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Saturday 8th June 2019
Hi Friend,
The Queen never had a better time ...
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| The Meeting Was Incredible ...
President Trump was in London this week. The visit went well. Major diplomatic gaffes avoided. Trump was keen to reassure Fox News he had not fist bumped the Queen on arrival. The President stayed on message, constrained within a tight script and an even tighter suit and waistcoat for the state banquet.
"The meeting with the Queen was incredible" Trump said. "I think I can say I really got to know her because I sat with her many times. We had automatic chemistry. She's a spectacular woman. We had a really great time."
"There are those who say they have never seen the Queen have a better time, a more animated time." We just had a great time together". "We had a period when we were talking solid straight. I didn't even know who the other people at the table were." Just the two of them in the room for a state banquet. "I intend to keep the conversation going" Trump promised the nation. Excellent.
Trump spent time with Prince Charles. The meeting scheduled for afternoon tea over ran by fifteen minutes. Prince Charles has strong views on climate change. The President considers global warming to be a "Chinese Hoax". Trump has withdrawn the US from the 2015 Paris convention on climate mitigation. Fears of a disruptive meeting were dispelled. The pair discussed a wide range of issues over an extended meeting. No fall out.
In an interview with Piers Morgan, Trump said of Prince Charles, 'I'll tell you what moved me is his passion for future generations. He's really not doing this for him. He's doing this for future generations. He wants to have a world that's good for future generations." Not for Trump the thought of future generations, the current timeline is confined to just "four more years".
Later Prince Charles revealed he fears it may be too late to save the planet, or the "natural world" at least. Just one meeting with Trump appears to have been enough to accelerate the demise of the planet. Yeah we know the feeling ...
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| Fed Set to Cut Rates ...?
Good news from the White House this week-end. The threat of further tariffs on Mexico has been abandoned indefinitely. In a joint declaration both countries said Mexico agreed to immediately expand a program that sends migrants seeking asylum in the United States to Mexico, while they await adjudication of their cases.
The country also agreed to increase enforcement to contain the flow of migrants headed to the US, including the deployment of national guard troops to its southern border and a crack down on human smuggling organizations.
The threat of further tariffs had risked a back lash in the Senate and Congress with Republicans and Democrats against the move. The White House team had been divided with Kushner, Mnuchin and Lighthizer pleading with the President to avoid further putative action on trade.
The US economy is already struggling to shake off the implications of a trade war with China. The imposition of tariffs will lead to higher domestic prices, job losses and a slow down in the economy. The latest jobs data released on Friday confirmed the economy added just 75,000 jobs last month compared to the 180,000 expected. The report also revised previous month's numbers down by an additional 75,000.
The US economy is not as robust as first thought. Stock markets rallied and bond yields fell. US ten year rates slipped to 2.06% on close, down 11 basis points. The Fed is now expected to cut rates this year. The conundrum clarified by a bad set of job results.
Wall Street couldn’t contain its excitement after Fed Chair Jerome Powell said he’d be open to interest rate cuts. Stocks enjoyed their second best day of the entire year. Last November, the Fed signaled it might raise interest rates three times this year.
The flight from Planet ZIRP may have hit a bird strike. It would be a mistake to cut rates at this stage in the cycle. The real challenge is to take the tariff toys away from the President. The world is facing a slowdown in world trade which can be easily avoided. The Bundesbank slashed growth forecasts for the German economy this week to just 0.6%. The World Bank reduced world growth expectations to just 2.6%. The IMF is concerned trade wars could cut 50 basis points from growth unless the trade disputes are ended ...
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| Ford workers devastated ...
This week, Ford announced the closure of the engine factory in Bridgend. The loss of some 1,700 jobs will come into effect in the Autumn of 2020. The company blamed changing customer demand and cost structures. Brexit was not attributed to the closure.
Bridgend Labour MP Madeleine Moon is not so sure. "The decision is clearly about Brexit. The knock-on effect to the South Wales economy is huge, there are about 12,000 jobs associated with the Ford installation."
The uncertainty over Brexit will have been a factor in consideration. A hard Brexit is now the more likely outcome. This week Theresa May resigned as leader of the Conservative Party. The runners and riders to be announced on Monday, will parade their Brexit credentials. The result from Peterborough will not ease the mood. The party was driven into third place in the bye-election with big losses to the Farage Brexit party. The Tories will swing "right" towards the ERG diehards. The Tories will be charged to deliver the "Will of the people". Business will take note and position accordingly. October 31st is not such a long way away.
So what of the prospects of a deal with the US? Trump avoided a gaffe on the NHS this week. The NHS will not take part in any "New Deal" on trade with Uncle Sam. Don't expect any favours from the USA ...
America’s trade deficit with the European Union has expanded to its widest on record, suggesting that President Trump’s protectionist policy is failing. US imports and exports tumbled in April, a report by the Census Bureau showed this week.
The trade deficit is widening, the threat of tariffs against the UK and Europe has been postponed for the moment. The Mexican manoeuvre serves as a warning to all ...
That's all for this week, have a great weekend. We will be back with more news and updates next week!
John
Our next Brabners Quarterly Economics Briefing will take place on the 25th and 27th June. We are in Manchester at the Lowry Hotel and in Liverpool at the Radisson Blu. Places are limited but you can still register here for the FREE Breakfast session. It would be great to see you there ... J
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