Daily Brief – 2024 Global Economy

2024 Global Economy

Like much else in the dismal science of economics the 80/20 rule applies to the global economy with the G20+ BRICS economies accounting for 80% of the pie and the rest of the world making up 20%. When it comes to the G20 the G7 countries make up 41% and the 5 BRICS countries 48% with the other 8 countries accounting for the remaining 11%. All of this is based on a Purchasing Power Parity adjusted GDP measure in US Dollars which is code for there being some significant rounding errors, but this is the big picture of the global economy and its breakdown at the end of 2024.

EUR/USD 1.0504

Eurozone

Having articulated the case for a 25bp consensus cut yesterday in our Daily Brief, we were still wondering if the ECB would be swayed by EU annual economic growth of 1% and virtually none at all in the EU locomotive, Germany and be bold, or rather if it would point to inflation at 2.4% or 0.4% above the 2% target, and wage growth of 6.5%, and go for caution. In the event, consensus prevailed, and a 25 bp cut was delivered. Given the political change ahead in both Germany and France, keeping some firepower in reserve to booster the EU economies seems prudent.

EUR/JPY 159.85

Anticyclonic Gloom

The German word dunkelflaute sounds marginally more upbeat and more mysterious and is almost a direct translation of dark wind lull which is another way that meteorologists have of describing anticyclonic gloom. What that means to us weather amateurs is a situation when there is minimal sunshine and wind for an extended period. What that has meant for Germany is that its dunkelflaute has sent German power prices to their highest level for almost 20 years. Of course the lack of wind is not just confined to Germany, it is a Europe wide phenomenon. Wind farm output has plummeted to 3% of its norm and those ever so eco keen Germans have been forced to dust off their coal and gas fired power stations to cope with demand.

EUR/GBP 0.8265

Virality

No not a typo this is the word when in this context a music video circulates rapidly and widely between internet users and goes viral which in turn has spawned the marketing science to measure the extent of its virality. Music tastes have evolved in the past 70 years and in the 2020s successful hits need to be energetic, danceable and novel. Just to debunk that theory Bing Crosby’s White Christmas is still a monster Christmas hit and is none of those things. That’s because it’s a classic.

GBP/USD 1.2709

2000 Light Years From Home

This day in 1975 The Rolling Stones proposed to the Government of Chile that they should play a concert for 100,000 fans on Easter Island which while 3,686KMS off the coast is a prized territory of Chile. Sensibly, Chile responded that the whole future of the Island would be damaged even assuming that all those fans succeeded in getting there.

Sun turnin’ ’round with graceful motion
We’re setting off with soft explosion
Bound for a star with fiery oceans

It’s so very lonely, you’re a hundred light years from home

Freezing red deserts turn to dark
Energy here in every part
It’s so very lonely, you’re 600 light years from home

It’s so very lonely, you’re a thousand light years from home
It’s so very lonely, you’re a thousand light years from home

Bell flight 14, you now can land
See you on Aldebaran
Safe on the green desert sand

It’s so very lonely, you’re 2,000 light years from home

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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