20 December 2018

Scott Reid

20 December 2018

Good morning,

The recent chaos surrounding Brexit has meant we haven’t heard or read much of President Trump in UK broadcasts and newspapers of late.

That reprieve is over, I’d wager, with the news yesterday that the White House is to withdraw all US troops from Syria in an apparent victory over Isis. True to form, the President took to Twitter yesterday to claim in a video statement, “We have won against ISIS. We have beaten them and we’ve beaten them badly.”

Two influential Republican senators were quick to brand the departure a “mistake”, which the FT reports as pointing to possible disagreements between the White House and the Pentagon over Syria policy. America’s western allies are also believed to be uneasy, at least in private if not yet in public.

Quite why Trump has chosen now to make the announcement bears a little thought. The move will leave Kurdish militias – the US’s main local ally – pretty much abandoned on the eve of a new offensive against them by Turkey’s military in north-eastern Syria, recently announced by President Erdogan. Something tells me, however, that this may have more to do with Trump’s longstanding commitments to “bring American troops home” and limit US involvement in overseas disputes.

It would certainly give the White House new cause for celebration just as a traditional benchmark of Trump’s (admittedly self-anointed) success looks to be on the wane. Yesterday, US stocks were in freefall following the Federal Reserve’s decision to hike interest rates by another quarter per cent to 2.5%, leading the market in its sharpest response to a rate rise since 1994.

The losses – which included a 2.3% drop on the S&P 500 – compounded falls seen during recent weeks over slowing global growth, which onlookers couldn’t fail to connect with Trump’s trade offensive against China. 

As with much of American foreign and economic policy these days, there may yet prove to be method in the madness. Until then, expect Trump to continue in his distraction techniques, trumpeting questionable military “success” to take keep prying eyes from consuming news elsewhere. 


A government white paper on immigration has suggested low-skilled EU migrants will be free to travel in the UK in search of work until at least 2025.  The scheme would allow those workers to remain for up to 12 months before applying again. A year-long consultation will also be launched amid a row over whether skilled migrants should earn more than £30,000 before qualifying for the right to work in the UK.

Jeremy Corbyn is under fire after claims he was spotted calling Theresa May a “stupid woman” during PMQs yesterday. The Labour leader was forced to deny the allegations yesterday, which he reportedly made in response to jibes by May comparing Labour’s threatened vote-of-no-confidence to a pantomime. John Bercow, the speaker of the House of Commons, was also criticised by MPs on suggestions that he was unable to escalate the row, ruling that the House must accept Corbyn’s claim that he had said “stupid people”. (£)

Elon Musk has unveiled a prototype underground tunnel for high-speed car travel across Los Angeles. The tunnel stretches only one mile, but is intended to create a network which would see modified electric vehicles travel at speeds of up to 150mph across the city. The ‘loop’ system was described as a ‘3D highway system underground’, connecting a series of ramps and arteries to ensure sustained driving at 150mph.

Business & Economy

The Court of Appeal in London has upheld a ruling that Uber drivers should be treated as workers rather than self-employed. In 2016, a tribunal ruled that drivers James Farrar and Yaseen Aslam were Uber staff and entitled to holiday, paid rest breaks and the minimum wage, which Uber disputed. Three judges had backed Uber’s appeal in the case , which it will now take to the Supreme Court. 

The ousted chairman of Nissan, Carlos Ghosn, could be released from prison on bail before Christmas following the rejection by a Tokyo court to extend his detention. The decision followed a five-minute video statement to the court on Thursday by the wife of Greg Kelly, another Nissan board member detained on allegations of financial impropriety, appealing for his release so he can receive surgery for a spinal ailment. The ruling affects both Nissan executives, who have been detained since November 19. (£)

Sky chief executive James Darroch has suggested UK investors are overly risk averse and too focused on the short term, in an interview with the Financial Times. Darroch, who has led Sky since 2007, said the mindset “held Britain back” and if applied to Sky would have prevented its tie-up with European counterparts, which Darroch claims were key attracting points in its eventual acquisition by Comcast earlier this year. (£)


What happened yesterday?


News that GlaxoSmithKline had agreed a tie-up for its consumer health division with Pfizer led the FTSE to finish in the black on Wednesday, reversing some of the previous session’s losses. By close of play, the FTSE 100 was up by 0.96% or 64.53 points to 6,765.94, while the pound was up on the dollar by 0.12% at $1.27 but 0.49% lower on the euro at €1.11.

GSK (up 3.78%) topped the corporate leader board having announced that its joint venture with Pfizer would be spun out as a separate listed company within three years when it is expected to be generating at least £10 billion in annual sales. GSK will have a controlling stake of 68%, and should lead to annual cost savings of £500 million.

Royal Mail was under the cosh (down 2.37%) as US parcel delivery company Fedex downgraded its outlook for the full year and warned that global trade has slowed in recent months, in turn hitting the wider delivery sector. 

Sports betting and gaming group GVC Holdings managed to dodge significant losses (down 0.79%) as the UK government’s £2 limit on fixed-odds betting terminals kicked in, allowing it avoid a £676 million payment over its takeover of Ladbrokes Coral. 

Henderson Diversifies Income Ltd.
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Smart (J) & Co.
Schroder Oriental Income Fund Ltd.

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UK Economic Announcements
(09:30) Retail Sales
(12:00) BoE Interest Rate Decision
Int. Economic Announcements
(09:00) Current Account (EU)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
(13:30) Philadelphia Fed Index (US)

Columns of Note

Alistair Osborne writes in The Times that the demerger of GSK’s consumer healthcare division makes investor sense. He suggests that Emma Walmsley reputation as chief executive will be boosted by the decision, having opted for a capital-lite solution to shifting GSK’s cumbersome consumer assets, and betting that Pfizer wouldn’t first be snatched up by Reckitt Benckiser. (£)
In the Financial Times, Philip Stevens comments that Canadian foreign policy provides an example for Brexit Britain of how second-tier nations can build reputation in adverse times. He notes that Canada’s decision to resist policy aggression by the likes of Saudi Arabia, China and the US on principle has been vindicated, even if its allies have been slow to its defence. Britain’s interest should be to preserve as much as they can of the rules-based international system, and like Canada, play by the rules. (£)

Did you know?

Because whales evolved from land mammals, the way they move underwater is anatomically closer to galloping than to the swimming of fish.

Parliamentary highlights


House of Commons
Oral questions
International Trade (including Topical Questions)

Women and Equalities (including Topical Questions)

Business Statement
Business Questions to the Leader of the House - Andrea Leadsom

Backbench Business
UN report on the Rohingya Refugee Crisis - Rushanara Ali, Mrs Anne Main

House of Lords
Oral questions
Ensuring healthy and nutritious food does not become more expensive after Brexit. - Baroness Boycott

Government commitment to build 300,000 new homes a year - Lord Shipley

Imprisonment for public protection prisoners - Lord Brown of Eaton-under-Heywood

Providing humanitarian relief to Yemen - The Lord Bishop of St Albans

Impact of Islamophobia in the UK - Lord Sheikh

Scottish Parliament
General Questions

First Minister’s Questions


House of Commons
Business will resume from Monday 7 January 2019

House of Lords
Business will resume from Monday 7 January 2019

Scottish Parliament
Business will resume from Tuesday 8 January 2019