Sunday, October 15, 2017
Friday, October 13, 2017
With Catalonia wanting independence from Spain, what would happen to the Spanish economy and the effect on the Euro .
Well, to be clear the threat of independence and the impact on the Dpannish economy would be a disaster for financial markets . The reason is because Catalonia splitting from Spain would rock the stability of Spain and cause an exit on all fronts . In addition the uncertainty of where the country post split would be going would add further damage .
What we saw in Geeece in 2014/2015, would be considered a tea party to what would be seen globally for a Catalonian independent state.
The Euro would collapse and thus have a significant down wind effect on the rest of Europe. Confidence would be lost in Spain and be a major shock to the EU. This would take months for the EU to recover from this and would send the Euro crashing and financial markets to drop significantly.
The independence call would have the effect of other minnow states looking for independence . The weak countries of the EU would be under further strain to recuperate from this and cause there economies to drift rudderless .
Bond prices in Spain would collapse and the yield would probably exceed 11%. In addition the other Eurobond prices would be shunted downwards with yields reflecting that downward push.
This call for independence by Catalonia is not going away and it's a matter of time before they succeed . Be aware and be prepared as the speed of decent in the markets and the Euro will be very fast .
Friday, September 15, 2017
It is clear to everyone that the cost of living has increased and will increase further since Brexit.
The fall in the pound being the main cause and the driver behind this increase in inflation and the man in the street feeling the household costs are increasing.
The Bank of England has changed its tone recently and has now become more hawkish , which means in simple terms that they will look to increase the bank lending rate . Why? Simply put the Bank of England has seen inflation increase in the last six money he to levels not seen for many years .
Inflation in the U.K. Is running at 2.9% and the Bank of England's tolerance is being pushed . Rising inflation above the BOE target of 2% puts pressure on the BOE to curb inflation and bring it back down to the target range .
Inflation has moved upwards and will move further due to the weakness of the pound . The UK has become heavily dependant on imports from food, vegetables, technology , chemicals etc that the cost of those goods in pound terms has risen .
What the pound could buy 18 months ago has gone up now by about 27%. The importers and retailers have tried to absorb much of this cost but are simply unable to continue absorbing this extra costs and so , are passing this onto the consumer . This means thatvroices are rinsing , which means the costs of goods is rising and so inflation Rises.
What about the pound £
Well here is the funny thing .
The pound will surely rise and become stronger on the sniff or smell that interest rates may rise in the U.K. . This is due to the pound becoming more attractive as a currency to invest in and the banks will benefit further from a high deposit environment .
As the pound gets stronger then the cost of imports per se flies down and then inflation should weaken.
This is the theory .
Tuesday, September 12, 2017
Is the hurricane season a season or is it becoming more of a regular event . Well, if you were to judge by the stock markets reaction they posted big gains once it hit landfall .
Is this the case or is it the States demonstration of strength for 9/11 as it was on Monday this week and the markets jumped . The Dow and the other US markets being global leaders and trend setters always want to waive the flag in piece terms and resilience when they have been under attack .
The horrific events of September 2001 caught everyone by surprise and the sheer horror of that day still rings in my head. The sight of evil in carnage driving death and destruction into the innocent people will never leave me .
Stock markets are highly emotional places and prices are often driven in emotions . The anniversary of September 2001 is a day when the US flag flies high and the USA wants to show all how strong it is and the willingness to fight for life .
Saturday, July 22, 2017
Well, as I am often approached by many start ups that are looking for finance . Most of the start ups either have no funding or have a little funding left over from round one or round 2 that will last them another 3 - 4 months .
The ideas out there are really great and probably one of them will make it big. The problem is that the two factors involved , the money needed and the time needed are a drain on resources . This demands a lot of patience and a very big time investment .
Is the business viable ?
Assuming that you have identified that the business is a good idea and the "go to market " timetable is acceptable. All well and good , but what about the resources as mentioned that are needed.
Looking at the funding requirement , which is normally well short of target as dates by the CEO this is only part of the assessment . Generally, the CEO states a figure that he thinks is needed. This number is usually about only 50% of what is needed over a 18-24 month period .
The other factors involved such as time and planning for the start up are a lot more expensive then the initial funding .Team expertise is called upon to analyse and assess the business case. All of this is cost , time and manpower .
It's obvious that the once an idea comes to the table then it's a matter of sourcing the funding and finding the right match . The start up and the investor have to get the foundations right. That means there has to be a natural chemistry between the parties . More often then not the money maybe available , but the parties just don't see eye to eye.
Unfortunately, this only comes out at a Peter stage once the details of the deal come out and are discussed and often at the Due Diligence stage . I have seen many deals go to advanced discussions and agreements to breakdown at the final stage .
More often then not , the Angel investors and the first VC, or incubators have a Major say as they also invested thus making it a 5-6 Party negotiating team.
Since there are more then just the host start up and the investor involved things get complicated .
So how do you succeed
In overcome the above , which are only a few of the hurdles there has to be a clear recognition by the Start Up that there will need to be a lot of give away at the negotiation table .
To try and get all the parties to agree often at different share prices will need intense and sensitive handling . This is where you will need a person in effect a very good broker that can handle all parties and get them to see eye to eye .
To leave the new investors and the existing investors to negotiate is possible but can cause a little tension and a breaking of the deal .
This is mainly due to the fact that new investors have not need there at the beginning of the Start up thus there emotional attachment is not there . The gap between the two can be bridged , but again needs a good broker to handle the 2 very different positions .
There is little summary here as each case needs to be looked at . Probably , lots of great ideas are falling between the gaps , but that's business . We will look back in time to come and say " Wow, I was presented that idea " when it's sold for hundreds of millions !!!!!