Daily Brief – European Central Bank

European Central Bank

With headline inflation expected to be at 3% for the year and after August saw year on year inflation reaching 3.3%, it was widely expected that the ECB would raise interest rates by 25 bps which it duly did yesterday lunchtime. Within that overall inflation rate, core inflation i.e. without energy, food, alcohol and tobacco fell to 2.4% from 2.5% while services inflation which is driven primarily by wages fell from 3.3% to 3.0%. With Oil breaking through the USD 100 mark again, it is only a matter of time before that feeds into the inflation numbers and it is on that which Mme Lagarde, ECB President is clearly most fixated, judging by her remarks at the post meeting Press Conference.

EUR/USD 1.1618.

EU Oil

With oil imports of 471 million tons and only 15 million tons of its own, the EU has a 97% oil import dependency. Positively only 7% of that comes from the Gulf Co-Operation Council countries while the USA, Kazakhstan and Norway as the largest suppliers to the EU are each responsible for between 12-15%. In terms of which countries import most oil, Germany at 118, Spain at 86, France at 82 and Italy at 73 million tons are the major importers. The Netherlands with its port, Rotterdam as a vast entrepot actually imports the most at 138 million tons but it re-exports 101 million tons i.e. imports a net of 37 million tons.

Brent Oil USD 104.84.

Japanese Yen

With USD at its lowest level versus JPY for 7 months at USD/JPY 153.94, the reason is firstly the US Treasury tripled the size of its US Long Bond buy back operations commitment to USD 6 trillion and secondly that US Treasury Secretary Bessent announced that if the market wanted to sell JPY, it would have to contend with him on behalf of the USA and further that he was now the house. Given that it is most unlikely that the USA would commit to an open ended support operation on behalf of Japan without having something up its metaphorical sleeve, one must conclude that Japan has shared with Secretary Bessent that it will be taking its own long called for economic measures to strengthen the JPY.

EUR/JPY 178.87.

Fat Wales

The stats on Welsh children are truly astonishing with 27% of 4–5-year-olds being obese while 25% of 17–24-year-olds have a diagnosable mental health condition. Such numbers if true are of course alarming but rather more likely is that the RCPCH or the Royal College of Paediatrics and Child Health is suffering from ill health in its statistics gathering capabilities on the definition of obesity perhaps. Otherwise, one can only mourn the fact that Wales has a colossal amount of fat children who are likely to grow into adulthood with mental health issues. In which case, one can only ask why it is that since statistics have been compiled since 2012, the proportion of obese children has remained steady.

GBP/USD 1.3517.

Valley Girl

Frank Zappa and his daughter Moon Unit managed to claw their way to Number 32 this day in 1982 with this song which at the time was a cynical take on a certain sort of Californian girl. Fans of Frank Zappa may recall a 1969 TV interview with a one-legged notoriously aggressive anchor when he was asked if his long hair made him a woman. Without missing a beat, Frank Zappa replied with a corresponding question as to whether the interviewer’s wooden leg made him a table.

Valley girl
She’s a valley girl
Valley girl
She’s a valley girl
Okay, fine
Fer sure, fer sure
She’s a valley girl
In a clothing store
Okay, fine
Fer sure, fer sure
She’s a

Like, oh my god! (Valley girl)
Like, totally! (Valley girl)
Encino is, like, so bitchin’ (Valley girl)
There’s, like, the Galleria (Valley girl)
And, like
All these, like, really great shoe stores
I, like, love going into, like, clothing stores and stuff
I, like, buy the neatest mini-skirts and stuff
It’s, like, so bitchin’
‘Cause, like, everybody’s like
Super-super nice
It’s, like, so bitchin’
Like

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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