🌎 Trimming Governments | New Guy On The Block | Volcano Havoc in Ecuador
September 25th, 2020
Yesterday the EU put forward new plans in what is the first step towards regulating cryptocurrencies. This will be exciting for the digital currency world which has admittedly been seen as the Wild West since its inception.
Did You Know...
As of September 8th, 2020, there are 6,955 different cryptocurrencies, with a total market cap of $324.716 bn.
Do you know the top five cryptocurrencies with the largest market cap?
Italians Vote To Slash Parliament
Almost 70% of Italian people voted in a referendum in favor of reducing the size of their Parliament by a third on September 20th and 21st. Sounds satisfying, right?
The referendum is one of the Five-Star Movement’s promises in the last election and means the number of MPs in the lower house (the Chamber of Deputies) will be reduced from 634 to 400 while the senate will be reduced from 315 to 200.
The new law will take effect after the next general election, which is due to be no later than 28 May 2023.
According to the Italian newspaper La Corriere Della Sera, the Italian government will save over 100M euros over 10 years. However, critics have argued that the move will soften the authority of Parliament and deliver minimal cost-saving benefits.
At the same time, Italians also voted in regional elections, where the results were seen as a setback for Five Star, the far-right-wing group. Matteo Salvini’s anti-migration opposition League party suffered a disappointing round as it failed to win in the historically leftwing stronghold of Tuscany in the country’s first votes since the Covid-19 outbreak. The region has been controlled by the left for the past 50 years.
Nevertheless, the result of the referendum was hailed as a victory for Five Star and despite Mr. Salvini’s failure to make a breakthrough in traditionally leftwing Italian regions, the latest opinion polls suggest that the League remains Italy’s most popular party.
A few weeks ago, the market was extremely bullish betting in favor of a strong EUR against the USD, raising concerns for the European Central Bank. However, the further deterioration of the epidemiological situation in the euro-area, along with Fed’s hawkish tone, might exhaust the recent EUR uptrend.
Trillions of Dirty Dollars Laundered Through the Worlds Biggest Banks
With recent reports coming to light about how some of the largest and most trusted financial institutions played a part in global #moneylaundering - As a topic that we take incredibly seriously, our Head of Advisory Paul Stafford put together this excellent summation how money laundering works and techniques like:
- North Koreas - ATM Cash Out
- Deutsche's - Mirror Trading Scheme
Isn’t it crazy that something as essential to life as water, can make you a multimillionaire? Well, in China, just that has happened. Bottled water tycoon Zhong Shanshan has dethroned Jack Ma, founder of Alibaba, as China’s richest man. Mr. Shanshan founded Nongfu Spring back in 1996 and his wealth has continued to grow, currently sitting at a modest $58.7bn. Needless, to say he isn’t living paycheck to paycheck.
His wealth has also been helped with a controlling stake in a vaccine maker Beijing Wantai Biological Pharmacy Enterprise which recently went public.
Shanshan’s rise up the charts can also be attributed to the list of Chinese tech billionaire casualties. Tech stocks in Asia plummeted as tensions continue to rise between China and the US over accusations of technological espionage through companies such as Huawei, TikTok, and WeChat. China’s food and grocery sector are now back in vogue with investors, compared to its tech counterparts. With the way things are going, it may indeed be safer to stick to (non-bat related) foods and liquids.
Correlation between the offshore yuan and major currencies has strengthened since the beginning of the pandemic under the perception that China is rebounding and driving the global recovery. CNY ends the week with modest gains of 0.83% while over the month the Chinese currency accumulated losses of 0.59%.
Volcano Ash ruins Bananas
Ecuador's Sangay volcano erupted at the beginning of this week, affecting nearby cities and their cows. The resultant ash fully covered over 80,000 hectares of farming land. The most affected provinces were Chimborazo and Bolívar, where ash accumulations exceeded 3 mm and 1 mm, respectively.
These two regions together concentrate 30-40% of the country's agriculture and cattle raising.
The volcanic ash provides nutrients to the soil however due to it falling on top of the grass, it has made much of the available grass inedible, and the cows have got to eat! This prompted the National Institute of Agricultural Research of Ecuador (INIAP) to deliver 33 tons of bananas and 9 tons of sludge palm to make sure no cow goes hungry.
Banana growers have also been severely affected. According to Ecuadorian growers, the ash acts as a “harsh sandpaper” on the hanging banana bunches and causes enough damage to the bananas, to make them unsuitable for export.
The good news/bad news, the price of bananas is unlikely to go up. Not only is there already a worldwide oversupply of bananas, since Covid-19 the overall demand has decreased by roughly 30%.
FX Over this week, the Dollar Index rose to its highest level at 94.52 since 24th July and remains strong against a basket of major currencies amid strengthening concerns over the surge in Covid-19 infections across the globe.
In Other News
Currency Heat Map
This chart shows the relative volatility between currencies. The redder the color, the higher the volatility.
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Quiz of the week
Bitcoin - $194,373,709,785
Ethereum - $38,725,861,739
Tether - $15,234,720,125
XRP - $10,292,946,035
Bitcoin Cash - $3,992,631,880