Anthony Peters, SwissInvest Strategist
The first is that the whole of the US is on the move as Thanksgiving is much more important for the family get-together there than Christmas. The second is that, although markets are open tomorrow, trading rooms will be run on skeleton staffing levels and it’s not a real day. The third is that the day after Thanksgiving is known as Black Friday because it is the biggest shopping day in the calendar and therefore is the one when shopkeepers’ annual P&Ls move into the black. Finally, as far as the US is concerned, the “festive season” begins tomorrow. Thank you for listening.
While the eurozone grapples with the aftermath of the deadlock at the Finance Ministers’ meeting on the Greek bailout, it is also beginning to prepare for the bruising matter of the seven-year budget discussions where the UK is once again setting itself up to play the bad boy.
Not unreasonable, to my mind, London is asking how the Brussels “spenderati” believes that it should be able to expect increased funding at a time when national budgets are being squeezed until the pips squeak? The net receivers clearly see that when things at home are tight, the external funds from Brussels are much more important. Net payers – the UK, Germany, the Netherlands and the other usual suspects – don’t see it quite the same way, for they simply don’t believe that they have the money to pay out more.
However, Germany has always kept its own counsel on such issues – there is something of a special EU brand of sovereign political correctness which the Germans master like nobody else. The British, on the other hand, have a history of confrontational parliamentary democracy where discreet acceptance of anything is not part of the political culture.
Cameron’s stand
David “call me Dave” Cameron has been behaving as though he had dusted down Baroness Thatcher’s handbag and he is threatening to make a stand. However, diplomatic missions serve a purpose and ambassadors at the London embassies of the EU partners will certainly have reported back to the mother ship that the man would award the tooth fairy an OBE if he thought it would make him friends.
On Cameron: Backbone is not his middle name
Backbone is not his middle name. His rhetoric has been of cutting the budget in line with the austerity expected at home but I think we already know that he has tacitly accepted that a freeze in spending – in real terms – is where the compromise will be reached. Whether that is a freeze in terms of a percentage of GDP or in real euros is not clear.
But as I noted yesterday, whatever the rule is in Europe, if it is not convenient, it will be broken until it can be changed. Whoever heard President Francois Hollande speak to the Assemblée nationale will not be holding out too much hope for restraint from that corner. Why, I wonder, am I not surprised?
Upbeat China PMI
However, not all is grim. HSBC reported its flash PMI in China this morning as it rose above 50 for the first time in more than a year. One swallow a summer does not make so it would be fatuous to call the beginning of a new golden era, but the reading has been creeping up gently for some months now and the break into expansionary territory does not come as a complete surprise.
US demand is growing steadily too but Europe remains volatile. Personally, I’d expect numbers to drift higher and lower and struggle to see the basis for sustained improvement in global demand. If the proof of the pudding is in the eating, let’s see how many Chinese goods get snapped up tomorrow in the shopping malls from Texas to Maine. Even the all-in-one flashing nativities including two cows, one donkey and three sheep are made in China now.