Humphrey Percy Chairman and FounderFri 21 Apr 2023
At 10.1% March UK inflation is not only higher than the other developed markets, it is not coming down much which suggests that the Bank of England has misjudged the amount of interest rate medicine that is required and also the speed that it needs to be administered. The expectation was that inflation should have fallen to 9.8% in March.
GBP did not like it and GBP/USD 1.2440 steady for the moment.
Brave words from Bank of Canada Governor Tiff Macklem in Ottawa yesterday: what he said was that higher US interest rates from the Federal Reserve would not have any impact on the Canadian Dollar since Canada has its own monetary policy and its own flexible exchange rate. Despite it being self evident that USD would benefit in the scenario that the Federal Reserve continues to raise rates while Canada has paused; maybe that’s what Governor Macklemore means by flexible. Canadian Dollar marking time in advance of the expected US interest rate rise:
US banks have approximately 18% of their loan books tied up in property finance which is why there continue to be worries about medium and smaller banks in the USA with illiquid asset exposures that are faced with a drain on their deposits. European banks on the other hand have an average of 6% of their books against property. While smaller European banks have some of the same challenges as their US counterparts, it would appear that risk to commercial property is less of a problem.
Fish and Chips
Once the go to staple cheap take away, fish and chips is now a treat and the prices are higher than for Noodles, Pizza, Curry or Burgers. Expect the number of UK chippies to dwindle in the next year as fish and chips is priced out of the market.
Against All Odds
This day in 1984 the somewhat unlikely(then) figure of Phil Collins began a 3 week reign at Number One with this number. Suddenly the distinctly uncool drummer from Genesis who had been drafted in to cover the vacant vocals slot was a star in his own right. Just take a look at him then/now…..
How can I just let you walk away? Just let you leave without a trace When I stand here taking every breath, with you, ooh You’re the only one who really knew me at all
How can you just walk away from me? When all I can do is watch you leave ‘Cos we’ve shared the laughter and the pain and even shared the tears You’re the only one who really knew me at all
So take a look at me now, oh there’s just an empty space And there’s nothin’ left here to remind me Just the memory of your face Ooh, take a look at me now, well there’s just an empty space And you coming back to me is against the odds And that’s what I’ve got to face Instrumental
I wish, I could just make you turn around Turn around and see me cry There’s so much I need to say to you so many reasons why You’re the only one who really knew me at all
So take a look at me now, well there’s just an empty space And there’s nothin’ left here to remind me, just the memory of your face Now take a look at me now, ‘cos there’s just an empty space But to wait for you, is all I can do and that’s what I’ve got to face Take a good look at me now, ‘cos I’ll still be standin’ here And you coming back to me is against all odds It’s the chance I’ve gotta take Instrumental
Take a look at me now
Discussion and Analysis by Humphrey Percy, Chairman and Founder
GBP While the Bank of England’s decision to pause on raising rates by the narrowest of margins with voting 5-4, that resulted in GBP being sold sharply which reflects the market’s view that while inflation at 6.7% looked better than expected yesterday, the effect of higher oil prices and petrol and diesel at the pumps […]
Bank of England It is the big week in UK markets not because there is much doubt in the minds of economists that rates will go up once again on Thursday, but rather more because the “clever” money is predicting that this increase will be the last. What could go wrong? Assuming rates go up […]
UK Interest Rates Despite soothing words from BoE Governor Bailey last week on interest rates reaching the end of the rise cycle, wage inflation of 7.8% in the 3 months to the end of July plus unemployment a tiny bit higher at 4.3% both suggest that the end may have been called too early. So […]