Morning Brief – US Economy

US Economy

Finely balanced is probably the best way to describe how the Federal Reserve views the US economy given that for the past 20 months policy has been directed towards restoring full employment. At one extreme there is a view that there are between 4 and 6 million fewer jobs than prior to the pandemic so the economy needs further nurturing through low rates and continued bond buying. At the other end is the view that inflation is being stoked and more immediate action is required than rate rises in 2022. There is also an argument that says that if rates are kept lower for longer it will hurt the very people that strategy is designed to help because when rates do rise they will have to do so in a bigger way than if some medicine is administered now. 10 Year US Treasuries yield 1.60% and EUR/USD at 1.1340.

Ireland

To be sure it seems a novel idea but Shell has inked a 51% stake in an offshore floating wind project off the West coast of Ireland. There is definitely plenty of wind in that area which is probably why the project is forecast to generate 1.35 gigawatts sufficient to power 1 million Irish homes. Floating wind power generation is in its infancy but could unlock generation in deeper waters and that is why Irish developer Simply Blue Group is doubtlessly celebrating with some of the other non-oil black stuff-Guinness.

Turkey: not Christmas

With inflation at 20% and a fall already in the Lira this year of 30%, conventional wisdom would be to raise interest rates. But this is Turkey so their unwillingness to tighten monetary conditions meant yesterday that rates were cut by 1% on top of cuts totalling 3% in the past few months as President Erdogan continues to call for lower interest rates. USD/TRL at 11.14.

Prada

The Italian luxury group is targeting 40% revenue growth by boosting its online business. Retail sales grew 18% in the 3 months to September versus the same period in 2019, so such an ambitious target does not look outlandish. Prada is listed in Hong Kong and the shares at HKD 54.60 are almost at their 5 year peak of HKD 59.10 reached on August 6 this year.

Moondance

This album released by Van Morrison in 1970 took a whole 6 years to make it into the Billboard 100 Chart and then only at number 29. However if Van Morrison is a slow burner, he is still having the last laugh as at the age of 76, the diminutive Irish rocker is worth USD 90 million and is still performing. Here is one of the best songs from the album; Dancing in the Moonlight:

We get it almost everynight

When that moon gets big and bright

It’s a supernatural delight

Everybody was dancing in the moonlight

Everybody here is outta sight

They don’t bark and they don’t bite

They keep things loose, they keep things light

Everybody was dancing in the moonlight

Dancin in the moonlight

Everybody’s feelin warm and bright

It’s such a fine and natural sight

Everybody’s dancin in the moonlight

We like to have fun and we never fight

You can’t dance and stay uptight

It’s a supernatural delight

Everybody was dancin in the moonlight

Dancin in the moonlight

Everybody’s feelin warm and bright

It’s such a fine and natural sight

Everybody’s dancin in the moonlight

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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