Here I am, stuck in the middle with you
IT may have escaped your notice but Europe as a whole has swung quite markedly to the right. So much so that Emmanuel Macron, already in trouble, has clearly decided to put himself in MORE trouble by calling an election within France.
Realistically, there is really only one outcome which will be that he is a lame duck. In terms of the markets, the Euro has in the vernacular “slumped” as markets take on board the implications of the new reality.
But what are we to make of this, when it looks as if the UK is about to turn decisively Left? In the last decades, the UK has been Right whilst France et al have been Left.
The position now appears to be in the process of being reversed. More importantly, what does this mean for markets and crypto in particular?
For sure, one of the reasons for dissatisfaction with the present ruling elites is that they have in almost all cases got the economies wrong in recent times. It’s almost as if, collectively, the various national Banks and Treasuries have completely forgotten how money works.
In the UK, as I have previously argued, inflation is being very stubborn. The same applies to the States, whilst the Europeans seem to think it doesn’t matter.
In my view they will learn how much it matters at the ballot boxes over the next year or so. The employment outlook remains cloudy at best, whilst, in a fit of unusual exuberance, the UK economy itself appears to be growing marginally.
That may not persist, but I wouldn’t be surprised if our good friends at the Bank of England use that as an excuse NOT to lower rates. They are helped in this by the fact that, belatedly, they are paying attention to monetary aggregates which appear to be picking up nicely. They won’t want that to get away from them again as it did so spectacularly in the not so distant past.
In America some fifty odd banks are at risk of going bankrupt, and if the FED doesn’t do anything soon some will undoubtedly go bust. There remains the fact of massive non-performing commercial property loans and any incoming President is likely to have to “do something” sharpish to prop up the sector.
Back to crypto. Ten days ago everyone and his dog was shouting that $100k for Bitcoin was baked in, which promptly led it to drop away once more. My feeling is we aren’t going to see massive jumps again as we did in the first quarter.
Those were bound to happen with the ETF and halving scenarios. There are quite a few who – having been well in profit – are suddenly looking at scenarios that are not so amiable.
If I was to put money on it (and I’m not suggesting you should) I would say, at best, we will see a long slow grind higher.
One of the things I had a most interesting conversation about the other day was potential profit. For Bitcoin to get from $70,000 to $140,000 represents cash going in of some $1.2 trillion.
Even today that is a lot of cash, and although it isn’t out of reach there are better bets to be made. Spend $1.2trillion to double your money or (for example) $30million. The risk/reward situation doesn’t bear thinking about, especially if you are using leverage.
Today’s headline refers to the fact that the UK is very definitely stuck in the middle. It’s a bit like a person climbing up a ladder who gets half way up and suddenly freezes. Although both the upwards and downwards paths are clear, the climber does not have the will or courage to go either way.
Starmer and his cohorts will want to make an impression in their first 100 days – and they have said lots – but, at the end of the day, it remains to be seen how good or bad the policies will be.
In a sense maybe it doesn’t matter as the most important thing on that ladder is movement not stasis. As one of the triumvirate who are the bosses of Nestle once said to me, “At my level it doesn’t matter what I decide. I’ll be gone before anyone knows what the outcome is.”
