Daily Brief – Canola for Cars

Canola for Cars

That was the deal struck by Canada’s Mark Carney with China’s President Xi on Friday evening in Beijing. The China tariff until then on canola oil imported from Canada was 85% but that will fall to 15% and in exchange Canada will levy a mere 6.1% on the imports of Chinese electric cars. The last talks between Canada and China were in 2017 and featured Justin Trudeau, loved up Katy Perry ex Canadian PM and they were not successful. While it is still early days it looks as if PM Carney is more pragmatic than his predecessor and that this may presage other trade accommodations between China and Canada.

EUR/USD 1.1590.

The Art of The Deal

At the Federal Reserve, Chair Jerome Powell has 4 months of his term still to serve – so much is well known, but what is less appreciated is that Powell has a Board position at the Fed which has a further 2 years to run. The stakes have gone very much higher for POTUS since he has initiated an investigation into Powell’s oversight of spending on the new Federal Reserve building as prior to that, perceived wisdom had Jerome Powell touching it out until May and then taking a well-earned retirement. Now the feeling is that Powell may well stay on to defend the independence of the Federal Reserve and to play an influential role in the ability of POTUS’ next pick to follow instructions emanating from the White House. Those with a good memory will know that Jerome Powell is no stranger to chicanery and deal making after spending many years at private equity titan, Carlyle Partners so he is well qualified to play in what promises to be a high stakes poker game with POTUS.

GBP/USD 1.3395.

Market Risks 2026

There is little upside in having a shot at this and plenty of egg on face potential but, with a deep breath, here goes: these risks are certainly in the running but they may turn out to be eclipsed by another risk or event which is not even on markets’ radar for now:

1. Upcoming trade negotiations between the USA and China, Mexico and Canada.
2. Post Venezuela fall out plus geo-political consequences i.e. Iran.
3. AI stock volatility due to supply chain issues and consequent lesser revenues.
4. Federal Reserve change of Chair and threat of the loss of Fed independence.
5. Domestic US events including shutdowns, civil unrest, and an increasingly muscular ICE.

EUR/JPY 183.40.

Transport for London

TFL has awarded a contract to Spanish tech company Indra to run the ticketing and control systems of the London transport network with a price tag of EUR 975 million. With 8.6 million journeys every day and 3.6 billion each year, let’s hope that this is a well thought out move by TFL.

With a 2-year transition (learning?) period, Indra is not taking sole responsibility manana but….

EUR/GBP 0.8666.

Brass in Pocket

Senior readers will recall this number from 1980 which this day in that year stood at Number One when the Pretenders broke through to commercial success. The Pretenders originated in Hereford in the West of England and their lead singer, songwriter and guitarist was the immediately recognizable Chrissie Hynde.

I got brass in a pocket
I got bottle, I’m gonna use it
Intention, I feel inventive
Gonna make you, make you, make you notice

Got motion, restrained emotion
Been driving, Detroit leaning
No reason, just seems so pleasing
Gonna make you, make you, make you notice

Gonna use my arms, gonna use my legs
Gonna use my style, gonna use my sidestep
Gonna use my fingers, gonna use my, my, my
Imagination

‘Cause I gonna make you see
There’s nobody else here, no one like me
I’m special (special)
So special (special)
I gotta have some of your attention, give it to me

I got rhythm, I can’t miss a beat
I got a new skank, so reet
Got something, I’m winking at you
Gonna make you, make you, make you notice

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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