Category: Economy

Business, Economy, Uncategorized

Psyops & the Greenback…

Psyops & the Greenback…

As we have mentioned numerous times over the last several months, the currency and stock markets seem to be more volatile and sensitive to the psychological effects of the current political unrest across all branches of the U.S. government.

That’s not to say that there are not some very perplexing stories (or at least headlines) animating out of the District of Columbia.  It seems that every day there is another “leak” dripping from the Executive Branch or perhaps another example of a Machiavellian plot in the Congress to embarrass an opposition party member…or even perhaps a colleague. 

In short, the U.S. dollar is suffering, the Dow Jones is slipping and investors are getting nervous feet due to the ongoing uncertainty of when this “chain letter” of bad news is going to end.  A well known international investor once opined, “…the markets imagination is capable of far worse machinations than what reality can rain upon it.”

The Infamous Pogo-Stick Chart…

Stocks across the major markets and the U.S. dollar sold off while bond yields fell on Wednesday of this week as investors fled risky assets amid the ongoing political uncertainty.  Much of this uncertainty is based on President Trump’s ability to deliver on his tax and banking reforms and infrastructure spending.

When you add to those reports that the President may have made questionable requests of recently fired FBI Director James Comey to end a probe into the administrations former National Security Advisor… the market foundations rumble even more.

U.S. stock market declines have continued as the week drew to an end.  The Dow Jones Industrial fell 372 points and the S&P 500 suffered their worst percentage drops since September 9th.

Additionally, the CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, ended above the 15 level in its highest close since April 13th.  In short, the U.S. dollar index has now erased all of its post-election gains.

…Is More Akin to a Yo-Yo Graph

Optimism over pro-growth economic policies Trump would implement helped drive a sharp rally in U.S. stocks after the November 8th U.S. election.  Even with this past week’s declines, the S&P 500 stock index is still up 10.2 percent since last November’s U.S. elections.

Chief Market Strategist at Newbridge Securities in New York, Donald Selkin has stated, “…The (equity) bull market is not over by any means, but between the political stuff and the fact that the next earnings season is three months away, (could mean) there’s going to be a lack of motivation.”

To that point, the Greenback index, which tracks the U.S. currency against six peers and had scaled a 14-year peak of 103.82 on January 3rd, fell 0.6 percent to its lowest level since November 9th…surrendering all of its “Trump Bump,” gains.  The dollar also fell by nearly 2 percent against the yen.

What Does the Future Hold?

There are literally hundreds of currency or economic reports and surveys available for review each week in the United States.  This voluminous amount of financial data is almost impossible to collate quickly enough to ascertain the correct currency management strategies necessary for the individual foreign exchange investor to protect his profits.

MosaicaFX is the partner international business needs to help assure their profits are protected by using the latest state-of-the-art hedging strategies and a highly personal approach to supporting your currency needs.  At MosaicaFX…your goals are our goals.  Your success is our success.  Give us a chance to prove that to you by scheduling an exploratory conference today with one of our Executive Account Managers.

 

Business, Economy, People

Whew!

Whew!

The European Union and an entire basket of currencies just breathed a collective sigh of relief.  On Sunday May 7th, the technocrats of the EU are certain they just dodged a bullet….or more likely, a mortar shell to be precise.

The election of Emmanuel Macron as the new President of France over the nationalist parties Marine Le Pen, was a tremendous rebuke of the concept of France eventually dropping the Euro and leaving the European Union.  This was the position that Le Pen had espoused during her aggressive campaigning and with her losing 33.9% of the vote to Macron’s 66.1% it can be assumed that her stance was repudiated.

On the other hand, with over one third of the French population eligible to vote declining to do so in this election, many believe that Macron secured a strong majority of only around 44%.  It stands to reason that if only two-thirds of the voters showed up at the polls and he garnered 66% of the vote, he does not have a majority of Frenchmen supporting him.

Where to Start?

President-Elect Macron now needs to prove that he is “neither left nor right,” and can manage from the “center,” which was his message throughout the campaign.  The far-left will need to see his support behind social programs that have yet to bear fruit in a positive sense and the far-right will want to witness his embrace of the labor unions.

Conventional wisdom though says that his entire administration may actually hang on his Countries internal security and immigration issues.  Many political-insiders believe that the entire success of his incoming administration hinges on any future terrorist attacks that may occur on his watch.

No doubt, the obvious relief shown by Germany’s Angela Merkel and other EU allies has been palatable immediately following the elections outcome.  Now, it is expected that Mr. Macron will be calling in any and all favors that he can rely on to help build more positive relationships with France’s EU trading partners.

The Immediate Effect…

The Euro has rallied briefly to a six-month high against the Dollar on Monday in support of Macron’s election.  The single currency touched $1.1023, which is its highest level since November 2016 and was up from its close on Friday of $1.0998.

The currency also hit a one-year high of 124.59 Yen from 124.05 Yen on Friday’s close.  However, these gains have all been short –lived and more modest than expected compared to the reaction following Macron’s first-round victory last month.  Since the outcome of the election eliminates any risk of France leaving the single currency bloc, it is expected that the Euro will continue to stabilize over the next several weeks.

MosaicaFX would strongly recommend that you stay in close touch with your Foreign Currency Account Managers to ensure that you remain well positioned to protect your profits going forward if you trade within the EU or on the Euro.  At MosaicaFX we would welcome the opportunity to discuss this new development with you and look forward to answering your questions.

 

Business, Economy

The GBP, Dollar & Euro… Chicken Bones and Crystal Balls

The GBP, Dollar & Euro…

Chicken Bones and Crystal Balls

There are a lot of things happening over the next couple of weeks with regards to the GBP, U.S. Dollar and Euro.  These currencies all have tremendous pressure being placed on them for a variety of external reasons.

While the Dollar is dealing with primarily economic data…the GBP and Euro are being impacted by stresses that are more of a political nature.  Therefore while the Greenback may be dealing with multiple data point adjustments over the next week or two, the GBP and Euro may be in for a rough ride for a bit longer.

No economist or currency managers are able to forecast with 100% certainty, although it is to be expected that they are somewhat better than fortune tellers who use crystal balls or chicken bones and voodoo spells.

Having said that, we at MosiacaFX pride ourselves on using the most up-to-date analytical data and experienced foreign currency managers available to interpret and predict future currency trajectories.  We are committed to providing our clients the best account support possible.  Let us prove to you today our resolve to protect your profits.

GBP

This week marks the beginning of the halfway point in the second quarter of the year.  In the UK, we can now expect updated data from the UK Purchasing Manager Surveys or PMI for Manufacturing, Services and Construction.  This up-to-date data will provide an overview of how the UK economy performed for April.

Conventional wisdom is forecasting that Manufacturing may slip by two basis points to 54.0 while Construction will also slip by two basis points to 52.0.  The Services survey will be published on May 4th and it is expected to fall from 55.0 to 54.5.

Markets will no doubt be watching to see whether these bearish trends continue with the PMI’s. On balance, TD Securities believes, “…markets are looking for a bit of a pull-back in the PMI’s, and we’re (just) modestly optimistic in a review of the weeks ahead.”  At present, we doubt that disappointment will feed into any sustained pressure on Sterling through as the currency appears to be more concerned with global investor dynamics and current UK domestic politics.

Dollar

The markets are anticipating the meeting this Wednesday of the FOMC (Federal Open Market Committee followed up this Friday with the Non-Farm Payrolls report.  As recent GDP data for Q1 was disappointing to the same the least and a low Payroll expansion of (98K) for March was also considered negative…the question of 2017 sustainability for the growth of the U.S. economy is now considered truly “concerning.”

When the Federal Reserve holds its next meeting in June, a great deal of interest (as usual) will be riding on the level of confidence they place in the U.S. economy through the generally “couched” language they publish.  Such language will no doubt weigh heavily on the Dollar. While expectations have been for the Fed to announce an increase in interest rates at that meeting, analysts now fear that recent data reflecting the aforementioned poor data may bring those assumptions into question.

Not all economic analysts are on board with those assessments however.  “While it is true that if the FOMC report lowers expectations for the economy, the result could be a weaker Dollar…it is also true that the Q1 GDP “miss” was possibly due to “transitory or seasonal,” effects more than it was based on real economic decline,”…according to Barclay’s Capital.

Current consensus estimates for April are that they will have a better showing than March as far as payroll expansion goes.  Specifically, TD Securities expects a 165K and Barcap forecasts a 225K expansion with an average of approximately 195K ….providing the “chicken bones and voodoo incantations,” are accurate.

Euro

As any foreign currency trader is aware, the future of the Euro is in flux while it awaits the outcome of the second round of the French elections.  While the main supporter of the European Union, Emmanuel Macron, has been leading in all of the current polls, the nationalist candidate Marine Le Pen, seems to be fast closing the gap.  In actuality, it may be that Macron has slipped as much as Le Pen has risen now making for a much more competitive race.

Conventional wisdom currently holds that this is not just an election for the Chief Executive’s Office of France, but it may also be a vote for the future of the European Union itself.  If Le Pen wins, “Frexit,” may be the next “hit,” the EU takes.  For this reason, the Euro has been softening a bit as markets are exercising caution ahead of the upcoming election.

Overall however, it is safe to say that the Euro is basically treading water ahead of the May 7th elections.  The markets appear to have priced into the current currency values a win by Macron.  Despite a lack of policy adjustments by the European Central Bank during their latest meeting, most stabilization of the Euro (including the aforementioned micro-softening of its value) are simply the “angst,” reflected in the currency markets due to the politics of France.  It is safe to say that much will be answered on the morning of May 8th.  Either the Euro will strengthen…or it may roil with a Le Pen surprise win.

MosaicaFX

As we opened this article, now is the time to partner with a currency manager that relies on more than voodoo to protect your profits.  Don’t allow yourself to be overwhelmed by the many different market gyrations that are under way.

It is fair to say that unless you do what we do everyday….there is no practical way to gather and analyze the vast amounts of market and currency data we work with on a daily basis.  That is why we would welcome the chance to work with and be honored to have you as our client.

 

 

 

Business, Ecommerce, Economy

A Second French Revolution?

A Second French Revolution?

We decided to let the dust settle from the Sunday first round of French elections before we tried to ascertain a fixed bearing to address from this outcome.   Needless to say, the results of the election almost create more questions than they answered.

The good news is that the “market horror,” scenario of a Le Pen vs. Melenchon run-off has been avoided.  The not-so-good news is that the poll differences between the top two finishers, was smaller than the anticipated margins of error.  This fact coupled with the combined percentage totals of the losing candidates most likely means that neither of the top two finishers may command a populist majority during the runoff.

While the polls  showed that that Centrist Macron and Right-Wing Le Pen qualified for the second round of voting to be held on Sunday May 7th, these same polls are now predicting that the likely winner (if the election were held today) would be pro-European Union centrist Emmanuel Macron…resulting in him becoming the new French President.

What Can We Expect if Macron Wins?

As previously stated, it appears as though Mr. Macron currently has the inside track to be the next French President.  If this were to happen how can we expect the financial markets to react to such news?  If the current financial markets reaction to him making the May runoff is any indication, relief may be the key word.

If Macron becomes the next Chief Executive of France it would be expected that concerns regarding France leaving the EU would greatly ease.  Mr. Macron is a huge fan of the EU and the Euro currency.  In fact, European shares surged to a 17-month high after Emmanuel Macron advanced as the favorite in the runoff over his nationalist opponent.  After opening to the best gains on record, the Euro scaled back as the week has advanced.

Macron, a committed globalist was the leading candidate as confirmed by a “snap” Ipsos survey late Sunday after the polls closed.  The survey suggested he would win with 62 percent of the vote to Le Pen’s 38 percent.  It is expected that macron would not only help to stabilize the European Union, but would also help integrate stronger support mechanisms…according to Azad Zangana, Senior Economist for Europe at Schroders Plc in London.

Mr. Zangana went on to say, “The contest is not over yet, but investors are likely to take comfort and to begin to think about the more attractive valuations that European equities offer.”

…And if Le Pen Wins?

At this point, most traditional survey houses have Le Pen losing in a runoff against Macron.  This may be wishful thinking.  With many unanswered questions in Macron’s background and the recent new terror attack in France leading up to the election, Le Pen’s supporters have been invigorated.

As for the effect that a Le Pen Presidency would have on the markets, most economists believe it would roil the currency and financial markets… at least in the immediate aftermath of her election.  Le Pen is the French version of Trump.  She wants to remove France from the EU, clamp down on immigration and support French labor organizations.  Many see a vote for Le Pen as a form of “revolution,” when it comes to the current globalist view of the French government.

She is also someone who does not mince words when it comes to terrorism and the influx of radicals who see France as a country that can easily be over run.  Le Pen has openly called for a much more aggressive law enforcement and military response to terror attacks and internal security for France.

The Smart Money…

At this point, a lot can happen between now and the May 7th runoff.  Macron may be polling higher, but many attribute that to the entrenched, elitist views of the “old guard,” that supports a more globalist view of France…who happen to also control many of the polling organizations who are publishing those surveys.

Le Pen is no “shrinking violet,” and is more than able to go toe-to-toe with Macron in the very public ongoing policy debates they have been embroiled in.  Macron is not without his own baggage as many believe he helped orchestrate much of the economic turmoil France has struggled with over the past several years.  If not him directly… he shares many of the common public and financial policies that contributed to high unemployment and a weakened economy.

As Le Pen will undoubtedly highlight these past associations with Macron, it is possible that the polls could be wrong.  As we saw with the last U.S. Presidential election….survey’s and polls are not infallible.  However, it will most likely come down to how effective Le Pen can make the case that she is the best suited to keep France safe from future terrorist attacks.  If Macron can successfully make a similar argument then he will most likely win the runoff.

The smart money says…the election is Mr. Macron’s to lose.

 

 

Business, Ecommerce, Economy

Brexit – Post Article 50 Update

Brexit – Post Article 50 Update

The Institute of Export & International Trade (IOE&IT) is recommending to exporters that now more than ever, they remain vigilant with regards to the ongoing Brexit negotiations so they can take precautionary steps to protect their profits and business positions.

Some of the key issues for international business that the current Brexit negotiations will no doubt take into account are as follows:

  • The unpredictability and complexity of future trade negotiations
  • The EU member countries individual agendas
  • Life outside the Single Market Model
  • The viability of free trade agreements
  • Preparation for future increased tariffs and trade barriers

The IOE&IT is focused on increasing the UK’s export performance by increasing the professional business standards in international trade management and practice that will allow the UK to continue to expand its export business post-EU Membership.  Arne Mielken, President of the IOE&IT states, “…EU law will automatically cease to apply in a maximum of two years, unless it is unanimously decided by the UK and EU to extend this period.”

Mielken went on to say, “…There is little time for governments to work on a withdrawal agreement and much more to agree on than trade.  While the UK hopes to secure a bespoke deal for generous access to the EU Single Market through a Free Trade Agreement (FTA), that outcome is far from certain.  Crucially, the EU Council, European Parliament with its veto powers and the 27 Member States (and possibly some regional parliaments) each with different interests must also agree to any future deal.”

Future Trade Agreements…

It has been noted that the complexity of navigating these hereto uncharted waters, could in fact derail future trade agreements due to the additional issues that will need to be discussed.

To that point, Mielken voiced the following concern, “…This means that trading with EU countries could become more complicated and international trade agreements and customs and border arrangements will have to be revised carefully to factor in the UK’s exclusion.  This rethink will take in its entire trade and customs policies, including everyday essential global trade matters.  It will affect the quota, tariff, valuation, origin and supply chain security of every company trading with us (UK).”

When you add in the imposition of duties and non-tariff trade barriers like licenses and certificates the result could be well established supply chains could be displaced….especially in areas of high regulatory control.

The IOE&IT President concluded his remarks by stating, “…I fear that an EU/UK FTA is not the solution for frictionless trade that most UK businesses are asking for.  Crucially, as a free trade deal is a contract between two nations, it can never be as ambitious as sharing a free and open single market.  Free trade may mean a duty reduction, but it will require the development and passage of massive administrative infrastructure, documentation and certificates.”

For the aforementioned reasons, it is expected that the only certainty is uncertainty; the IOE&IT are advising exporters and importers to add trade delays and disruption contingencies to their future trade agreements.

Currency Questions…

As the future for post-EU membership for the UK is uncertain….so it is for the EU in general.  It is for this reason that it is expected that the GBP, Sterling, Euro and U.S. Dollar are all destined for volatility over the next several months and possibly years.

It is imperative that from this moment on if your business relies on any of the aforementioned currencies, you must keep an even closer eye on the Brexit negotiations now that Article 50 has been enacted.

MosaicaFX has identified that the momentum of uncertainty that was launched with the Brexit vote has been compounded now with the Article 50 negotiations taking place.  We will be providing regular updates on this situation for the foreseeable future.  If you need additional information or guidance from a reliable source, feel free to contact us at your convenience to discuss how best to position your company to protect its profits.

Remember, a post-UK membership is not truly about how it will impact your currency trading decisions now or in the next 90 days.  The true impact on your business will be long-term and possibly not known for years.  Now is the time to lay the groundwork for your future in dealing with UK currency!

Business, Ecommerce, Economy

Cold Hard Cash Facts …interesting facts about currency!

Cold Hard Cash Facts

…interesting facts about currency!

As the financial world has been in such flux and turmoil over the last several weeks, we thought we would try something different with this article.

Every day most people who work within the financial markets or with foreign currency need to remain focused on the vast amounts of information and data that must be processed to properly manage their portfolios and protect their profits.

We thought you might enjoy a few facts (25 to be exact) about currency.  Who doesn’t like to keep a few trivial facts in their back pocket for light-hearted cocktail hour discussions?

Believe it…or not!

  • There is currently an estimated total of approximately $75 TRILLION Dollars (U.S.) in the entire world. If this amount was distributed equally amongst all the people on Earth, each person would have less than $11,000 (U.S.) totaled!
  • If you donate blood, most of it is sold on the open market and it generates $4.5 BILLION Dollars (U.S.) annually.
  • McDonald’s as a corporation generates approximately $75 MILLION Dollars (U.S.)
  • Apple Inc. earns approximately $300,000 Dollars (U.S.)…per minute.
  • Of the twenty richest women in the world, all of them inherited their wealth from either their husband or their father….except one of them.
  • Americans spent more than $61.4 BILLION Dollars (U.S.) on their pets in 2012.
  • Former Drug Lord Pablo Escobar had so much cash on hand, that while trying to “stash” it, he would lose an estimated $1 BILLION Dollars (U.S.) each year to rats that ate it!
  • If Bill Gates spent $1,000,000 a day, it would take him 218 years to spend all of his money.
  • Sea Shells were once commonly used as currency in many parts of the world.
  • Paper currency can transport the live flu virus for over two weeks while in circulation.
  • Two out of three inherited family fortunes are lost by the new family generation.
  • Americans spend more money on pets annually than Germany spends on its entire defense budget.
  • The total amount of money owed (debt) by every single person and country in the world today totals $199 TRILLION Dollars (U.S.)
  • The wealthiest families in Florence Italy today….are the same families as 600 years ago.
  • Under Federal Law, only deceased people can appear on U.S. currency.
  • The first recorded Bitcoin transaction was to buy a pizza for 10,000 Bitcoins…which later was revalued at over $12 MILLION Dollars (U.S.)
  • $1.5 TRILLION Dollars (U.S.) are paid in bribes worldwide every year, according to a World Bank Estimate.
  • In the 1980’s, the financial sector claimed just 10% of U.S corporate profits. By 2010, it was 30%…supplanting manufacturing as the biggest profit center in the economy.
  • In 2015, a Chinese billionaire purchased a painting for $170 MILLION (U.S.) with his credit card so he could use the points for free airfare.
  • In 2015, Apple Inc. was worth more than Switzerland, Sweden or Nigeria.
  • Two-thirds of all U.S. $100 bills are held outside the United States.
  • Americans throw away $62 MILLION Dollars (U.S.) worth of coins every year.
  • London’s after-hours economy generates $32.3 BILLION Dollars (U.S.) every year.
  • A U.S. one-cent penny costs 2.4 cents to manufacture.
  • China began using paper money more than 1,000 years ago. Marco Polo wrote about it during his expeditions.

Now that we have provided you with enough currency trivia to impress your friends, give us a chance at MosaicaFX to protect your profits!  We are looking forward to discuss your currency management needs at your convenience.

 

Business, Ecommerce, Economy

CRITICAL UPDATE! GBP/USD

CRITICAL UPDATE!

GBP/USD

Yesterday saw a tremendous upsurge in the pound.  Whether this upsurge was an over-reaction to the ongoing Brexit news being released on a daily basis or a true stabilizing of the pound, is unclear as of yet.

Tuesday saw a 300-pip rally, which has so far led to the pound holding a neutral position today.  Conventional Wisdom is that the position that Prime Minister Theresa May has taken calling for a snap general election may have contributed to yesterday’s surge.

To that point, investors are counting on the PM developing a stronger mandate to secure the UK’s European Union exit and that she will be able to push back established deadlines for trade deals until the 2022 election cycle.

GBP vs. Brexit

At this point successful currency managers are wondering what type of trade deals the UK will secure with the EU.  For that reason, it could be argued that Tuesday’s upsurge in the pound may have been a bit of any over-reaction.

It is also likely that when you consider that financial (currency) speculators had held record net short positions in the GBP previously, the move higher was undoubtedly fuelled in a big way by short-covering as the GBP/USD moved outside of their recent trading positions.

Now the question is will these speculators aggressively change their GBP holdings in a significant manner?  When you consider that the GBP no longer appears to be as undervalued as it did a few months ago, a “pullback,” of some type may again present the GBP in an attractive light again!

No doubt, the Brexit negotiations and turmoil caused by those efforts still makes the GBP a tough currency to predict trajectories on.  More will be known in the coming days thus helping to provide clarity on the short-term anticipated movements for the GBP.

GBP vs. Greenback

It is expected by international currency players that the GBP is still expected to trend downwards for the long-term against the USD.  It cannot be understated just how important a hawkish central banking system effectively supports the Greenback.

For that reason, most foreign currency exchange entities believe that if a more sustainable rally for the GBP against the USD were to take place, there would need to be a significant change in the interest rates in the UK and/or in the US.  Put another way, the Bank of England will be forced to be more vocal about tightening its currency policies and/or the US FED will need to drop its openly hawkish position as well.

As there is no current sign that either banking entity is willing to entertain such thoughts, we may expect currency speculators to once again take a bearish position on the GBP positions in the coming weeks.  Having said that, many currency management groups believe that the pound will come under pressure again…but with a bit more room to go on the upside before it does so.

Consider this…

Based on yesterdays currency movements,  MosaicaFX believes that this may be a good time to consider using options to help protect profits and short-term currency strategies.  As the RSI indicator moved north of 70 on Tuesday, it is possible the GBP/USD was slightly overbought in the short-term.

While this does not presume another collapse is imminent, it does indicate that exercising options with these currencies could be well conceived.  Our suggestion would be for you to contact your MosaicaFX Account Managers and let them review your current currency portfolio.  Based on the strong performance of Tuesday and the latest information coming out of the UK today… taking such steps could be timely.

Contact us today and let us see what we can do to help you protect your profits with such options.  As we stated in an earlier article, we will continue to monitor this highly fluid situation coming out of the UK to provide up-to-date guidance regarding the GBP.

 

 

Business, Ecommerce, Economy

Green Products Grow Greenbacks Fast!

Green Products Grow Greenbacks Fast!

One of the areas that importers and exporters are always focusing on is on how to increase revenue.  Most large corporations will tell you that for any notable revenue growth to take place on their P&L statements, it is necessary to continue to refine and add new product lines.

As the saying goes in business, “…tried and true products pay the bills but new products grow the profits!”  For that reason, business owners are constantly on the lookout for new and innovative products to bring to market.

Ideally, these entrepreneurs are in search of new, unique and highly desirable products that have minimal costs associated with them but support high margins at the consumer-purchasing end of the process.  Of course, if an exclusive can be carved out regarding the product….all the better!

One of the most notable areas of product innovation and growth in the consumer retail vertical has been with bio-friendly or “green” products.  These types of products are in high-demand for a variety of reasons.

Give us green!

As one may imagine, if you can get the general media, education centers and influencers to constantly explain why using “green” products are important for us individually, collectively as well as for the environment…then your marketing costs can be greatly mitigated when selling bio-friendly or environmentally friendly products.

In fact, 72% of consumers now claim to feel “pressured” into buying “green” products, even if they cost substantially more than alternative products.  Even products that claim to be “green” or eco-friendly yet are unable to provide substantiating documentation from independent sources are chosen over similar products which do not make such dubious claims.

Market Research Direct, Inc., a leading market research company has uncovered that by simply using “green” sounding terms and verbiage (substantiated or not) targeted consumers will pay up to 18% more for that product over similar performing products not using such “green” sounding terms.

Eco-Marketing

Inc. Magazine research discovered that ninety-five percent of consumer products claiming to be “green” over the past year were in some way vague, deceptive or misleading.  That data was correlated by the marketing company TerraChoice, which also found a 73% increase in so called environmentally friendly products on the market over the past twelve months.

Since these “green” products are now more popular than ever, more businesses are introducing new eco-friendly products and even relabeling old products to appear “green.”  If you are considering updating your products to be more “green” appealing, there are certain concepts you should keep in mind.

  • Be Specific. The FTC has now published guidelines called the Green Guides for businesses making environmental benefit claims.  These guidelines are designed to discourage companies from using terms like “Earth-smart,” or “nature-approved,” which are not supported by scientific evidence.
  • Use provable and simple terminology on your packaging. Conventional wisdom dictates that the easier eco-friendly terminology is to understand by laypersons, the more likely the claims are provable and true.  Overly complicated terms and verbiage used to explain products “green” performance generally turns customers off as the claims are more likely to be considered “bogus.”
  • Consider independent certifications or claims endorsements. Many companies will now apply third-party approvals and/or endorsements regarding a products “green” gravitas.  Having an applied approval or logo from Green Seal or the Chlorine Free Products Association as an example, can easily provide more effective (and honest) claims confirmation.
  • Be transparent. Market research indicates that consumers want transparency when it comes to green-claims made by product representatives.  If the products green-claims are accurate, make that data available for review on your website.  It doesn’t mean that every customer will read the data, but, it does mean that every customer will feel better knowing you were willing to provide it.

Eco-Option Sales…

If your company is looking to expand its profit stream, then consider the following concept.  The old business model was that a company needed to import or manufacture new products to sell on their digital marketplace.  The new model is that it may not be necessary to import or manufacture new products….but only green alternatives to established brands!

As an example, why import a new super efficient clothing detergent when the market may already have a hundred versions you would have to compete with, when you could sell a eco-friendly, chlorine-free, hypo-allergenic, all natural product….that could sell for at least 18% more than competitor products already saturating the market?

Perhaps now is the time to expand your market and increase your margins by simply capitalizing on the fastest growing product trend on the internet today.  The old business adage used to be, “Go Big or Go Home,” now the more appropriate motto could be, “Go Green or Go Broke!”

 

Business, Ecommerce, Economy

Euro vs. Dollar: Heavyweight Match Up of the Year!

Euro vs. Dollar

Heavyweight Match Up of the Year!

The heavy weight bout of the year (to-date) is taking place right now.  We’re talking about the Euro and how it is valued against the U.S. Dollar.  As we have recently been reporting, the Euro is under a great deal of stress right now due to Brexit and the political issues currently facing multiple EU members.

Some more pressure was applied to the Euro this week when the ECB indicated that it has no intention to withdraw its massive stimulus program.   Couple this with stronger than anticipated economic news for the United States, resulting in a slight strengthening of the Dollar, and the Euro appears ripe for continued weakening against the Greenback.

New EU Numbers…

Numbers just released by the EU reflecting its March confidence figures shows the actual numbers were lower than the published expectations.  The economic sentiment indicator came in at 107.9, below the previous 108.00 and well below the expected 108.2.  Consumer confidence however remained unchanged at -5.

Pending March inflation numbers have yet to be released yet they are expected to have advanced less than during February.  Unless the final revision of the US Q4 GDP is substantially greater than the previous estimate of 1.9%, it is expected this updated data will have little or no effect on the currency pairing.

ECB Hammer about to DROP…

It is expected by most currency analysts that the Euro exchange rate values are about to be hit by Thor’s Hammer in the shape of the European Central Bank as analysts from a prominent Scandinavian economic research house has suggested that another round of quantitative easing is about to enacted.

Many economists believe that in the coming months, the ECB will begin releasing warning statements that another such effort will be needed to stabilize several member economies, with the ECB taking a more hawkish stance by the end of this year.

It is important to remember that the common belief was that the ECB was poised to begin shutting down the quantitative easing program?  The value of the Euro was essentially based on this assumption.  Now however, if the ECB shifts its stance (as expected) this could trigger additional (notable) weakening of the Euro.

Having said that, it is important to recall that the Euro plunged in December when the ECB announced another extension to the quantitative easing program.  If this was a formula for the Euro dipping then…it is expected a repeat could be in the cards!

An Unexpected Inflation Deviation

At this point, the 2% inflation target as set by the ECB looks more and more unlikely.  In fact, it appears that inflation is headed in the opposite direction from where the European Central Bank needs it to go.

The most recent inflation data for Germany, Spain and Belgium indicates that the Eurozone inflation rate has dropped back to levels well below 2% in March.  In fact, HICP indicates that the German inflation rate declined to 1.5% down from 2.2% in February…when markets had actually forecast a rise of 1.9%

In Spain it actually dropped to 2.1% from 3.0% and Belgium recorded a decline to 2.3% from 3.0%.  This published inflation data again indicates another factor in the Euro’s underperformance and underscores again why the ECB is not keen on withdrawing its stimulus at this time.

If you look at the current Euro exchange rate, it is obvious that we are seeing a reaction to several factors including news the ECB is very concerned with the direction inflation is headed.  It is also likely that the ECB is equally unhappy with the market’s reaction to their March policy meeting.

EURO/USD Slipping Below Parity?

Citibank also sees more bad news on the horizon for the Euro. These analysts are suggesting that the current price action for the EUR/USD is remarkably consistent with what we realized in October and November of 1999, thus suggesting “…we will see levels below parity over the medium term.”

At that time, the market entered a short EUR/USD position.  If history repeats itself and the EUR/USD falls below parity you can be assured that the EUR/GBP may fall sharply too owning to those same correlations.

THE BOTTOM LINE…

U.S. economic data has been quite strong in recent weeks.  Durable Goods Orders are reflecting robust gains, New Home Sales have risen 6.1% and the Current Account deficit is shrinking…..all potentially positive indicators for the Greenback moving forward.

The March Personal Consumption Expenditure (PCE) numbers as released reflect a 1.8% rate… beating February’s 1.7% yet still below a hoped for 2.0%.  When this data is coupled with the Michigan Sentiment Rating of 96.9, up from February’s 96.3 the overall effect is considered negligible regarding its impact on the Dollar.

Overall, the Dollar may continue to strengthen against a basket of currencies in the near term and specifically against the Euro.  When you consider the overall volume of data that must be collected and correlated to effectively manage currency trading today, it is even more obvious that working with a preeminent foreign exchange partner like Mosaica FX is even more essential.

Let us prove our worth to you today.  Contact one of our experienced currency trading Managers for a briefing on how you should manage your currency trading in today’s market.

 

 

Business, Ecommerce, Economy

BerkShares… Is this the future of currency trading?

BerkShares…

Is this the future of currency trading?

Currency is by definition traditionally developed and managed by national governments to ensure that parity and consistent value and quality are maintained for all entities that rely on that currency for monetary support.

However, that doesn’t mean that new concepts (based on historic precedent) are not being experimented with in limited applications today.

In fact, there are examples in places all around the world where the use of regional or local currencies are not just considered passively acceptable, but, even preferable to federally monetized currency.

What are BerkShares?

Berkshares are a local currency that circulates in the Berkshires region of Massachusetts.  Originally, it was launched in 2006 by BerkShares Inc., with research and development assistance from the Schumacher Center for a New Economics.

In Berkshire County, there are over 400 businesses that accept BerkShares as legal tender, with over $7,000,000 issued BerkShares in circulation.  Today there are over 10 different branch offices of three participating banks that issue BerkShare currency.

Currently, BerkShares are “pegged” to an exchange rate to the U.S. Dollar; however, recent discussions have taken place exploring the possibility of pegging its value to a basket of local goods as well to insulate the local economy against potential volatility in the U.S and global economy.

Why BerkShares?

Businesses that accept BerkShares at full dollar value differentiate the business as an entity that supports the local economy, ecology, sustainability and community by attempting to retain community value and wealth on a local scale.

A BerkShare is purchased for ninety-five cents on the U.S. Dollar, yet the businesses that accept BerkShares at full dollar value create a 5% discount incentive for those using the currency.  BerkShares can then be used by accepting businesses to purchase goods and services from other participating businesses, make change, pay salaries or support local non-profits thus increasing the local economic multiplier effect and keeping value re-circulating in the region.

If businesses have an excess of BerkShares, they may also be returned to a participating bank at the equivalent rate of .95 cents per BerkShare, while charging no exchange fees.  Interestingly, when tourists shop in BerkShare County many of them exchange dollars for BerkShares.  When they leave and have BerkShares left over…they usually keep them for later use or as souvenirs.  In any case, that currency remains in circulation which is good for the local economy.

What is the purpose of local currency usage?

Programs that support local currency usage such as the BerkShare program, seek to foster growth and collaboration among producers or manufacturers, retail businesses, non-profit organizations, service providers and consumers.

Such programs are an attempt to strengthen the local economy.  Programs like the BerkShares works to increase public awareness of the importance of strong local economies as well as to generate optimism for the prospect of gaining local economic self-sufficiency.

The main goal of such a program is to assure that a high-percentage of each dollar spent locally will remain circulating in the local community.  To assist with that process, it is expected that when given the option of spending BerkShares or dollars in the local community…BerkShare currency will get the “nod” by consumers and businesses.

Isolated Experiments or Future Opportunities?

A number of other local currency initiatives around the world such as the Totnes Pound and the Lewes Pound in the United Kingdom have been developed and built upon the BerkShares model.  As these new “experimental” currencies are launched and tested…it can be expected that such models will be well received by the local population.

Government departments such as Treasury or the Internal Revenue Service has historically been less than supportive of such concepts as local currency driven economies as it may be more difficult to account for proper income taxes from the populace.

However, as technical advances have continued to account for these issues, federal agencies are less likely to frown upon local currency concepts.  As currency options such as BerkShares become more prevalent in currency trading, it will be even more important that you seek out currency management partners who are forward thinking and visionary in their scope.

How many other currency trading companies are aware of these futuristic currency trends?  At MosaicaFX we pride ourselves on staying ahead of the learning curve so you don’t have to.  Contact us today to learn about what else is on the currency trading horizon.

 

Photo: James Worrell