A record month for Acorn returning over 13%.
A record month for Acorn returning over 13%.
The drop in the British currency on Friday will have an impact not just on the local economy but also on companies from around the world doing business in the country as well as tourists and shoppers.
The pound fell as much as three cents against the dollar, from $1.2950 to $1.2635, after the British election produced no clear winner. By Friday, it had recovered slightly to $1.2755.
The drop is not as dramatic as the near 17-cent slide — from $1.50 to $1.33 — that the currency endured after Britain voted last year to leave the European Union, but it is likely to be felt broadly if it is sustained.
Here’s a look at the main effects it could have.
A drop in the pound makes it cheaper for people holding other currencies to visit Britain — and shop there. Britain has already seen a surge in tourism since the pound dropped on the Brexit vote last year. A record 37.6 million people visited Britain last year, spending 22.5 billion pounds ($29 billion), with visits from the U.S. up more than 10 percent. It’s not just the stay that’s cheaper. London is one of the biggest destinations for international shopping, particularly luxury goods, and the weaker pound has helped sales. Companies like Burberry have credited tourist shopping for helping to boost sales.
The drop in the pound will help lower the cost of Britain’s exports around the world. Retailers tend to have contracts on imports that span months, if not years, to avoid the uncertainties of fluctuating currencies. So don’t expect the price of a bottle of Scotch whisky to fall overnight. But in the longer-term, as the supply contracts are renegotiated, a weaker pound will, all other things being equal, reduce the cost of British goods sold around the world.
BRITAIN’S COST OF LIVING
The opposite is true for the British: imports for them become more expensive as the pound drops. Some things, like oil and car fuel, which are priced internationally in dollars, will reflect the pound’s drop quickly by edging up. Other things, like foreign cars and food, could take longer as supply contracts get renewed. Since the pound’s big fall on last year’s Brexit vote, inflation has risen faster than wages across Britain, eroding people’s standard of living. Higher inflation also eats away at the benefits exporters will get from the lower pound.
British companies become cheaper takeover targets and will find it more expensive to buy foreign companies. Since last year’s sharp fall in the pound, British companies have been approached and been taken over. Software company Arm Holdings was taken over by Japan’s Softbank for $32 billion. More recently, consumer goods giant Unilever has rebuffed a $143 billion approach by Kraft Heinz.
The British currency’s drop will have an automatic impact on company earnings. British multinationals like BP or Shell will see their revenues made in other countries become more valuable when repatriated and translated back into pounds. For non-British companies, their revenues in Britain will take a hit. Some companies have raised their prices or reduced the amount of goods sold in Britain to make up for the decline in local revenue. The issue was highlighted when Mondelez International, based in Deerfield, Illinois, last year reduced the size of some of its Toblerone chocolate bars in Britain.
I have individual shares I have Russian government bonds have yields very, very high you can get 10 percent in rubles and I in my view the ruble has stabilized so it’s a lot better than 2 percent in America. (Market Vector Russia ETF Trust (RSX), iShares MSCI Emerging Markets Index ETF (EEM))
The Chinese economy will certainly slow because its customers are slowing. Some parts of the Chinese economy have a lot of debt and that is going to cause problems in China. (iShares FTSE/Xinhua China 25 Index ETF (FXI), iShares MSCI Emerging Markets Index ETF (EEM))
The price of bitcoin surpassed $2,000 for the first time in history today, pushing the cryptocurrency to a fresh, new record amid rising trader interest.
The currency’s price rose as much as 2.62% during the session, according to CoinDesk’s Bitcoin Price Index (BPI) to hit a press time high of $2,019. By rising above $2,000, bitcoin’s price has surged more than 100% this year and nearly 125% since hitting an annual low of $891.51 in late March.
Now that the the digital currency has surpassed this key, psychological level of $2,000, it could experience some significant tailwinds, according to several analysts who spoke with CoinDesk.
The Swiss based company AlgoTrader which provides algorithmic trading solution to support automated Bitcoin trading just announced that has added an automated Bitcoin algo trading – an algorithmic trading software that allows trading of cryptocurrencies on a fully automated quantitative basis.
Blockchain and cryptocurrencies are a hot trading topic this year. Many banks are already establishing blockchain-based services and using cryptocurrencies for interbank settlement. The first blockchain / cryptocurrency-based hedge funds have also appeared.
The upcoming AlgoTrader release 4.0 integrates Coinigy, an all-in-one digital currency platform. Coinigy offers connectivity to over 45 of the world’s most popular cryptocurrency exchanges, allowing clients to trade hundreds of different cryptocurrencies.
Benefits of the new Coinigy integration include:
“The U.S. stock market rally is ending,” said Schiff. “It’s a bubble that is going to deflate.”
Since the November election, the Dow Jones Industrial Average has surged over 12%. Additionally, the S&P 500 has added over 9%, and the Nasdaq has soared 13%.
But Schiff thinks the markets are extremely overinflated due to “investor optimism.”
“We are not getting the Obamacare repeal, we are not getting the comprehensive tax reform, I mean we are not getting anything and still the stock market has not surrounded any of the gains from the Trump rally that was based on the expectation of a bunch of things that will not happen. What is going to happen is a recession!” wrote Schiff on his blog April 12.
However, according to Schiff, the real impetus that will topple this economy has already begun…
Listening to Warren Buffett never gets old to the thousands of Berkshire Hathaway shareholders who filled an arena Saturday to listen to the billionaire investor at the company’s annual meeting.
More than 30,000 people came to Omaha to hear Buffett and Berkshire Vice Chairman Charlie Munger talk. The 86-year-old CEO and his 93-year-old partner have been leading the conglomerate for more than five decades, but the crowd is always listening for new tidbits of wisdom. Buffett is known for his candor and plain speaking.
Berkshire’s top two executives acknowledged Saturday that they missed out on investing in Google years ago, but they expressed pride in the company they built through acquisitions and said they believe it will thrive for decades to come.
“In retrospect, I think we were smart enough to figure out Google early, and we didn’t,” Munger said.
Buffett and Munger avoided technology investments for most of their careers because they said it was too hard to figure out which companies will win. Berkshire does now own 133 million Apple shares, but it just sold off one-third of its 81 million IBM shares because Buffett misjudged that firm.
Buffett had harsh words for Wells Fargo’s managers who failed to respond promptly to the sales practices scandal that cost the former CEO his job last year. The bank said last fall that its employees opened up 2 million bank accounts without customer approval to meet unrealistic sales goals.
“The main problem was they didn’t act when they learned about it,” Buffett said.
Berkshire is Wells Fargo’s biggest shareholder. Buffett said he still believes in the long-term prospects of the bank even though Wells Fargo mishandled the scandal.
Buffett said there’s no change in Berkshire’s plan to eventually replace him. He said one of the most important qualities his successor will need is a talent for wisely investing Berkshire’s cash.
“We need a money mind as CEO,” said Buffett, who has no plans to retire.
Berkshire plans to name one of its existing managers CEO after Buffett is gone, and the decentralized structure of the company allows Berkshire’s subsidiaries to largely run themselves.
“We have an extraordinary group of good managers,” Buffett said.
The executives who run Berkshire subsidiaries look forward to the meeting just as the shareholders do.
Brooks Running CEO Jim Weber said he’s always careful about how much of Buffett’s time he takes up when he talks to him, so those conversations tend to focus just on Brooks’ running-shoe business. The annual meeting offers one of the few times Weber gets to hear Buffett discuss other topics.
“I want to hear him talk about the economy and investing,” Weber said. “I’m looking forward to hearing him as much as everybody else.”
Dozens of companies Berkshire owns set up booths in an adjoining 200,000-square-foot exhibit hall to sell their products and take questions about their businesses. The event offers Geico insurance quotes, See’s Candy, Justin cowboy boots, RVs and homes manufactured by Clayton Homes.
“I think it’s a neat way to keep the enthusiasm up in shareholders,” said Jerry Meyer, who drove to Omaha with family from Coffeyville, Kansas.
Buffett is the celebrity that everyone wants to get close to at the meeting. When Buffett toured the exhibit hall, he was surrounded by a pack of reporters, shareholders and security officers. While Buffett met Mr. Peanut at the Kraft Heinz booth, Miami Dolphin Ndamukong Suh wandered a few feet away without a crowd.