THE City of London is on alert and for once the fears are not related to the Eurozone debt crisis.
Horsemeat-gate has filtered its way through to the square mile meaning eating habits across the financial world have been turned on their heads.
I even heard a leading private equity boss turn down a plate of venison at the BVCA annual dinner on Tuesday in case it was “related to Shergar”. We financiers sure know how to make a mountain out of a pile of horse manure.
It’s been an eventful fortnight since we last spoke with the Pope resigning and Britain falling in love with a certain Canadian who took a bow in front of MPs last week.
Mark Carney appearance before the Treasury Select Committee raised expectations that he will consider more monetary stimulus for the economy and a more flexible approach to inflation targeting when he becomes BoE Governor in July. Economists I know tell me the Bank’s Monetary Policy Committee is already prepared to change its ways.
The MPC’s latest quarterly Inflation Report showed that inflation is likely to remain above the 2pc target for the next two years, but the committee, led by current governor Sir Mervyn King, signalled policy will not be tightened even so.
The reason being the economic backdrop remains extremely weak, with a greater likelihood that growth will be weaker and not stronger than the Bank and other forecasters are currently predicting. All of this – my friends in the City assure me – points to more and not less stimulus in the coming months.
Over on the continent, the President of the European Central Bank has been in gloomy mood of late, warning of the risks to recovery in the Eurozone. My contacts tell me that this is the ECB’s way of letting the markets know there is unlikely to be any policy tightening any time soon. Further afield, leading lights of the mining industry met for their annual bash in South Africa last week where I hear the mood was upbeat. Positive data from China has raised sentiment across the sector although soaring costs and regulatory threats remain a concern.
Elsewhere, gold traders I know reckon the precious metal is heading for $2,000 an ounce. However, the way things are going platinum will probably get there first. Chinese car sales are going great guns (up about 45% year-on-year in January) and uncertainty back in South Africa are likely to keep prices high. Any sign of more strike action in the country could send the price flying.
As for oil, it looks like prices are reaching a high. One oil trader told me that funds in the US had started to trim back their positions for a first time in a couple of months. Equities and oil seem to have momentum at the moment. However, I’m quite conservative, so remain cautious.
That’s all for now as I’m off to find a good horsemeat restaurant. Well, if you can’t beat them join them I say.
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.
by City Insider
How Platinum can help you Eat like a Horse
Feb 14, 2013 at 2:46 pm in Market Commentary by City Insider
THE City of London is on alert and for once the fears are not related to the Eurozone debt crisis.
Horsemeat-gate has filtered its way through to the square mile meaning eating habits across the financial world have been turned on their heads.
I even heard a leading private equity boss turn down a plate of venison at the BVCA annual dinner on Tuesday in case it was “related to Shergar”. We financiers sure know how to make a mountain out of a pile of horse manure.
It’s been an eventful fortnight since we last spoke with the Pope resigning and Britain falling in love with a certain Canadian who took a bow in front of MPs last week.
Mark Carney appearance before the Treasury Select Committee raised expectations that he will consider more monetary stimulus for the economy and a more flexible approach to inflation targeting when he becomes BoE Governor in July. Economists I know tell me the Bank’s Monetary Policy Committee is already prepared to change its ways.
The MPC’s latest quarterly Inflation Report showed that inflation is likely to remain above the 2pc target for the next two years, but the committee, led by current governor Sir Mervyn King, signalled policy will not be tightened even so.
The reason being the economic backdrop remains extremely weak, with a greater likelihood that growth will be weaker and not stronger than the Bank and other forecasters are currently predicting. All of this – my friends in the City assure me – points to more and not less stimulus in the coming months.
Over on the continent, the President of the European Central Bank has been in gloomy mood of late, warning of the risks to recovery in the Eurozone. My contacts tell me that this is the ECB’s way of letting the markets know there is unlikely to be any policy tightening any time soon. Further afield, leading lights of the mining industry met for their annual bash in South Africa last week where I hear the mood was upbeat. Positive data from China has raised sentiment across the sector although soaring costs and regulatory threats remain a concern.
Elsewhere, gold traders I know reckon the precious metal is heading for $2,000 an ounce. However, the way things are going platinum will probably get there first. Chinese car sales are going great guns (up about 45% year-on-year in January) and uncertainty back in South Africa are likely to keep prices high. Any sign of more strike action in the country could send the price flying.
As for oil, it looks like prices are reaching a high. One oil trader told me that funds in the US had started to trim back their positions for a first time in a couple of months. Equities and oil seem to have momentum at the moment. However, I’m quite conservative, so remain cautious.
That’s all for now as I’m off to find a good horsemeat restaurant. Well, if you can’t beat them join them I say.
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.