Daily Brief – UK Growth

UK Growth

The Rachel Reeves growth legacy: she and her de-fenestrated UK Government Cabinet colleagues have been expounding on their success and discouraging the new Cabinet from destroying it by announcing the type of new spending measures trotted out by PM Andy Burnham in his first heady fortnight. There are a couple of things here: firstly, while those spending measures adding up to GBP 2 billion are not de minimis, equally they are not the answer let alone the question as to how to make the UK economy hum. Secondly, the measure of how unsuitable RR was for the post of Chancellor lies in her description of that growth as being “strong”. The population of England grew by 1.2% last year so economic growth of 0.4% is not only not strong… it is flat to negative.

GBP/USD 1.3538.

Transshipment

This is the word used to describe when one country – China for example – uses another country – Mexico, Japan, or Canada – to send exported goods to the USA. The USA has woken up to this practice and cited 40 countries in a recent report which routinely receive imported Chinese goods that are then re-routed to the USA. It may sound obvious, but this tariff arbitrage is extremely lucrative. The White House is unhappy and has warned the intermediary country perpetrators to desist or face higher tariffs. The imposition of the tariffs and the arbitrage response is a prime example of when free market trading collides with ill-conceived barriers to trade and inevitably is costing the US consumer more without an increase in domestic US jobs – so far.

EUR/USD 1.1570.

Oil

One of the enduring mysteries arising from the past 6 months of the Gulf war is how much divergence and disagreement there is among so called oil market experts. At the end of last week, the oil price eased because we were told, stocks of oil reserves were fuller than previously believed. Then Saudi Aramco the world’s largest oil company, followed that by saying the world had lost 2.6 billion barrels of oil due to Hormuz being shut. China is reported to be the most comfortably placed of the large countries with enough reserves for one year. The rest of the world’s situation is less clear with estimates ranging from a low of 40 days to 180 days. Given both the uncertainty over just how great the reserves are, and the absence of a credible US-Iran peace deal, to this part of the FX market, it looks like an overly complacent mindset – and consequently price.

Brent Oil USD 88.52.

Ice Cream Curfew

News to you? It certainly was to ice cream van business owner Mark Edwards of Trebanog, Wales who has been slapped with an order by Rhondda Cynon Taf Council to stop his chimes after 7pm following a curmudgeonly noise complaint from a Tonyrefail ice cream vendor hater. Mark Edwards is battling on – tooting instead of chiming in each street – and the Council has reluctantly agreed that he can trade after 7pm – but silently.

EUR/GBP 0.8547.

Punk Prayer

This day in 2012 the Russian girl band Pussy Riot staged a performance inside Moscow’s Christ the Saviour Cathedral which featured this number and which did them little good as they were arrested and hauled off to prison. The song is heartfelt but wins few prizes for lyrical or musical greatness and for those of a sensitive disposition even 14 years on, I suggest you look away now.

Virgin Mary, Mother of God, banish Putin
Banish Putin, Banish Putin!

Congregations genuflect
Black robes brag, golden epaulettes
Freedom’s phantom’s gone to heaven
Gay Pride’s chained and in detention

The head of the KGB, their chief saint
Leads protesters to prison under escort
Don’t upset His Saintship, ladies
Stick to making love and babies

Crap, crap, this godliness crap!
Crap, crap, this holiness crap!

Virgin Mary, Mother of God
Become a feminist, we pray thee
Become a feminist, we pray thee

Bless our festering bastard-boss
Let black cars parade the Cross
The Missionary’s in class for cash
Meet him there, and pay his stash

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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