Morning Brief – Germany

Humphrey Percy
Chairman and Founder
Wed 14 Feb 2024


With the German IFO or Business Climate Index down from 90.10 a year ago to its current level of 85.20, Germany’s business leaders are more realistic about the outlook for Europe’s largest economy than their political leaders. Chancellor Scholz wisely passed the speech making duties yesterday to one of his cohorts who managed with a straight face to announce that Germany was not in a recession despite the 2023 contractions in its economy and moreover was set for a strong economic performance in 2024. That strong economic performance is optimistically defined as being growth of 0.5%, the weakest outlook for any of the largest global economies.
EUR/USD 1.0745.

UK Bank Valuations

One of the ongoing puzzles for investors in UK banks is that with the exception of HSBC which trades at 0.82 price to book, the other 3 largest banks trade at large discounts with Barclays at 0.33, NatWest at 0.55 and Lloyds at 0.60. Compare that to Swiss behemoth UBS at 1.05 or the American banking giants Wells Fargo at 0.95 and Bank of America at 0.93. Top of the class of course is US banking giant JP Morgan at 1.68 while on the naughty step with Barclays is the German Deutsche Bank also at 0.33. If you think that this low valuation puzzle is just for the long suffering UK bank shareholders, in a speech at Loughborough University on Monday evening the Governor of the Bank of England also expressed his bemusement for the lowly UK bank valuations given the robust state of their reserves.
GBP/USD 1.2670.


It has been a long 34 years for those investors convinced of a recovery in the Japanese market since the Bubble Market burst back in 1990, but yesterday the Nikkei 225 Equity Index went through 38,000 for the first time since then. So, for those who could afford to hang on, or better still for those who continued to invest in Japan Inc, yesterday was vindication.
EUR/JPY 161.04.


The Federation of French Wine and Spirits Exporters or FEVS has reported that total exports in 2023 fell by 6% to EUR 16.2 billion. While exports to China fell, China only accounted for EUR 1.2 billion. The major market for France is of course the USA and, while there is little sign of the American liking for French wines and spirits diminishing, the reduction is down to the USA firstly having built up stocks during LockDown and then in 2022/3 with the increases in cost of living, reducing the size of their cellars rather than buying more wine and spirits.
USD/JPY 149.40

Born to be Wild

This was of course American rock band Steppenwolff’s greatest song from 1969, but after 6 albums and a farewell concert this day in 1972, Steppenwolff split up citing the reason as being:” We were locked into an image and a style of music and therefore there was nothing for us to look forward to.” That lasted all of 2 years before they re-formed having overcome their artistic reservations in favour of a whole lot more moolah by sticking to their knitting.
Get your motor runnin’
Head out on the highway
Looking for adventure
In whatever comes our way

Yeah, darlin’, go and make it happen
Take the world in a love embrace
Fire all of your guns at once
And explode into space

I like smoke and lightnin’
Heavy metal thunder
Racing with the wind
And the feeling that I’m under

Yeah, darlin’, go and make it happen
Take the world in a love embrace
Fire all of your guns at once
And explode into space

Like a true nature’s child
We were born, born to be wild
We can climb so high
I never wanna die

Born to be wild
Born to be wild…

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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