Daily Brief – EU Chamber of Commerce China

EU Chamber of Commerce China

Chamber Supremo Jens Eskelund gave a speech this week which made it all too apparent that China is directing its trade exports away from tariff heavy USA to tariff light EU. At the same time, China is making it much harder for foreign businesses to operate in China. That imbalance has reached an inflection point according to EU Commission President Ursula von der Leyen. The EU is waking up to the sheer competitiveness of China, its state sponsorship for business, and its weaker currency. Unfortunately, the EU mood music is turning toward a trade war rather than the EU getting on its commercial bike in the words of the late and lamented Norman Tebbitt. 

EUR/USD 1.1675.

Digital EUR

More news in and it’s hardly a surprise: 10000 respondents to a survey by the European Consumers Association or BEUC and what they want are the following for digital EUR: security, ease of use, and free of charge. Not wishing to spoil the digital rave up, but it’s by no means approved as a project yet as the proponents have not successfully made the case for the Digital Euro being a significant step forward from cards, cash, and bank transfers. Will it happen? Probably yes, but not until 2029 according to the ECB.

EUR/GBP 0.8745.

Simply Nuts

When it comes to flying on multiple airlines in Asia, no-one seemingly ever suffers from nut allergies; so grave announcements over the PA system on planes that nuts will not be served nor should anyone carrying nuts or foodstuffs containing nuts be tempted to graze on them lest a passenger unable to resist might be tempted to hijack a fellow passenger’s nuts just does not happen. Contrast that with flights within Europe, when in a majority of cases in funereal toned warnings that a passenger not only has a nut allergy but a serious nut allergy, so nuts will not be served. While of course not to be taken with a pinch of salt let alone herbs, the flying nut syndrome is symptomatic of European airlines letting themselves fall for wokeism overlaid with serious health and legal implications by not addressing the issue at source i.e. at point of ticket sale (if you are unable to control yourself/your child, don’t fly).

GBP/USD 1.3345.

US Debt

For a change we will not be bemoaning the size of the US debt mountain today, although maybe we should be doing that given that it continues to grow apparently without consequence….so far. Instead, it’s worth thinking about a recent Barron’s Daily article that challenges the basic tenet of US Government Debt, yielding less than top US corporate debt. The basic rule of finance is that the historically top rated US Government debt should form the baseline for risk free returns. That is now under the microscope with 10 year US Treasuries yielding 4.19% and a 2035 Microsoft Note for example yielding 3.62% issued at the time when US Treasuries yielded 4.11% so a clear 50bps through Treasuries. On this side of the pond, France’s OATs Government Bonds are yielding more than some top rated Corporate bonds due to France having been downgraded last week. Time to revise those economics textbooks.

EUR/JPY 174.84.

Rocky Horror Picture Show

This day in 1975 the movie RHPS opened in Westwood California featuring Meatloaf, Tim Curry, and Susan Sarandon and flopped badly. So badly in fact that it became an ironic cult experience with audiences taking water, rice, toast and toilet paper among other props while singing along and shouting at the screen. You had to be there and joining in as indeed I was when it opened in the King’s Road, Chelsea later in 1975.

Michael Rennie was I’ll the day the earth stood still
But he told us where we stand
And Flash Gordon was there in silver underwear
Claude Rains was the invisable man
Then something went wring for Faye Wray and King Kong
They got caught in a celluloid jam
Then at a deadly pace it came from – outer space
And this is how the message ran

Science fiction – double feature
Doctor X will build a creature
See androids fighting
Brad and Janet
Anne Francis stars in Forbidden Planet
Oh oh oh oh
At the late night double feature picture show

I knew Leo G. Carrol was over a barrel when
Taratula took to the hills
And I really got hot when I saw Janet Scott fight a
Triffid that spits poison and kills
Dana Andrews said Prunes gave him the runes
And passing them used lots of skills
But When Worlds Collide said George Pal to his bride
‘I’m gonna give you some terrible thrills’ like a:

Science fiction – double feature

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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