27 August 2019

Javier Maquieira

27 August 2019

Good morning,

Last time I visited Biarritz it was a clammy September day, unlike the stormy and confusion-filled conditions of this past weekend, when all the G7 leaders (plus some controversial guests) spent their time in the French resort.
 
For once, Brexit wasn’t the only source of uncertainty taking a stroll down the Promenade de la Grande Plage. Take the president of the United States, for example. After China threatened Washington with additional tariffs on $75 billion-worth of American goods and the US reacted with even higher duties ahead of the summit, Donald Trump said on Sunday that he regretted his trade duel with Beijing right before sending his aides to say the contrary: that his only regret was not having been tougher on China. Then yesterday, he went back to his initial position and said he believed China is sincere in wanting a new trade deal.
 
Of course, Trump has got us used to his conflicting messages. The big surprise came from the host himself: France’s Emmanuel Macron. In his effort to bring Iran back into full compliance with the nuclear deal, the French president orchestrated the visit of Iranian foreign minister Javad Zarif, whose arrival was announced to the rest of the leaders only the night before. As things stand, Macron’s diplomatic gamble may well have worked as President Trump, who had hindered the nuclear deal after withdrawing and imposing sanctions on Iran in the first place, confirmed on Monday that a meeting with Hassan Rouhani in the next few weeks “sounded realistic.”
 
Besides trade wars and nuclear tension, the climate crisis was also high on the G7 agenda (at least for some). Amid his war of words with Jair Bolsonaro, president Macron announced a joint two-stage plan to extinguish fires raging in the Amazon with a fund of $20 million from G7 states - which Brazil refused. The funds were intended for reforestation and to protect what Macron called “the lung of the planet.” But someone went MIA during the talks. Indeed, president Trump decided to skip yesterday’s crucial discussion on climate, later (rather unconvincingly) claiming that he had already scheduled other bilateral meetings.
 
Beyond the closed doors of the G7 summit, hundreds of climate activists marched in south-western France denouncing the gap between Macron’s official pledge to fight global warming and his government’s insufficient action to lower emissions.
 
Despite all the informality that characterises G7 summits, it could be the case that “what happens in Biarritz, stays in Biarritz” and that some of the messages of unity and joint action remain nothing more than a charade.

News

In the framework of the G7 summit, prime minister Boris Johnson said that it was the responsibility of “everybody in parliament” to deliver Brexit, as he declined to comment on whether he would suspend parliament to stop MPs from preventing a no-deal withdrawal from the European Union. MPs have been preparing meetings to discuss ways to avoid the UK leaving the single market without a deal on 31 October, while Labour leader Jeremy Corbyn aspires to win a no-confidence vote in the government in order to delay Brexit and stop a no-deal exit.

The government plans to replace mobile reception blind spots with bigger and taller masts to improve rural phone signal. The digital secretary, Nicky Morgan, said she wanted to scrap current rules banning structures of more than 25 metres on public land following the launch of a government competition for rural areas to host tests of 5G applications and stimulate investment.

In the 12th weekend of protests in Hong Kong, thousands of demonstrators marched from Kwai Chung to Tseun Wan district, in the city’s New Territories. On Sunday, what had started as a peaceful pro-democracy demonstration ended with a police officer firing a live shot into the air in one of the most violent nights since the protests began. State-run media outlet Xinhua signalled that Beijing was losing patience with protestors, stating that the central government had the “responsibility and authority” to intervene.

Business & Economy

Key Brazilian businesses and trade groups fear that the international outcry over the Amazon fires could create a loss of competitiveness and the surge of boycotts, making environmentally conscious buyers turn their backs to Brazilian produce. Although many of the fires are seasonal, some are thought to have been started by loggers and farmers hoping to clear land following Jair Bolsonaro’s support for opening the Amazon to commercial activity. One of the most immediate consequences could be the non-ratification of the EU-Mercosur trade deal by Emmanuel Macron and other EU leaders. (£)
 
According to documents seen by the BBC, the government and HS2 were aware years ago that the high-speed railway project was going to be over budget and delayed. The fact that documents outlining the budget and timescales were written in 2016 suggests that MPs and the public were not given the full picture about the real cost before parliament approved the first stage of the project. The new government announced last week that it planned to review the costs and benefits to make a decision by the end of the year.
 
The Dutch government has started talks with more than 300 UK-based companies that are thinking about relocating to lessen the impact of the UK’s withdrawal from the EU. The Netherlands Foreign Investment Agency reported that almost 100 enterprises had already moved some of their business to the Netherlands, including Bloomberg, Discovery, and UK P&I. The agency also highlighted the economic implications that Brexit will have for international business and expects more companies to change headquarters in the coming months.

Markets

What happened yesterday?

Global markets welcomed news that the US and China could be “getting back to the table” to negotiate a trade deal. On Monday, Donald Trump told reporters during the G7 summit in France that both countries were ready to start negotiations “very seriously” following a phone conversation between the two superpowers the day before. As a result, the Dow Jones Industrial Average was up 1.06% at 25,899.84, while the S&P 500 was ahead 1.11% at 2,878.60 and the Nasdaq Composite closed 1.32% firmer at 7,853.74.
 
While London was closed for the bank holiday, European stocks pushed mostly higher, with the Stoxx Europe remaining flat and the Dax rising 0.4%. On the other hand, China’s renminbi continued to fall, putting it on track to its worst month since 2005. Elsewhere in Asia, the CSI 300 of Shenzhen and Shanghai stocks was 1.4% lower while Japan’s Topix was down 1.6%.

What's happening today?

Interims
Bk. Cyprus Hldg
Jadestone Energy
Puretech
 
AGMs
Baillie Gifford
Iomart IOM
Metalnrg Plc
Solo Oil
Vertu Capital

Int. Economic Announcements
(07:00) Gross Domestic Product (GER)
(14:00) House Price Index (US)
(15:00) Consumer Confidence (US)

Columns of Note

Robinson Meyer argues in The Atlantic that the Amazon fires are also a political problem, emphasising that the three Brazilian states worst affected by the fires are all governed by Jair Bolsonaro’s allies. According to Meyer, however, identifying the environmental and political challenges posed by the fires will hardly resolve the issue. The author grimly concludes that, once the rainforest is degraded and the diversity of creatures lost, the Amazon will not recover for roughly 10 million years despite people’s efforts to replant.
 
The Guardian’s Nesrine Malik writes that Donald Trump’s focus on identity politics to win the 2020 elections will become more prominent – a scenario, she says, for which Democrats are still not ready. In Malik’s view, the “when they go low we go high” approach of the mainstream American left is likely to fail once again, calling the Democratic party leadership to dive into the identity politics pool and convert the jaded by demonstrating how Trump’s vision leads to a less safe world for everyone. In short, Democrats need to go beyond reactive and “fact-checking” strategies and play “both dirty and inspiring” if they want to beat the Republican candidate.

Did you know?

Indians are the world’s biggest readers, spending 10 hours a week (on average) reading. Brits spend half that time, spending five hours a week with a book.

Parliamentary highlights

House of Commons
In recess until 3rd September.
 
House of Lords
In recess until 3rd September.
 
Scottish Parliament
In recess until 2nd September.