Daily Brief – K Shaped

K Shaped

This is the term applied to an economy – in this case that of the USA – when one part is flourishing and the other is declining. No better an example than that of Delta Airlines which this week reported its Q4 2025 earnings which showed that Main cabin or Economy sales had fallen by 7% year on year while Premium-Business and First-cabin sales had grown by 9%. This is the first reported incidence of Premium sales exceeding those of Main cabin sales at Delta. This is not an isolated incidence with all airlines cashing in on Business and First class cabins being heavily in demand and investing accordingly. Delta is projecting an increase in revenues for 2026 of 20% and it is assuming that most of that increase will be from Premium cabin sales. Extending this example when combined with the increasing clamour about cost-of-living pressures in the USA reflects that the US economy is seeing the wealthier getting, well wealthier, and the rest feeling the pinch.

EUR/USD 1.1613.

UK’s Clean Energy Policy

UK Energy Secretary Miliband has an unswerving target of making 95% of the UK’s energy needs from clean energy by 2030 just 4 years away. Already the UK is importing 40% of its energy needs and by 2030 that will have grown to 80% while UK energy resources in the North Sea lie untapped due to those resources not being deemed clean. Never mind that the growing imported energy quotient comes from countries which are producing energy in a way that is patently far from being clean. Germany is the business case par excellence for not putting all its eggs in one basket, having many years ago banked on Russia to meet its needs, but there is no imperative for the UK to incur additional costs (those hugely expensive additional windfarms announced this week for example) and at the same time forego revenues and reduce jobs in the energy sector. Incidentally, in a further example of economic vandalism the cost of building and operating the wind turbines under subsidised energy contracts is generally more than the wholesale costs of purchasing electricity except in the ever-decreasing peak periods due to warmer temperatures as a result of climate warming. The exception was in respect of electricity generated during the 2022 energy crisis period but since then in 2024 to 2026, newer offshore windfarm projects are more expensive due to inflation, steel, interest rates, and construction costs. So more expensive GBP 90 per KwH versus GBP 79 per KwH and that is before the “constraint costs” which is a way of hiding the fact that the taxpayer is charged for compensating windfarms for the electricity that is produced but not consumed because the UK power grid cannot handle or utilise surplus electricity at certain times. That is a further GBP 1.5 billion a year – and rising.

GBP/USD 1.3390.

Ayandeh Bank, Iran

In case you are wondering what precipitated the financial crisis that is causing much of the civil unrest in Iran, it is in large part due to the failure of Ayandeh Bank which was effectively nationalised with the ruling regime effectively printing money to cover the losses which amounted to USD 5 billion. The losses stemmed from a series of poor decisions on real estate investment projects including multiple loans to Ayandeh Bank’s principal shareholder’s own companies – what at the time of the secondary banking crisis in the UK in the early1970’s was less than charmingly nicknamed pig on pork. When the music stopped, the Ayandeh Bank had more than 90% of its resources committed to its own projects. There are at least 5 Iranian banks including Bank Sepah that are in similar positions after Ayandeh Bank was forced upon Bank Melli in an arranged marriage. In a country of 93 million people that has suffered annual inflation rates of 40%+ for the past 5 years, the loss of 80%+ of the value of its currency and annual increases of 70%+ in food prices, the loss of trust in Iran’s financial system will likely be the final factor in forcing regime change – although quite what that entails is far from clear as POTUS is apparently just beginning to comprehend.

EUR/JPY 184.07.

Kobi

In a salutary tale for cat or indeed all pet owners, Bournemouth, Hampshire cat Kobi developed a heart condition that necessitated a complicated operation that saved Kobi’s life and which took place at the Ringwood Southern Counties Veterinary Specialist unit. The operation cost GBP 21,000 and meant that Kobi’s owners had to use the money put aside for a new motorcycle towards saving Kobi.  Pet Insurance covered a substantial part of the cost but additionally due to the pioneering nature of the feline heart surgery, Kobi was eligible for a government grant. A number of takeaways are evident from this shaggy cat tale underscored by the fact that Kobi the cat was for its owners definitely not just for Christmas.

EUR/GBP 0.8672.

You Won’t Find Another Fool Like Me

This day in 1974 clean cut combo the New Seekers went to Number 1 for this their second and final Number 1. Describing themselves as a pop or folk or rock group the New Seekers have been a constant feature in the pop landscape apart from a 2 year break since 1969.

You won’t find another fool like me, babe
No you won’t
Who’ll sit around all night and wait for you
And close their eyes
To oh so many lies
No one else could love you like I do

I wanna tell ya
You won’t find another clown like me babe
No you won’t
I can’t count the times you said you’d leave
You know darned well you’re fooling
‘Cause wherever you may go
You won’t find another fool like me

Sometimes I can’t understand
What makes me the fool that I am
Then you touch my hand
And suddenly I know

Even though you treat me like you do babe
You know you do
I’m so hooked on you I can’t get free
Oh but I’ll get through the bad times
‘Cause in my heart I know
That you won’t find another fool like me

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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