Morning Brief – Eurozone

Humphrey Percy
Chairman and Founder
Wed 1 Nov 2023


With Eurozone core inflation now at 4.2 % but the economy stuttering at -0.1% growth, the forecast from a Reuters poll of economists is for a gentle increase in growth starting now: +1% in 2024 and +1.5% in 2025. Apart from that benign outlook being almost certainly wrong, it is notable for the non inclusion of wording regarding Ukraine and Gaza and the inflationary impact of those conflicts on both food and energy. Inflation across the Eurozone varies from +7.8% in Slovakia to -1.7% in Belgium. Yesterday the World Bank set a blistering pace for oil with a bleak warning of a USD 150 per barrel price. Brighter news however from Malta which had its own Budget Day this week: in 2024 Malta inflation will fall to 3%, while its budget deficit will fall from 5.7% in 2022 to 4.5% in 2024 but Malta’s economic growth is forecast to be at the top of the European class with +4.2%.

EUR/USD 1.0605.

Japanese Yen

With EUR/JPY at 160.20 the expectation is for Bank of Japan to intervene in support of the Yen. The argument goes that without that expectation the Yen would be weaker still. Braver hearts are calling for a reversal of Bank of Japan interest rate policy, but that is a well worn trail. Still never say never.

China’s Real Estate Crisis

Why it matters to China is obvious given that Real Estate accounts for such a large slug of the Chinese economy. Why it matters to the world as a whole is twofold: at one level the IMF is cutting its global economic growth forecasts due to the implosion of the largest Chinese Real estate companies such as Evergrande and Country Garden. At a more practical level that everyone can relate to, is that with Chinese developments mothballed and a hold on new ones, quite simply there is a huge drop in demand for concrete, steel and glass.

USD/CNY 7.3165.

Airlander 10

Pulses quickened yesterday in the Orkneys, Shetlands and Western Isles of Scotland on the announcement that Bedford based Hybrid Air Vehicles is looking at how the Airlander 10, part plane part airship could be put into service to deliver freight to the islands. Those passengers who struggle with BA or Loganair will doubtless be wondering why the craft cannot be adapted for passenger travel-it definitely would be cheaper.

GBP/USD 1.2120.

Hungry Heart

Rock prodigy(then) US singer Bruce Springsteen scored his first No 1 album with River this day in 1980. This song managed to limp as far as number 44 in the UK charts but that was before BS’s blue collar cult following took off and packed stadiums-world wide.

Got a wife and kids in Baltimore, Jack
I went out for a ride and I never went back
Like a river that don’t know where it’s flowing
I took a wrong turn and I just kept going

Everybody’s got a hungry heart
Everybody’s got a hungry heart
Lay down your money and you play your part
Everybody’s got a h-h-hungry heart


I met her in a Kingstown bar
We fell in love, I knew it had to end
We took what we had and we ripped it apart
Now here I am down in Kingstown again

Everybody’s got a hungry heart
Everybody’s got a hungry heart
Lay down your money and you play your part
Everybody’s got a h-h-hungry heart

La-la-la-la-la-la, oh yeah

Everybody needs a place to rest
Everybody wants to have a home
Don’t make no difference what nobody says
Ain’t nobody like to be alone

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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