28 November

@Stu7Tay

28 November

Good morning,

It has previously been referred to as the currency of the future, has a total circulation more than the combined value of Barclays, Lloyds and Royal Bank of Scotland, and only last month Goldman Sachs considered becoming the first Wall Street firm to trade it in.
 
However, concerns have been heightened that Bitcoin could be about to cause the digital currency bubble to burst after it soared to record highs yesterday, with the cost of one bitcoin reaching $9,721 yesterday.
 
The growth of the cryptocurrency, which was launched in 2008, over the past year has been stratospheric. At the start of the year, one bitcoin would have set you back $966, and it passed the $5,000 threshold a mere two months ago. To compare this to more traditional markets, Amazon’s growing stock is up just one-fifteenth as much as Bitcoin over the same period.
 
Along the way there have been dramatic drops in value and this volatility has raised significant concerns among regulators and analysts, who believe the immature market poses dangers to those who trade in the currency, which has no physical form beyond a computer code. Unlike traditional currencies, it offers no consumer protections to buyers and investors are exposed to heavy losses every bit as much as large gains.
 
So what’s in store for Bitcoin? CME Group Inc., the world’s largest exchange operator, has said it will introduce trading in bitcoin futures by the end of this year and this endorsement seems to have given the virtual currency a degree of legitimacy, with a flood of buyers viewing it as a serious investment choice to rival gold. However, scepticism remains, with the chief executive of JPMorgan Chase branding it “a fraud”.
 
With such division of opinion, it seems the outlook over Bitcoin’s future is every bit as unpredictable as its price. 

NEWS

The date and venue of the royal wedding between Prince Harry and Meghan Markle are expected to be revealed later. The nuptials are unlikely to be planned for April, as Prince Harry's sister-in-law, the Duchess of Cambridge, is expecting her third child around that month.

The Brexit Secretary has come under criticism from MPs after information in the Brexit “analysis papers” that were handed over to parliament on Monday appeared to be redacted. David Davis has been denounced by all opposition parties after Brexit papers that covered 58 sectors had been distilled into a single, 850-page document and had market-sensitive information removed. (£)

Angela Merkel has called on her old partners in government to reform a “grand coalition” and suggested the whole world was waiting on them to agree. Merkel said the Social Democrats needed to join her Christian Democratic Union party in government to tackle global challenges such as relations with Russia and the US. Martin Schulz, the SPD leader, agreed to meet the acting chancellor for exploratory talks on Thursday but said his party was not yet ready to re-form the “grand coalition”. (£)

BUSINESS AND ECONOMY

The Bank of England’s latest stress tests have demonstrated that Britain’s big banks can withstand a hard Brexit and still keep lending, but Barclays and Royal Bank of Scotland struggled more than most to meet the pass rate. The hypothetical test replicated the UK leaving the European Union with sterling slumping, interest rates rising to four per cent and a record housing crash hitting the UK. All seven lenders passed for the first time since the financial crisis, with Barclays emerging with the smallest headroom. (£)

IAG, the owner of British Airways, has held off competition to buy 20 take-off and landing slots from collapsed carrier Monarch Airlines. The company said the deal will allow its airlines – primarily BA – to offer more flights and new routes from Gatwick.
 
Investment bank Morgan Stanley has told investors that another general election towards the end of 2018 is likely as, in its opinion, Theresa May’s government will come to realise it cannot secure the Brexit deal it wants. The company also told investors that the prospect of Jeremy Corbyn becoming prime minister was a more serious threat to business than the UK leaving the EU. The US bank warned that the nationalisation of key industries, higher taxes and a shift in spending priorities towards low-income households could damage the valuations of UK companies.

MARKETS

What happened yesterday?

The FTSE 100 ended yesterday slightly down, having been up around lunchtime. The index closed 25.74 points, or 0.35%, down at 7383.90.
 
This fall didn’t stop GlaxoSmithKline from enjoying a good day, with shares in the pharmaceutical company increasing by 1.77% following an analyst boosting its rating to "buy" from "neutral”.
 
Indeed, it was the lifting of a rating that saw Easyjet’s shares boosted by 1.47%, after Paribas raised its rating on the airline to "neutral" from "underperform”.
 
For Pearson, the education group, a tough year continued yesterday after news it had sold its language teaching unit caused shares to fall by 2.05%. Already this year the company has issued several profit warnings and reported a record £2.6bn loss back in March.
 
On the currency markets, the pound fell 0.05% against the dollar to $1.3340 but was up 0.14% against the euro at €1.1193.

Finals
Gooch & Housego, Greencore Group, ITE Group, Shaftesbury, Sanderson Group, Treatt, Topps Tiles, Urban&Civic, UDG Healthcare Public Limited Company
 
Interims
Acal, Alpha Financial Markets Consulting, BCA Marketplace, Cranswick, D4T4 Solutions, GB Group, IG Design Group, KCOM Group, Pets at Home Group, Park Group, Scholium Group, ULS Technology

UK Economic Announcements
(07:00) Nationwide House Price Index
(08:30) Index of Services
 
International Economic Announcements
(07:00) GFK Consumer Confidence (GER)
(08:00) M3 Money Supply (EU)
(13:00) House Price Index (US)

COLUMNS OF NOTE

In the Financial Times, Sebastian Payne says that finding a solution to avoid a hard border between Northern Ireland and the Republic of Ireland has illuminated the difficulties that Theresa May has given herself when she agreed a post-election deal with the DUP. Payne concludes that May must strike a “tough form of wording” that pleases both the DUP and Leo Varadkar, the Irish prime minister, and hope a feasible solution becomes apparent as the next phase of Brexit talks get underway. (£)
 
Chris Deerin confesses in The Herald today that he is still not coming round to Brexit. Thursday’s news that British cities would no longer be considered as hosts of the European City of Culture cast Deerin into “a gloom” he is finding “hard to shake”. He argues that feelings are at the very heart of the “mental and emotional distress the decision to leave the EU continues to cause many of us. The details, the pounds and pence, matter, but our personal associations, our constructed identities, matter more.”
 
Writing in The Telegraph, Asa Bennett asks what German voters will think if Angela Merkel decides to bring the “grand coalition” back together again, given September’s election highlighted a desire for change. Bennett says it is unusual for leaders to maintain the status quo after being humbled at the ballot box and warns the acting chancellor that “presenting voters again with exactly what they tried to reject will just make them more determined to secure change”.

DID YOU KNOW?

We don’t yet know the date of the wedding, but one thing we can predict is that Meghan Markle will place her wedding bouquet on the Grave of the Unknown Warrior at Westminster Abbey after the service. This has been a tradition of royal brides first started by Queen Elizabeth, the Queen Mother, and observed ever since.

PARLIAMENTARY HIGHLIGHTS

TODAY

House of Commons

Oral questions
Treasury (including Topical Questions)

Debate
Conclusion of the Budget Debate

House of Lords

Oral questions
Addressing the concerns of the Care Quality Commission in its review of the particular difficulties faced by children and vulnerable young people in accessing mental health care - Baroness Wheeler
Improving air quality in Britain - Lord Dubs

Legislation
Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill - Report stage - Lord Bourne of Aberystwyth

Scottish Parliament

Ministerial Statement
Refreshing Scotland’s Alcohol and Drugs Strategies

Scottish Government Debate
Making Scotland Equally Safe

TOMORROW

House of Commons

Oral Questions
International Development

Prime Minister's Questions

House of Lords

Oral Questions
Tuition fees of nurses who spend some years working in the NHS or related care services - Lord Clark of Windermere
 
Target for annual budget savings on cost of interpretation and translation services in criminal proceedings - Baroness Coussins

Impact of the introduction of the new system of apprenticeship training on training providers - Lord Aberdare

Scottish Parliament

Portfolio Questions: Health and Sport

Scottish Conservative Debate: Barclay Review and ALEOs