Morning Brief – Germany and the EU

Germany and the EU

The Germany Supply Chain Act came into force in 2023 as a result of Germans wanting to do something good for employees in other countries in particular with respect to human rights and environmental issues. So far so good. But a combination of cost and bureaucracy overlaid with the difficulty of obtaining accurate information for example from Asian or African companies means that for the 5,000 German companies struggling to complete forms regarding workers’ rights, child labour and environmental health, it is frequently an unworkable nightmare. No-one disputes the well meaning intentions behind the Act, but the fact remains that non EU, Chinese or Indian manufacturers do not have such requirements which make their goods more competitive. Now the catchily named CSDDD or Corporate Sustainability Due Diligence Directive from the EU is set to be rolled out EU wide and that is bad news for the EU when it comes to competitiveness and of course form filling for all EU companies.

EUR/JPY 168.51

EU Interest Rates

With annual inflation at 2.4% and core inflation at 2.7% at the end of Q1 2024, market watchers are declaring an EU victory over the USA in the interest rate cutting stakes. Growth came in at 0.3% for Q1 2024 which while anaemic by Chinese standards does appear positively muscular versus the end of 2023 when it barely registered at 0.1%. While one swallow does not make a summer, the current expectation is for an interest rate cut by the ECB in June.

EUR/USD 1.0703

Bonza

In fact it turned out to be far from bonza for the thousands of Bonza passengers who were caught out when the budget Australian airline went into voluntary administration yesterday. The first new airline to launch in Australia since 2007, Bonza struggled against the two airlines that have the Aussie market sewn up: Qantas and Virgin. Bonza’s fleet comprises 8 Boeing 737 Max aircraft and it is now grounded while the Administration process is followed. Bonza has only been in operation since 2021.

USD/AUD1.5382

Commodity Corner

All too easy to lose sight of where exactly commodities have gone in the course of the last couple of weeks with such a torrent of news and often conflicting market views. Gold is well off its high but is firm at $2303, Brent Oil has stabilised at $87.88 and the 45 year Copper chart with the latest price at $4.58 for any chartists out there, looks awfully like a triple top or in plain language is poised for a sell off. 10Year US Government Bonds now yield 4.62%.

GBP/USD 1.2521

Smooth Criminal

This day in 1989 police attended a jewellery store in California due to a man acting suspiciously and who was quite clearly wearing disguise. Having made him remove the false moustache, teeth and eyelashes as well as the wig, it transpired that it was just Michael Jackson doing some shopping. Nothing to see here, move along etc.

As he came into the window
It was the sound of a crescendo
He came into her apartment
He left the bloodstains on the carpet
She ran underneath the table
He could see she was unable
So she ran into the bedroom
She was struck down
It was her doom

Annie, are you okay?
So, Annie, are you okay?
Are you okay, Annie?
Annie, are you okay?
So, Annie, are you okay?
Are you okay, Annie?
Annie, are you okay?
So, Annie, are you okay?
Are you okay, Annie?
Annie, are you okay?
So, Annie, are you okay?
Are you okay, Annie?

Annie, are you okay?
Will you tell us that you’re okay?
There’s a sign in the window
That he struck you – a crescendo, Annie
He came into your apartment
He left the bloodstains on the carpet
Then you ran into the bedroom
You were struck down
It was your doom

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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