Morning Brief – Bank of England

Humphrey Percy
Chairman and Founder
Fri 4 Nov 2022

Bank of England


Yesterday’s meeting and subsequent release was the BoE’s biggest outing of the year in the wake of Trussonomics, the Gilt market meltdown and last but not least inflation at over 10% the highest for 40 years. If it had not been for the spotlight being shone on the events in the Westminster bubble between the end of September and the end of Trussonomics on 25-10-22 when Rishi Sunak became Prime Minister, there would have been more than the surprisingly mild opprobrium that has been poured on the Governor of the Bank of England for his performance which has been summarised most kindly as being overly slow and less than deft. With a rise of 75bps expected, the scene was set. When it came as expected, the FX market sold GBP in a classic buy the rumour sell the fact-on Wednesday GBP was 3 cents higher. Because it was expected and the inflation fighting action had been taken, the mood music was negative as the logic was that things really were bad and this large rate rise would be bad for the economy. Two months ago it might have been different, but this is now in the light of the damage done to the UK by the ill judged/timed/telegraphed (take your pick) Kwasi Kwarteng package on 23-09-22. GBP/USD 1.1210.


Technology Stocks


If we had written that Apple was to fall 23% earlier this year, our readers might well have snorted in disbelief over their breakfast-we did not, so dodged that particular bullet. However as of yesterday with Apple having fallen from its $3 trillion market cap to $2307 billion, a much more dramatic move has occurred: adding Meta $240 billion to Amazon $940 billion and Alphabet $ 1126 billion, the total at $2306 billion spookily comes to just less than the market cap of Apple.


UK Reservoir Levels


Only a few weeks ago, we were on a hosepipe ban with strictures on watering of gardens and cleaning of cars-the next step would no doubt have been aerial reconnaissance followed up by fines for suspiciously green lawns. A quick check of the reservoir levels shows that most regions are now around 50-60% of capacity with outliers like Devon and Cornwall at 33% and West Cumbria at 99%. Give it another month with weather like this week and with floods in many places today including London and those levels will no doubt be much higher, but closer reading of the individual reports reflects a more concerning picture with much wastage and a lack of new investment in infrastructure to manage water more effectively in the interests of shareholder returns. Instead of the flim flam of attending/not attending Cop27 there is a case to be made for the press to focus on pressuring the government to address issues rather closer to home. GBP water logged with GBP/EUR 1.1460.


River Dance


This time nothing to do with water but rather than the Irish enthusiasm for dancing which has found international fame with the River Dance phenomenon launched many years ago by the now retired Michael Flatley who hung up his dancing shoes in 2016. Pub quiz fact: MF held the Guinness World Record for tap dancing 35 times per second and his feet were insured for USD 57.6 million. Dark tales surfacing of how the Irish competitive spirit to further the dancing careers of child prodigies with fees of EUR 20,000 to enter competitions, bribery of judges and even, tighten your laces, sexual favours being offered to ensure the right results. Nothing to do with these shenanigans in this distant outpost of the EU, Euro struggling against a strong USD with EUR/USD 0.9780.


Elton John


This day in 1989 Elton became the third artist ever to put 50 hit songs in the charts-the first two in case you were wondering were The King and probably surprisingly to younger readers, Cliff Richard. The first hit for Elton was Your Song and here it is, one of his very best:


It’s a little bit funny, this feeling inside
I’m not one of those who can easily hide
I don’t have much money, but, boy, if I did
I’d buy a big house where we both could live


If I was a sculptor, heh, but then again, no
Or a man who makes potions in a traveling show
I know it’s not much, but it’s the best I can do
My gift is my song, and this one’s for you


And you can tell everybody this is your song
It may be quite simple, but now that it’s done
I hope you don’t mind, I hope you don’t mind that I put down in words
How wonderful life is while you’re in the world


I sat on the roof and kicked off the moss
Well, a few of the verses, well, they’ve got me quite cross
But the sun’s been quite kind while I wrote this song
It’s for people like you that keep it turned on


So excuse me forgetting, but these things I do
You see, I’ve forgotten if they’re green or they’re blue
Anyway, the thing is, what I really mean
Yours are the sweetest eyes I’ve ever seen


And you can tell everybody this is your song
It may be quite simple, but now that it’s done
I hope you don’t mind, I hope you don’t mind that I put down in words
How wonderful life is while you’re in the world


I hope you don’t mind, I hope you don’t mind that I put down in words
How wonderful life is while you’re in the world


Have a Great Weekend!




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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