Casterrian Weekly Roundup

Welcome back to our Casterrian Weekly Roundup!

It’s been another interesting week in markets, particularly for cryptocurrencies, so grab a coffee and catch up on currencies, markets, and the latest headlines from around the business world!

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Currency and market commentary

The euro slipped slightly lower last week as investors struggled to find reasons to buy into the common currency, despite upbeat European Central Bank minutes from the December meeting.

The minutes showed that there was a cautious optimism among policy makers that there are mild indications of core inflation is rising. Whilst these comments underpinned the euro, the ECB minutes also showed that the central bank was more cautious on the state of the economy as a whole.

The ECB will meet to decide monetary policy on Thursday, its second monetary policy meeting with Christine Lagarde at the helm.

The Swiss franc came off the boil after rallying precipitously following the logic-defying decision by the U.S. to add Switzerland to its list of currency manipulators earlier in the week.

In the U.K., sterling has become less volatile in recent sessions after a one-month phase of heightened choppiness following the UK election result.

The U.K. currency is presently back at levels that were prevailing in early December, ahead of the election, against both the dollar and euro, showing a respective year-to-date decline of 1.3% and 0.7% (as of Friday morning).

In Japan, the yen posted fresh lows against the USD on Friday as risk appetite continue to course through global markets. The MSCI all-country world equity index touched fresh record highs earlier, even though Chinese markets have sputtered somewhat and momentum appears to have waned a little.

The Australian dollar hasn’t been performing as well as it might in the context of the strength in global equity markets and the good vibes coming from the trade negotiation between the U.S. and China this week.

Recent data has been showing that the Australian domestic economy is amid a consumer-led slowdown, which is being exacerbated by the worst-in-decades wildfires.

On Friday in commodities:

  • Oil closed at $58.54
  • Gold closed at $1,557.30

Ireland to hold a general election in February

Irish Taoiseach (Prime Minister) Leo Varadkar briefed the Cabinet and opposition leaders last Tuesday morning that a general election would be held on Saturday, February 8th.

It is the first time that Leo Varadkar will face the electorate as Taoiseach in a general election.

It will be the first time since 1918 that a general election will be held on a Saturday.

The logic, it seems, is based on an effort to encourage more young people to vote and to make it easier for working families who might have to pay childcare if the election was held on a weekday.

Read the report from the Financial Times here.

Bitcoin has its best start to the year since 2012

Last Wednesday the Wall Street Journal reported that Bitcoin was having its best start to the year since 2012.

The cryptocurrency was up 23% in the first 15 days of 2020, having not gained more in the year to Jan. 15 since 2012.

Bitcoin closed at $8,896.67 (up 23.7% YTD) on Friday, though had declined to $8,642.70 when markets opened on Monday.

Other cryptocurrencies have also surged through the last two weeks. Ethereum closed on Friday up nearly 32% year-to-date, while Ripple has gained just under 24% in the same period.

Numerous factors are fuelling bitcoin bulls’ hopes. Global markets company CME Group launched options tied to bitcoin futures this week, establishing a new vehicle for institutional investors to buy in to the crypto coin.

The new-year rally follows a tumultuous year for the world’s biggest cryptocurrency. Bitcoin nearly broke through $14,000 in the summer as hopes for Facebook’s libra coin peaked, but fell through the second half of 2019 amid fading enthusiasm around the project and heightened regulatory fears.

Read the Wall Street Journal article here, or track the currencies live on Markets Insider here.

Is Apple preparing to do battle with Google and Amazon over privacy?

Jay McGregor at Forbes reported last week that he thought Apple’s recent acquisition of Seattle-based artificial intelligence company Xnor.ai, suggested that Apple might be preparing for a future battle with Google’s Assistant or Amazon’s Alexa.

The article suggests that the levels of personal data required by Google and Amazon “might not sit well with some and Apple is likely looking to capitalise on that. From taking swipes at rivals Facebook and Google on data collection, to the on-device AI that already takes place on iPhones to repeatedly resisting requests to weaken encryption on its devices specifically for law enforcement – Apple has long made clear its position on data privacy.

Some of this may very well be grandstanding that plays well to privacy-concerned onlookers, especially considering Apple’s use of Google tech and the money it receives to do so, but Apple is clearly on a different path to its rivals.”

Read the full article on Forbes here.

The end of Google’s “Double Irish, Dutch sandwich” tax scheme

As was reported earlier in the month, Google parent Alphabet will no longer use an intellectual property licensing scheme, known as the “Double Irish, Dutch sandwich”, which allowed it to delay and avoid paying a range of taxes.

While the date of termination of the Company’s licensing activities has not yet been confirmed by senior leadership, management “expects that this termination will take place as of 31 December 2019 or during 2020”.

Whether Google’s decision signals another shift in the global tax environment and potentially the start of a longer-term plan to reduce its presence in Ireland with a negative impact on employment, corporation tax and economic growth, remains to be seen.

Read the full article in the Irish Times here.

Disclaimer: The Casterrian Weekly Roundup is a marketing communication and should not be used for any investment research. This document is a general communication being provided for informational purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products.