Daily Brief – Muscular EUR

Muscular EUR

A group of the larger EU countries have come to the realisation that talking about EUR becoming a global currency needs to be translated into more concrete actions with an integrated EU capital market and increased EU borrowing as being the two key measures. This realisation has been amplified by the successive US signals from POTUS, VP Vance, and most recently, Secretary of State Marco Rubio. Europe cannot rely on the US Administration to continue the previous 80 years’ post WW2 Global USD policy. The snag is that becoming a truly global currency will bring EUR appreciation and the EU are not keen on a stronger EUR blunting their export competitiveness. Hence, the creation of what the EU has perfected as an art: the establishment of an inner EU group of 6 to deal with the seemingly intractable problem of both wanting EUR to be global but not wanting the currency strength that will accompany that. The EU 6 are: France, Germany, Italy, Spain, Netherlands, and Poland. 

EUR/USD 1.1847.

UK Unemployment

At 5.2% it’s a new high but only an increase of 0.1% but before dismissing the latest release as being unimportant, within that number is the highest level of youth unemployment for 10 years at 16.1%. Youth is defined as the 16-24 age group and represents the single greatest political prize if only a political party could successfully tackle it.

EUR/JPY 181.07.

Asset Managers ranked

After the excitement generated by the savvy Schroder’s sale of itself to its rival Nuveen to create a combined AUM of USD 2.5 trillion it is worth noting that this deal puts the new group in the big boys league headed by Blackrock with 13.4 trillion, Vanguard with 11.6 trillion, Fidelity and UBS at just under 7 trillion, followed by State Street, JP Morgan, Goldman Sachs, and Capital all between 3 and 5 trillion, and then Nuveen. Some accused Schroder’s CEO Richard Oldfield of selling out to an opportunistic foreign bidder but it looks much more like pragmatism and at a full price.

GBP/USD 1.3540.

British Pound

The prospect of a more imminent rate cut has increased both with the UK employment figures at a 5 year high plus the 0.1% growth rate reported last week. All that was enough to send Sterling to its lowest recent levels against both USD and EUR.

EUR/GBP 0.8713.

Shine on You Crazy Diamond

58 years ago today in 1968 Pink Floyd unceremoniously fired their leader and greatest inspiration, Syd Barrett on the grounds that his experimentation with industrial quantities of psychedelic drugs was making him less than a reliable front man. Syd Barrett was replaced with David Gilmour whom after an initial fruitful co-operation with fellow bandmate Roger Waters, was followed by DG pursuing a 50 year feud with him that continues to this day. Musical differences……..

Remember when you were young, you shone like the sun
Shine on you crazy diamond
Now there’s a look in your eyes, like black holes in the sky
Shine on you crazy diamond
You were caught in the crossfire of childhood and stardom, blown on the steel breeze
Come on you target for faraway laughter, come on you stranger, you legend, you martyr, and shine!

You reached for the secret too soon, you cried for the moon
Shine on you crazy diamond
Threatened by shadows at night, and exposed in the light
Shine on you crazy diamond
Well you wore out your welcome with random precision, rode on the steel breeze
Come on you raver, you seer of visions, come on you painter, you piper, you prisoner, and shine!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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