27 June 2018

Stuart Taylor

27 June 2018

Good Morning, 

No one is totally sure how it works. Many think it takes too long to come to a decision. And, whatever side of the debate you sit on, everyone has a strong opinion on it.
 
I speak not of the use of Video Assistant Referees at the World Cup but instead the government’s implementation of Brexit, as we awake this morning to yet more headlines of a cabinet division over the approach Britain should take as it hurtles towards the EU exit door.
 
Yesterday it was the turn of the business secretary to risk the wrath of his pro-Leave colleagues as he laid out his vision for a soft Brexit that would retain a form of single market access for services as well as goods and secure “labour mobility” with the EU. Speaking at The Times CEO Summit, a forum for Britain’s 100 most influential and dynamic business leaders, Greg Clark stressed the government was listening to what he described as the evidence-based voice of business, suggesting that Brexiteers were engaged in a “theoretical exercise” over what the world might look like.
 
Several political commentators took to social media to say that Clark’s rebuke of Brexiteers went further than he ever has previously, and it is perhaps of little coincidence given the warnings sounding from companies including BMW and Airbus that investment could be withdrawn unless Theresa May negotiates a Brexit deal that kept Britain closely aligned with Europe.
 
Across the Atlantic, it is a division of another kind that has people talking. General Electric announced that it would spin off its healthcare division and exit its oilfield service business as part of a comprehensive divestment programme.
 
The decision by the industrial conglomerate to scale back its priorities comes follows more than a decade of poor financial fortune that ultimately led to yesterday’s ignominy of being the last original member of the Dow Jones Industrial Average to be dropped from the index.
 
CEO John Flannery said that it was a milestone day in the company’s history and that he was “a believer” when it came to achieving a turnaround in fortune. Having watched shares fall by more than half since he took over in August last year, it’s perhaps just as well he associates himself in such a way as the next phase of the company’s recovery begins in earnest.

News 

More than 30 homes have been evacuated as a blaze on Saddleworth Moor that has been declared “a major incident” continues to spread. The army is on standby to stand in should the fire that began in Greater Manchester on Sunday night continue.

The defence secretary is expected to ask the prime minister for up to £4 billion extra a year for the armed forces at a meeting next week. Gavin Williamson will ask for the extra funding when he discusses the future shape and size of Britain’s military with Theresa May. (£)
 
A 10-term Democrat who was expected to become his party’s next leader in Congress has lost the New York congressional primary to a 28-year-old socialist. Joe Crowley was defeated by Alexandria Ocasio-Cortez, a Puerto-Rican American and former Bernie Sanders volunteer, in what is considered one of the biggest upsets in recent American political history.

 

Business & Economy 

Coffee chain Costa has said a lack of shoppers on the High Street was to blame for a 2% fall in like-for-like sales in the first three months of the year. However, total UK sales growth were up by 5.2% thanks to new store openings, said Costa parent Whitbread. The results come as Whitbread begin to demerge Costa from the group.
 
Uber has been granted a short-term licence to operate in London after it won its appeal against Transport for London at a court hearing. The taxi app has been given a 15-month licence to operate in the capital after it said it had made "wholesale" changes to the business since last September. The company had been seeking a five-year licence. London Mayor Sadiq Khan said Uber had been “put on probation”.
 
Hedge funds are seeking for the UK Takeover Panel to set a new floor for the fair value of Sky, following the disclosure by Walt Disney of new internal figures that showed expectations of a sharp jump in the profitability of the pan-European media group. The updated forecasts come as Sky has become embroiled in a transatlantic bidding war between US cable group Comcast and Disney that will reshape the global media industry. (£)Coffee chain Costa has said a lack of shoppers on the High Street was to blame for a 2% fall in like-for-like sales in the first three months of the year. However, total UK sales growth were up by 5.2% thanks to new store openings, said Costa parent Whitbread. The results come as Whitbread begin to demerge Costa from the group.
 
Markets 

What happened yesterday?
The FTSE 100 made up for some of Monday’s losses after it closed 0.4% higher at 7,537 points.
 
It was a good day for Carnival, with the 3.1% rise in shares enough to make the cruise operator Tuesday’s top riser. IAG was the day’s biggest faller, with the British Airways owner seeing its shares drop by 3.3%.
 
It was a mixed bag for European stocks yesterday, with Madrid and Milan ending in positive territory. However, both Frankfurt and Paris were lower at the close of trading.
 
Wall Street saw a rebound thanks to gains in gains in technology, consumer discretionary stocks and General Electric shares. However, fears over an impending trade war continue to overcloud investor mood. Energy was the best performing sector in the S&P 500 thanks to Brent oil overcoming an early fall to trade above $76 a barrel, its best performance in seven sessions.
 
Shares in Harley-Davidson fell 0.8% after Donald Trump threatened the company with higher taxes, a day after the company said it would move production of motorcycles bound for the EU to facilities outside of the US.

Finals
Great Eastern Energy Corp Ltd. GDR
Liontrust Asset Management
Sysgroup
Tatton Asset Management
ULS Technology

Int. Economic Announcements
(09:00) M3 Money Supply (EU)
(12:00) MBA Mortgage Applications (US)
(13:30) Durable Goods Orders (US)
(15:00) Pending Homes Sales (US)
(15:30) Crude Oil Inventories (US)

 

AGMs
Amati AIM Vct, Animalcare Group, Atalaya Mining, British American Inv Trust, Caledonia Mining Corporation (DI), Crawshaw Group, DCD Media, Downing Strategic Micro-Cap Investment Trust Red, Dragon-Ukrainian Properties & Development, Exillon Energy, First Derivatives, Hemogenyx Pharmaceuticals, Helios Underwriting, PJSC RusHydro ADR, HydroDec Group, Keystone Law Group, Kore Potash, Monreal, Midatech Pharma, Pacific Assets Trust, Rockrose Energy, Rurelec, Shield Therapeutics, Sumo Group, Venn Life Sciences Holdings, Walker Greenbank, Wentworth Resources Ltd (DI), Whitbread, Watchstone Group

Columns of Note 

Daniel Finkelstein uses his weekly column in The Times to contemplate Boris Johnson’s behaviour over the issue of a third runway at Heathrow. Finkelstein says that the doctrine of collective responsibility within the cabinet must still exist and, as such, the Foreign Secretary must either toe the line when it comes to the government’s stance on airport expansion or resign his position. (£)
 
In the Financial Times, Isabelle Mateos y Lago and Hans-Werner Sinn go head-to-head over whether Angela Merkel should embrace Emmanuel Macron’s vision for eurozone reform. Mateos y Lago, chief multi-asset strategist at BlackRock, says that she should on the grounds that more risk-sharing across the EU is essential, while Sinn, a former president of the Ifo Institute for Economic Research, argues that the German chancellor should resist the calls and instead direct the EU’s focus towards matters of security, border control and defence.

 

Did you know? 

In 2017, a group of students went to a modern art gallery in Aberdeen and left a pineapple in an empty exhibit to see if people would mistake it for art. When they returned four days later, not only was the pineapple still on display, it had been covered with a glass case.

Parliamentary Highlights 

TODAY

House of Commons 
Oral questions 
Chancellor of the Duchy of Lancaster and the Minister for the Cabinet Office (including Topical Questions)
 
Prime Minister’s Question Time
 
Legislation 

House of Lords
Oral questions
 
Monitoring of hate speech against non-Muslims in preaching in mosques and teaching in madrassas in England and Wales - Lord Pearson of Rannoch

What benefit the Government anticipate from the increased funding recently announced for grammar schools - Lord Bassam of Brighton

Impact of the outcome of the general election on 24 June on the govenment of Turkey’s treatment of those in prison - Lord Balfe

Review of the effectiveness of the National Probation Service - Lord Beecham
 
Legislation
Civil Liability Bill [HL] - Third reading - Lord Keen of Elie

Domestic Gas and Electricity (Tariff Cap) Bill - Report stage - Lord Henley
 
Scottish Parliament
 
Portfolio Questions: Communities, Social Security and Equalities
 
Ministerial Statement: Ending homelessness together - Actions recommended by the Homelessness and Rough Sleeping Action Group
 
Stage 1 Debate: Prescription (Scotland) Bill

TOMORROW

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

Women and Equalities (including Topical Questions)

Backbench Business
Improving Air Quality - Mary Creagh, Lilian Greenwood, Neil Parish, Andrew Selous, Mr Ben Bradshaw, Dr Sarah Wollaston

House of Lords
Oral questions 
Economic Statistics Centre of Excellence's conclusion that some of the UK’s largest and most internationally competitive companies account for the biggest reduction in UK productivity growth - Lord Haskel
 
Impact of the Boarding School Partnership information service and how many children who would otherwise have been taken into local authority care have been given places in state boarding schools as a result - Lord Farmer
 
Recommendations of the Select Committee on the Inquires Act 2005, in the light of the report by the National Audit Office Investigation into government-funded inquiries
- Lord Shutt of Greetland

Debate 
Challenges facing disabled people in the UK in 2018 - Baroness Thomas of Winchester

Scottish Parliament 

General Questions

First Minister's Questions

First Minister’s Appointment of Scottish Ministers and Junior Scottish Ministers