Thursday 17 November 2022

Compo: wither sterling?

While we await our fiscal fate ... it seems that placating international markets is the major desideratum of Hunt's upcoming Statement.  Writing as a self-confessed know-nothing about macroeconomics, Sterling must surely be a proxy for international sentiment?  

So:  as of this moment in time (08.23) the pound buys:

  • $ 1.1944
  • € 1.1494
Compowhere will it be at 09:00 tomorrow?  

In my ignorance I shall take a punt at slightly lower.   See - I don't even have a serious view on up / down / sideways.  Any better takes on the outlook than this feeble effort?  A small liquid prize for the winner, adjudicated by a complex algorithm that takes into account numerical accuracy, and time of day the prediction is posted (the earlier, the better).  BBC market data used.


*  *  *  *  *  *

So the outturn was 1.1895 (0.4% down); 1.1488 (0.05% down). 


... is Jeremy Hunt!  (only kidding).  

The winner is Andrew - correct in both direction, and that it would only be small in magnitude.  Not very prompt off the mark, though: so ...

... Hon mention for Shiney (who got in very fast, and in the correct direction, but a bit too far).  Anon was quite fast, and small in magnitude, but wrong direction.

Prizes:  I will stand both Andrew and Shiney a drink, if & when we have our next blog pub session.  It has to be said that we haven't had one since Covid struck, but here's hoping.  In the meantime, enjoy a free subscription to C@W.  

PS - anon is welcome too, but sadly we need to know what you go by before you get a prize ...


Caeser Hēméra said...

With Truss/Kwarteng the pound actually rose, until the penny - and, shortly thereafter, the pound - dropped that all those lovely tax cuts were every bit as unfunded as Corbyn's wet dreams were.

With that in mind, and what has been leaked so far, pretty much a minor bump, mostly against the Euro.

The market's a bit of a crocodile, and the job of Sunak/Hunt is to keep us ahead of the Euro, until the yellow brick road to some mythical sunny uplands is found anyway.

Shiney said...

Buy the rumour sell the news?


Anonymous said...

What should happen and what will happen could well be two different things.

Given that Truss was ousted for a few billion unfunded tax cuts. How come there was no market outrage when Rishi commited the following spending:

£11.6bn international climate finance
£1.5bn Pakistan & Somalia climate adaptation
£65.5m green tech in Kenya & Egypt
£150m Congo & Amazon
£65.5m Clean Energy Innovation
£3bn Nairobi’s Railway City & hydropower project

(source )

Has this been fully funded as our media like to tell us all our spending must be, to keep the markets happy.
What about the money we're sending to support the are in Ukraine - where is the demonstration of how that's being paid for? (Without getting into the debate of whether it's justified).

It seems spending (or tax cuts) only needs to be proven to be fully funded when it goes against the globalist agenda.

Any spending towards the globalist agenda can be any insane number it needs to be and the markets won't bat an eye lid.

So given Rishi and Hunt will no doubt stay on message,maybe the markets won't have much reaction
$ 1.1964
€ 1.1499

Maybe the markets have become part of the problem?

Matt said...

I see the government want to go ahead with Sizewell C. Cunt says it'll provide 50 years of reliable and low-carbon energy. NOTE he didn't say cheap!

He also wants to invest in energy efficiency to reduce bill for business and ordinary consumers. This will reduce bills by £480 per annum. Note that the saving won't come from cheaper energy but from using less of it.

Since the economy is driven by cheap energy, how are we going to grow? Unicorn farts aren't going to cut it!

dearieme said...

The fools are going to persevere with HS2. And there's no sign that the gifts to Ukraine will be attributed to the Foreign Aid budget.

Don Cox said...

"Since the economy is driven by cheap energy, how are we going to grow?"

Small businesses will have to look for profitable activities that don't require much energy. They can also increase their prices, carefully.

People who are imaginative, adaptable and practical will do OK.


andrew said...

$ 1.18
€ 1.14

as in not much different

iOpener said...

@Don Cox: Were you serious about "Small businesses will have to look for profitable activities that don't require much energy." Or was it sarcasm? Because on it's face the statement is a comical non sequitur.

Businesses will always find something profitable to sell but in a low energy environment the goods and services they sell will be much less desirable and worth much less than otherwise. Business can make a profit from selling a Rolls Royce or a donkey cart, but neither the consumer nor the business is going to like the donkey cart world the ignorant and the environmentalists are foisting on us. Profits on donkey cart transactions are not enough to have warm homes.

jim said...

£/dollar/euro not much difference - what joy.

Trawling through the post budget scribblings one thing is missing - growth. Growth was missing before the budget and growth was missing 10 years ago and growth is still missing. Have we lost how to do growth or is it more difficult now or have we hemmed ourselves in with too many constraints.

There are no new microchips, pharma is for poor and old people, energy is up against laws of nature and Mr Putin. The good jobs are in law, finance, show biz, consultancy, meeja - non of them very productive. Doing medicine or physics qua medicine and physics is not well paid by comparison. As a country we are stuck between sucking up to the USA and sucking up to China. Both those countries are looking for growth and quite willing to take some of ours.

Education is held up as 'a good thing'. But we produce thousands of surplus applicants for the medical schools and the law schools and for Oxford/Cambridge. We've got plenty of education, we don't seem to find a productive use for most of it.

We are told lack of housing is the cause of no growth. So knock up loads of houses. But because we have no real source of growth - other than pseudo-growth from property - we dare not do that. So, without some radical (and unpleasant) actions we will be in the same boat in ten tears time.

BlokeInBrum said...

The only growth that the fools in charge can create comes from importing loads of immigrants and borrowing from future generations to spend (invest) . That has worked for decades but I think that we are rapidly running out of road in that regard.

Diogenes said...


Growth is there, in that they are forecasting net immigration to be 70,000 higher at over 200,000 each year. It's the bit that got Suella hot under the collar - and fired by Truss. These additions, the OBR assumes, will increase economic activity to produce the taxes needed for pensions and welfare. At a time when unemployment will rise 50%.

So reading between the lines, it's the lazy feckless Brits being saved by hard working immigrants such as the Albanian entrepreneurs we are welcoming.

Or ... do these soothsayers actually know anything or are they, and the politicians, making it up as they go along?

Caeser Hēméra said...

Immigration is currently a necessity for growth, we've piles of vacancies, so lack of available workers is a "now" problem.

There are solutions for the future - bringing those on long term sick back into work, tempting the early retired back to work and fixing the education systems - but jam tomorrow doesn't spread on today's bread and butter.

The Tories are loathe to admit 12 years of failures in that department, so cheerfully say one thing and do another in the hope no one notices, rather than be honest and admit we need economic migrants whilst providing an actual plan to reduce the need in the future.

It is very telling how the Tories seem to be more interested in trying to win the next election rather than admit defeat early, and do the right things for the nation - things Labour would disagree with for political points, but wouldn't get around to reversing as it'd solve a future headache for them.

As has been said before, and elsewhere, they are no longer a party that can be trusted to serve the nation, only their own thirst for power.

Old Git Carlisle said...

Jim is spot on.

We have created an unstable economic model.
In 50's an ordinary working class family could buy a house in london suburbs probably did not have a car and could progress to middle management where his experience was invaluable. HNC qualification was regarded as a credible achievement and path to middle management.
Professionals looked and sounded like professionals. post was delivered on time.
Industry was large component of economy and had room for productivity

What happens to economy if house prices come back to sane levels ??

We are doomed !!!!!!

Nick Drew said...

Compo results now appearing at the foot of the post.

Matt said...

Immigration is bringing us Albanian cannabis minders and itinerant goat herders. We're not getting lots of doctors and engineers - or at least, not with verifiable qualifications (not that that stops the NHS letting them butcher people!).

So, where are the taxes coming from when we import these people? Even our own countrymen (tradespeople) are working cash in hand to avoid paying for services. Remember that when your plumber is complaining about the NHS - ask him for a VAT receipt to piss on his parade!

E-K said...

The value of the pound is immaterial at street level. Either it is higher and we get taxed more and pay more interest on borrowing (still pitifully low on saving) or it is lower and we can't afford anything either.

Part of the Tory Doom Spiral.

I'm still reeling from the 10% (tax free) rise in benefits. We have the ludicrous situation where wages are chasing benefits.

The benefit/wage spiral... and wage rises suffer fiscal drag as they get taxed whereas benefits don't, nor do the myriad of add-ons (£84k a family on welfare was on, in the news.)

No wonder the country is looking like there's been a prison hospital breakout.... all the wrong people are being encouraged to breed.

We DID elect a Tory government, didn't we ????

E-K said...
This comment has been removed by the author.
E-K said...

So. No problems with a corrosive migrant-magnet policy such as a 10% welfare rise or Net Zero so long as they are funded by soaking middle earners.

(as opposed to *unfunded* tax cuts)

Anyone calculated the loss of revenues as SMEs pack up for good or the increase in the welfare burden from it ?

Notice where scrutiny is applied - always in favour of Statism:

- Death by Covid (scrutinised)

- Death by Lockdown (not scrutinised)

- Tax Cuts (scrutinised)

- Tax rises with reverse austerity, ie more NHS and welfare spending (not scrutinised)

Conservatism has been outlawed. Only oppressive socialism is allowed and the markets are tipped off when anyone dares to challenge it.

DJK said...

>We DID elect a Tory government, didn't we ????

Apparently not. The only Conservative --- Conservative Party, that is --- thing about it is that they are doing everything they can to protect the wealth of pensioners, who are about the only people likely to vote for them. So, big increase in pensions plus big funding for the NHS, which is heavily used by pensioners. To fund it all, we have increased taxes on business, enterprise and aspiration and we have decided to import a million people per year, partly to fund a low-wage, high tax economy, and partly to increase demand for houses (pensioners, again).

Heaven forfend that the government might invest in infrastructure, or skills, or do anything to encourage family formation to create the next generation of britons.

I don't hold out great hopes for the next Labour government, but perhaps they will bring in PR, which at least might break the present political logjam.

shiney said...

Actually you used BBC results - my HSBC market ticker at 9:00am was slightly closer to my predictions but I was still to far down. I had expected a bigger correction but I guess the movers and shakers who had Rishi and (c)Hunt installed to replace T-K didn't want to make them look too bad.

Anyway - let me know when the get together happens.

andrew said...

... so I am as useful as a lettuce or octopus in predicting things :)

John in Cheshire said...

From all those I read and listen to, the trajectory of the US Dollar is eventually down. So, regardless of how it moves this coming week, 2023 is highly likely to see a higher pound against the dollar. But gold and silver are likely to rise significantly. Which in itself will demonstrate the worthlessness of all fiat currencies.