26 January


26 January

Good morning,

Little praise is directed Theresa May’s way these days, from anywhere, but one quality she must be given credit for is her resilience. 
Despite losing the Conservative majority at June’s snap election, endless Cabinet infighting and briefing wars, freelancing ministers and a shambolic conference speech, she has clung on to the top job.
This had been attributed to the fact that the Conservative Party did not wish to create more instability so soon after the general election and with Brexit negotiations ongoing. Particularly since there is no obvious successor to the role which increases the probability of a divisive leadership election.
Despite this, the question still remains when, rather than if, May will depart 10 Downing Street.
And we might be edging towards an answer. There are reports today that Sir Graham Brady, chair of the 1922 Committee, has received more than 40 letters formally requesting a leadership contest. Under party rules, a contest is automatically triggered if 15% of the parliamentary party – currently equating to 48 MPs – submit a letter of no confidence in their leader.
The expectation appears to be that May will make it to the local elections as leader, but all bets are off after that.


President Trump attempted to fire Robert Mueller from his role as the special counsel overseeing the Russia investigation in June, according to four sources cited in The New York Times. Trump is reported to have alleged that Mueller had three conflicts of interest that should disqualify him from the role. However, he was forced to back down after the White House counsel refused to carry out the directive and threatened to resign.
Four male BBC news presenters are to take pay cuts following the controversy over equal pay at the corporation. Jeremy Vine, John Humphrys, Huw Edwards and Jon Sopel have all agreed, either formally or in principle, to reduce their salaries. Earlier this month, Carrie Gracie resigned as BBC China editor in protest at the differentiation in pay between male and female international editors.
Lord Mendelsohn, the Labour peer, has been removed from his position as spokesman for business and international trade in the House of Lords due to his attendance at the Presidents Club dinner. An investigation by the Financial Times brought to light sexual harassment allegations at the fundraiser. In a statement, a Labour spokesperson said: "Jeremy Corbyn has this evening asked Lord Mendelsohn to step back from the front bench as he attended the Presidents Club dinner, and he has agreed to do so”.
Thousands of deaths could be caused by a Russian attack on the UK’s infrastructure and energy supply, the defence secretary has warned in an interview with The Telegraph. Gavin Williamson asserted that an increasingly assertive Moscow had been researching the UK’s critical national infrastructure to find ways to “hurt Britain”. Williamson’s intervention follows a speech from the chief of the general staff earlier this week and comes at the start of a new defence review in which the Ministry of Defence is seeking increased funding from the Treasury.

Voters in the Czech Republic go to the polls in the second round of voting today, as the populist President Miloš Zeman faces off against a liberal rival Jiří Drahoš. Reman has been likened to Trump and faces a tough battle against his opponent. Polls suggest the outcome is on a knife edge and could go either way.


Business & Economy

More than 60% of companies are preparing for a “no-deal Brexit”, according to a survey by the CBI. With the March 2019 deadline looming and little clarity being provided by the government, plans for no deal are “becoming reality at an increasingly rapid rate”. This includes moving jobs and operations out of Britain to elsewhere in the EU. Speaking in Davos, Lloyd Bankfein, the chief executive of Goldman Sachs, warned that his bank’s contingency planning is reaching the point of no return.
The number of mortgage approvals fell to its lowest level since April 2013, prompting fears of a housing market slump. Lenders approved 36,115 mortgages in December – down 19% on last year, according to figures from UK Finance, which was set up in July and merged six organisations including the Council of Mortgage Lenders and the British Bankers’ Association. The trade body said the data showed “a healthy mortgage market in a traditionally quiet month”.
Walmart has partnered with Rakuten – Japan’s largest e-commerce company – to launch a new online delivery service. The new operation, set to launch later this year, will replace Walmart’s existing online delivery service in Japan. Customers will place orders through Rakuten which will then be fulfilled by the joint venture.


What happened yesterday?
The FTSE 100 was down 27.59, or 0.36%, to 7,615.84, whilst the FTSE 250 fell 16.72 or 0.08%.
Kier, a constituent of the FTSE 250, was the day’s big winner, gaining 15.30% after it set out a net debt target of £300 million by 2020 - £100 million lower than previous guidance. Numis stated: “This clearly illustrates that there are no trading or balance sheet parallels to Carillion, so recent share price weakness is misplaced.”
Smith & Nephew, the medical equipment manufacturer, also had a good day, rising 4.15% - its biggest daily gain in two years. This came on the back of news of a new cost savings programme will be announced next month.
The strength of the pound led to some downward pressure on dollar earners - British American Tobacco dropped 2.13% and IAG shed 1.88%.
However, it was good news for retailers whose sourcing tends to dollar denominated, with Next climbing 3.09%.
On the currency markets, the pound was down 0.10% against the dollar and up 0.04% against the euro.
The dollar climbed sharply after President Trump said he wanted the dollar to be strong. This was in contrast to comments made by Treasury Secretary Steve Mnuchin, who had said just a day earlier that a weak dollar would be good for US trade.

Kcell Joint Stock Co GDR (Reg S)
Haynes Publishing Group
JPMorgan Chinese Investment Trust, Treatt, URA Holdings
Annual Report
Shoe Zone


UK Economic Announcements
(09:30) Gross Domestic Product
International Economic Announcements
(08:00) M3 Money Supply (EU)
(13:30) Durable Goods Orders (US)
(13:30) GDP (Preliminary) (US)

Columns of Note

With GDP figures set to be published later this morning, Ed Conway questions its use as a benchmark in The Times. He acknowledges that GDP is good at what it does i.e. measuring the total amount of income generated in the UK, but asks why politicians view income as the sole measure. He states that happiness tells us more about the state of the country, and that economics is about more than the money we earn.
Writing in The Telegraph. Spicer asserts that, with Jacob Rees-Mogg as chair, and 50 Conservative MPs as members who will wield significant influence when it comes to votes, the European Research Group is now the real Brexit watchdog, rather than UKIP.

Did you know?

The British Museum is the world’s oldest national public museum. It was founded in 1753 when Sir Hans Sloane left his collection to the nation. One location that was considered to host the collection was Buckingham House (which went on to become Buckingham Palace) but the trustees agreed instead on Montague House – the site of the current museum.