7 November 2018

Stuart Taylor

7 November 2018

Good morning,

Votes are still being counted, but we wake this morning to the results of the US elections already being broadcast and having gone largely to script.

In one of the most highly anticipated midterms, the Democrats have taken control of the House of Representatives for the first time in eight years. However, they fell short in their attempt to take back the Senate and instead saw Trump's Republicans strengthen their grip on the Upper House.

The president had all but accepted that his party would relinquish control of the House in advance of the elections, but the result will still be a blow to him and his administration. The outcome grants his rivals licence to launch investigations into his business affairs, tax returns and potential conflicts of interest, and is also likely to consign his promise of building a border wall with Mexico to nothing more than a chant at his rallies for the remainder of his term.

However, as CNN’s Jake Tapper has summarised, this was not the ‘Blue Wave’ that the Democrats had hoped for as they failed to transfer high expectations into gains, succeeding so far in turning only one state from Republican red to blue in the Senate. The Republican Senate victory was sealed when Ted Cruz overcame his Democratic opponent Beto O’Rourke to regain his seat in Texas. O’Rourke, whose progressive campaign attracted the high-profile support from global superstars Lebron James and Beyoncé, was just one of the party’s rising stars to be defeated, with Andrew Gillum and Stacey Abrams suffering similar fates in Florida and Georgia.

There was also a big win for Trump in Florida’s gubernatorial election. Trump handpicked Ron DeSantis against the perceived wisdom of his party and the president will now be rewarded with a grateful friend in a key state when it comes to his presidential election in two years’ time.

There may have been no clear winner when it comes to the parties but it was a good night for women and minority candidates. There has been a record number of women elected to Congress in this election and women now make up a third of the Democratic caucus. The election also saw the first Muslim congresswomen and the first openly gay man to be elected governor.

The record for early voting in the US was smashed at this election, proving that Trump’s polarising administration has succeeded in at least making voting great again. Early exit polling suggests that two-thirds of voters treated yesterday as a referendum on Trump. The outcome might be too close to call but we can say with some certainty that the race for the White House in 2020 has begun in earnest. 

News

Theresa May has been criticised after leaked Whitehall notes suggested that the prime minister would use foreign leaders and business figures to pressure sceptical MPs in her party into backing her eventual Brexit deal. The note revealed that May had planned to utilise the support of high-profile leaders including Shinzo Abe, the Japanese prime minister, and even Labour’s Manchester mayor, Andy Burnham. (£)

Ryanair has sacked six of their cabin crew members for gross misconduct after they said a photograph of them sleeping on the floor of a Spanish airport office last month was staged. Over 20 crew members were stranded in Malaga airport when their Porto-bound flights were diverted on 14 October but the airline said that despite the issues "no crew slept on the floor".

Business & Economy

Marks and Spencer has reported a fall in both food and clothing sales and has warned that it sees little improvement in sales this year. Overall like-for-like sales, which strip out store openings, showed a fall of 2.2% for the six months to the end of September. Like-for-like food sales fell 2.9% and clothing and home sales slid 1.1%. (£) 

Jeff Fairburn, the CEO of Persimmon Homes, who was at the centre of a row over his £75m pay award, has left his role. The company said Fairburn left by "mutual agreement and at the request of the company" after his decision to walk away from an interview over his pay had a “negative impact” on the company’s reputation.

Theresa May has created five business councils to advise on how to create the optimal business conditions in the UK following the country’s exit from the EU. Each council will meet three times a year, twice with Mrs May and once with a senior cabinet minister, and will be headed by Tesco boss Dave Lewis, ITV boss Carolyn McCall, entrepreneur James Timpson, and CBI head Carolyn Fairbairn.

Markets

What happened yesterday?

The FTSE 100 closed down 0.89% yesterday to end the day at 7,041 points. While US stocks were flat, investors this side of the pond surprisingly showed more caution than their US peers as they awaited the outcome of the midterm elections. The fall in the UK blue-chip index mirrored markets across Europe, with both Frankfurt’s Xetra Dax and the Europe-wide Stoxx 600 equity index slipping 0.1% and 0.3% respectively, while the FTSE 250 also fell, dropping around 20 points at 19,043. 

Packaging company DS Smith PLC took over from AB Foods as the best performing stock on the FTSE 100, rising 2.4% as investors warmed to the company after an upbeat trading statement this morning.

On the currency markets, sterling rose to a two-week high after hopes were raised that a Brexit deal could at long last be brokered. The pound was up around 0.30% against both the dollar and euro at $1.3082 and €1.1463.

Interims
Dairy Crest Group
Marks & Spencer Group
Mulberry Group
Sophos Group
Wizz Air Holdings

AGMs
Gulf Investment Fund
Hansard Global
InnovaDerma
Infrastructure India
Redrow 

UK Economic Announcements
(20:00) Consumer Credit (US) 
 
Intl. Economic Announcements
(00:00) Industrial Production (GER)
(08:30) Halifax House Price Index
(10:00) Retail Sales (EU)
(12:00) MBA Mortgage Applications (US)
(15:30) Crude Oil Inventories (US) 

Columns of Note

Henry Paulson writes in the FT that we are living in an age of unprecedented risks. Paulson, who served as US Treasury secretary from 2006 to 2009, says that governments are faced with levels of risk never seen before as a result of the private sector generating so much disruptive innovation, while businesses are having to navigate through periods of expectational political upheaval and uncertainty. (£)

The Times’ Daniel Finkelstein says that the Conservative Party should learn from Donald Trump when it comes to understanding how tribal feelings can shape political allegiance. Finkelstein argues that Theresa May and her party cannot bank on the fact that people who normally vote Labour will balk at the idea of making Jeremy Corbyn prime minister and must instead appreciate that social class and economic circumstances predict less than they used to, while social attitudes predict more. (£)

Did you know?

A police riot squad in the southern Russian town of Rostov-na-Donu is made up entirely of sets of identical twins. The unusual composition was created after instructors apparently liked the way they worked together as teams.

Parliamentary highlights

TODAY
  
House of Commons
In recess until Monday 12 November

House of Lords
In recess until Monday 12 November
 
Scottish Parliament
Portfolio Questions
Finance, Economy and Fair Work
 
Scottish Government Debate
Safeguarding Scotland’s International Research Collaborations and Reputation for Scientific Excellence from the Threat of Brexit
 
Members’ Business
Emergency Service Workers – Liam Kerr

TOMORROW

Scottish Parliament
General Questions

First Minister's Questions

Ministerial Statement: Scotland’s Plan to Improve the Educational Experience of LGBTI Young People