Humphrey Percy Chairman and FounderFri 19 May 2023
US Consumer Credit
Back in 2000 US consumer credit stood at USD 1.6 Trillion. Clearly near zero interest rates for the past 10+ years plus easy credit conditions have lulled US consumers into a sense of borrow now repay tomorrow. Except that the repay tomorrow part seems to be getting lost with US consumer credit now at USD 4.5 Trillion and interest rates no longer anywhere near zero. 2 Year US Government Bonds now yielding 4.18% and 3 months USD Libor at 5.37%. That compounding interest effect on non repayments is one to watch.
With a staff force of 130,000 of which all but 20,000 are in the UK, BT has not been slow to announce that in the next few years they plan to shed 55,000 staff of whom 20% will be replaced by Artificial Intelligence. Which ever way you look at this, BT has made it plain that they are capable of generating huge efficiencies in the business and, given the customer care they have to offer, it is hardly surprising that some of that can be replaced with AI technology. So, instead of speaking to someone in India, get ready for a chatbot coming to speak to you soon.
On the face of it good news that Japan is investing GBP 18 billion in the UK of which GBP14 million is wind farm related by Marubeni Corporation and Sumitomo Corporation, and a significant increase from the current level of trade and services worth GBP 27 billion.
Back down to $1976 and a new range of $1970 to $2020 being talked about. Still some gold bugs out there who are looking for a break out on the upside which would be predicated for example by a failure in the US to agree a new debt ceiling. Be careful what you wish for!
Circle of Life
Can it be that it is only 5 years ago today that Prince Harry and Meghan Markle tied the knot at Windsor Castle and Elton John played many of his best songs at the Royal Reception including this one when clearly Megarry did not listen to the ninth line of the song :
From the day we arrive on the planet And blinking, step into the sun There’s more to see than can ever be seen More to do than can ever be done
Some say, “Eat or be eaten.” Some say, “Live and let live.” But all are agreed As they join the stampede You should never take more than you give
In the circle of life It’s the wheel of fortune It’s the leap of faith It’s the band of hope ‘Til we find our place On the path unwinding In the circle, the circle of life
Some of us fall by the wayside And some of us soar to the stars And some of us sail through our troubles And some have to live with the scars
There’s far too much to take in here More to find than can ever be found But the sun rolling high through the sapphire sky Keeps great and small on the endless round
In the circle of life It’s the wheel of fortune It’s the leap of faith It’s the band of hope ‘Til we find our place On the path unwinding, yeah In the circle, the circle of life
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Japan Some of the market’s Great Minds spent yesterday afternoon debating whether Japan could get away with raising interest rates at the same time as the Central Banks from the other major markets are starting to cut their interest rates. In short, Japan can and probably will, since its monetary policy has been effectively in […]
I’m a central banker, get me out of here Ant and Dec were not present at the RBA decision overnight. However, based upon the reception of the decision, Governor Michele Bullock might rightly feel she was in one of the duo’s trials. Markets offered a frosty reception to the Reserve Bank of Australia’s latest interest […]
UK With 2 year mortgage rates less than 4% and 5 years at 4.39%, the implication for the housing market which has responded by a modest 0.2% rise, is that rates are soon going to fall and that the UK economy is stabilising. While there will doubtless be setbacks to this rose tinted scenario, for […]