Morning Brief – Germany

Germany

Another tale of one of the world’s leading economies borrowing much more to do what it takes: this time it is Germany and the announcement that the Finance Minister plans to take on more than EUR 160 billion or USD 190 billion in debt in 2021 to counter Covid. The German government expects GDP to contract by 5.5% in 2020 and to grow 4.4% in 2021. If that proves to be correct the arithmetic means that Germany’s GDP will still be net minus 1.34% after 2 years.

Taipei

Yesterday the streets of the capital of Taiwan were full of protesters for the annual “Autumn Struggle”march which this year was focused on the government’s decision to ease restrictions on imports of US pork despite concerns for food safety. US pork contains the drug Ractopamine which while encouraging leanness is banned in both China and the EU. The government rationale is that this easing will enhance links between the USA and Taiwan which most observers including and especially China hitherto believed had no need for enhancement. So far this year the New Taiwan Dollar has only strengthened versus USD from 30.5 to 28.5 an increase of 6.5%.

Electric Vehicles

Now that the announcement has been made in the UK that new car sales of petrol and diesel vehicles will be banned after 2030, attention will turn to the knotty problem of charging them. Less than 7% of new vehicles are fully electric but 1 in 4 are hybrid. The UK Gov website loftily says that there are more than 4,000 charging points in the UK but misses the point that only a tiny proportion of cars use them. At 8 hours for a full charge, the only practicable way to achieve that is overnight. Most drivers go for a 100 mile top up which takes 35 minutes with a rapid charger. Setting off from home to refuel might involve rather a long wait unless of course dramatic advances in both batteries and charging infrastructure happen in the next 9 years. That could explain the small print which says that hybrid vehicle sales will be permitted in the UK until 2035.

The Moon: Ocean of Storms

Nothing much to do with financial markets on Planet Earth, but China is set to be the third nation after the USA and USSR to land on the Moon with the intention of bringing back 2kg of lunar rock. This week the Chang e5 unmanned mission will launch with the target destination of the Moon’s Ocean of Storms which is a huge lava plain and has never previously been visited. For those wondering when it was that the previous missions brought back Moon samples, it was back in the 1970’s, round about the time that Pink Floyd released Dark Side of the Moon. Honestly you had to be there but the music has lasted better than the lyrics:

“I’ve always been mad, I know I’ve been mad, like the
most of us…very hard to explain why you’re mad, even
if you’re not mad…” Breathe
Breathe, breathe in the air
Don’t be afraid to care
Leave but don’t leave me
Look around and choose your own ground

Long you live and high you fly
And smiles you’ll give and tears you’ll cry
And all you touch and all you see
Is all your life will ever be

Run, rabbit run
Dig that hole, forget the sun
And when at last the work is done
Don’t sit down it’s time to dig another one

For long you live and high you fly But only if you ride the tide
And balanced on the biggest wave
You race towards an early grave
On The Run

“Live for today, gone tomorrow, that’s me, HaHaHaaaaaa!”

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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