|
Saturday 27th January 2018
Hi Friend,
So what can I say ...
|
|  |
The Prime Minister was in Davos this week. A keynote speech, "So what can I say" or "what did she say", more to the point?
Not much, according to Janet Daley in the Telegraph. "It was a classic speech of the May genre, it said nothing. Her peroration was so platitudinous as to be utterly meaningless". Ouch. "If you look at the newswires from other countries around the world, they’re all talking about Macron, Modi and Merkel not May". [Trump, still to come, was to be the closing act on Friday]
Ah yes, platitudinous peroration, perfectly positioned to avoid the delicate issue of Brexit. Brexit is rapidly becoming "Brexit, the policy that dare not speak its name". Lord Alfred Douglas and Oscar Wilde would be proud. Theresa May has abandoned preparations for a third high profile speech on Brexit next month. Why...? For fear of widening cabinet and back bench splits on Britain's future relationship with the EU. No thought to businesses up and down the country, desperately looking for clarity on what we are hoping to achieve.
Philip Hammond suggested changes to the UK-EU relations could be very modest post Brexit. The Chancellor received a rap on the wrist from Downing Street for his modesty. David Davis claimed there was no difference between him and the Hammond. Hammond's comments provoked "fury" on the back benches. Jacob Rees-Mogg accused the government of adopting "a timid and cowering" approach to the talks.
Rees-Mogg an iconic item of Victorian memorabilia, plays the rôle of Palmerston. "Implementation not transition" the mantra for the post Brexit period. No new regulations or new laws from the ECJ or we "send the gunboats". Ah yes, a big old stick waving an old big stick. Someone should point out we have no landing craft to get the marines on the beach and we will have to wait some time for Boris's Bridge across the channel, if we are going to make the trip.
Matthew Parris in The Times today, suggests one well aimed speech could topple the Prime Minister. Nick Boles had a go this week. A speech in which he called the Prime Minister "timid". According to reports, about 40 Tory MPs have now written to Graham Brady, Chair of the 1922 committee, to express their lack of confidence in Theresa May. Just eight more and he will be forced to launch a vote of no confidence in the Prime Minister. Brady himself is getting nervous. He is advising MPs to "think carefully" before putting pen to paper. "Just do it" the Nike mantra and probably the best way forward. Anything is better than this condition of "anarchic anomie" ... |
|
 |
A conscious recoupling ...
The UK can “consciously recouple” with an accelerating global economy this year, according to Bank of England governor Mark Carney.
"The UK economy could start to grow in line with the global economy if more clarity about the UK’s relationship with the European Union emerges from Brexit negotiations." he said.
It was a (not so) subtle hint to government.
Gwyneth Paltrow had coined the phrase. The Governor gave due credit. Paltrow had been talking about her divorce ... her conscious uncoupling. “I wanted to turn my divorce into a positive,” “What if I didn’t blame the other person for anything and held myself 100% accountable? What if reminded myself about the things about my ex-husband that I love. What if I fostered the friendship?” A form of conscious re coupling.
"Not Implementation, Not Transition, but "fostering the friendship" in a "Conscious Re Coupling" under the broad church of the European Court of Justice." Moog Music to business ears! Mogg cacophany on the back benches. So what was the Governor talking about ...
World trade grew by over 5% in the third quarter of 2017. World growth will be almost 4% this year. The EU and the US grew by 2.3% last year. The UK grew by 1.8%. According to the latest data from the ONS. Growth slowed to 1.5% in the final quarter, despite a strong performance from manufacturing and business services. The figures could well be revised up. We expect a similar performance in the overall economy in 2018 despite the continuance of platitudinous perorations about our future with the EU.
Did the economy really slow in the final quarter? The jobs market and the borrowing figures suggest not. In the latest data for the quarter, employment and vacancies increased, unemployment fell. Earnings increased by 2.5%. Vacancies increased to 810,000. Unemployment fell to 1.439 million a rate of 4.3%. With recruitment difficulties becoming more acute and the UV ratio at an all time low, something has to give on wage rates. Either the ONS is already under recording the real level of earnings in the economy, or wage rates are set to rise this year as we have long expected.
Government Borrowing would put a smile on the Chancellor's face, despite the rap on the knuckles from the Prime Minister over Brexit. Public sector borrowing fell by £6.6 billion to £50.0 billion in the current financial year-to-date compared with the same period in 2016.; this is the lowest year-to-date net borrowing since 2007. In December, borrowing fell by £2.5 billion to £2.6 billion helped in part by a £1.2 billion credit from the European Union. Oh the delicious irony!
The Office for Budget Responsibility (OBR) forecasts that public sector net borrowing will be £49.9 billion in the current financial year. The projection appears pessimistic. £42 billion seems a reasonable extrapolation, down from £46 billion last year ...
|
| |  |
West Wing WTF ... Trump in Davos ...
Trump was in Davos this week. Which Trump would turn up? It was business man and salesman Trump. On the podium and on script. America First Not America Alone. America Open For Business, yes even for talks with the TPP on the right terms. Cuts in US taxation and regulation. The repatriation of billions of dollars in overseas earnings - bonus payments to shareholders and employees in the US. It was a great investment pitch. OK, some of the claims were slightly over exaggerated but ...
It must have been a great "rush" even for Trump. The trip on Air Force One, the arrival in a fleet of helicopters with the fighter jets circling overhead. The rapturous reception of the crowd. The humour with which the attacks on the "Fake News Media" were met. Can there really be such a thing as warm hearted booing? I think there is. If only every public appearance was like this.
The sole purpose of being part of the Trump White House is to prevent worse from happening, claims Michael Wollf's in Fire and Fury. A persistent game of whack-a- mole, the practice of dealing with a Trump tweet only to have more appearing following a feature on Fox News. Did someone confiscate the phone? It wasn't John Kelly. The White House chief of staff didn't make the trip. [Who will lose office first" Theresa May of John Kelly, it's the transatlantic cross play". Short odds on both plays with money piling into a multiplier.]
Trump played his own game of Whack-a mole" this week. Steve Mnuchin put his foot in his mouth suggesting a weak dollar is good for trade. "The dollar tanks the most in 10 months after Treasury secretary comments" were headlines in CNBC this week. Sterling closed at $1.42. The IMF asked for an explanation. The White House is learning on the job. Steve Mnuchin is a Munchkin when it comes to international trade and economics. Head Nanny, Christine Lagarde was unimpressed. It was left to Trump to correct the policy misdirection. A strong Dollar is good for the US he said.
By the end of the week, Mnuchin was back on script, a strong dollar was in the "best interest" of the U.S. the statement. The dollar continued to weaken. The currency could decline further if Trump appears protectionist or sparks a trade war. Tax cuts will enhance earnings and boost stock markets but currency markets will fret about the impact of tax cuts on borrowing and the trade deficit ... it could be a bumpy ride ...
That's all from the West Wing WTF this week. Much more to follow, let's face it, there is so much material to work on ... Have a great week-end, .
J
|
| | |
| | © 2018 John Ashcroft, Economics, Strategy and Social Media, experience worth sharing.
______________________________________________________________________________________________________________
The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The receipt of this email should not be construed as the giving of advice relating to finance or investment.
______________________________________________________________________________________________________________
If you do not wish to receive any further Saturday Economist updates, please unsubscribe using the buttons below or drop me an email at jkaonline@me.com. If you enjoy the content, why not forward to a friend, they can sign up here ...
_______________________________________________________________________________________
For details of our Privacy Policy and our Terms and Conditions check out our main web site. John Ashcroft and Company.com
_______________________________________________________________________________________________________________
Copyright © 2018 The Saturday Economist, All rights reserved. You are receiving this email as a member of the Saturday Economist Mailing List or the Dimensions of Strategy List. You may have joined the list from Linkedin, Facebook Google+ or one of the related web sites. Our mailing address is: The Saturday Economist, Tower 12, Spinningfields, Manchester, M3 3BZ, United Kingdom.
|
| |
|
|
