Daily Brief – Unfortunate

Unfortunate

That was how the Indian Foreign Ministry described POTUS’ extra 25% tariffs on Indian goods exported to the USA as a blunt instrument to prevent India buying Russian oil which indirectly funds the war in Ukraine. India is more than unlikely to find a ready replacement for the 2 million barrels of oil that it purchases each and every day from Russia. Before this flare up, POTUS had been making nice with his Indian counterpart President Modi and India was touting itself as China+1, in other words as the alternative market to China. In turn POTUS had calculated that India would be the alternative market to China. This is not a one sided game of winner and loser: India will find it harder to attract US investment but on the other side of the coin, surely it cannot have passed President Trump by that the USA is hardly India’s biggest trading partner? India exports USD 92 billion of goods to the USA annually which is approximately 2% of India’s GDP.

EUR/USD 1.1670.

European Companies by Value

The Top Ten European companies leader board has 3 Swiss, 2 French, 2 British, 1 Dutch, 1 Danish, and 1 German companies of which the largest at $313B is German software titan SAP. The Swiss comprise healthcare company Roche, chocolate maker Nestle and pharma champ Novartis while the French duo are both in the luxury goods category, LVMH and Hermes. Britain’s runners are drug maker AstraZeneca and global chemical colossus Linde which leaves Dutch semi conductor supremo ASML and Ozempic supplier to the shrinking masses, Danish company Novo Nordisk.

EUR/GBP 0.8731.

EU Strategic Defence Spending

Following the USA pressuring Europe to ratchet up its defence spending and to cease depending on the USA to the extent that it has for the past 80 years, the EU swung into action and held a security summit earlier this year. The output we learnt was that the EU would make a commitment to increase its defence spending by country to 3.5% of GDP (versus the 5% demanded by Trump) over the next 10 years. Just what was that defence spending? Armies but also tech including drones and forms of electronic weaponry. The aim was to bolster the Eastern flank of Europe to prevent Russia from further territorial aggrandizement. In Italian PM Georgia Meloni’s mind, in a mind blowing geographical stretch, this has been interpreted as dusting off the EUR 4 billion decade old plan to build a bridge between the Italian mainland and Sicily. Described this week as a strategic defence initiative to enable EU troops to mobilize between the mainland and Sicily, surely it has nothing to do with using the spend on the most economically deprived areas of Italy. As a further political plus both domestically and internationally for Meloni, the cost of the bridge project has soared to EUR 13 billion. Win Win.

EUR/JPY 171.88.

B&Q

Owned by Kingfisher plc, B&Q the multinational DIY, Home Improvement, and Garden Centre company has 1,100 stores in 8 countries across Europe and is named after the first letters of founders Block and Quayle. On a tear, having acquired 3 Homebase stores in Ireland and 5 in the UK in January this year, managers will be rubbing their hands as Mondeo man takes to the wheel and sets out for their stores in this fine weather. Meanwhile, we have our fingers crossed for that fine weather continuing tomorrow which sees the SGM-FX BBQ in the Weald of Kent and which will feature not only a sizzle but weather permitting the rare sight of SGM-FX’s finest showing their knees.

GBP/USD 1.3367.

Rock and Roll

This day in 1992 in a line up that surely spelt trouble, Metallica and Guns n Roses appeared as a double bill in concert in Montreal, Canada. Metallica opened and all was going well until lead singer James Hetfield was injured by fireworks which meant Metallica had to call a halt to their act. Guns n Roses then took to the stage and that served to quell the unrest in the audience caused by Metallica’s early exit. But then Axl Rose in a distinctly un rock n’roll moment claimed that he had a sore throat which caused Guns n Roses also to take an early bath and return to the Green Room for refreshments and medication. Canadian rock audiences are slow to anger but when they lose it they set things on fire, overturn cars, loot shops and smash windows. Once they had done all that, things calmed down. O Canada.

Oh, my God
Whoa

Welcome to the jungle
We got fun and games
We got everything you want
Honey, we know the names

We are the people that can find
Whatever you may need
If you got no money, honey
We got your disease

In the jungle, welcome to the jungle
Watch it bring you to your, sha-na-na-na-na-na-na, knees, knees
Ooh-ah, I, I wanna watch you bleed

Welcome to the jungle
We take it day by day
If you want it, you’re gonna bleed
But that’s the price you pay

And you’re a very sexy girl
Who’s very hard to please
You can taste the bright lights
But you won’t get them for free

In the jungle, welcome to the jungle
Feel my, my, my, my serpentine
I, I wanna hear you scream

Welcome to the jungle
It’s worse here everyday
You learn to live like an animal
In the jungle where we play

You got a hunger for what you see
You’ll take it eventually
You can have anything you want
But you better not take it from me

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter