Morning Brief – US Federal Reserve

Humphrey Percy
Chairman and Founder
Wed 18 Oct 2023

US Federal Reserve

Given what feels like the near non-stop commentary on the path of US interest rates, it may be useful to break down where we are now in readily comprehensible speak given the predilection of the world’s central bankers to obfuscate with the Fed being one of the world’s leading proponents of opaqueness. The chance of US interest rates increasing in November is priced at 10% and in December 33%.

EUR/USD 1.0530.

Scottish Windpower

Gone are the days when climate deniers could sneer at wind turbines and suggest that all they were capable of was to power a single electric kettle. With Seagreen Wind Farm fully on stream now, the joint venture between SSE Renewables and French energy giant Total is able to power two thirds of Scotland’s households. 114 giant turbines 17 miles off the coast in 58 metres of water adds up to Seagreen being the deepest fixed wind farm in the world which has been achieved at a cost of GBP 3 billion.

GBP/EUR 1.1565.

Debt Trap Diplomacy

This is one of the less kind epithets applied to China’s Belt and Road Diplomacy which is now 10 years old and has cost the Peoples’ Republic conservatively USD 1Trillion. The bulk has been expended on linking China to the West and consequently energy is the single largest cost at USD 400 billion, transport at USD 230 billion followed by metals and mining and real estate. By extending credit to so many nations, China has become the single largest international lender, hence the debt trap diplomacy moniker. The snag is that many of those nations are now struggling to service that debt due to higher interest rates. However the glittering prize of extending China’s influence can be judged to have been comprehensively won despite the true cost of winning it being far from clear.

USD/CNY 7.3120.

Suspicious Minds

This day in 2009 a clump of Elvis’ hair carefully kept since he was shorn when he joined the US Army in 1958 went for USD 15,000 at the Lesley Hindman Auction House in Chicago. That raises a number of questions including why, who, to what purpose…etc?

We’re caught in a trap
I can’t walk out
Because I love you too much, baby
Why can’t you see
What you’re doing to me
When you don’t believe a word I say?

We can’t go on together
With suspicious minds (suspicious minds)
And we can’t build our dreams
On suspicious minds

So if an old friend I know
Stops by to say hello
Would I still see suspicion in your eyes?
Here we go again
Asking where I’ve been
You can’t see the tears are real, I’m crying
(Yes I’m crying)

We can’t go on together
With suspicious minds (suspicious minds)
And we can’t build our dreams
On suspicious minds

Oh, let our love survive
I’ll dry the tears from your eyes
Let’s don’t let a good thing die
When honey, you know I’ve never lied to you
Mmm, yeah, yeah

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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