Bound 2 tease Posted October 7, 2016 Share Posted October 7, 2016 The strength of the Pound against the Dollar doesn't concern me too much, well not compared to the Pound against the Euro.... we're forever being told that the Euro is a failed currency....if the Pound can't hold it's own against a failed currency, what hope is there for it ? Anybody know what formal qualifications need to be held to hold the position Chancellor of the Exchequer ? ....CSE Maths ? Grade 3 or above ? You can add this to the mix To my understanding and in a nutshell, the shares that you and I own in Lloyd's are going to be sold to financial institutions only ...as they are unlikely to realise the value hoped for . ie turn a profit for the taxpayer . That's right the institutions can buy them at a low , but the public are to be denied the opportunity, we're being shafted with our own money again https://www.gov.uk/government/news/sale-of-publics-stake-in-lloyds-to-restart-shortly Lazy link, but stops those that are in denial bothering Link to comment Share on other sites More sharing options...
Ramarena Posted October 7, 2016 Share Posted October 7, 2016 34 minutes ago, Bound 2 tease said: The strength of the Pound against the Dollar doesn't concern me too much, well not compared to the Pound against the Euro.... we're forever being told that the Euro is a failed currency....if the Pound can't hold it's own against a failed currency, what hope is there for it ? Anybody know what formal qualifications need to be held to hold the position Chancellor of the Exchequer ? ....CSE Maths ? Grade 3 or above ? You can add this to the mix To my understanding and in a nutshell, the shares that you and I own in Lloyd's are going to be sold to financial institutions only ...as they are unlikely to realise the value hoped for . ie turn a profit for the taxpayer . That's right the institutions can buy them at a low , but the public are to be denied the opportunity, we're being shafted with our own money again https://www.gov.uk/government/news/sale-of-publics-stake-in-lloyds-to-restart-shortly Lazy link, but stops those that are in denial bothering Really, Oil is priced in dollars and that affects a lot of things. Link to comment Share on other sites More sharing options...
Bound 2 tease Posted October 7, 2016 Share Posted October 7, 2016 2 hours ago, Ramarena said: Really, Oil is priced in dollars and that affects a lot of things. The phrase was "concern me" the singular I Yes really , I import in Euro and sell in Sterling, ( yes I'm a stupid boy, who refuses to do 9 to 5) Ever heard of solar panels, cycling , grow your own, reduces your dependency no end. So oil priced in dollars means this is all good news for North Sea Brent then ? Link to comment Share on other sites More sharing options...
Zag zig Posted October 7, 2016 Share Posted October 7, 2016 9 hours ago, Wolfie said: I get it that there is a great deal of uncertainty with Brexit etc at the moment and that's why the pound has fallen. How come shares are doing so well in the same environment, though?. Genuine question. Adding to Ramarena's comment, many of the FTSE high flyers are global companies, as such the domestic market has little bearing on their growth prospects. Moreover any that earn their revenue in dollars (of which there are a fair few, not just in the FTSE too), are getting an added profit boost due to the strength of the dollar. Translate these profits back to the U,K listing, no wonder the market caps are soaring. Personally follow a little tiddler, where this is the case and I'd say the market is still undervaluing some stocks(mine included), by a good distance for this reason. The valuation usually catches up with events one way or another at some point though. Link to comment Share on other sites More sharing options...
SillyBilly Posted October 7, 2016 Share Posted October 7, 2016 9 hours ago, Wolfie said: I get it that there is a great deal of uncertainty with Brexit etc at the moment and that's why the pound has fallen. How come shares are doing so well in the same environment, though?. Genuine question. 1) FTSE 100 companies generally earn most of their money in dollars and other non-sterling currencies, so their profits are worth more when converted into sterling if GBP falls on international forex markets. 2) QE of £60bn post-Brexit. That boosts the money supply, which has two effects, a) generally will weaken the currency (increasing the effect of 1)) and b) the central bank uses new supply of currency to buy bonds from investors such as banks or pension funds. That increases the overall amount of "useable currency" in the financial system where most of it ends up in asset bubbles such as stocks (most liquid) and property (a little later as more illiquid). If you overlay the dates of the QE "programmes" by the Federal Reserve on a US stock market graph you see the trend clearly. People think of the Great Depression as the model of any great crisis (i.e. stocks must crash). Not at all. You can have deflationary or inflationary collapses, people don't understand currency risk nor inflation or deflation so no wonder money can be lost. The Caracas Stock market (Venezuelan) market is up what, 300% this year? What Venezuelans will be celebrating that? It just tells a story of how worthless the currency is becoming, at least 20% down when measured in the local currency? QE is basically a controlled model of that. Similar effect, you're not really getting richer, your money just buys less assets.But the illusion is all that is needed to keep the plates spinning. A confidence game. Also an important point in diversifcation for people's pensions and investments. The FTSE 250/350 can be considered a straight play on the UK economy as most of their earnings are British. FTSE 100 is international so you should always consider that when buying non-UK equity IMO, ie. if you own both are you buying the same exposure & reducing your diversification? Link to comment Share on other sites More sharing options...
Zag zig Posted October 7, 2016 Share Posted October 7, 2016 3 minutes ago, SillyBilly said: 1) FTSE 100 companies generally earn most of their money in dollars and other non-sterling currencies, so their profits are worth more when converted into sterling if GBP falls on international forex markets. 2) QE of £60bn post-Brexit. That boosts the money supply, which has two effects, a) generally will weaken the currency (increasing the effect of 1)) and b) the central bank uses new supply of currency to buy bonds from investors such as banks or pension funds. That increases the overall amount of "useable currency" in the financial system where most of it ends up in asset bubbles such as stocks (most liquid) and property (a little later as more illiquid). If you overlay the dates of the QE "programmes" by the Federal Reserve on a US stock market graph you see the trend clearly. People think of the Great Depression as the model of any great crisis (i.e. stocks must crash). You can have deflationary or inflationary collapses, people don't understand currency risk nor inflation or deflation so no wonder money can be lost. The Caracas Stock market (Venezuelan) market is up what, 300% this year. What Venezuelans will be celebrating that, it just tells a story of how worthless the currency is becoming. QE is basically a controlled model of that. Similar effect, you're not really getting richer, your money just buys less assets. Also an important point in diversifcation for people's pensions and investments. The FTSE 250/350 can be considered a straight play on the UK economy as most of their earnings are British. FTSE 100 is international so you should always consider that when buying non-UK equity IMO, ie. if you own both are you buying the same exposure & reducing your diversification? Just knew you would come along 5 minutes after me with a "bit" extra detail Can I add, go below the FTSE 250/350 and onto the likes of AIM for the junior miners, oilers, explorers etc that's where you will also find a few misplaced valuations due to dollar earnings, probably because many don't understand the significance. Link to comment Share on other sites More sharing options...
eddie Posted October 7, 2016 Share Posted October 7, 2016 1 hour ago, Bound 2 tease said: The phrase was "concern me" the singular I Yes really , I import in Euro and sell in Sterling, ( yes I'm a stupid boy, who refuses to do 9 to 5) Ever heard of solar panels, cycling , grow your own, reduces your dependency no end. So oil priced in dollars means this is all good news for North Sea Brent then ? I think that produces a pint a week now. Link to comment Share on other sites More sharing options...
SillyBilly Posted October 7, 2016 Share Posted October 7, 2016 Just now, Zag zig said: Just knew you would come along 5 minutes after me with a "bit" extra detail Can I add, go below the FTSE 250/350 and onto the likes of AIM for the junior miners, oilers, explorers etc that's where you will also find a few misplaced valuations due to dollar earnings, probably because many don't understand the significance. I wouldn't have bothered if I saw your reply . Agreed on AIM. An investment in a miner is ofcourse also a bet on USD with commodities priced in them. Link to comment Share on other sites More sharing options...
SillyBilly Posted October 7, 2016 Share Posted October 7, 2016 5 hours ago, Bound 2 tease said: The strength of the Pound against the Dollar doesn't concern me too much, well not compared to the Pound against the Euro.... we're forever being told that the Euro is a failed currency....if the Pound can't hold it's own against a failed currency, what hope is there for it ? Anybody know what formal qualifications need to be held to hold the position Chancellor of the Exchequer ? ....CSE Maths ? Grade 3 or above ? You can add this to the mix To my understanding and in a nutshell, the shares that you and I own in Lloyd's are going to be sold to financial institutions only ...as they are unlikely to realise the value hoped for . ie turn a profit for the taxpayer . That's right the institutions can buy them at a low , but the public are to be denied the opportunity, we're being shafted with our own money again https://www.gov.uk/government/news/sale-of-publics-stake-in-lloyds-to-restart-shortly Lazy link, but stops those that are in denial bothering You are making a mistake (IMO) of not seeing a currency from the point of view of its intended purpose, but only its value at a moment in time. When people say the Euro is a failed currency they mean its construct is failed. It is normal and often necessary for a currency to weaken on poor economic performance or uncertainty (what we have now), that does't mean GBP is failing. Whereas the Euro is: 1) It imposes a common monetary policy on economies that require different ones. For instance - Greece needs prices to fall relative to other European countries. With an independent drachma, the necessary adjustment would take place in foreign-exchange markets. 2) The majority of EU states have economic and monetary union based on the Euro, but the majority of decisions about taxes and spending are at the national level. The European Union therefore has a monetary union but not a fiscal union. It doesn't have a consolidated debt market where "federal" debt (debt is the creation of currency) gives common yields over the whole currency area. Yields are different all over Europe based on the nation issuing the debt. When you hold a currency you take a bet on the issuer of that currency being a) transparent and b) reputable. The Euro creates odd distortions. For example you'd likely see yields drop majorly in Germany on a loss of confidence in the Euro as people hedge toward ending up with Deutschmarks if the worse was to happen. You cannot have that imbalance INTERNALLY within a currency market. GBP/USD other national currencies don't have that issue. This is a major problem, EU leaders thought political union would lead to fiscal union quickly but underestimate how unpopular grouping all national debt together would be. I could list a few more adverse effects but I am getting drunk and tired now! FWIW I believe the Euro in its current form will fail spectacularly one day (ERM on steroids). We would not be talking about weakening at that point but the dissolution of the currency itself. Therein lies the difference between GBP/Euro. The GBP will be here next week,next year...whatever its value may be. Euro?...bets are on. Link to comment Share on other sites More sharing options...
jono Posted October 8, 2016 Share Posted October 8, 2016 On 7 October 2016 at 10:48, Wolfie said: I get it that there is a great deal of uncertainty with Brexit etc at the moment and that's why the pound has fallen. How come shares are doing so well in the same environment, though?. Genuine question. Shares in FTSE companies that get a big chunk of their income from overseas .. Eg multinationals like Diageo and Unilever will see income rise as those foreign earnings gain relative value Link to comment Share on other sites More sharing options...
ketteringram Posted October 8, 2016 Share Posted October 8, 2016 20 hours ago, Ramarena said: Really, Oil is priced in dollars and that affects a lot of things. Yes. And even more importantly, I'm going to NY in Dec. Link to comment Share on other sites More sharing options...
Stive Pesley Posted October 10, 2016 Share Posted October 10, 2016 On 07/10/2016 at 09:48, Ramarena said: Really? According to some of the people I've spoken to about this, they seem to think a tanking currency is great news for exporters and won't have any affect on them personally, let it slide is the general consensus. Happy days! Huh? So it's already been established that we import a lot more than we export, with the main difference being that *some* people are in the business of exporting for a living, and yep I'm sure their order books are bursting and they are doing pretty well out of the tanking currency. But *everyone* is a tacit importer because we all buy the imported goods - and its generally agreed that the price of this stuff is going to increase substantially quite quickly now, as businesses still need to make a profit, so the cost will be passed on to the consumer For example: http://www.bbc.com/news/business-37605642 So if anyone thinks that a drop in the value of the pound won't affect them personally they must be deluded Link to comment Share on other sites More sharing options...
BathRam72 Posted October 10, 2016 Share Posted October 10, 2016 On 08/10/2016 at 13:34, ketteringram said: Yes. And even more importantly, I'm going to NY in Dec. I am going in two weeks!!!!!! Link to comment Share on other sites More sharing options...
Ramarena Posted October 10, 2016 Share Posted October 10, 2016 On 8 October 2016 at 13:34, ketteringram said: Yes. And even more importantly, I'm going to NY in Dec. Hope you booked your flight a few months ago! Link to comment Share on other sites More sharing options...
jono Posted October 11, 2016 Share Posted October 11, 2016 On 10 October 2016 at 12:55, StivePesley said: Huh? So it's already been established that we import a lot more than we export, with the main difference being that *some* people are in the business of exporting for a living, and yep I'm sure their order books are bursting and they are doing pretty well out of the tanking currency. But *everyone* is a tacit importer because we all buy the imported goods - and its generally agreed that the price of this stuff is going to increase substantially quite quickly now, as businesses still need to make a profit, so the cost will be passed on to the consumer For example: http://www.bbc.com/news/business-37605642 So if anyone thinks that a drop in the value of the pound won't affect them personally they must be deluded You are right Stiv but I suppose it depends if the effect it has on us means we are still able buy a home based product instead of the newly more expensive import. White goods and electronics and Clothes .. Yep expect to see rising prices Cars ... . We have assembly units not car makers .. Large chunks of vehicles are imported from the EU and South Korea and then bolted on .. Still it might mean uk factories with a suddenly lower labour cost can export more and thus make more profit/tax revenue. My guess is little change. food produce .. A potential winner and some uk producers prospering Booze .. Well I'll be sulking cos my fav French and Italian wine is only going in one direction. there will be a sum somewhere .. I await balance of trade figures 6-12 months from now to see what has really happened Link to comment Share on other sites More sharing options...
eddie Posted October 12, 2016 Share Posted October 12, 2016 10 hours ago, jono said: You are right Stiv but I suppose it depends if the effect it has on us means we are still able buy a home based product instead of the newly more expensive import. White goods and electronics and Clothes .. Yep expect to see rising prices Cars ... . We have assembly units not car makers .. Large chunks of vehicles are imported from the EU and South Korea and then bolted on .. Still it might mean uk factories with a suddenly lower labour cost can export more and thus make more profit/tax revenue. My guess is little change. food produce .. A potential winner and some uk producers prospering Booze .. Well I'll be sulking cos my fav French and Italian wine is only going in one direction. there will be a sum somewhere .. I await balance of trade figures 6-12 months from now to see what has really happened In 2013 (the last DEFRA figures I have available), we exported £19 billion worth of food. Unfortunately, we imported food to the value of over £40 billion over the same period. It's a trend that has been widening for the last 25 years. Saying that, it's an area where there hasn't been a positive net export figure since records began in 1936. Link to comment Share on other sites More sharing options...
jono Posted October 12, 2016 Share Posted October 12, 2016 3 minutes ago, eddie said: In 2013 (the last DEFRA figures I have available), we exported £19 billion worth of food. Unfortunately, we imported food to the value of over £40 billion over the same period. It's a trend that has been widening for the last 25 years. Saying that, it's an area where there hasn't been a positive net export figure since records began in 1936. Thanks Eddie .. I think I kinda knew we were a net importer but reckon it genuinely is an area where things might change .. Supermarkets buying mountains of chicken from Thailand .. A few pence per kilo might swing a balance to a uk producer. Seasonal fruit, all that sort of thing ? Link to comment Share on other sites More sharing options...
GboroRam Posted October 12, 2016 Share Posted October 12, 2016 13 minutes ago, jono said: Thanks Eddie .. I think I kinda knew we were a net importer but reckon it genuinely is an area where things might change .. Supermarkets buying mountains of chicken from Thailand .. A few pence per kilo might swing a balance to a uk producer. Seasonal fruit, all that sort of thing ? I think most supermarket chicken comes from Lincolnshire, home to the biggest chicken factory in Europe. Link to comment Share on other sites More sharing options...
Stive Pesley Posted October 12, 2016 Share Posted October 12, 2016 It will be interesting for sure. These UK food manufacturers/growers have been hammered for years by trying to compete with much cheaper imports from abroad, and supermarkets continually trying to push them for lower prices. So if they suddenly become the cheapest option due to the fall in the value of the £ then I'm not entirly sure that will still be cheaper than we're used to. I find it hard to believe that we won't see a difference in our pockets - but the silver lining being it should drive growth in the UK food producing market nonetheless. How this pans out if we cut off the supply of cheap labour to service that sector from the EU remains to be seen! Link to comment Share on other sites More sharing options...
ketteringram Posted October 12, 2016 Share Posted October 12, 2016 Read the other day, some expert saying pound could go down as far as $1.20 by the end of 2017. More like the end of this week! Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.