Morning Brief – Milan, Italy

Humphrey Percy
Chairman and Founder
Wed 24 Apr 2024

Milan, Italy

The City of Milan has a late night noise problem and so it has acted unilaterally to resolve it-Italian style. A ban on the sale of take away food including ice cream and pizza after midnight is being imposed to protect the “peace and health of residents.” Here in the UK late night anti social noise is more likely to be fuelled by alcohol than ice cream, but in Milan the sale of late night drinks will continue and somewhat surprisingly is not considered likely to impact the peace of Milan’s streets.

EUR/JPY 165.66


French borrowing looks set to stay high or even get worse with the current budget deficit of 5.5% of GDP while targeted to fall to 4.5% in 2024 before reducing to 3% in 2025 is unlikely to get there. The debt to GDP ratio is 110% and that is slated to grow to 115% by 2029. There are a number of issues with these figures including the fact that France’s debt position is much higher-around 30%- than the average for the EU as a whole. The rating agencies are all contemplating what to French thinking at least was unthinkable until recently: a downgrade from the current AA rating. Currently French Government Bonds trade at a premium of 0.50% to German Bunds and that can only grow in the event that France is downgraded which is looking increasingly probable. Mon dieu.

EUR/USD 1.0710


Looking at the oil options market reveals that the market is taking money off the table and unwound much of the geopolitical risk premium that has been a feature in the past three weeks due to missile and drone attacks in the Middle East. Headlines reflect that too with wording such as Back from the Brink. Let’s hope that this risk de-escalation is correct and continues. When I started writing this, Brent stood at $86.10 and now it is substantially higher so it’s maybe a case of the market getting ahead of itself.

Brent $ 88.43

UK Gilt Sales

The UK Government will sell GBP 12.4 billion more bonds than planned which means that 2024 will see the second highest UK government borrowing on record. Further impetus to cut interest rates and reduce the gigantic borrowing bill faced by the UK.

GBP/USD 1.2455

Ebony and Ivory

This was the song at Number One this day in 1982 which was a collaboration between ex Beatle Paul McCartney and Stevie Wonder. It might have felt old hat to Paul McCartney since it was the 24th Number One that he had written but commercially it was a huge hit going Gold selling 500,000+ although more than a little syrupy:

Ebony and ivory live together in perfect harmony

Side by side on my piano keyboard, oh Lord, why don’t we?

We all know that people are the same whereever you go

There is good and bad in ev’ryone

We learn to live, when we learn to give

Each other what we need to survive, together alive

Ebony and ivory live together in perfect harmony

Side by side on my piano keyboard, oh Lord why don’t we?

Ebony, ivory, living in perfect harmony

Ebony, ivory, ooh

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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