Daily Brief – Two Complimentary Systems

Two Complimentary Systems

That is how EU Commissioner Ursula Von der Leyen described Canada and the EU in her speech on Friday’s EU-Canada Summit in Montreal. In concrete terms there is an ambitious agenda to co-operate on trade, bilateral investment, supply chains, AI, climate, security, the Arctic and programs such as Erasmus for student exchanges and Horizon for research and innovation. Co-operation is a somewhat nebulous term but if conducted dare one say co-operatively and symmetrically, it can be very fruitful indeed and makes great sense both for Canada and the EU now that the USA has abandoned the post WW2 entente with its former allies and friends.

EUR/USD 1.1160.

British Pound

On Friday Sterling enjoyed the sunny London autumnal weather by shining versus all major currencies. Without unpatriotically raining on its parade, the conclusion by some analysts ( not us) that this was down to Chancellor Healey’s Budget plus the expectation that the Bank of England will raise interest rates next week which we do subscribe to, is flawed. If there is indeed any substance to Sterling being strong on the Mini Budget, it is only due to relief that there was so little to it-in fact the Budget is now being downgraded from Mini to Micro by the Chancellor. That lack of substance means that the current Sterling strength is unsustainable for long; meanwhile enjoy that bright sunshine while it lasts.

GBP/USD 1.3391.

Consensus

As expected, when the Bank of Japan announced its conclusions on Friday, the third and final major Central Bank to do so last week, it was to leave Japanese interest rates unchanged as did the Federal Reserve and the ECB for their respective currencies. The only noteworthy output from Japan was the announcement that inflation in Japan had finally reached its 2% target after a decades long deflationary environment. The PM resisted the temptation to announce that the deflationary dragon had been slain presumably as there is a realisation that the inflation has been hit more by default than economic activity due to the depreciation in the Yen and the rise in energy costs.

USD/JPY 157.56.

AI

20 years ago at the dawn of the biggest tech revolution the world has ever seen with the advent of superfast broadband, smart phones and access to news and pricing on a whole new scale, it all added up to allowing small players to participate on near wholesale market terms with the very largest players in the world’s global financial markets. The realisation that small meant agility and speed of decision making followed swiftly. As ever-increasing amounts of money are deployed towards AI, the same argument can be made that smaller participants will soon if they are not already, be able to compete with the very largest players as the financial markets through analysis and decision making become more open to all through the use of AI.

Brent Oil USD 113.43.

White Room

This day in 1963 supergroup The Cream released their album Disraeli Gears which in addition to being correctly hailed as one of the greatest rock albums ever, was the forerunner of the Wheels of Fire album which has also has its share of advocates for that accolade. This 1968 song spawned a whole generation of air guitar merchants who were well in advance of the Dire Straits artistes who believed that they had invented the genre 20 years later.

In a white room with black curtains in the station
Black roof country, no gold pavements, tired starlings
Silver horses ran down moonbeams in your dark eyes
Dawn light smiles on you leaving, my contentment

I’ll wait in this place, where the sun never shines
Wait in this place, where the shadows run from themselves

You said no strings could secure you at the station
Platform ticket, restless diesels, goodbye windows
I walked into, such a sad time, at the station
As I walked out, felt my own need, just beginning

I’ll wait in the queue when the trains come back
Lie with you where the shadows run from themselves

At the party, she was kindness in the hard crowd
Consolation for the old wound now forgotten
Yellow tigers crouched in jungles in her dark eyes
Now gets morning, goodbye windows, tired starlings

I’ll sleep in this place with the lonely crowd
Lie in the dark, where the shadows run from themselves

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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