Politics and Nature Moving Markets

Daily Analysis - 16/01/2018

Turkish Lira Weakens, wheat Falls, Milan Strong and Barclays, not so much

turkish-lira


Turkey’s Erdogan reaps bitter fruit of power consolidation and the Lira weakens to 3.8219 to the US Dollar. Wheat continues its decline in price as bumper crop weighs on price. The Milan index continues it strengthening and Barclays bank is low and falling on a major corporate restructuring campaign.

Markets Vote on Erdogan and the Turkish Lira


Turkey is in the throes of a power consolidations worthy of Russia’s Putin governing style: Absolute, vicious and ham fisted. A country’s currency is a proxy for the performance and management of the trading zone/country itself. Much as a share of stock is for a corporation. And thus, the market doesn’t like what it sees in Turkey. The Lira has fallen consistently from 2009 until today by a whopping 238 per cent. The markets are directly reflective of sentiment toward an asset and its fundamental characteristics. Where those fundamentals, in the case of a currency as opposed to a stock or commodity, are political, the sentiment about the politics of the nation, expressed as willingness to own its currency, is indefatigable. USD TRY UP.

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Milan Stock Index Rises as Italy sees Vigor as Elections Approaches


There is no lack of speculation as to the outcome of Italy’s election due on March 4th of this year. Speculation not merely about the outcome of the plebiscite but no less its significance for the nation as well as the EU as a whole. While hardly the “sick man of Europe”, Greece holds that august mantle, she is definitely the patient with the most eyes on her charts. That is because she is many times larger than her Greek neighbor and so the stakes concerning her ill-health are all the greater. You read about the complex, nay tortured, politics of the EU, particularly of its finances with respect to the Germans and their attitude to the “Mediterranean” members of the Eurozone. This has little to do with attitudes of superiority and all to do with the fact that Germany holds a great deal of the Italian government’s debt. They would like to squeeze some more productivity out of the Italians, but they are not going to press them to the wall like they did to the Greeks. And so the fact that the Milan Stock Index is rising and continues to do so not only indicates positive vibes by and from the Italians themselves but also a fine trading opportunity for us. SPMIB UP.

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Barclays Bank is Down and Falling


“Profit improvement will be gradual” states a report out yesterday from Moody’s credit evaluator. When these guys are reporting on an asset you know it is true because they are always the last to know anything concerning an asset they evaluate. The truth is that Barclays has been underperforming for some time. The share price has fallen from 700 in 2007 to today’s low of 196. A handsome 71.88 per cent decline. It has undertaken to restructure itself to right the ship. The process will take a long time and so in the meantime, a trading opportunity presents itself to sell Barclays until signs of a profitable return emerge. Barclays DOWN.

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Wheat Down


The bumper crop in the US, which if you can get your head around numbers like these, is expected to come in at around 1.44 million tons of the crop. Can you imagine that much wheat? A rail car holds around 3,770 bushels of corn which about 226 tons per car. Roughly speaking we are talking of a crop that would require over 6,371 rail cars to transport. Obviously the crop is enormous, so much so in fact that price is falling due to its abundance. Corn. DOWN

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