15 June 2018


15 June 2018

Good morning,

Between prophesies of doom that he will be brought down by Russian electoral interference, impeachment or an extramarital affair, it’s fair to say that President Trump has had his share of bad press. But whilst I leave question of his guilt to the jury, it’s also safe to say that not everybody shares the media’s naysaying.
Indeed, far from it. According to new research by FiveThirtyEight.com, the firm launched by polling whiz Nate Silver (who rose to fame on the back of correctly predicting the vote of every state in the 2008 presidential election), Trump is more popular among members of his own party than any president since the Second World War bar George W Bush
It is difficult to underestimate the magnitude of what this poll suggests. Sure, Americans as a whole aren’t happy, with some 53% disapproving of the president’s time in office (which is less, as it happens, than yesterday’s numbers which show up to two thirds of UK voters think Theresa May is making a mess of Brexit).
But it also indicates a sea change in the political psyche of the American right and tells us a lot about how future electoral contests might shape up. Even if Trump decides not to pursue the Republican nomination again in 2020 (though I’m sure numbers like these will put paid to that idea), this polling suggests that we could be in for populist, anti-establishment candidates in the Trumpian mould for a long time yet.
Take Virginia. This week, a state known for its centrism and which swung for Hillary in 2016, selected a far-right candidate in Corey Stewart as the Republican nominee for one of its two Senate seats. Stewart made the defence of Confederate monuments in Virginia a hallmark of his campaign, and despite being promptly disowned by the Republican establishment, still managed to romp home with a primary win.
The question now is; where do American liberals go from here? By this time in 2014, Bernie Sanders and Hillary Clinton were both emerging as the clear front-runners in the Democratic primary two years later. Any newcomers on the left have failed to register on a popular scale since, and that should pose cause for concern.


The National Audit Office has released research which suggests that the Universal Credit system may end up costing more to administer than the benefits system it is replacing. The public watchdog said that the £1.9 billion programme cannot be guaranteed to place an extra 200,000 people in work or save an estimated £2.1 billion in fraud and error. The research also cited evidence that some claimants waited up to eight months for payments amid switches to Universal Credit last year.
The government faces a clash with pro-EU Conservative rebels after abandoning a compromise over how parliament should be consulted at the end of Brexit negotiations. The move follows two days of talks among ministers before a decision was taken to abandon the so-called “Grieve amendment”, introduced by Dominic Grieve MP during a debate on the Withdrawal Bill on Tuesday. The rebels have signalled they may now re-introduce the amendment in parliament next week as a potential vote on confidence in the PM. 
Labour has won a by-election in Lewisham East despite shedding a majority of over 15,000 votes that it achieved in the 2017 General Election. Janet Daby was yesterday elected as Labour’s newest MP, campaigning on a platform to oppose a hard Brexit in a seat that voted nearly 70% for Remain in the 2016 EU referendum. The Liberal Democrats also leapfrogged the Conservatives to take second place with a 24.6% vote share.


Business & Economy

The European Central Bank has announced that it is to end its €2.4 trillion bond-buying programme by the end of 2018. Speaking in Riga yesterday, ECB president Mario Draghi said that the phase-out will begin by halving the size of monthly asset purchases by the bank to €15 billion after September before phasing them out entirely by the end of the year. The bank also left interest rates unchanged, signalling they were unlikely to rise before September 2019.
President Trump is expected to impose tariffs up to $50 billion on imports from China, justified by long-standing claims of theft of US companies’ intellectual property. The White House will today release a new list of Chinese products that will targeted with a 25% duty, following an initial list of 1,300 categories that was released earlier this year. The list is said to target Chinese exports linked to Beijing’s “Made in China 2025” plan, affecting key sectors including robotics. 
Tesco's acquisition of the wholesaler Booker has helped to boost its sales at the start of the year. Group like-for-like sales at Tesco grew by 1.8% in the 13 weeks to May 26, marking a tenth consecutive quarter of growth. Booker also reported a 14.3% sales growth on the back of new business deals.

The Bank of England has issued a warning about the risk of promoting 0% interest rate credit cards, throwing pressure on the Virgin Money’s negotiations of a £1.6 billion takeover by CYBG.  In a letter sent to banking leaders last week, the Prudential Regulation Authority said “a small number of firms” were vulnerable to sudden losses if customers on zero per cent interest credit card offers then leave earlier or borrow less than expected. Although the letter did not explicitly name Virgin Money, the FT reports that it is widely seen by analysts as the most exposed after aggressively growing its credit card business in recent years. 


What happened yesterday?
London stocks regained ground yesterday afternoon alongside their continental peers following an announcement by the European Central Bank that it was unlikely to raise interest rates before autumn 2019. By close of trading, the FTSE 100 stood 0.8% higher at 7,765.79, including a 0.7% boost in the mining sector as investors responded well to better-than expected retail sales data.
According to the ONS, retail sales grew at a monthly rate of 1.3%, beating a previous rate of 0.5% in April, but lower than the 2.4% expected. Overall sales growth was boosted by sharp increases in clothing, sporting good and garden items which were 1.7%, 3.3% and 6.2% respectively. 
In corporate news, stocks in Rolls-Royce (up 6.54%) jumped after the carmaker announced 4,600 job cuts to save an estimated £400 million a year as the last tranche of restructuring reforms set to be introduced by chief executive Warren East. GlaxoSmithKline (up 2.27%) also saw rises after it said that its two-drug treatment for HIV met its main goal in late-stage studies this year. Among the miners to reap the best of yesterday’s rewards from UK sales data were Rio Tinto (up 5.0%) and Glencore (0.13%).
Unilever (down 2.81%) was the standout loser after the company announced that it was unlikely to remain in the FTSE 100 indices after its move to a single HQ based in the Netherlands. The news wasn’t helped by further suggestions that sales growth in H1 2018 was likely to fall below the full-year forecast range of 3 per cent to 5 per cent.
The euro bore the worst of yesterday’s losses following the announcement that the ECB will end its QE programme, ending trade down at £1.15. The pound also stood at $1.32 against the dollar.


Real Estate Credit Investment Ltd
Wynnstay Properties
Trading Announcements
Baker Steel Resources Trust Ltd.
Inspiration Healthcare Group
M. P. Evans Group

JD Sports Fashion
UK Economic Announcements

  1. RICS Housing Market Survey 

Int. Economic Announcements
(07:00) Wholesale Price Index (GER)
(10.00) Balance of Trade (EU)
(10.00) Consumer Price Index (EU)
(14.15) Capacity Utilisation (US)
(14.15) Industrial Production (US)


Columns of Note

Gillian Tett comments in the FT that a US Dept of Justice ruling to approve the proposed acquisition of Time Warner by AT&T signals the Trump administration might have begun lightening its previous opposition to large corporate tie-ups. Arguing that the case represents a watershed in antitrust law, Tett now suggests business might be excluded from populist attacks, with the case serving as a significant victory for America’s legal process.
Philip Collins comments in The Times that President Trump looks to be turning his attention towards re-election in 2020. Collins cites Trump’s adherence to campaign pledges, including lowering unemployment which stands at its lowest rate since 1969, but suggests the Republican campaign will be hampered by adverse demographic change, including rising numbers of Democrat-voting Asian Americans and Latinos.

Did you know?

In iPhone adverts, the time is always 9.42am or 9.41am. This is because Apple showcase events start at 9am and big product reveals generally happen 40 minutes into the presentation.

Parliamentary Highlights

House of Commons
House of Lords
No business scheduled
Scottish Parliament
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