4 May

@cstreetpartners

4 May

Good morning,

In a speech outside Downing Street yesterday, Prime Minister Theresa May launched an attack on Brussels officials, accusing them of dirty tricks and an attempt to sabotage the UK general election.
 
Using the kind of language one might associate more with declarations of war than peacetime negotiations, May said: "Threats against Britain have been issued by European politicians and officials” and urged voters to back her to “fight for Britain”.
 
After formally dissolving parliament in a meeting with the Queen, May insisted "Britain's negotiating position in Europe has been misrepresented" and accused “some in Brussels” of not wanting the UK to succeed with Brexit.
 
The Prime Minister was referring to leaks in a German newspaper about a “disastrous” private dinner with European Commission President Jean-Claude Juncker at Number 10. Reports in The Financial Times that the UK faces a €100bn divorce bill only added fuel to the fire.
 
Opposition politicians were quick to react, accusing May of playing party games with Brexit to try to win the general election.
 
While we attempt to analyse that declaration of verbal war on Europe, polling stations across England, Scotland and Wales have opened this morning for local elections.
 
A total of 4,851 council seats are up for grabs and eight mayoral elections are taking place in England. In addition, six areas will elect newly created “combined authority mayors”, who will be mainly responsible for the economic development in their regions.
 
A good day to remember the words of Larry J. Sabato, an American professor of political science, who once said: “Every election is determined by the people who show up”.

 

NEWS

Marine Le Pen and Emmanuel Macron last night contested their only head-to-head television debate before a run-off election on Sunday for the French presidency. A snap poll taken just after the ill-tempered debate gave the win to Macron, with 63 per cent of those polled saying he had been the “most convincing,” versus just 34 per cent for Le Pen.
 
The US House of Representatives will vote today on a controversial Republican bill that would repeal and replace key parts of Obamacare. The vote comes a day after two leading Republicans agreed to switch their expected votes. If the bill is passed, it would then go to the Senate, where it may face more difficulty.
 
Russian President Vladimir Putin hosted his Turkish counterpart Recep Tayyip Erdogan in the Russian city of Sochi yesterday. Russia and Turkey improved bilateral relation and agreed to boost economic ties, and even appeared to make progress on Syria, where the two countries have backed opposing sides. The leaders stated their joint intention to create "de-escalation zones" in Syria, which were due to be discussed in more detail at fresh peace talks in the Kazakh capital Astana yesterday, before rebels suspended their participation in protest at air strikes on civilians.
 
Speculation is mounting at Buckingham Palace after The Queen called an emergency meeting this morning. The Queen's most senior aides have summoned her entire Royal household to London, including staff at Balmoral. Buckingham Palace is yet to give an official announcement, but said there is "no cause for alarm".

 

BUSINESS & ECONOMY

Facebook's profits have jumped in the first three months of the year, as the social network closes in on two billion users, according to its latest results. Facebook's first quarter revenue rose 49% to $8.03 billion, ahead of an estimated $7.38bn and above last year's $5.2bn. The company warned that expenses in 2017 will increase “meaningfully” and that "ad load", the volume of adverts the company can show users, will become a less significant revenue growth factor into this year. Facebook shares fell as much as three per cent in after-hours trading.
 
In a move that reinforces the retail group’s long-term investment in the UK, Amazon is to expand its workforce in Cambridge, adding 400 staff to a new research and development centre focused on machine learning. The laboratory is hiring scientists who will work on the development of advanced Amazon hardware, including the voice-activated Echo speaker and Prime Air drones. (£)
 
Europe's largest bank, HSBC Holdings Plc, reported its first-quarter results today. The bank has seen its pre-tax profit fall 19% to £3.88bn in the first three months of the year. However, it said adjusted pre-tax profit, which excludes one-off items, rose to $4.61bn from $4.12bn a year earlier, with group chief executive Stuart Gulliver calling it a “good set of results”. The fall in profits to $5bn (£3.9bn) beat analysts' forecasts, and HSBC's shares rose 1.5% in Hong Kong.
 
Adele is now the richest musician under 30 in Britain and Ireland, according to the latest edition of The Sunday Times Rich List. The singer's global success has rocketed her wealth to a cool £125 million, an increase of almost 50 per cent in the past year alone. She is the 19th richest musician - and only solo female artist - in the Music Millionaires list, which is topped by Sir Paul McCartney and his wife Nancy Shevell, whose combined fortune is said to be £780m.

 

MARKETS

The FTSE 100 has finished yesterday down 15.52 points at 7,234.53.
 
Sainsbury's was the day's biggest faller, with its share price down 5.72% at 263.5p, after the supermarket group revealed an 8.2% fall in annual profits and warned of rising prices. 
 
Paddy Power was another major faller on the FTSE 100 - dropping 4.3% - after saying it was cautious on European revenue growth due to a "pretty extreme" level of competition.
 
ITV fell 1.75% on news that its chief executive Adam Crozier is to step down after seven years at the helm.
 
Strong interim profit growth at accountancy software group Sage sent its shares to the top of the risers, up 3.44% to 707p. 
 
The FTSE 250 closed down 121.90 points at 19,683.39, with construction group Galliford Try by far the biggest faller - its shares tumbled 10.67% to £10.03 - after it said it would take a £98m hit after a financial review of two joint infrastructure projects.
 
On the currency markets, the pound was down 0.23% against the dollar at $1.2909 and flat against the euro at 1.1826 euros.

Trading Announcements 
Morrison (Wm) Supermarkets (MRW), PurpleBricks Group plc (PURP), RSA Insurance Group (RSA)

AGMs
Computacenter, Elecosoft, GKN, GlaxoSmithKline, Gresham Technologies, IMI, Inmarsat, Johnson Service Group , Ladbrokes Coral Group, Moneysupermarket.Com , Morgan Sindall Group , Reckitt Benckiser Group, Rio Tinto, Rolls Royce Holdings, Sagicor Financial Corporation Limited, St James's Place, Stadium Group, Trinity Mirror  

UK Economic Announcements
(9:30) Consumer Credit 
(9:30) M4 Money Supply
(9:30) Mortgage Approvals 

 

International Economic Announcements
(13:30) Balance of Trade (US) 
(13:30) Continuing Claims (US) 
(13:30) Initial Jobless Claims (US)
(15:00) Factory Orders (US)

 

COLUMNS OF NOTE

Writing in The Financial Times, Philip Stephens calls the upcoming general election “a contest between competing visions of the past”. He writes that Britain has inverted the natural order. Summing up Theresa May’s premiership, the author suggests she has struggled to define her own style. She differs from her predecessor who “celebrated a metropolitan Toryism that in turn championed globalism”. On the other hand, Jeremy Corbyn, according to Stephens, is stuck in the 1970s and as the polls suggest, voters are “unable to imagine such a politician framed by the doorway of No 10”. (£)

In The Times, David Aaronovitch analyses what happens when politicians break their election pledges. He concluded that people sign up to hard choices if they know that those offering them believe in them and that they are part of a coherent strategy. The real fury, he says, is reserved for politicians who pretend hard choices don’t have to be made.

 

DID YOU KNOW?

The current official Hawaiian alphabet consists of twelve letters: five vowels (Aa, Ee, Ii, Oo, Uu) and eight consonants (Hh, Kk, Ll, Mm, Nn, Pp, Ww, ʻokina). 

 

PARLIAMENTARY HIGHLIGHTS

House of Commons
In dissolution. The House will next sit on Monday 19th June.
 
House of Lords 
In prorogation. The House will next sit on Monday 19th June.

Scottish Parliament
No business scheduled. 

TOMORROW

Scottish Parliament
No business scheduled.