Daily Brief – Brazil

Brazil

When most Europeans hear the phrase Belt and Road in reference to China they think of the route of the ancient Silk Road from China to Europe. There is of course an initiative of the same name in Latin America and specifically between Brazil and the Pacific Coast to the Peruvian port of Chancay. Brazil traditionally has derived its trade predominantly from its Atlantic seaboard. Now however Brazil is looking to the Pacific. By building the links to the Pacific Coast, President Lula of Brazil is planning to increase GDP by 1 percent or USD 22 billion per year and to decrease the time for goods to reach China by 12 days. As world leaders jet in to attend APEC and the G20 no guest is more important to Brazil than President Xi of China who is also being given a state visit in Brasilia. Equally President Trump’s impending tariffs will be uppermost on all Presidential minds at all of those gatherings.

USD/JPY 155.91

EU v USA

Mario Draghi’s report on the EU is now some weeks old but it is only now that the importance of what he wrote is becoming clear. In 1980 GDP per capital between what is now the EU and the USA was almost at parity but now the USA is more than twice that of the EU. Rather than list the EU woes, it is worth looking at the remedies: invest in digitalisation, education and frontier technologies to future proof the EU. The underlying problem is productivity with for example the productivity of US listed tech firms increasing by 40% in the past 20 years whereas EU tech firms’ productivity has remained the same. The EU does of course have plenty of smart tech savvy firms but they are small; the USA has a large number of “gazelles” that have grown big quickly and that makes a huge difference. Paul Marshall of the eponymous investment firm Marshall Wace posed the question in yesterday’s Financial Times as to whether investors would prefer to hitch their wagons to the robust engine of USA growth or the museum economy of the EU. Ouch.

EUR/USD 1.0567

Mansion House

With Chancellor Reeves preparing her notes for her first outing as guest of honour and key speaker at the Mansion House dinner just across the road from where she worked at the Bank of England at the time of writing, in the short time since she has been in office, it has become all too apparent that nothing should be ruled out. Well headlined has been the Chancellor’s consolidation plans for Local Authority pension funds into a smaller number of so called mega funds. It is not apparent quite how that will improve growth, investment or returns for pensioners but by the time that you read this, maybe the veil will have been lifted. Meanwhile GBP is being buffeted like all major currencies in the path of a mighty USD.

GBP/USD 1.2702

Glastonbury June 25-29 2025

No not a diary malfunction: last night coach tickets went on sale at the price of GBP378.50 or EUR455 plus the cost of the coach fare. 200,000 attendees, 100 stages and 5 days all make up Glastonbury as being the biggest arts festival full stop. So if you want to get in ahead of the general ticket sale that opens on Sunday morning at 0900 GMT, a coach ticket is the way to Glasto in 2025. Any more fares please?!

GBP/EUR 1.2020.

Chic

This day in 1978 NY band Chic released their smash hit Le Freak  which went on to take dance floors by storm, went Gold and sold no less than 7 million copies. You had to be there.

One, two

Ah, freak out!
Le freak, c’est chic
Freak out!
Ah, freak out!
Le freak, c’est chic
Freak out!
Ah, freak out!
Le freak, c’est chic
Freak out!
Ah, freak out!
Le freak, c’est chic
Freak out!

Have you heard about the new dance craze?
Listen to us, I’m sure you’ll be amazed
Big fun to be had by everyone
It’s up to you, it surely can be done

Young and old are doing it, I’m told
Just one try and you too will be sold
It’s called ‘Le Freak’, they’re doing it night and day
Allow us, we’ll show you the way

Have a Great Weekend! 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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