Morning Brief – UK Inflation

UK Inflation

At over 4%, the warning lights have been flashing for a few weeks now. Bank of England  Governor Andrew Bailey has been saying that such a level of inflation in the UK is temporary. Respected Panmure Gordon analyst, Simon French wrote the same over the weekend. However, it looks likely that following comments by Governor Bailey yesterday afternoon that he is contemplating a rise sooner rather than later to put a brake on inflation going higher. While his message is the same ie that it is a temporary blip, he referenced much higher energy prices and is clearly concerned that they will force the headline rate higher still. GBP/USD at 1.3740 in NYC on Friday night but will open higher for sure in Asia on this news.

Turkey and Africa

Those who follow President Erdogan closely might have noticed that he has embarked on a clear mission to create business and influence in more than 30 African countries. Rwanda, Ghana and Ethiopia have all been beneficiaries of significant Turkish backed infrastructure projects. Erdogan’s latest trip will include Somalia, Nigeria and  Angola. There are two forthcoming major conferences that demonstrate the intent of Turkey: Turkey-Africa Summit and Turkey-Africa Business Summit. All this serves to demonstrate that Turkey wants to set itself up as an alternative external power in Africa and is trying to play catch up with China. Historically Ottoman Turks built strong ties with Morocco, Ethiopia, Nigeria and South Africa, so this latest initiative by Turkey is a return in may ways to that earlier time. Cynical readers might rather conclude that President Erdogan is keen to distract his domestic audience away from his less than successful economic performance and the USD/TRL at 9.27 a new low for the TRL.

DF17

For those of us not well versed in missiles, the DF17 is a hypersonic missile with nuclear capability and rather to the USA’s surprise it turns out that China has them and has been testing them for the past 3 months. The DF17 has a speed of 6,200 KPH or 3,850 MPH. These missiles are very difficult to deal with as they leave the Earth’s atmosphere, hurtle through space and then return at a very steep trajectory making them difficult to neutralise. They are also difficult to manage for the Chinese as it turns out as they have a habit of missing their targets by 40-50 kilometres. Despite the accuracy challenges, they have added a layer of complexity and risk to the escalating tensions in the South China Sea. USD/CNY at 6.4340 over the weekend.

Chuck Berry

This day in 2016 was Chuck Berry’s 90th birthday. No bath chair for him: he announced his first new album for 38 years and named it Chuck. Here is one of his best songs ever, the 1955 hit Maybelline:

Maybellene, why can’t you be true?
Oh, Maybellene, why can’t you be true?
You done started doing the things you used to do
As I was motivatin’ over the hill
I saw Maybellene in a Coupé de Ville
A Cadillac a-rollin on the open road
Nothin’ will outrun my V-8 Ford
The Cadillac doin’ ’bout 95
She bumper to bumper, rollin’ side by side
Maybellene, why can’t you be true?
Oh, Maybellene, why can’t you be true?
You done started back doin’ the things you used to do
The Cadillac pulled up at 104
The Ford got hot and wouldn’t do no more
It done got cloudy and started to rain
I tooted my horn for the passin’ lane
The rain water blowin’ all under my hood
I knew that wasn’t doin’ my motor good
Maybellene, why can’t you be true?
Oh, Maybellene, why can’t you be true?
You done started back doin’ the things you used to do
Oh, Maybellene, why can’t you be true?
Oh, Maybellene, why can’t you be true?
You done started back doin’ the things you used to do

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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