Daily Brief – US Recession

US Recession

In the past year the USA and indeed the whole world has been watching and hoping that the Federal reserve will succeed in bringing down inflation without causing a recession. That is the Goldilocks scenario which is described as a soft landing. Looking at the S&P 500 which has declined 7% since January 20 when President Trump was inaugurated, the market is reflecting its doubt in the face of on-off-on sanctions and the carefully orchestrated sequence of moves from the Federal Reserve look to be yesterday’s chip paper as defined by the announcement of 50% tariffs on Canada. Now that will give newly minted PM Mark Carney a chance to demonstrate his claimed mastery of crisis management.

GBP/USD 1.2945.

Yoji Muto

The latest foreign Minister to feel the impact of POTUS Trump’s wide ranging sanctions is Japan’s Trade minister, Yoji Muto who, despite arguing that Japan should be exempt from 25% tariffs on its exports to the USA of aluminium and steel has received no such assurances. Plus for good measure the USA also plans to impose the same 25% tariffs on Japan’s exports of cars to the USA from early April. So it looks likely that very soon if you are in the USA, the car in front of you will not be a Toyota.

EUR/JPY 161.55.

Greenland

Yesterday the registered voters of Greenland cast their votes in a closely watched election. There are only 57,000 Greenland citizens and 40,500 are eligible to vote. It’s been a slow march towards independence: a territory of Denmark since 1953 which gained the right to its own Parliament in 1979 and since 2009 is allowed to declare full independence through referendum. So why has that not happened so far? For the simple reason that the savvy Greenlanders while liking the idea are fully clear that without Denmark, their living standards will fall sharply. Enter the USA which is offering to buy it and then incorporate it as a State of the US but what goes with that is POTUS Trump’s mantra: we are going to drill baby drill.

EUR/GBP 0.8438.

World Health Organization

What a sad reflection: only 7 countries meet the clean air objectives set out by WHO. They are: Australia, New Zealand, Bahamas, Grenada, Estonia, Barbados and Iceland. Less than 1 in 5 of global cities meet the air standards. Then at the very most polluted end of the scale are Bangladesh, Chad, Congo, Pakistan and India. Budget cuts mean that the USA is no longer monitoring air quality and the 17 years worth of data that has been collated have been taken down from the US State Department website.

EUR/USD 1.0913.

Over the Rainbow

This day in 2001 this Judy Garland number was voted Song of the Century. Difficult to argue with that verdict: here is the song:

Somewhere over the rainbow
Way up high
There’s a land that I heard of
Once in a lullaby

Somewhere over the rainbow
Skies are blue
And the dreams that you dare to dream
Really do come true

Someday I’ll wish upon a star
And wake up where the clouds are far behind me
Where troubles melt like lemon drops
Away above the chimney tops
That’s where you’ll find me

Somewhere over the rainbow
Bluebirds fly
Birds fly over the rainbow
Why then, oh, why can’t I?

Somewhere over the rainbow
Bluebirds fly
Birds fly over the rainbow
Why then, oh, why can’t I?

If happy little bluebirds fly
Beyond the rainbow
Why, oh why can’t I?

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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