POTUS understandably given his current polling, lost no time in hailing the increase of 4.8 Million jobs in June announced yesterday afternoon as a further example of why he should be returned in November as the architect of bringing the USA out of the Covid lockdown and resultant economic trough. As seasoned market practitioners know, whatever the polls show now will be secondary to how the economy looks in November and what happens in domestic USA nearer to polling day. Before Trump is written off, the real test is how the USA feels economically rather than the success or otherwise of its foreign policy. Equity markets picked up on the US release and the sun even managed to make a (brief) appearance in East London. GBP unmoved on the weather but steady versus USD.
While it may seem a distant prospect for most countries, the return of inflation may be a whole lot closer than we may think and is certainly on the minds of the Central Banks including for example the Bank of England. Certainly given the breadth and depth of the economic aid to all global economies, it would be extraordinary if there were not some inflationary consequences.
However, one does wonder if there is not some simple catching up going on-e.g. in an effort to replace income or defray expense for the past 3 months, for service based industries there is some evidence of taking the opportunity to increase prices as the thinking goes that customers will be so pleased to have services restored, that they will wear higher prices.
Anecdotally, my hairdresser has clearly come to that conclusion because her prices have gone up by 16% and I am perfectly sure that I do not have a commensurate amount of extra hair! Petrol prices are also up by about 7% from their lows of April, but that has rather more to do with the resurgent oil price-WTI $40.27
“People born on July 3rd are deeply emotional, financial wizards and good orators.” No doubt birthday boy Tom Cruise can identify with the orator part and we hope and trust that all SGM-FX clients fall into the category of financial wizards.
With the return of F1 next weekend at the Red Bull Ring in Spielberg, Austria onJuly 10-12, fans of Sebastian Vettel -another birthday boy today-will be hoping that he manages to suppress his often demonstrated deeply emotional tendencies(particularly when being overtaken by Lewis Hamilton) and stays out of the sand pit!
Have a great, sunny, fun and healthy weekend!
Discussion and Analysis by Humphrey Percy, Chairman and Founder