Daily Brief – UK Budget Reverberations

UK Budget Reverberations

Last week we posed the question of what it would feel like for the new UK Chancellor post her maiden budget. Well now she (and we) have found out: social media is vitriolic as are farmers, small and medium sized businesses, long suffering private school fee paying parents, people sitting on capital gains and the list goes on. The Gilt market has also given the Chancellor a thumbs down as has the Equity market and lastly the Great British Pound. The actuality may not have been as bad as some feared after a relentless leak campaign in the past 3 weeks – but only some – but with no sign of a carrot and plenty of thin gruel on the economic growth front, the judgement after 48 hours is that the new UK Government promised the prospect of growth but has neither delivered nor held out the prospect of jam tomorrow.

GBP/USD 1.2865.

Eurozone Inflation

One EU release does not make EU policy but yesterday’s Eurozone Inflation number of 2% for October was above the expected 1.9%. So what? you may be thinking but it may well give the ECB pause for thought given that Eurozone growth in Q3 was better at 0.4% than the anaemic 0.2% expected. Rate cuts now seem less likely sooner.

EUR/USD 1.0850.

Societe Generale

It must be something in the water in the C Suites of the largest European banks: last week the newish CEO of HSBC announced a de-duplication program for his senior management which was a nice way of saying that he was axing plenty of senior executive jobs. No-one dared say that the implication was that HSBC management was flabby just in case they were added to the goodbye list. It’s not overly surprising however that all banks have the same issue in the wake of regulatory requirements following the two most recent financial crises. Now Soc Gen has followed suit and axed the two heads of the Retail bank plus the CFO for good measure. The Q3 results plus this evidence of a firm management grip from the top was sufficient initially to send the shares up 9%. Strong leadership back in vogue clearly.

EUR/ GBP 0.8432.

Digital Nomads

In the wake of Thailand offering a 5 year visa in a bid to attract digital workers seduced by the prospect of beaches, lush mountain scenery and a buzzy nightlife in Bangkok, other Asian capitals are joining in too: Japanese cities Osaka and Fukuoka, Taiwan’s Taipei and South Korea’s Seoul are all getting in on the act. Resounding silence from the old world of Europe with the honourable exceptions of Spain and Italy which both offer la dolce vita and more as Asia mops up the Gen Z market. Go East young man/woman/person.

EUR/JPY 165.29.

Brothers In Arms

This day in 1987 British rock band Dire Straits released this album which went on to sell 3 million copies-the most ever of any British album- and spawned a whole generation of air guitar afficionados. Plenty of good songs on it but this one of the same name as the album is rated as being the fifth best Dire Straits song ever (so there).

These mist covered mountains
Are a home now for me
But my home is the lowlands
And always will be
Someday you’ll return to
Your valleys and your farms
And you’ll no longer burn to be
Brothers in arms

Through these fields of destruction
Baptisms of fire
I’ve witnessed your suffering
As the battle raged high
And though they did hurt me so bad
In the fear and alarm
You did not desert me
My brothers in arms

There’s so many different worlds
So many different suns
And we have just one world
But we live in different ones

Now the sun’s gone to hell and
The moon’s riding high
Let me bid you farewell
Every man has to die
But it’s written in the starlight
And every line in your palm
We’re fools to make war
On our brothers in arms

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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