23 January 2019

Stuart Taylor

23 January 2019

Good morning,

Last Friday’s Daily Briefing set out a few of the features that define the month of January. This morning I offer another, this time from the world of English football. Ever since its introduction in the early 2000s, the January transfer window has come to be known for two, rather paradoxical, themes: the exorbitant sums of money being splashed out by clubs - a record £419.5m changed hands in the month last year - and the daily reminders from coaches that the players actually worth buying are just not available at this time of year.
But away from the pitch, the league itself is having troubles of its own when it comes to finding their star striker. Back in June when Richard Scudamore, the chief executive credited with transforming the league into the richest in the sport, stepped down after 20 years, it was widely believed that he had created a vacancy for one of the most prestigious sporting positions in the world.
However, in the subsequent months, the £2.5m-a-year role has come to be seen as a “poisoned chalice”, with Susanna Dinnage, a senior executive at US TV network Discovery, and the BBC’s Tim Davie turning down the chance to take over the reins in recent weeks. Dinnage even went as far as accepting the role, before having a change of heart. According to media reports, there is no obvious third choice.

It raises the curious question as to how the most watched football competition on the globe has ended up with this gaping void at its helm.
An article in The Telegraph yesterday tried to make some sense of it all. They suggested that Scudamore’s success in delivering blockbuster TV deals, which under him rose from £670m to a peak of £5.1bn, may have helped bankroll the megabucks transfers and wages for the superstars that have built the iconic and valuable brand it is today; but this has diminished the position of CEO to one of a “TV rights salesman”. Given that any successor will be expected to maintain media rights revenues at these eye-watering levels, it’s little surprise that experience of broadcast production and distribution have featured highly in the CVs of those touted.
Scudamore’s successor will have to juggle this demand with those of the ‘big six’, the league’s most powerful clubs, as they prepare to use their growing muscle to lobby for their own interests, principally a greater share in revenues. Throw in changes in how media is consumed, the looming possibility of a breakaway league and of course the uncertainty of Brexit, and you start to gain a picture of an organisation at the peak of its game but unclear if the trajectory ahead points further up or down.
Finding someone prepared to tackle these challenges is the task that remains with Bruce Buck, the chairman of Chelsea, as he gears up to spearhead a third round of recruitment. However, unless a new star emerges from the sidelines, we appear some way away from the final whistle being blown on this search.


Theresa May has told cabinet ministers that they will be required to vote next week to keep open the option of a no-deal Brexit, a decision that puts her at odds with senior members of her cabinet and business leaders. The PM’s decision comes after Amber Rudd, the work and pensions secretary, called for ministers to have a free vote, while business leaders last night warned that a no-deal Brexit “would be a disaster” during a conference call with May. (£)
Zimbabwe president Emmerson Mnangagwa has criticised the violence by the country’s security forces during a brutal crackdown on fuel protests. Mnangagwa said the actions were “unacceptable”, with a government-appointed human rights group accusing soldiers of using "systematic torture". The price rises were designed to tackle fuel shortages, but mean that Zimbabwe now has the most expensive fuel in the world.
Angela Merkel and Emmanuel Macron yesterday signed a treaty that will see much of the two countries’ defence, foreign and economic policymaking merge. Merkel said that the Aachen treaty – which is designed to boost the European Union against its many internal and external risks – will help Europe fight the rising forces of populism and nationalism. (£)

Business & Economy

Sony has become the latest company to relocate its headquarters from the UK to avoid disruptions caused by Brexit. The Japanese firm will move to the Netherlands in order to avoid any customs issues tied to Britain's exit from the EU. It follows the controversial decision yesterday by Sir James Dyson, a vocal supporter of Brexit, to move his company’s HQ to Singapore. British ferry and shipping freight operator P&O also announced that it will shift the registration of its UK vessels to Cyprus.
More than 3,000 jobs are at risk after Patisserie Valerie collapsed into administration yesterday, following an alleged £40m fraud that left it unable to pay back large overdrafts. Valued at £511m at its peak last June, the café chain revealed in October that it had discovered “significant, potentially fraudulent accounting irregularities”, prompting an investigation by the Serious Fraud Office. (£)
The Financial Reporting Council, Britain’s accounting watchdog, has warned the biggest audit firms not to attempt to subvert controversial European rules that require large companies to switch auditors every 20 years. In a letter to the Big Four firms, the FRC set out what they expected from banks based outside of Europe and their auditors in relation to the rotation rules. The FRC’s intervention has been widely interpreted by the sector as a way to block Goldman Sachs from hiring a smaller accountancy firm in the UK to do a fraction of its European audit, while continuing to rely on PwC for the majority of it. (£)


What happened yesterday?

A gloomy outlook for global growth weighed heavily on UK stocks yesterday as both the FTSE 100 and 250 closed down. London’s blue-chip index dropped one per cent at the end of trading to close at 6,901.39, while the FTSE 250 was 0.42% to 18,681.59. The fall, particularly in the FTSE 100, was as a result of the IMF’s forecast that trimmed global growth to 3.5% for this year, down from an October projection of 3.7%.
The projection for lower growth impacted on indexes across Europe, sending major banking, mining and energy stocks lower. EasyJet was the top performer, closely followed by Ocado and Kingfisher. The airline reported a 14% jump in total revenue, a 20% rise in ancillary revenue and a 12% increase in passenger numbers for the first quarter.
And the pessimism also affected commodities such as oil, with Brent crude down 1.9% at $61.56 a barrel, after briefly touching $60.57 earlier in the day.
On the currency markets, sterling was up 0.56% against the dollar to $1.2959 while the euro was down 0.6% at £0.8765.

Harwood Wealth Management Group

Trading Announcements
Burberry Group
Brewin Dolphin Holdings
Great Portland Estates
Wetherspoon (J.D.)
WH Smith

UK Economic Announcements
(11:00) CBI Industrial Trends Surveys

Joules Group
Burberry Group

Edinburgh Worldwide Inv Trust
McCarthy & Stone
Redx Pharma
Schroder Asia Pacific Fund
WH Smith
Troy Income & Growth Trust

Int. Economic Announcements
(12:00) MBA Mortgage Applications (US)
(15:30) Crude Oil Inventories (US)

Columns of Note

As relations with the West have deteriorated, Vladimir Putin is on a diplomatic quest to win new friends and partners in Africa. This week’s Big Read in the Financial Times explores how building alliances to bolster its global geopolitical clout is a key pillar of Moscow’s foreign policy. (£)
Bob Diamond, former chief executive of Barclays, writes in the Financial Times that Europe’s leaders should take the bold step of proposing an entirely new deal that offers UK citizens a change in terms while keeping the union intact. For example, Diamond suggests that a new proposal could see economic ties deepen but also see powers return to London. For Diamond, only a new pitch for a different kind of alliance between the UK and Europe will break the deadlock. (£)

Did you know?

There were four mass extinction events before the one that killed the dinosaurs. The most severe killed a staggering 97% of all species. All life on Earth today is descended from the 3% that survived.

Parliamentary highlights 

House of Commons
Oral questions 
Prime Minister’s Question Time
Ten Minute Rule Motion 
Ancient Woodland Inventory (England) – Michael Fabricant
House of Lords
Oral questions
Preventing shop workers being attacked – Baroness Kennedy of Cradley
Risks from Chinese ownership of technologies and platforms critical to UK domestic infrastructure – Baroness Anelay of St Johns
Improving rail service reliability – Lord Teverson
Trade Bill – Committee stage (day two) – Baroness fAIRHEAD
How immigration policy post-Brexit will take account of the recruitment of EU and other foreign nationals to jobs in teaching modern foreign languages and public service interpreting – Baroness Coussins
Scottish Parliament 
Portfolio Questions
Transport, Infrastructure and Connectivity
Justice and the Law Officers
Ministerial Statement
Review of Personal and Social Education
Clinical Waste Services
Supporting Entrepreneurship


House of Commons

Oral questions
Exiting the European Union (including Topical Questions)
Business Statement
Business Questions to the Leader of the House of Commons - Andrea Leadsom
Backbench Business
Holocaust Memorial Day 2019 - Ian Austin
Appropriate ME treatment - Carol Monaghan, Nicky Morgan, Alex Chalk
House of Lords
Oral questions
Brexit negotiations - Lord Pearson of Rannoch
Progress towards the restoration of devolved government in Northern Ireland - Lord Lexden
Prosecution of grooming gangs - Baroness Cox
Ensuring a sufficient supply of insulin when the UK leaves the EU - Lord Roberts of Llandudno
Scottish Parliament
General Questions
First Minister’s Questions
Finance and Constitution Committee Debate: Committees Budget Scrutiny