Good morning,

We start in Northern Ireland, where violence has continued for an eighth night, sparked mostly by anger amongst loyalists over the Brexit derived Northern Ireland protocol, which has effectively put a border down the Irish sea and led to lengthy port delays, empty supermarket shelves and some online retailers refusing to send goods to Northern Ireland.  Every political party is condemning the violence, but also playing a blame game and not making any progress on calming the situation.  Boris Johnson has voiced his “deep concern”, as has Ireland’s Simon Coveney and the US are now making their voice heard on the matter, but nobody has yet to come up with a solution – and it’s not likely to solve itself.  The Globe and Mail has a detailed read on the situation as it’s not something that can be effectively summed up in a paragraph.

The UK vaccine rollout is also getting a bit of scrutiny, with the change of advice on the AZ vaccine being read into by the markets that the success of the deployment so far might come to a halt.  This all seems overblown to us and on a relative basis it’s really only the US that is going to eclipse our progress so far.  However, this has weighed on Sterling, as has the Northern Ireland news and also there has been a lot of profit taking in the market, with bets placed on the Pound in the first quarter of the year paying off handsomely.

Though April is typically a month for Sterling strength, the next risk on the horizon is the Scottish election on the 6th May and the likely outcome is that parties favouring an independence referendum will make up the parliamentary majority. Though Boris has said there won’t be another referendum anytime soon, if parties are putting that pitch front and centre of their campaigns and that is why people are voting for them, there will be a huge moral pressure on him to allow something to take place.  At the moment all polls point towards a referendum going the way of independence, so Boris will no doubt do what he can to avoid it.  With the general exhaustion in the markets around UK politics, we don’t think this will become something people particularly factor into their trading and asset weighting for now, but it’s inevitably going to become the news cycle in the not too distant future.  Great.

Some good news out of the UK is that the government is lining up to allow us to travel on holiday, with a traffic light system coming into play.  There has been criticism that the need for holidaymakers to pay for up to two PCR tests per person upon their return could price many out of holidays, with this potentially costing a family of four £1,200, but the thought of being able to travel will be seen as a huge plus to many.  This along with news that theoretical herd immunity will be reached by the 12th April, according to University College London, and it’s not all bad out there.

In Europe:  The single currency is performing well, as the news cycle of a slow vaccine rollout and AstraZeneca flip-flopping has already been there and done that, so it becomes a case of any good news and risk appetite gives the currency a chance to bounce back.  European equity markets are also performing in line with the rest of the world, with a general upward trend.  We saw the minutes from the ECB yesterday and the governing council at the central bank have shifted their tone and said the risk to growth has become more balanced, compared to last month which was skewed to the downside. Investors were also looking for signs of how the frontloading of asset purchases was going and what plans the bank might have to take further action if required – it seems the general consensus from the bank is that they’re happy to let bond yields rise if underlying economic growth is there, but if they’re rising just because there is a perception of inflation risks then they’ll step in and buy more, which is a reasonable position to take.

Across the Pond:  More automakers are having to halt production as the chip shortage deepens.  GM is shutting several of its plants for a couple of weeks and Ford have announced further pauses in production.  The Verge has a quick read on why the problem is so bad and what’s being done about it – their audience’s interest in the story is because the lack of supply is hurting the availability of video games consoles.

Washington have added seven Chinese supercomputing companies to an economic blacklist over national security concerns. T he US is worried that these companies are being leveraged by the Chinese state to help develop advanced weapons systems and from today US companies won’t be able to export any goods to these entities . CNBC has more.

In late March we talked about a big hedge fund placing block trades in stocks that shifted the US stock market and individual stocks quite dramatically.  That hedge fund was Archegos and as Bloomberg points out in a very worthwhile long read, the fund owner, Bill Hwang, was the “greatest trader you’d never heard of – until he lost it all”.  The story is interesting, but Archegos’ collapse could also be a pivot point for regulation, which the ECB has already said will need to be improved if we’re to avoid another situation like it.

Have a great weekend


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