Daily Brief – US Interest Burden

US Interest Burden

At $882 billion in the year to end September which equates to $2.4 billion a day or 3.06% of US GDP, the USA is staggering beneath the weight of just servicing its debt before even contemplating reducing it. As we have remarked previously and as picked up in Saturday’s Financial Times, neither of the two Presidential candidates have commented on it, let alone set out a plan to tackle it. Too difficult and doubtless their focus groups have deemed the subject to be a vote loser. However like every debtor, and the USA is no different, the reality has to be confronted and addressed at some point and the sooner the better.

EUR/USD 1.0865

Conservative Party Leadership

A quick look at Oddschecker reveals that Robert Jenrick is trailing at 14/5 while Keri Badenoch looks nailed on at 1/2 after the debate last week on Thursday night when Jenrick was described as wooden versus Badenoch’s no nonsense rating. All will be revealed in 12 days time.

GBP/USD 1.3045

Moldova by numbers

2.5 million citizens, 1 million mainly Ukrainian refugees of whom 900,000 have left and bordering Ukraine. Down in that far corner of Europe the assumption is that if Ukraine falls to Russia, tiny Moldova with its army of 6000 will follow soon after. Except their President Maia Sandu has surprised many by nailing her colours firmly to the mast of joining the EU. Granted candidate status by the EU in June 2022, Moldova has been set 9 objectives to meet to progress. The greatest obstacle apart from poverty is the Transnistria breakaway state which precludes Moldova joining unless that issue is resolved.

EUR/GBP 0.8320

Germany

Having made a colossal strategic error in pinning its energy strategy on Russia, one would have thought that Germany would be more circumspect about placing itself in an awkward international position again so soon. But that energy strategy was Angela Merkel’s and now Olaf Scholz has done it again. As recently as in June this year Scholz announced that he openly preferred Biden over Trump. Oh dear. Now with Trump making a strong showing against Harris in the polls and market bets moving in Trump’s favour, the next “Quad” could well be more awkward than this weekend’s love in.

EUR/JPY 162.48

Hallelujah

This day in 2016 Leonard Cohen released his last album You Want It Darker and only 11 days later departed this world. While his last album received critical acclaim it is mostly his earlier work that the Canadian poet, singer and song writer is best known for including this gem from 1984.

Now I’ve heard there was a secret chord

That David played, and it pleased the Lord
But you don’t really care for music, do you?
It goes like this, the fourth, the fifth
The minor falls, the major lifts
The baffled king composing Hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah

Your faith was strong but you needed proof
You saw her bathing on the roof
Her beauty and the moonlight overthrew you
She tied you to a kitchen chair
She broke your throne, and she cut your hair
And from your lips she drew the Hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah

You say I took the name in vain
I don’t even know the name
But if I did, well, really, what’s it to you?
There’s a blaze of light in every word
It doesn’t matter which you heard
The holy or the broken Hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah

I did my best, it wasn’t much
I couldn’t feel, so I tried to touch
I’ve told the truth, I didn’t come to fool you
And even though it all went wrong
I’ll stand before the Lord of Song
With nothing on my tongue but Hallelujah.

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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