24 Aug 2018

Scott Reid

24 Aug 2018

Good morning, 

‘As a dog return-eth to his vomit, so a fool return-eth to his folly.’
 
So says Proverbs 26:11… Well, sort of.
 
Instead, these are comments made by Jacob Rees-Mogg attacking the chancellor Philip Hammond’s view that a no-deal Brexit would significantly damage the economy, which was also described by the MP for North East Somerset as a kind of ‘dodgy project fear’.
 
The problem being that Rees-Mogg was also misquoting. As his parliamentary colleague, Paul Masterton pointed out: “Just because you throw in the odd bit of Latin… by adding “-eth” at the end of some words to make your soundbites sound a wee bit fancy doesn’t make them any less nonsense.”
 
Do we expect anything less at this point? Perhaps, but that’s not to say that Rees-Mogg’s reference was off-mark. If anything, it underlined the truly biblical proportions of the consequences laid out by the Brexit secretary Dominic Raab yesterday.
 
The anticipated loss of £150 billion in the economy equivalent to 7.7% GDP over 15 years; pharmacies ordered to stockpile medicines; Britons on the continent losing access to their pensions; even resorting to Denmark to supply the nation’s sperm banks. At least there’s no need to fear that our nation’s trusty BLT may be under threat, Raab told us.
 
So clearly the government has it covered... right? It would be in our best interests to think so. As cabinet unity further breaks down, it’s hard to see how the initially proposed agreement of the future UK-EU relationship in October won’t get kicked further down the line.

News

Alex Salmond is understood to be launching legal proceedings against the Scottish Government over the way it has investigated claims of sexual misconduct alleged against the former first minister. The Daily Record reports that Salmond is challenging a complaints procedure which has been activated against him over an alleged assault dating back to his time in office in December 2013. Salmond denies the allegations.
 
Australia’s finance minister, Scott Morrison, is set to replace Malcolm Turnbull as prime minister after winning a leadership ballot among Liberal MPs. Morrison will succeed Turnbull as Australia’s sixth prime minister in 11 years after defeating the conservative candidate Peter Dutton, a former home affairs minister. A close ally of Turnbull and moderate within the party, Morrison had initially backed the outgoing PM earlier in the week before offering himself as a unifying candidate yesterday.
 
Nazanin Zaghari-Ratcliffe, a British-Iranian woman, has been reunited with her family after being granted a three-day release from prison in Iran. The charity worker was jailed for five years in 2016 after her arrest on “secret charges” of espionage whilst visiting her family on holiday. The Free Nazazin campaign group said a three-day release was “standard practice” ahead of lengthier time out of jail and her lawyer was due to apply for further extensions on Saturday.

Business & Economy 

Saudi Arabia’s sovereign wealth fund is reported to be seeking up to $12 billion of investment in order to plug the funding gap left by the aborted flotation of Saudi Aramco announced this week. Investors including JPMorgan Case, Morgan Stanley and Goldman Sachs have been actively pitching for the deal, and currently stand to lose out in fees previously earmarked for the Saudi Aramco IPO. (£)
 
Angela Merkel is reported to have dropped attempts to secure a German presidency of the European Central Bank in favour of the European Commission, according to the FT. Bundesbank president, Jens Weidmann, had long been seen as the frontrunner to assume the presidency of the ECB when Mario Draghi steps down in October 2019. Other high-ranking German officials, including Peter Altmeier, economics minister, Ursula von der Leyen, defence minister, and Manfred Weber, head of the European Parliament’s center-right EPP, are now touted as potential leaders to succeed Jean-Claude Juncker as commission president. (£)
 
Goldman Sachs is to launch an online retail bank in the UK “in the coming weeks”, according to an internal staff memo circulated among the bank’s UK staff yesterday. Marcus – named after Goldman Sachs’ founder and launched in the US in 2016 – will reportedly offer the highest interest rate on the British market in order to entice new savers in the bank’s first international expansion. (£)

Markets 

What happened yesterday? 
Brexit-related anxiety weighed heavily on the London market yesterday as the government revealed its preparations for the possibility of ‘no deal’. This led the FTSE 100 index 0.15% or 11.02 points lower to 7,563.22, whilst sterling was also down against both the dollar by 0.7% at $1.28 and by 0.39% on the euro at €1.11.
 
Also behind the decline in the pound were comments made by US central bank official, Esther George, who said that she supported two further interest rate hikes during in 2018, with a so-called ‘neutral rate’ likely lying between 2.5% and 3.0%. A hawkish attitude on the currency markets was only partially eased by the latest CBI survey which showed that attitudes towards retail sales remained unexpectedly optimistic during August, reporting a score of +13 (where anything above 0 indicates growth).
 
In corporate news, homebuilder CRH (down by 0.73%) suffered despite reporting a five per cent increase in first-half profit amid a broader recovery in the construction markets. Its sector peer John Laing (up 0.14%) was boosted after reporting increased first-half profits and net asset value, as was Stobart Group (up 1.71%) on the back of two new board appointments.

Finals
Byotrol
 
Interims
Henry Boot
Camellia
Computacenter
Kingspan Group
 
AGMs
Naspers Ltd. ADR

EGMs
Infrastructure India
PJSC Lukoil ADR
 
UK Economic Announcements
(09.30) BBA Mortgage Lending Figures
 
International Economic Announcements
(07.00) Gross Domestic Product (GER)
(13.30) Durable Goods Orders (US)

Columns of Note 

Stephen Bush suggests in the New Statesman that a split in the Labour party is now inevitable. Bush writes of the four camps of disgruntled Labour MPs – including “the Stay and Fighters”; the “Conscientious Objectors”; the “Brexit Firsters” and the “Policy Platformers” – and suggests that action by Corbynites to deselect center and right-wing sitting parliamentarians will force some Labour MPs to drop the party whip, before coalescing as a new party sometime in 2019.
 
Santham Sanghera writes in The Times on the folly of the overelaborate out-of-office message. Running through some of the best messages he found whilst researching the piece (which included wedding anniversaries, the birth of children and rhetorical questions), Sanghera suggests when setting the “OOO”, less may in fact be more to avoid raising the ire of colleagues. (£)

Did you know?

The Bank of England estimates that 60% of 1p and 2p coins are used in just one transaction before going out of circulation.

Parliamentary highlights 

House of Commons
In recess until September 4, 2018.
 
House of Lords
In recess until September 4, 2018.
 
Scottish Parliament
In recess until September 4, 2018.