Daily Brief – Knock On Currency Moves

Knock On Currency Moves

Reuters conducted a survey of the largest European companies and unsurprisingly pretty much all of them are citing the strengthening EUR as having negatively impacted their results in H1. Whether it’s German telecoms or Dutch paint, the story is the same. But in another twist to the tale of tariffs and strengthening Swiss Franc, the latest wheeze for Swiss companies faced with 39% tariffs and a muscular CHF is to export operations and jobs to other countries, including the EU. Med tech company Ypsomed is thinking about moving some operations to Germany. Swiss Army knife manufacturer Victorinox is thinking about the USA. Finally, Swiss bank Julius Baer is looking to move jobs to Spain and India. That will test the loyalty of their premier private banking clients to the max when they get put through to a call centre in Hyderabad. 

EUR/USD 1.1648.

Cass Freight Index

This is the measure of the intra continental North American freight market which has been around since 1995. Taking the last 15 years since 2010, the Index is on its lowest level, with the exception of the 2020 Covid outbreak. Since the 2021 economic snap back, the Index has shown a consistent decline and is now 30% below that level. This is relevant to observers of the US economy because it is a useful measurement of the overall US economy and adds further grist to the mill for the Federal Reserve to deliver the cut in US interest rates indicated by Chairman Powell on Friday at the Jackson Hole summit.

GBP/USD 1.3480.

Reading

An interesting editorial in the weekend Financial Times which came as no surprise to readers of a certain age. Those readers have puzzled for years as to how successive younger generations have lost the habit or enjoyment of reading books, magazines or newspapers. Instead they draw their news and media fixes from social media. What did come as a surprise was the statistic that 20 years ago only 28% of all those who could read actually did read books, magazines, and newspapers. Even more of a surprise is that that figure is now at 16% so only 1 in 6 people still read books, newspapers or magazines.

EUR/JPY 171.65.

Federal Reserve Independence

So far, and it is early days, markets have reacted in a sanguine way to the sacking of a Fed Governor by POTUS. Maybe that is due to the fact that current betting at gambling sites Kashif and Polymarket is that POTUS will not succeed in sacking Governor Lisa Cook. Whatever, it’s a big story which has widespread implications for both the US and global economies: the financial system is based on a system of checks, and balances, and independence, which in a different form goes right back in time to the Roman Empire and the Vestal Virgins, who were there to guard the sanctity of Rome and its peoples. The question then was raised by Juvenal who asked Quis vestales custodiet meaning who guards the guards, which is rather the question for the USA, given POTUS’ determination to install his own team at the Federal Reserve.

EUR/GBP 0.8640.

Tracy Chapman

A whole generation at least will be wondering who TC is, given that while she has an extensive discography over 35 years of singing and song writing, there are significant date gaps between some of the albums the longest being of 15 years. This day in 1988 marked the release of her debut album which is one of her very best. For those who wonder what happened during those career gaps, the answer is simple but somewhat surprising for a perfomer: she did not like the attention of performing before audiences and since the industry has been more about tours and merchandise sales than album sales in recent years, Tracy Chapman virtually disappeared from public view.

You got a fast car
I want a ticket to anywhere
Maybe we make a deal
Maybe together we can get somewhere
Anyplace is better
Starting from zero got nothing to lose
Maybe we’ll make something
Me, myself I got nothing to prove

You got a fast car
I got a plan to get us out of here
I been working at the convenience store
Managed to save just a little bit of money
Won’t have to drive too far
Just ‘cross the border and into the city
You and I can both get jobs
And finally see what it means to be living

You see my old man’s got a problem
He live with the bottle that’s the way it is
He says his body’s too old for working
His body’s too young to look like his
My mama went off and left him
She wanted more from life than he could give
I said somebody’s got to take care of him
So I quit school and that’s what I did

You got a fast car
Is it fast enough so we can fly away
We gotta make a decision
Leave tonight or live and die this way

So remember we were driving, driving in your car
Speed so fast I felt like I was drunk
City lights lay out before us
And your arm felt nice wrapped ’round my shoulder
I had a feeling  that I belonged
I had a feeling I could be someone, be someone, be someone 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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