3 May 2018

@Stu7Tay

3 May 2018

Good morning,

With the rubber stamp still drying on his promotion, you might have expected Sajid Javid to be on his best behaviour and offer his undivided support to the boss who appointed him, at least in the short term.
 
However, that notion has proved fanciful, a fact laid bare at yesterday’s meeting of the ‘Brexit war cabinet’. Javid, only days into his new role as home secretary, voted against Theresa’s May’s plan for a customs deal with the EU, leaving her with a race against time to reach a new settlement.
 
Despite the prime minister emphasising that a “customs partnership” with the EU, whereby the UK would mirror EU customs rules and collect tariffs for Brussels, was her favoured option, Javid voted against with five of his colleagues, forcing the prime minister into a rethink. The former business secretary labelled the proposed hybrid model as “untested and unprecedented”.
 
The bitter irony for May is that it was Javid’s intervention that tipped the 11-person committee’s balance in favour of an alternative option. Had his predecessor, Amber Rudd, still been in post, May could confidently have bet the Downing Street mortgage on her plans being backed by a majority, illustrating at least one reason why the PM was so reluctant to lose her key ally.
 
And if a revolt by her own cabinet members wasn’t bad enough, May is bracing for the possibility of her party being rejected by the electorate today too, as council and mayoral elections take place across England.
 
A total of 151 councils are holding elections, as well as a number of mayoral races, in what is the first test at the polls since last year’s general election. Labour start in the rather unfamiliar position of favourites, realistically targeting London seats that have been solid blue since the 1960s.
 
While her party is expected to suffer losses, May can perhaps console herself with the feeling that she might just have stabilised her position sufficiently to ensure a bad result is not likely to be viewed as a verdict on her premiership.

News

Cambridge Analytica, the political consultancy at the centre of a scandal over the use of Facebook data, is shutting down. It has been embroiled in controversy since facing accusations of widespread mishandling millions of Facebook users’ information. In its statement, the company said customers had been driven away by the recent negative media coverage. The UK’s data watchdog said it would continue its investigation into the company’s operations nonetheless.
 
Hundreds of thousands of women face an “agonising wait” of up to six months to be checked for breast cancer, after the health secretary admitted that up to 270 women in England may have died as a result of an IT error. Jeremy Hunt apologised for women’s lives having been cut short due to “administrative incompetence” after conceding that 450,000 women aged 68-71 had failed to receive invitations for screenings since 2009.
 
The White House lawyer handling Donald Trump’s response to the Russia probe has stepped down. Ty Cobb’s decision to retire at the end of the month creates more upheaval within the administration’s legal team and raises further concerns of growing tension between the president and Robert Mueller, special counsel. (£)

Business & Economy

House of Fraser has announced that it is to close stores as part of a restructuring of the company. The deal that will see China's C.banner, which also owns Hamleys, taking a 51% stake, is dependent on a restructuring of House of Fraser’s portfolio of 59 stores via a company voluntary arrangement, a procedure that allows the department stores group to close stores and slash rents while avoiding administration. (£)
 
Renewed promises of Model 3 production failed to reassure Tesla investors about the electric carmaker’s path towards financial sustainability, with the company seeing five per cent of its shares sold-off in after-market trading. Chief executive Elon Musk is under pressure to convince investors that Tesla is in sufficient financial health to deliver its ambitious growth plans. (£)
 
Xiaomi, the Chinese smartphone maker, has filed to list on the Hong Kong stock market, in a move that will be the world's biggest debut stock flotation this year, and the largest since fellow China tech giant Alibaba raised $25bn in 2014. The listing is expected to raise up to $10bn (£7.5bn). Already competing with Samsung in China, the company has ambitions to move into the US market and take on Apple.

Markets

What happened yesterday?

The FTSE 100 finished 0.3% higher at the close of trading yesterday, the third straight day it has risen.
 
Paddy Power was the headline loser yesterday after it saw shares fall five per cent in response to the company unveiling disappointing first-quarter results. The bookmaker announced that its underlying operating profit fell to £80m, a drop of £11m compared to the same period in 2017. Bad weather in March was blamed, with 14% of UK and Irish horse races cancelled in the month, causing lower revenues from gambling on the sport.
 
Across the pond, it was a strong showing by Apple after its results eased investor fears that there was a declining demand for iPhones. Shares in the tech giant rose by more than four per cent, a performance that failed to transcend the broader US tech sector with the US markets seeing a muted response.

Finals
Elektron Technology

Trading Announcements
Equiniti Group
Fisher (James) & Sons
Glencore
IMI
Smith & Nephew
Trinity Mirror
 
AGMs
Centaur Media, Dalata Hotel Group, Everyman Media Group, Equiniti Group
GKN, GlaxoSmithKline, H&T Group, IMI, Johnson Service Group, Kaz Minerals, Kerry Group 'A' Shares, Lighthouse Group, Moneysupermarket.com Group, Octopus AIM VCT 2, Reckitt Benckiser Group, Rolls-Royce Holdings, Savannah Petroleum, Sanne Group, Trinity Mirror

 

UK Economic Announcements
(09:30) PMI Services
 
International Economic Announcements
(10:00) Producer Price Index (EU)
(13:30) Balance of Trade (US)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
(14:45) PMI Composite (US)
(14:45) PMI Services (US)
(15:00) Factory Orders (US)
(15:00) ISM Non-Manufacturing (US)

Columns of Note

Iain Martin has words of advice for Theresa May in today’s Times. On the issue of Brexit, Martin says that the prime minister is in a much stronger position than it might seem and it is now up to her to break the deadlock in negotiations by picking her favoured option in relation to the customs union. Martin concludes by imploring May to call the bluff of her party rebels and just “get on with it”. (£)
 
Writing in the FT, Philip Stephens argues that Donald Trump’s presidency shatters trust in America on the international stage. Citing the examples of his dealings with North Korea and Iran, Stephens says that Trump is sending a dangerous message to unsavoury regimes that “if you want to be safe against America, build a bomb”.

Did you know?

The wax museum Madame Tussauds has displayed 23 different life-size models of the Queen during her reign.

Parliamentary highlights

TODAY

House of Commons
Oral questions
Exiting the European Union (including Topical Questions)
 
Business Statement 
Business Questions to the Leader of the House – Andrea Leadsom
 
Backbench Business 
General Debate on matters to be considered before the May adjournment - Ian Mearns, Bob Blackman
 
House of Lords
Oral Questions
Impact of levels of gambling advertising - The Lord Bishop of St Albans
Improving the experience of passengers requiring assistance when travelling through airports in the UK - Lord Blunkett
Establishing a nationwide video relay service for users of British and Irish sign language - Lord Bruce of Bennachie
Introduction of identity cards for UK citizens - Lord Empey
 
Legislation 
European Union Committee report: 'Brexit: sanctions policy' - Baroness Verma
 
Scottish Parliament
 
General Questions
 
First Minister’s Questions

TOMORROW

House of Commons
No business scheduled

House of Lords
No business scheduled

Scottish Parliament
No business scheduled