Consumers and investors are dealing with mixed signals at the moment. Signs of recovery in the euro zone are tempered with fears over the possible impact of Brexit. The US economy appears to be on a solid footing but delivered weak jobs figures on Friday, raising concerns about the Federal Reserve's plan to hike rates. Although global stock markets are well ahead year to date, tension over North Korea has cast a cloud. Meanwhile, the euro has risen by 13% so far this year against the dollar and 7% against sterling.
Ahead of the ECB's meeting on Thursday, Bernard Swords, chief investment officer with Goodbody Wealth Management, said the currency movements will no doubt feature on the ECB's agenda as they are causing monetary tightening in the euro area - which is not what the ECB wanted. ECB President Mario Draghi at Jackson Hole in the US recently said that the ECB must remain vigilant about "hidden tightening" which was a reference to what the currency is doing.
Equity markets are surging at the moment despite the geopolitical tensions surrounding North Korea. Gold is at a ten month high, while the yen and even Bitcoin are all rising - a sure sign of investor nervousness. Mr Swords said that while investors are nervous, there is a belief that China will control North Korea at the end of the day. He said that we are in a "QE world" and there is still a lot of cash sloshing around the world, which is driving everything.
On the US jobs figures week, Mr Swords said that we should not put too much reliance one month's figures. He also pointed out that there is lots of seasonal factors at play in August and the three month US non-farm payroll figures continue to show an acceleration of jobs creation there. The US economy has seen eight or nine years of expansion with over 100,000 new jobs being created a month - something which has not been seen since the Second World War and which signals a robust labour market and economy.
Mr Swords said the costs from the impact of Tropical Storm Harvey is the US appear to be varying. While last week it was thought they would be almost as high as Hurricane Katrina, it now looks like some of the lost petrol capacity is coming back on line. While it had been feared the storm could halve the US growth rate in the third quarter, those fears have been calmed somewhat and the impact is not thought to be as damaging, he added.
MORNING BRIEFS - Drinks group C&C has bought UK pub operator Admiral in partnership with investment firm Proprium Partners and Admiral's own management. C&C said it has put up £37m for 47% of the company. It said the minority stake in Admiral, the owner of 845 pubs in the UK, will give it a direct route to market for its products.
*** Wholesale gas prices surged during August and are now 30% higher than at this time last year. The latest Vayu energy report warns of what it calls "considerable energy price volatility this winter". The immediate cause of the run up in gas prices during August was a supply issue in Norway. The report also notes almost 15% of refining capacity in the US is shut down due to the impact of tropical storm Harvey. The only mitigating factor for business and consumers here at the moment is the strong euro which is taking the sting out of rising wholesale oil and gas prices. Both those two commodities are largely traded in dollars and sterling respectively.
*** Profits are up significantly at the Irish Stock Exchange. The company, co-owned by a group of stockbrokers, recorded a pre-tax profit of €8m - an increase of 21% from 2015. The ISE benefited from stronger revenue from listings. It also saw higher trading volumes as the number of stock trades in Dublin was up just over 17% to a record 6.6 million last year. Speaking to the Irish Times, which obtained a copy of the stock exchange's annual report before its publication through the Companies Registration Office, ISE chief executive Deirdre Somers said 2016 was a "standout year".
*** Publicly listed property fund Hibernia REIT has signed Core Media to a 21 year lease at its 1 Windmill Lane Development in Dublin. An announcement to the stock exchange in Dublin said that Core Media will pay initial rent of €1.4m per year.