Morning Brief – US Tariffs on Chinese Imports

US Tariffs on Chinese Imports

Recently we wrote about how Mexico has become the Number One trade partner for the USA. It now transpires that Mexico may have had what is known as a little assist with their numbers: the statistics for the number of 20 foot shipping containers for the first three Quarters of 2023 that crossed the border into the USA has risen from the same period in 2022 from 689,000 to 881,000. Upon examination it seems that those containers started their journey in China and were routed via Mexico to overcome those pesky US tariffs put in place by ex President Trump and maintained by President Biden. A veritable Mexican Wave! Caramba!
USD/MXP 17.11

UK Banks returning Capital to Shareholders

Amidst the reports of Barclays returning GBP 10 billion over 3 years, HSBC buying back USD 2 billion of their shares in Q1 2024 and Lloyds returning GBP 2 billion by buying back their shares, there is little or nothing in the way of commentary on what that means for banks -just the bland reporting of the announcements. Without stating the obvious, apart from a shareholder charm offensive and doubtless a fillip for the share prices, it means that the banks have surplus capital. Normally when a company has surplus capital, it decides in which of its operations that capital could be most profitably deployed, or whether through acquisition or expansion it could improve its trading position. The clear message from the UK banks is that they have no ideas for deploying that excess capital and therefore are returning it to their shareholders for them to invest more profitably elsewhere. A poor look out for the banks and also for the UK economy.
EUR/USD 1.0820

Nikkei 225

It may have taken 34 years but the Nikkei 225 Index closed on a new high yesterday after a 2% surge caused by tech stocks rallying hard on the back of Nvidia the AI US Nasdaq wonder stock and its gravity defying earnings and growth forecasts. Nvidia in case you have not been following this story currently has 70% repeat 70% of the global AI chip market. Despite other companies working furiously to catch up and erode Nvidia’s market share, such is the time that it will take those other companies that for the moment Nvidia is set fair. Meanwhile the Nikkei 225 is a beneficiary of the flight from Chinese stock markets after the rout as investors have stampeded out of China Inc.
USD/JPY 150.50

US Student Loans

This week President Biden has forgiven a further USD 1.2 billion of student loans accompanied by much verbiage about opportunity and commitment to education. With no sense of irony given the colossal borrowing by the US Government that we have written about last week, President Biden topped up his total debt forgiveness in this administration of those student loans to a new total of USD 138 billion to the benefit of 3.9 million students. Before you reach for your calculator, that works out at approximately to an average of USD 35,000 each.
GBP/USD 1.2655

World’s Sexiest Accent

When Babbel the language company polled 15,000 people in 2017, French was the clear winner for the world’s sexiest accent. Babbel has recently repeated the survey asking for the most, sexy, romantic and passionate nominations for the various accents. Leading contenders were Irish Lilt, King’s English and husky Spanish, but in a fiercely fought contest the winner that emerged was Italian which was found to be the most sexy and most romantic of any language. Apparently it comes down to the rolling of the r sound which is the most appealing aurally. So there you are. Mamma Mia!
GBP/EUR 1.1695

Hotel California

This day in 1978 American band, The Eagles won best record for this one at the 20th Grammy Awards ceremony. They were in good company with Fleetwood Mac for Rumours and Paul Williams for Love Theme from a Star is Born. You can check out but you can never leave the Grammys.
 
On a dark desert highway
Cool wind in my hair
Warm smell of colitas
Rising up through the air
Up ahead in the distance
I saw a shimmering light
My head grew heavy and my sight grew dim
I had to stop for the night

There she stood in the doorway
I heard the mission bell
And I was thinkin’ to myself
“This could be heaven or this could be hell”
Then she lit up a candle
And she showed me the way
There were voices down the corridor
I thought I heard them say

“Welcome to the Hotel California
Such a lovely place (such a lovely place)
Such a lovely face
Plenty of room at the Hotel California
Any time of year (any time of year)
You can find it here”

Her mind is Tiffany-twisted
She got the Mercedes-Benz, uh
She got a lot of pretty, pretty boys
That she calls friends
How they dance in the courtyard
Sweet summer sweat
Some dance to remember
Some dance to forget

So I called up the Captain
“Please bring me my wine”
He said, “We haven’t had that spirit here
Since 1969″
And still, those voices are calling
From far away
Wake you up in the middle of the night
Just to hear them say

“Welcome to the Hotel California
Such a lovely place (such a lovely place)
Such a lovely face
They’re livin’ it up at the Hotel California
What a nice surprise (what a nice surprise)
Bring your alibis”

Mirrors on the ceiling
The pink champagne on ice
And she said, “We are all just prisoners here
Of our own device”
And in the master’s chambers
They gathered for the feast
They stab it with their steely knives
But they just can’t kill the beast

Last thing I remember
I was running for the door
I had to find the passage back
To the place I was before
“Relax, ” said the night man
“We are programmed to receive
You can check out any time you like
But you can never leave!”…

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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