Daily Brief – Change in the Westminster air?

Change in the Westminster air?

Only a matter of hours until the newly minted UK Prime Minister will unveil his agenda for change and his Cabinet appointments. Markets await that avidly. There are a couple of questions: the first of course is as to the identity of the new Chancellor and the implications for the country as to how the second most powerful Government minister will act. Andy Burnham has claimed that the current Labour government woes owe their cause to the 1980’s when of course Labour were in the middle of 18 years in Opposition. If it sounds a bit trite and rather like student politics, that is because at that time Andy Burnham was exactly that : a student of politics. Keir Starmer and his Chancellor Rachel Reeves struggled to espouse a narrative as to what they stood for which meant they reverted to blaming their predecessors and sounding awfully like they were still in opposition rather than in government. The question that markets are asking is whether Andy Burnham will continue in that Opposition vein or, if not, what that means for the UK. Buckle up for the PM’s first outing at the Downing St podium.

EUR/GBP 1.1439.

Love Machines

Having stumbled into a late-night TV interview with the author of this book, James Muldoon, while channel hopping last night, I learnt quite a lot: both men and women have relationships with AI bots; in fact, almost one third of all younger men have had AI relationships. There are different levels of AI bots available, ranging from texting with a compatible companion having loaded up a “back story” which is a way of describing what sort of person the loader is and what sort of companion therefore he/she seeks. Top of the range is an Avatar and James Muldoon espouses the advantages as well as the dangers of such relationships for those challenged by other people and socialising with them. If all that seems a bit improbable, some spend as much as 8 hours a day in flirting with their bot. Last stat: 16 million people interacted daily with AI bots. 

GBP/USD 1.3452.

Moonshot

No nothing to do with rockets, but Moonshot the Chinese AI company had roughly the same destructive effect on stock markets on Friday when Kimi K3 its cutting-edge new AI product was unveiled amid claims from Moonshot that it will challenge and overtake Anthropic’s Claude  and Open AI’s ChatGPT. That was enough to knock 6% off Taiwan’s market and Tokyo down by 4%. Some with memories stretching back will recall China’s  Deepseek having a similar impact on markets in January 2025. It all goes to show as we recently wrote, that the AI market continues to evolve and given its disproportionate weighting in all markets it causes major market moves and volatility.

EUR/JPY 185.81.

US Dollar

The safehaven argument for USD is back on the agenda once again as 6 days of sliding away from an Iran-US Peace Deal and increased hostilities in the Gulf are felt. That sentiment is bolstered by US Consumer Confidence. Plenty of noise around still new Fed Chair Kevin Walsh’s inaugural speech but its more to do with geo-politics and Main Street at present.

EUR/USD 0.8502.

Forever Love

This of course was Gary Barlow of Take That fame and the first one from the boyband to score a Number One Single. Forever Love went to Number One this day in 1996 and GB has never looked back. There’s plenty more of this saccharine rich schmaltz, but the adage of a little goes a long way most definitely applies here.

Love, it has so many beautiful faces
Sharing lives and sharing days
My love it had so many empty spaces
I’m sharing a memory now
I hope that’s how it stays

Now I’m deep inside love and still breathing
She is holding my heart in her hand
I’m the closest I’ve been to believing
This could be love forever

All throughout my life
The reasons I’ve demanded
But how can I reason
With the reason I’m a man

Oh, oh-oh-oh-oh yeah
Hmm

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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