Daily Brief – Jackson Hole

Jackson Hole

At the world’s central bankers’ forum there is nothing bigger than today’s speech by Federal Reserve Chairman Powell. What he says about a) Crushing inflation and b) the US employment market will precede his justification for signalling an interest rate cut which in turn will educate what the world can expect for economic growth globally. Right now the markets have convinced themselves that it will be a case of the Fed chair greenlighting interest rate cuts starting in September. Dollar weakness and EUR and GBP at year highs.

EUR/USD 1.1134.

EU Business Strength

Overall EU business strength has been stronger than expected. The two largest economies showing divergent pictures with Germany contracting and France growing on the back of a boost from hosting the Olympics. Steady economic growth, a firm labour market, growth in inflation and in particular pressure on wages will all add up to the ECB exercising caution at their next meeting on September 12. Hence the muscular EUR.

EUR/JPY 162.64.

UK Mortgage Rates

Nationwide snuck in and took the title for the most competitive 5 year fixed mortgage rate open to both existing and new customers at 3.78%. This will come as a relief to embattled borrowers who have been awaiting better news on borrowing rates in the face of a largely moribund housing market hobbled by Stamp Duty Land Tax and the fear of what the new UK Government might do as regards taxing capital gains on prime residences. Not much good news there in prospect so this Nationwide news stuck out particularly when it was announced yesterday afternoon.

GBP/USD 1.3110.

Rough Diamond

In 1905 the 3106 carat Cullinan Diamond now in the British Crown Jewels was unearthed. The largest diamond to be discovered since 1905 using sophisticated detection equipment by Canadian miner Lucara in Botswana at 2492 carats was announced yesterday. Lucara tightlipped about how it will be cut and what the likely value will be. Despite being found in Botswana the diamond is 100% owned by Lucara. 

Unlikely to end up in the British Crown Jewels but definitely good for the Lucara share price whatever the destination.

Man in Black

The live album Johnny Cash at San Quentin began a 3 week run at Number One this day in 1969 and went on to sell 3X Platinum as well as to become an icon of anyone’s record collection: still as cool today as it was 55 years ago.

Well, you wonder why I always dress in black
Why you never see bright colors on my back
And why does my appearance seem to have a somber tone
Well, there’s a reason for the things that I have on

I wear the black for the poor and the beaten down
Livin’ in the hopeless, hungry side of town
I wear it for the prisoner who is long paid for his crime
But is there because he’s a victim of the times

I wear the black for those who’ve never read
Or listened to the words that Jesus said
About the road to happiness through love and charity
Why, you’d think He’s talking straight to you and me

Well, we’re doin’ mighty fine, I do suppose
In our streak of lightnin’ cars and fancy clothes
But just so we’re reminded of the ones who are held back
Up front there ought to be a man in black

I wear it for the sick and lonely old
For the reckless ones whose bad trip left them cold
I wear the black in mournin’ for the lives that could have been
Each week we lose a hundred fine young men

And I wear it for the thousands who have died
Believin’ that the Lord was on their side
I wear it for another hundred-thousand who have died
Believin’ that we all were on their side

Have A Great Bank Holiday Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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