Daily Brief – BRICS

BRICS

In case you missed it, and I very nearly did due to the sheer amount of soon to be again President Trump’s social media output, he was vociferous in his opposition to a BRICS inspired alternative currency to USD. While we have been following the long running Brazil, Russia, China, India and South Africa debate on such a currency, we have not devoted too much time to it as apart from Russia being sanctioned and with the exception of South Africa, the other countries not having continuously freely traded currencies, there is the knotty issue of the need to agree where the central monetary authority might reside of such a currency union – should of course they agree on the “in” price and the rules of operation plus the no small matter of the global markets accepting and trusting such a currency. The message from Trump is that in addition to his promised tariffs on almost all countries, if such a currency union is pursued he will impose 100% tariffs on those countries. In fact it goes beyond not pursuing, Trump wants them to commit that they will neither support nor pursue a currency that sets out to replace USD or face 100% sanctions. Strong sanction indeed.

EUR/USD 1.0522.

British Pound

GBP remained steady yesterday firstly against the USD following comments from Fed Reserve Governor and rate setter Christopher Waller supporting a 25bp US interest rate cut in December. At the same time GBP remained steady against EUR which was suffering on the back of France’s lame duck government and vote of no confidence motion later today. The Bank of England is currently expected to leave UK rates unchanged in December unlike their colleagues at the Federal Reserve and the European Central Bank and that explains in large part GBP being broadly unchanged.

GBP/USD 1.2665.

EU and Switzerland House Prices

This widely disparate area of nearly 600 million citizens has a world of difference in house prices with at one end of the scale, Switzerland at 166% of the average and at the other end Bulgaria at 39% of the average. Between 2010 and 2023 the average price rose 48% led by Estonia +209%, Hungary +191% and Lithuania +154%. Only Italy and Cyprus fell in price with single digit drops. Greece did not manage to provide data! People spent on average 20% of their disposable income on housing and tellingly 66% of households owned their own homes.

EUR/JPY 157.53

Santa Rally

It’s beginning to look a bit like a Europe wide Santa Rally in equity and bond markets. That’s the funny thing given the political situation in France and Germany where the two largest economies both have political crises and minority holed below the water line governments: markets can display traits that look positively schizophrenic. Meanwhile deck the halls, pour the punch etc.

EUR/GBP 0.8310.

Man Smart, Woman Smarter

Released this day in 1976 this calypso version of the song became a Billboard Hit for Robert Palmer the Batley UK born singer who variously and prolifically wrote jazz, soul, funk, rock, pop, reggae and blues songs as well as calypso obviously.

Let us put man and woman together
And see which one is smarter.
Some say men, but I say no
The women got the men like a puppet show
Ain’t me, it’s the people that say
The men are leading the women astray
But I say, it’s the women today
Are smarter than the man in every way

A little boy sat down and cried
An old man passing asked him why
He said, I can’t do what the big boys do
Old man sat down and he cried too

Ain’t me, it’s the people that say
The men are leading the women astray
But I say, it’s the women today
Are smarter than the man in every way

It ain’t me, it’s the people that say
The men are leading the women astray
But I say, it’s the women today
Are smarter than the man in every way

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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