Morning Brief – Friday 15th

It’s Official: to understand the British and Brexit (you non Brits) you need to appreciate….Marmalade!

So first things first: for the classical scholars among you, recipes go back to Pliny and Martial. Marmalade is either shop bought or home made and like a number of great institutions-the monarchy, tea and democracy is non British in origin with the oranges historically coming from Asia.

The word comes from a Portuguese description of quince paste, but was derived from the Greek word melimelon or honey apple.
So there you have it: a Peruvian Bear named Paddington keen to integrate into a British family-the Grubers?!-adopted that most British of culinary excellence, the marmalade sandwich …which is of course foreign in its antecedents!

The German Economic Locomotive and Europe

Yesterday morning Germany announced their Q4 Growth figure which was precisely zero. While ardent Brexiteers will no doubt seize on this with cries of triumph, this is anything but as without the German locomotive to pull the Eurozone train, it is a poor look out for the region and the huge market on the UK’s doorstep.
The second set of stats yesterday concerned the fact that the Germans could (just) say legitimately that they were not in recession. Again this is not a matter for British self congratulation: a recession is defined as two successive quarters with negative growth.

German carmakers in particular have had a tough time as funnily enough with the necessity of them complying with the emission controls that they were meant to be complying with anyway, they incurred additional costs which eroded their margins on all those VWs, Audis, BMWs and Mercedes.
This last point gives some credence to the argument that German carmakers are very keen NOT to see a No Deal Brexit.

South Africa’s Eskom reduces the 45,000 megawatt output by 4,000 megawatts

In case you missed it, President Cyril Ramaphosas’s grace period nicknamed Ramaphoria has come to a grinding halt with the announcement that the 56 million citizens of South Africa face a rolling period of power cuts for the foreseeable future.
This has spooked the markets with ZAR weakening in the past 24hrs despite Eskom’s problems being out there publicly and for a long time. ZAR has weakened against both GBP and USD as this is symptomatic of the scale of the problems faced by the President who was elected on the pledge to root out corruption which was and still is embodied in Eskom.

UK Parliament and Brexit

Last night’s vote in Parliament brought the fragile Conservative Party unity to an end with mass abstentions resulting in the Government’s defeat for what was a largely symbolic vote since it is not legally binding. Whatever it really meant, the market did not like it with GBP weakening against both USD and EUR.

Surprisingly weaker US Retail Sales brought the market up short with the Dow weakening to 25,439. Oil WTI firmed to $54.39. FTSE now open is trading at 7191. Markets do not like uncertainty and the UK market is no exception, marmalade sandwich anyone?!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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