Latest / Merryn Talks Money / Markets Wrap: Gold, Bonds and Bitcoin Struggle as War Uncertainty Clouds Investor Outlook

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Markets Wrap: Gold, Bonds and Bitcoin Struggle as War Uncertainty Clouds Investor Outlook · Merryn Talks Money

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
• 0:20
  Speaker 2: Welcome to the Merton Talks Money Market Wrap. We'll be
• 0:23
  Speaker 2: talking about the biggest moves in markets this week and
• 0:25
  Speaker 2: what's driving them. I'm joined Stevig, author of the award
• 0:28
  Speaker 2: winning money Distilled newsletters, stepping in for Medon this week
• 0:32
  Speaker 2: and back again. Joining me in the studio is Marcus Ashworth,
• 0:35
  Speaker 2: Bloomberg opinion columnist and all round markets expert. Hello, Marcus,
• 0:40
  Speaker 2: Hana John, Thank you very much for joining us again. Yes,
• 0:43
  Speaker 2: it's excellent to have you heard, because because nobody really
• 0:47
  Speaker 2: seems to know what's going on.
• 0:49
  Speaker 1: Yeah, it's quite difficult. We get asked, you know what's
• 0:52
  Speaker 1: going to go on and what way should you put
• 0:53
  Speaker 1: your money away? Shouldn't you put your money? And the
• 0:55
  Speaker 1: answer is, well, the dollar is done? Okay? Is really
• 1:00
  Speaker 1: not that well as a haven in that sense gold
• 1:04
  Speaker 1: we can clearly see, and bitcoin has become sort of
• 1:07
  Speaker 1: speculatively joined at the hip and that's quite quite a
• 1:12
  Speaker 1: big correction goal. But at least it did bounce off
• 1:14
  Speaker 1: the Turner day moving average of four hundred and ten sound,
• 1:18
  Speaker 1: and that shows that I think that there's a lot
• 1:20
  Speaker 1: of the speculative stuff is mostly out now.
• 1:23
  Speaker 2: I mean that is interesting because the I suppose and
• 1:27
  Speaker 2: people have a little bit of you know, skepticism or
• 1:31
  Speaker 2: the kind of skeptism but charting. But the truth is,
• 1:33
  Speaker 2: if there is if you're talking me short taim moves
• 1:36
  Speaker 2: and b if you're talking about an asset that has
• 1:38
  Speaker 2: no obvious fundamental pracing, you know, you can't praise something
• 1:43
  Speaker 2: that doesn't generate a cash for easily. So technical analysis
• 1:47
  Speaker 2: actually is pretty useful when it comes to stuff like
• 1:50
  Speaker 2: gold and bitcoin specifically.
• 1:53
  Speaker 1: Yeah, I mean, well, indeed, some of these markets, like
• 1:56
  Speaker 1: a lot of the FX markets are you know, a
• 1:58
  Speaker 1: lot everyone prays tacticals on and so you don't and
• 2:00
  Speaker 1: I think gold is it's reasonably important to factor to it.
• 2:03
  Speaker 1: So I think this puts gold into a different paradigm
• 2:07
  Speaker 1: in the sense it's now perhaps a bit more normal.
• 2:10
  Speaker 1: A retpiece is basically saying that some central banks who
• 2:12
  Speaker 1: have been buying may look to cash out pig you know,
• 2:16
  Speaker 1: read the piggy bank and their hour of need. As
• 2:18
  Speaker 1: we cly can see both if there are energy resource
• 2:21
  Speaker 1: poor or indeed requiring a lot more banging things because
• 2:25
  Speaker 1: at military need. So I think it's going to be
• 2:28
  Speaker 1: quite an interesting time where you know, certain Asian and
• 2:31
  Speaker 1: Middle East in countries may may decide just to trim
• 2:34
  Speaker 1: a little bit of what's been a fabulous returning asset
• 2:37
  Speaker 1: and gold and that will help smooth the sort of
• 2:40
  Speaker 1: pain on their on their on their populacis. But equally,
• 2:44
  Speaker 1: some still believe in goals, still want to move away
• 2:47
  Speaker 1: from the dollar for whatever reason. You know, the gold
• 2:49
  Speaker 1: has attraction, so that the sense I don't think, you know,
• 2:52
  Speaker 1: gold is going to collapse all like that. I just
• 2:54
  Speaker 1: think it's going to do chops and wood, and there's
• 2:59
  Speaker 1: good reasons to buy, good reasons to sell it, and
• 3:00
  Speaker 1: that makes it a little bit more possibly a little
• 3:03
  Speaker 1: bit more predictive than it has been at the last
• 3:05
  Speaker 1: year or two.
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  Speaker 2: I think that's really interesting obviously. I mean, the point
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  Speaker 2: of central banks buying reserve asis is to an extent
• 3:13
  Speaker 2: to have something that can lay on emergencies. And so
• 3:17
  Speaker 2: we've had an emergency. So anyone who's selling gold at
• 3:20
  Speaker 2: the moment from a central bank, I mean, I'm basically
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  Speaker 2: suing that it's what it's done, what it was meant
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  Speaker 2: to do.
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  Speaker 1: Yeah, And I think that all the talk of interest
• 3:28
  Speaker 1: rate hikes among major central banks. Well, one, I think
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  Speaker 1: it's madness because you know, an external supply shock, there's
• 3:36
  Speaker 1: very little you can you can control it. And more importantly,
• 3:39
  Speaker 1: you know, with labor markets weakening in general overall economic sogginess,
• 3:43
  Speaker 1: the actual price mechanism isn't going to be quite so
• 3:47
  Speaker 1: bad as time, likely not to be quite so bad
• 3:51
  Speaker 1: in the sense that second round effects and wage demands
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  Speaker 1: and all the things that followed clearly in twenty twenty
• 3:56
  Speaker 1: two is unlikely to be anywhere near as strong. However,
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  Speaker 1: clearly central aren't hang any risks on that, and there's
• 4:03
  Speaker 1: a lot of talk at the moment. I hope that
• 4:04
  Speaker 1: will calm down a bit, but clearly bomb markets and
• 4:08
  Speaker 1: fixed income have not been anything like haven you would
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  Speaker 1: expect because they're seeing straight through and inflation and potential
• 4:15
  Speaker 1: changes of certainly no more rate cuts and potentially a
• 4:19
  Speaker 1: rate hikes. That will work its way out, I hope,
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  Speaker 1: but you know, we've got to really have a clearer
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  Speaker 1: end to the war for that to be have any
• 4:27
  Speaker 1: former level of confidence. At some point, if bon yields
• 4:30
  Speaker 1: keep on rising, and it just makes me feel a
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  Speaker 1: little bit sick, this will move credit spreads wider, and
• 4:36
  Speaker 1: it will move equity markets down, but we are holding on.
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  Speaker 1: Everyone's hoping that they don't want to miss out on
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  Speaker 1: the relief rally when any of it ever properly comes.
• 4:45
  Speaker 2: Well, there is that isn't There's that element The TRP
• 4:48
  Speaker 2: put still walks, but it doesn't what they seemed that
• 4:51
  Speaker 2: the coding spine on the Central Bank put used to.
• 4:54
  Speaker 2: It's like with central banks, it was like, well they'll
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  Speaker 2: actually plent money and do something that props the mind
• 5:00
  Speaker 2: it up. But at some point, Trump's kind of like
• 5:03
  Speaker 2: social media output has to lose its potency.
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  Speaker 1: I think we've seen it maybe at sort of six
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  Speaker 1: and a half thousand on the S and P one
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  Speaker 1: hundred dollars on certainly West Texas crude, and you know,
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  Speaker 1: maybe five percent of the thirty yeld or four and
• 5:18
  Speaker 1: a half what do you want to call it or
• 5:20
  Speaker 1: more on the tenure is where clearly he doesn't find
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  Speaker 1: very comfortable, and that's when you get some more dubbish
• 5:28
  Speaker 1: comments coming from him. But I mean, there's no point,
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  Speaker 1: you know, trying to guess whether war is going to
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  Speaker 1: go or it's going to stop. And I think that's
• 5:35
  Speaker 1: where it's quite tricky to choose markets. I do see
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  Speaker 1: plenty of talk about you know, even space x IPOs
• 5:41
  Speaker 1: and you know the electronic arts. You know, LBO deal
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  Speaker 1: going through clearly in the US primary bomb markets are open.
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  Speaker 1: Less so in Europe, but there's still the old deal
• 5:53
  Speaker 1: came through a few today six I think, mostly from
• 5:56
  Speaker 1: Coca Cola. But you know, the point is is that
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  Speaker 1: the market's already want to go back to action. Perhaps
• 6:03
  Speaker 1: that's front running a little bit too aggressively. What really
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  Speaker 1: will happen with this war? But no one's really willing
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  Speaker 1: to cash and bail out out of all equities was
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  Speaker 1: expecting to bounce back hard when if it does end.
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  Speaker 1: So it's a bit of a strange market. As I said,
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  Speaker 1: markets are training very poorly. Currencies are you know again
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  Speaker 1: the dollar is a bit stronger, but not that much
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  Speaker 1: obvious yea, and gold, if you know, it hasn't worked
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  Speaker 1: very well, and Nora's bitcoin or anything like that, so
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  Speaker 1: there's no philological place to hide other than dollar cash.
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  Speaker 2: Bit Coin has actually growing up since the war started,
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  Speaker 2: but only because it fell so hard before. So yeah,
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  Speaker 2: it's kind of split in heels. But I think the
• 6:42
  Speaker 2: bitcoin people would say, oh, seven six percent. But one
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  Speaker 2: thing I was going to ask about the fiscal seed.
• 6:50
  Speaker 2: So going back to Boyne yields, how much of the
• 6:54
  Speaker 2: concern is not so much or not just a boit
• 6:58
  Speaker 2: the fear that central banks well entry streets and instead
• 7:02
  Speaker 2: of boat where what arms when other governments start to
• 7:05
  Speaker 2: try and blo people energy bells home? Which is that
• 7:10
  Speaker 2: going to drive up bordering costs like in Breton for example,
• 7:14
  Speaker 2: you know, get up an energy blow when Mutual Reeves
• 7:18
  Speaker 2: is already looking at her fiscal Hadron cannot like vanish
• 7:20
  Speaker 2: and don't the pine yea any of that.
• 7:23
  Speaker 1: I mean we calculated about three to five billion extra.
• 7:27
  Speaker 1: If prices persist this high, that's not really going to
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  Speaker 1: change the dial. They're clearly not talking about any packages anyone,
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  Speaker 1: like the trust style of bailout, which of course that
• 7:38
  Speaker 1: was the real mover and shaker that the unfunded taxes
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  Speaker 1: was a minor, very minor thing compared to the huge
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  Speaker 1: potential which ended up only being a quarter of what
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  Speaker 1: it could have been. But that's that's the real driver then.
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  Speaker 1: So there's nothing like that now yet anyway, And clearly
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  Speaker 1: the government isn't ready to still start helping NASE or
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  Speaker 1: anything like that. So for the moment. I think currently
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  Speaker 1: in the UK there is a window because the way
• 8:02
  Speaker 1: the off gem price cat works out June July July,
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  Speaker 1: and then I thinks the next time, which will be higher,
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  Speaker 1: but you know clearly, but I mean it's just not necessarily.
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  Speaker 1: I've got a few months of hoping and praying that
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  Speaker 1: this war goes away. But nonetheless growth in the UK
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  Speaker 1: is set ahead towards zero again, which is staggering. So
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  Speaker 1: that's what I personally don't think the banking will be
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  Speaker 1: able to really bring themselves to height rates. But you know,
• 8:27
  Speaker 1: the market guilt yields up close to five percent. You know,
• 8:30
  Speaker 1: this is doing all the hard work for him anyway.
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  Speaker 1: You know, he's pricing mortgage deals of gone through, you
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  Speaker 1: know the roof and likewise you know corporate loans and
• 8:38
  Speaker 1: things like that which are priced off guilts. You know,
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  Speaker 1: it is already the pinch is already happening. So we're
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  Speaker 1: hopes that will do a lot of the heavy lifting
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  Speaker 1: for the banking and they won't feel they need to
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  Speaker 1: do much more.
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  Speaker 2: Because we will be more a lot d anyway.
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  Speaker 1: Well, I mean I think we're looking at they were
• 8:54
  Speaker 1: predicting less one percent growth this year anyway, which was
• 8:57
  Speaker 1: a bit on the those sides. The ABI had been
• 8:59
  Speaker 1: much more optimistic, trimmed it back but just over one
• 9:02
  Speaker 1: one point two something like that. But I think now
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  Speaker 1: we'll be lucky, we'll get half a percent at this rate.
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  Speaker 1: So very in mind, the first quarter the last two
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  Speaker 1: or three years has been the big quarter and the
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  Speaker 1: rest of the year has been pretty much flat, and
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  Speaker 1: it's a real kick in the teeth to get you know,
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  Speaker 1: first quarter is going to go be flat probably at
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  Speaker 1: best on very very small up. So that's going to
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  Speaker 1: kick the momentum out out of the economy, stop it dead.
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  Speaker 1: And I think that's you know, a worry because if
• 9:28
  Speaker 1: we were to get right hikes in the in the
• 9:30
  Speaker 1: UK and likewise in Europe. Again, I don't see it
• 9:33
  Speaker 1: happening for them. But bear in mind their rates are
• 9:34
  Speaker 1: at two percent, we're at three three quarters. They were
• 9:36
  Speaker 1: really double that. We do have stickier inflations where they
• 9:39
  Speaker 1: are index everything and up at ratchets and people demand
• 9:43
  Speaker 1: higher wage rises. It's very hard to get out out
• 9:45
  Speaker 1: of the system in the UK, but it was looking
• 9:47
  Speaker 1: like it was going to start coming out. But I
• 9:49
  Speaker 1: think if they do have to cut hike rates, maybe one,
• 9:51
  Speaker 1: just to you know, preemptively. I suspect it might last
• 9:55
  Speaker 1: very long. And I see the banking and turning around
• 9:58
  Speaker 1: to cutting rates again. Possible he quite up sharply if
• 10:01
  Speaker 1: they already does collapse. I don't think this is going
• 10:04
  Speaker 1: to happen, but you know, we don't have to be
• 10:06
  Speaker 1: aware that all bets are off now and we have
• 10:08
  Speaker 1: to look at things, you know, Yeah, much more philosophical way.
• 10:26
  Speaker 2: We touched on the housing market. They briefly have mortgage rates,
• 10:29
  Speaker 2: but it did catch my eye yesterday. Hello. You know,
• 10:32
  Speaker 2: I've been aware of this for a while, but like
• 10:34
  Speaker 2: London prices from the o NS, the Official House Price Index,
• 10:39
  Speaker 2: which I don't pay that much attention to because it's
• 10:41
  Speaker 2: very late in arriving, but they've gone down for about
• 10:44
  Speaker 2: six months in a row now, and it was down
• 10:46
  Speaker 2: something like one percent or something that yearine year. It
• 10:49
  Speaker 2: is quite the significant drop. I mean, clearly, if mortgage
• 10:53
  Speaker 2: rates go up, that's going to get wash this year presumably.
• 10:57
  Speaker 1: Well, there was sign of it turning around. I've fallen
• 11:00
  Speaker 1: so hard and so fast, and I just think that's
• 11:03
  Speaker 1: kicked the momentum out of it again. And then yeah,
• 11:07
  Speaker 1: that knock on effect of like the marginal buyer you know,
• 11:13
  Speaker 1: buying on a eighty or ninety percent learn to value
• 11:16
  Speaker 1: is going to be put off. It won't alter the
• 11:20
  Speaker 1: bulk of transactions these days, which are sixty percent or
• 11:23
  Speaker 1: indeed in cash, but again people will be more cautious
• 11:27
  Speaker 1: and other knock on effect fair of the whole rest
• 11:28
  Speaker 1: of the economy won't be great. But it's going to
• 11:31
  Speaker 1: take a while to filter through that, and I think
• 11:34
  Speaker 1: that you know, London properly will probably go to my mind,
• 11:38
  Speaker 1: probably almost nowhere in that sense. I don't think it's
• 11:40
  Speaker 1: collapse much further. I think we've seen, you know, towards
• 11:43
  Speaker 1: the bottom. But as I said, that momentum when it
• 11:45
  Speaker 1: was starting to look like a concern around is it
• 11:48
  Speaker 1: happened no more?
• 11:49
  Speaker 2: And just a sort of a final question, which really
• 11:52
  Speaker 2: is t your pick to your guess how much longer
• 11:56
  Speaker 2: doing this goes on for before we actually start to
• 11:59
  Speaker 2: see some than very young players in because I mean
• 12:02
  Speaker 2: that are sayings that countries also really Anesia. I mean
• 12:05
  Speaker 2: that haven't they start rationing if you're also players in
• 12:08
  Speaker 2: some place, which yeah, as we.
• 12:10
  Speaker 1: Know, it's not just the visible stuff, it's it's the
• 12:13
  Speaker 1: stuff that comes off at you know, fertilizer snap for
• 12:17
  Speaker 1: for plastic bags. Apparently it is a Russian South career
• 12:20
  Speaker 1: for plastic bags. You know, it's all, it's all the
• 12:22
  Speaker 1: other products which you know, the heavier stuff, you know,
• 12:26
  Speaker 1: diesels and and bitchumen and all these sorts of things
• 12:29
  Speaker 1: which you know are products from hydrocarbons. Are are what
• 12:33
  Speaker 1: really makes the world go around. And I think, I mean,
• 12:37
  Speaker 1: Dodgebank did a quite an interesting survey and when they
• 12:39
  Speaker 1: thought everyone thought the war would would come to an end,
• 12:41
  Speaker 1: and I think most people view it as the early part,
• 12:44
  Speaker 1: early to mid part of April. You know that that's
• 12:46
  Speaker 1: really where everyone's tolerance and patience will put pressure on
• 12:51
  Speaker 1: Trump to say enough already, and that maybe well be
• 12:54
  Speaker 1: earlier than that. But I think, you know, we know
• 12:57
  Speaker 1: the deadline and end of Friday is normally where obviously
• 13:02
  Speaker 1: if they weren't to further pick up big pickup and aucilities,
• 13:05
  Speaker 1: that will happen over this weekend. If it carries on
• 13:09
  Speaker 1: after that for much longer, I think it will become
• 13:12
  Speaker 1: increasingly less and less effective, increasingly less and less easy
• 13:16
  Speaker 1: for the US administration and Israel to carry on. So
• 13:19
  Speaker 1: they get on with it very quickly and accelerated right here,
• 13:22
  Speaker 1: right now, and see if they can break the Iranians,
• 13:25
  Speaker 1: or indeed that there are there will be some success.
• 13:28
  Speaker 1: And so I don't think many people see it extending
• 13:32
  Speaker 1: out into late April. But you know, these things like
• 13:37
  Speaker 1: a lobsterpot, praise, you wander your way into these things
• 13:40
  Speaker 1: and very very difficult to turn around and get back out.
• 13:42
  Speaker 1: So you know, but I mean, I sense what I'm
• 13:44
  Speaker 1: talking about is a cessation, some form of cease fast,
• 13:47
  Speaker 1: some form of partial opening the straights form is. I
• 13:49
  Speaker 1: don't think the you know, this will drag on for
• 13:52
  Speaker 1: a long while. But in since that the worst bit
• 13:54
  Speaker 1: of it maybe opened fairly soon, would one would hope?
• 13:58
  Speaker 2: Well things conrost and thank you very much again, Marcus.
• 14:03
  Speaker 1: I think, yeah, I wish it could be clearer on
• 14:05
  Speaker 1: this stuff is, but it is. It's clear as mud,
• 14:08
  Speaker 1: and it's very difficult to navigate one's way through this
• 14:11
  Speaker 1: without you know, keep it tight, keep it, get it
• 14:14
  Speaker 1: close to home, and you know, try not to obviously
• 14:17
  Speaker 1: panic out of anything. But you know, liquidity, if you
• 14:20
  Speaker 1: have it is clearly where the sensible thing to be.
• 14:22
  Speaker 1: But that does seem to be quite a lot of
• 14:25
  Speaker 1: movement into cash and reduction of of equity positioning and
• 14:29
  Speaker 1: outright market sort of positions. That's definitely had a huge shakeout,
• 14:33
  Speaker 1: so a lot of leverages come out of the system,
• 14:35
  Speaker 1: and that that's you know, that'll calm things down when
• 14:38
  Speaker 1: once we get some.
• 14:39
  Speaker 2: I mean, that's not unhealthy, probably exactly.
• 14:43
  Speaker 1: I don't think the markets are in bad shape structurally,
• 14:47
  Speaker 1: but you know, there is still quite a lot of
• 14:49
  Speaker 1: hope and expectations. As I said, they know that this
• 14:51
  Speaker 1: will be over and done with in a few weeks
• 14:53
  Speaker 1: and we can get back to you know, running like whatever.
• 14:55
  Speaker 1: But it does drag on. There's going to be some
• 14:59
  Speaker 1: more more time. But let's hope that hasn't the case.
• 15:02
  Speaker 2: No more by that right, Well, thanks for listening to
• 15:09
  Speaker 2: this week's Man Talks Money Debrief. If you like the show,
• 15:12
  Speaker 2: rate review and subscribe whever you listen to podcasts, and
• 15:14
  Speaker 2: also be sure to follow me and Marcus on ex
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  Speaker 2: slash Twitter. I'm at joined Underscore step Ck and Marcus
• 15:22
  Speaker 2: is act Marcus Ashworth all one words, but the episode
• 15:25
  Speaker 2: was produced by Moses and and Summer Sadie and special
• 15:28
  Speaker 2: thanks to Marcus Ashworth. As always,