28 Aug 2018

Scott Reid

28 Aug 2018

Good morning, 

There’s no point crying over spilt milk.
 
And for once, President Trump seems to have got the memo, having yesterday agreed an ‘incredible’ trade deal with Mexico to focused on dairy products and car exports. The big take home for those of us who are more than a little concerned at the prospect of the US entering into yet another trade war is that this deal paves the way for the 25-year old North American Free Trade Agreement (Nafta) between the US, Mexico and Canada to be continued.
 
So far so good? Not quite. The one country not in the room was Canada, whose officials will join talks today and are expected to be very vocal on protections for the Canadian dairy industry. President Trump has previously railed against the eye-watering tariff of up to 300 per cent faced by Wisconsin dairy farmers should they export to Canada. That seems to me like a few more tears could be shed yet, if President Trump’s relationship with Prime Minister Trudeau is anything to go by.
 
Over-the-top chat of a “breakthrough” then is in no small part motivated by President Trump’s need to regain some political capital at home ahead of November’s midterm elections. The extent of Trump’s protectionist trade policy to date has flown in the face of his Republican party’s traditional platform in favour of free trade, which some commentators have suggested could lead to a lukewarm turnout among sections of the party base in November.
 
For now, Trump will take what he can get. If a deal with Canada isn’t forthcoming, the president has suggested he’s happy to press ahead with the newly-minted US-Mexico trade agreement and drop the Nafta moniker.
 
But time is running out. If Nafta’s $1 trillion value is to be protected, the leaders of the three countries have just until December to ratify the deal before incoming Mexican President-elect Obrador takes the helm, signalling he would be reluctant to sign up to any deal opening up Mexico’s energy sector.
 
Let’s hope Canada isn’t too cheesed off in the meantime.

News

Emmanuel Macron has hinted he is not willing to concede ground in Brexit negotiations by accepting Theresa May’s “Chequers” proposal. Speaking in his annual foreign policy speech in Paris yesterday, President Macron said that Britain’s decision to the leave the EU was “a sovereign choice, which we must respect, but it cannot come at the expense of the European Union’s integrity”. The line is similar to that taken by the EU’s lead negotiator, Michel Barnier, and suggests that Theresa May was unsuccessful in her attempts to make new allies when she visited President Macron at his presidential retreat at the Fort de Bregançon earlier this month. (£)
 
Theresa May is expected to announce plans for the UK to overtake the US to become the G7’s biggest investor in Africa by 2022. Speaking in Cape Town later today as part of her first trip to the continent as prime minister, May will say that she expects private sector investment to drive the growth, which will also help tackle extremism, political instability and European migration. May will also visit Nigeria and Kenya during the three-day trade mission.
 
The White House will resume the flying of flags at half-staff following widespread criticism of President Trump’s response to the death of Republican senator John McCain. Flags flying on federal buildings were fully raised on Monday, far earlier than the indicated date of next Sunday, which yesterday ignited a furore among politicians and commentators. President Trump has so far ignored media questions about the flag, and is not expected to attend McCain’s funeral next weekend.

Business & Economy 

Toyota is to invest $500m in Uber as part of a partnership to develop self-driving car technology. The Japanese carmaker said this was intended to involve “mass-production” of autonomous vehicles that would be deployed on Uber’s ride sharing network. Despite mounting losses, the deal surprised analysts by also valuing Uber at up to $72 billion.
 
A nationwide rail strike has been discussed as part of an ongoing industrial dispute between the government and the 25,000 employees of Network Rail. The dispute centres on demands for pay rises above 3.2 per cent when the current two-year 2.2 per cent pay deal ends in 2019. According to The Times, the negotiations are being viewed as an early test of authority for Andrew Haines, Network Rail’s recent appointment as chief executive. (£)
 
The largest pay deal to be agreed in nine years for partners at Deloitte is expected to fuel criticism that the big four audit firms should be broken up to boost competition, according to the Times. The 702 equity partners of Deloitte will receive an average payout of £832,000 for the latest financial year, equivalent to an annual rise of 0.6 per cent. (£)

Markets 

What happened yesterday? 
The London markets were closed yesterday for the Summer bank holiday in England, Wales and Northern Ireland.

Finals  
Bunzl
BATM Advanced Communications Ltd.
PJSC RusHydro ADR
Jadestone Energy Inc NPV (DI)
 
Trading Announcements
Air Partner
 
International Economic Announcements
(09.00) M3 Money Supply (EU)

GMs
Countrywide

AGMs
Blue Planet Investment Trust   
Bank of Cyprus Holdings Public Limited Company         
Georgian Mining Corporation NPV (DI)
Gordon Dadds Group   
Iomart Group  
Cadence Minerals        
Path Investments

Columns of Note 

Maryanne Wolf writes in the Guardian that society’s move towards ‘skim reading’ is impacting our ability to understand emotional depth and complex ideas in other texts. Wolf highlights new research which suggests that reading from screens can be linked with poorer rates of comprehension in school students, which in turn has impacted abilities to “deep read” longer, historical texts, legal documents and particularly deliberately misleading political questions and voting exercises.
 
James Ashton comments in The Times to speculate on potential leadership candidates in the race to fill two of the City’s most senior positions. Ashton suggests that the roles soon-to-be-vacated by Ross McEwan as chief executive of RBS and by Mark Carney as governor of the Bank of England would be best filled by women in order to push through a cultural overhaul. Ashton identifies Santander’s Baroness Vadera and Dame Minouche Shafik as possible leaders at the Bank, and at RBS, suggests head of commercial and private banking, Alison Rose, and Virgin Money’s Jayne-Anne Gadhia are in the running. (£)

Did you know? 

The first Indian restaurant in the UK was opened 50 years before the first fish and chip shop.
 
In 1810, Dean Mahomet opened the Hindoostane Coffee House near Portman Square, Central London, where a Jewish immigrant, Joseph Malin, opened the first recorded combined fish-and-chip shop in Cheapside, East London in 1860.

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.