- Sterling drops on Mark Carney’s comments
- Mario Draghi defends low interest rates
- Brevival is the new word for Brexit, say I
I have decided I am bored of the negative connotations of the contraction of Britain and Exit. Brexit sounds downbeat, glum and negative. Politicians and business leaders use the word in a disparaging way and this could all spiral downwards. So if you link the word Britain and another word for emergence from the EU, you could choose Brennaisance, Brecovery, Brebirth, or my favourite, Brevival. I am sticking with that from now on.
The Governor of the Bank of England (BoE) was offering his views to the House of Lords Economic Committee yesterday and, as BoE governors tend to do, he weakened the Pound with his concerns over the risk premium that may be applied to UK assets as the UK prepares to depart the EU. Carney said the weakness of the Pound would persuade him to vote against further interest rate cuts. Now, in any normal circumstance, that would strengthen the Pound, but these are not normal times. The Pound has fallen below $1.22 and €1.12 and is down on most other exchange rates. This morning’s British Bankers’ Association (BBA) mortgage lending data is unlikely to cause a bounce, but a solid performance by David Davis in front of the Select Committee for EU-UK relations may be helpful to the poor Pound. More importantly, tomorrow brings the first estimate of Quarter Three Gross Domestic Product (GDP) growth and any nice surprise there would cause a GBP bounce.
The GBP-AUD exchange rate is also down on improved Australian inflation. The pick up from 0% to 0.7% in the three months to September was a surprise, but is being put down to one-off food price rises and other factors. Underlying inflation is still muted, but that didn’t stop the Aussie Dollar from strengthening.
Another central banker was in action yesterday. The European Central Bank (ECB) President, Mario Draghi, was defending the bank’s policy of ultra-low interest rates, but stated that he would like to see a return to higher rates as soon as is practical. He reassured the audience in Berlin that low interest rates have not damaged consumers. Tell that to anyone with savings –they feel pretty damaged.
There isn’t a lot of hard data to get enthused by today, but overnight we will get New Zealand’s trade balance numbers. A small contraction of the trade deficit is expected and that will strengthen the already strong NZ Dollar. This is not what you want to hear if you are moving funds to NZ, but being forewarned is always useful.
And, as every politics student will know, Britain has an unwritten constitution. That isn’t as nebulous as it sounds; the laws are written down, but they are in a gazillion different files and boxes and not in a single document filed under ‘C’ for Constitution. Kyrgyzstan is a step ahead of Britain. They created their written constitution in 2010 in a single document. The only problem is, they have misplaced it. No one seems to know where the original is. ‘Awks’, as my niece might put it.
A couple are playing golf together on a course they haven’t been to before. At the top of the rise on the seventh fairway, just to the back of the green, is a beautiful mansion house.
“Careful on this one,” says the wife. “We don’t want to overshoot. Any damage to that palace would cost us a fortune.”
The husband hits his tee shot and the ball catches the wind, sailing over the green and smashing through the beautiful ornate stained glass window at the front of the mansion. The sound of glass and ornaments smashing can be heard even from the tee, 200 yards away.
“Oh my god! What have you done?” says the wife. “We need to get up there and apologise”.
They run up to the house and knock on the door. A voice says, “Come in”. They enter a massive hallway and can see the devastation wreaked by the golf ball. Ornaments and glassware are strewn on the floor, smashed into pieces. The couple start apologising and profusely, although they can’t see the owner until the source of the voice appears and calms them down.
The voice comes from a suave looking 50-something man. He is debonair; well dressed and neatly groomed. “Allow me to introduce myself”, he says, extending his hand to the husband. “I am the genie of the lamp you can see shattered on the floor. I have been incarcerated for hundreds of years and I believe it was your golf ball that released me from my jail. As such, I will grant you each one wish. Anything your heart desires can be yours and I will only ask one favour in return.”
The couple look at each other, a bit confused, but then the wife says, “OK, I’ll take a hundred million pounds please?”
“It is yours.” Says the genie.
“OK”, says the husband, “in that case I’ll have an unlimited supply of cars and boats and planes and helicopters to use as I see fit.”
“I’ll happily arrange that,” says the Genie. “but now I must ask for my favour. I have been locked up in a bottle for hundreds of years with no opportunity to satisfy my…shall we say…urges. I will grant your wishes if I may have one hour of unbridled passion with your most attractive wife.” He takes the wife’s hand and kisses it.
Once again the couple are flummoxed, but after a few quiet words out of the earshot of the Genie, they agree that an hour of unfaithfulness is worth it if they are going to be multi-millionaires, will never have to work again and have the use of all that flash machinery. They agree to his request and he escorts the wife upstairs to a lavish bedroom where they have a wild and abandoned hour of passion and lust.
When the hour is over, the genie turns to the wife and says, “Might I ask, how old is your husband?”
“He’s 42”, says the wife.
“Interesting,” he says. “And yet he still believes in Genies!”
Today's Major Economic Releases
||British Bankers' Association (BBA) Mortgage Approvals
||US: Goods Trade Balance
||US: Flash Services Purchasing Mangers' Index (PMI)
||US: New Home Sales
||US: Crude Oil Inventories
||New Zealand: Trade Balance
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Daily Currency Analysis by David Johnson
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