Chapter 1: What are the latest developments in the Japanese yen's exchange rate?
First up, we are going to get straight into it and look at some of the stories in the papers this morning with Ross Mould from AJ Bell. Good morning, Ross.
How are you, Sarah? Sorry, how are you?
I'm great altogether. Thanks so much indeed for joining me. So first up, Ross, the euro is now worth 184.33 yen. I checked it just before we went in and I can see here that it now means the yen is trading at an all-time low after the Bank of Japan raised rates. What's driving that?
Well, it's a good question because the Japanese did raise rates and bond yields went up on Friday. But I think it's because Bank of Japan Governor Katsuo Ueda promptly waffled about when the next interest rate increase would be. So there wasn't an awful lot of conviction in financial markets that the Bank of Japan was taking a tough enough stance on inflation.
Chapter 2: How is the Bank of Japan influencing global financial markets?
And the weaker the yen goes, the more important inflation there could be. And so the more that the Bank of Japan may need to act.
The other thing that's going on is that there is no doubt, given that Japanese interest rates are incredibly low, that global financial institutions, particularly hedge funds, are using the yen as a source of funding for their buying and trading around the rest of the world.
Chapter 3: What are the implications of Binance's recent troubles?
So they're borrowing yen at low levels. or even short the currency and borrow it, and then put that money to work overseas and try and get higher returns, which shouldn't be too hard if your cost to borrow is only 0.75%. The challenge, therefore, of course, is if the yen ever starts going up and they start losing money on their...
positions against the yen, are they then forced to sell the positions they bought overseas? We saw a squall like this in summer 2024. So although everybody thinks about the dollar as being the global reserve currency, which it is, the yen may be the most important one from financial markets point of view in 2026.
So a big short of sorts.
It is, in fact, a big short of the yen, and it is currently greasing the wheels of the global financial markets. And so if that year currency starts to rise and it starts to gum up the works next year, then we could be in for a very, very interesting year after what's been actually a fantastic year for financial markets, even though we've had... Wars in the Middle East and Eastern Europe.
We've had Liberation Day.
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Chapter 4: How is the US responding to the situation in Venezuela?
We've had worries over AI bubbles. It's been a fantastic year, particularly for global stock markets. But you've been able to make money in bonds, able to make money in commodities. So it's been, on the end, a pretty straightforward year. Something like a yen shakedown could make next year less straightforward. And we're probably overdue a bit of volatility.
Well, speaking of volatility, now that you've mentioned it, we have a breaking story in the FT this morning about Binance, the world's largest cryptocurrency platform. What's going on there?
Well, this is an intriguing one.
Chapter 5: What are the geopolitical factors affecting Venezuela's oil supply?
The company got into trouble with the US federal authorities in 2023 for having weak controls, for sanctions busting, money laundering, and was fined something around ā¬4 billion, I think, by the federal authorities.
The FT has now done a really deep dive investigation, as it's very good at doing, and they think they've got proof that the company is still moving money around between sanctioned individuals, terror organizations, and money laundering. They cite an example of somebody who allegedly lives in a Venezuelan ghetto who's moved around $90 million around through the platform.
So they're saying that there is still a problem here. The company has been given a chance to comment, and it's understandably pushed back, saying we've got robust systems, stout controls. No, no, no, you've got it wrong. And don't forget that their founder, Changpeng Zhao, was actually pardoned by President Trump back in the autumn, which I think is part of the...
the White House's drive to position America as the center of cryptocurrency worldwide.
Chapter 6: How is the hospitality industry impacted by economic conditions?
But it continues to raise questions over exactly who is using crypto, why, and what the potential implications of that are. But it doesn't, for that matter, seem to necessarily stop crypto buyers, although Bitcoin's had a bit of a swan dive in the second half of this year.
And you do see most monetary authorities now looking to ease regulations on crypto, even for investment purposes for private individuals, rather than tighten them.
I read through that piece that's an exclusive from the Financial Times, Ross, and some of the transactions, the repeated nature of them.
They make your toes cold.
They really would. How one could even think up of these things? But you also mentioned Venezuela and that too was in the headlines this morning because the US is growing its largest military build-up in the Caribbean Sea since the 1962 missile crisis and sought to board a third oil tanker yesterday outside Venezuela.
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Chapter 7: What does the administration of the Sixes Social Cricket Bars mean for the industry?
What's behind this? Because this one could be one to really, really watch. Not in 2026, in the hours ahead.
Yeah, I mean, the blockade rumbles on. I mean, the Americans are saying this is part of President Trump's drive against drugs and something where he's taken a very strong position on with China with regard to fentanyl. And he's arguing that President Maduro... is actually in some ways in control and leading Venezuela drug exports.
President Maduro, for his point, is saying, actually, what you're trying to do is oust me and take control of Venezuela for yourselves. And the Americans have certainly been very vocal about the 2023-24 elections and how they argue that President Maduro bought them. Also, rattling around in the background, you have Venezuela and oil. Now, China's sanctioned.
The biggest buyer of it right now is China. The unsanctioned supply is provided by America's Chevron, which has got a license down there. So... There are multiple possible explanations for why America is getting involved, but getting involved it is, from a global perspective, Venezuela is about 1% of global oil supply. Now, that's not a huge number.
It's also very heavy, very sweet, needs an awful lot of refining, so it's not the easiest product in the world. But nevertheless, it is taking a tiny bit of supply out of global markets. And that is just giving a little bit of support to the oil price, which is very, very beleaguered. It's struggling to hold on to the $60 mark.
And some traders have been looking to cover positions just in case you see an escalation here.
So do you think that this is a democracy story? Is this an oil price story? Is there a further geopolitical element to this, all of the above, and some that we don't know about as well?
I think, Susan, there are two or three angles here, but I think if you believe that there is a coherent US foreign policy, and some people think there is, and some people definitely think there isn't, you're certainly looking at something equivalent to the Monroe Doctrine, where America is pretty much pulling up the shutters with regard to staying within its borders, not being the global policeman of the world, at the same time taking a very active interest in Latin America, because that is just down south, and it's an area where
America will wish to, if not wish to exercise an influence, certainly make sure that there are no untoward influences coming from it. Intriguingly, if you look at the recent elections in the continent, there has generally been a swing from the left to the right, which you would assume, given the current incumbent in the White House, is something that they're fairly pleased to see.
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