What did it all mean.......
UK General Election
The decent into chaos continues; from the SNP asking for a second independence referendum despite the evidence that the people did not want it and loosing half their seats to the conservatives selling a hard Brexit that nobody wants. The UK has been left with a coalition of a “dead woman walking” and the political wing of the 17th Century to negotiate with Europe, it will not last. The Conservative party has proven it can turn on any leader that doesn’t win and it is a ruthless organization that will let the dust settle before removing the hapless Mrs May in an instant. The agreement with the DUP will fail, it contradicts the Good Friday agreement, which brought peace to Ireland and puts an anti-gay, anti-abortion, anti-just about everything party in power. The 1922 committee will rip it to shreds and the Uk will be back at the polls within a year. Uncertainty is the enemy of a strong currency, pressure is back on the pound. I fully expect it to break lower and substantially so.
Department of Labour in the US reverse Obama Contract legislation
This is why the Trump trade gained traction and business was Happy with the US election result. Unravelling this type of legislation (it meant that franchise chains were responsible for employment matters of each individual franchisee) reduces the risk to big businesses franchises like Mcdonalds and allows them to press on with growth plans.
Santander Bought Banco Popular Espanol
It’s a rescue not a purchase, Santander bought it for 1 Euro (after an auction!) The ECB arranged the deal and got away with it this time. The Italian banking system might be the next one to need help what will the bids in an auction be like there ? 10 cents, probably too high.
The other concern here was the toxic coco bonds, Popular did not pay its debts so the coco bonds convert to equity and get a share of the 1 euro. Coco’s might be the next crisis in waiting.
ECB Holds rates
A slight increase in forecasts for economic growth and a marginal change in language gave this a hawkish hold feel. It will not be long before they start to taper and become truly hawkish, the problem is that unlike the US and the UK the Europeans have not dealt with the fallout from the financial crisis, European banks still hold huge amounts of bad debt on their balance sheets.
Trading last week:
Before the election trading was slow with 5 wins out of 8 trades for a total of 148 pips. Election night itself was really good with short GBP trades delivering 349 pips in total. My signal service launches tomorrow, I will be sending trades before I take them and as I take them.
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