks more difficult - Mike van Dulken, Head of Research at Accendo Markets commented to clients this afternoon: “Equities are positive to close out the week, rebounding from a negative US close and ahead of a key Senate vote to stave off a government shutdown tonight. Weaker than expected UK Retail Sales have seen the UK’s blue-chip index take a leg higher, benefiting from Sterling's retreat from fresh post-referendum highs earlier this morning. Interestingly, Germany’s DAX is the rank outperformer, this in spite of additional Euro strength after hawkish ECB comments, whilst US equities point towards a positive open this afternoon. The FTSE has climbed higher thanks to GBP weakness benefiting names such as ULVR, BATS, SHP, RELX, CCL and GSK, while Miners are embracing the weaker USD's fillip for metals. This is easily offsetting weakness for BP (Oil lower on IEA report), HSBC (US forex fine), BT (pension scheme deal) and KGF (Carpetright profits warning). Germany’s DAX outperforms with just Linde in the red, as Thyssenkrupp, Adidas, BASF and Fresenius lead the way higher. The FTSE 100 has broken back above 7715. The DAX 30 has broken above 13350 to flirt with a 13420 breakout. Dow Jones Futures have rebounded to re-test 26055. Gold has broken back above $1332.” --

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Issue 83 - July/August 2015
Cover Story Friday, 28 August 2015

How to live with a rising dollar

It’s a bugbear of a late summer. The China story has dominated the headlines as investor confidence weakens in the face of worrisome global growth projections. The VIX index had doubled in mid August, as the market response to a complicated mix of concerns over macro and market fundamentals, exacerbated by the recent exchange rate adjustment, was one of turmoil. Volumes were were also down over the summer, which didn’t help and consequently any directional trades had a more powerful effect. The Chinese government has intervened to keep prices from freefalling, but its (mainly) retail investors appear dogged in testing official resilience and the ability of the Chinese authorities to eat up its reserves to shore up its mainland stock markets. However, the real story of the summer is not stock markets but currencies. In that regard, there are important questions now about the valuation of the US dollar and its impact on global markets.

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This article considers the recent decision in The Queen on the Application of Jason Lord, Paul Reynolds, Justin Mayger v Director of the Serious Fraud Office [2015] EWHC 865 (Admin). It looks at the High Court's ruling to refuse permission to judicially review the decision of the Serious Fraud Office to prevent three senior employees from being accompanied by the external legal representative of their employer at a section 2 compelled interview. Abdulali Jiwaji and Rory Spillman of Signature Litigation take us through process and the implications for witnesses.

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It is probably an understatement to suggest that August was a testing month for emerging markets. Irrespective of the drivers of the recent route the sheer extent of market volatility in recent weeks only served to question the commitment of investors to segment as an allocation choice. Should emerging markets be worried that it is indicative of a lasting directional change?

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At a time when Saudi Arabia continues to pump out oil as demand falls and inventories rise, it has now turned to the capital markets to help prop up budget spend as export revenues and reserves fall. Saudi Arabia has tapped the capital markets twice in the last six weeks: the first involved some SAR15bn ($4bn) in seven and ten year bonds; followed by a SAR20bn issue. The issues were sold down rapidly in the local banking market, but while ratings agencies and investors remained quite sanguine about the bonds, it signals a new direction in Saudi economic affairs.

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The roll out of the Kuwait’s five year development plan (2015-2020) looks to have been revitalised in the summer after something of a hiatus in the first half of the year. Despite low oil prices, and a substantial projected drop in state revenues over the 2015/2016 financial period, Kuwait’s capital goods project market looks once more to be gaining traction. In recent weeks a new refinery project and an extension to Kuwait City’s airport were signed, in deals worth a combined KWD5.2bn (approximately $17.3bn). As of the beginning of August, the country looks to be generating some KWD71bn (around $234bn) of capital goods projects over the coming half decade.

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Friday, 28 August 2015

Qatar’s LNG: trading places

Until last year, Qatar fair dominated the narrow world of LNG. Having consistently controlled a tad over a third of the global market (by comparison, Saudi Arabia barely has 10% of the global oil market). It led in gas liquefaction; its output helped influence prices and its long term offtake contracts were the envy of other producers. Now Qatar has to make some tough choices as aggressive and rising producers such as Australia, the United States have thrown down a competitive gauntlet. Qatar’s once cosy world is not cosy anymore. Can it rise to the challenges it will inevitably face over the coming decade?

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Market dynamics over the summer continue to bring into focus whether the US Federal Reserve Bank will raise interest rates. It is not a question of whether the Fed will raise rates, but when. At various junctures in this edition we have looked at the impact of rate rises. In her regular column for the magazine Kathleen Hughes, managing director of Goldman Sachs Asset Management looks at how equities and fixed income have performed around rate hikes historically and what these trends mean today.

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In July, US Commodity Futures Trading Commission (CFTC) issued an order to continue the transition to a global system of legal entity identification (LEI) and that it had extended the designation of the utility operated by DTCC-SWIFT as the provider of legal entity identifiers under the regulator’s swap data recordkeeping and reporting rules. DTCC-SWIFT’s initial designation was made by a Commission order back in July 2012 for a two-year term. At the time the order was issued, the Commission was already participating in an international process to establish a global LEI system, into which the legal entity identifier to be used to comply with Commission requirements was expected to transition.

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