9 October 2018

Katie Stanton

9 October 2018

Good morning,

In the aftermath of her crushing presidential defeat, Hillary Clinton reflected: “America was caught up in a historic wave of angry, tribal populism sweeping the world”. And, as another populist treat washes up – this time on the golden sands of the Copacabana – it seems she was right.

Brazilian presidential candidate, Jair Balsonaro, is a far-right populist famed for his ruthless militarism. In the first round of voting he has seen a surge in approval, winning 46 per cent of the vote. His rival, Fernando Haddad of the left-wing Workers’ party, gained just 29 per cent of the vote amid general public dissatisfaction. South America’s biggest nation now awaits the run-off on 28 October in which Balsonaro is expected to be victorious, becoming the first far-right president in 30 years.

This development represents a radical anti-establishment shift to the right. Balsonaro’s history of “advocating a shoot-first policy against criminals and yearning for Brazil’s former military dictatorship” has seen him sidelined politically in the past, in spite of his 27-year stint in congress. His “casual misogyny and nostalgia for Brazil’s 1964-85 military dictatorship” has long horrified many voters. But the man referred to as Brazil’s answer to Donald Trump is riding the populist wave.

The vote comes as Brazil struggles to recover from the worst recession in the country’s history, a huge increase in crime and a spike in gun violence. The Brazilian political system is awash with corruption claims and, while leading in the polls, former president and leftist Luiz Inacio da Silva was jailed for corruption. The Brazilian people are fed up and they want change.

Balsonaro has offered himself as the change that Brazil needs. Prioritising massive economic liberalisation, deregulation and privatisation to reduce the vast fiscal deficit, his form of authoritarianism is seen by some voters as necessary to control the spiralling crime rates. And – bonus – he hasn’t been implicated in any corruption scandals.

But many fear the former army officer. Political tensions are running high: Balsonaro was almost killed in a stabbing while campaigning last month. And without an outright victory in the first round, anything could happen – opposition voters could band together to elect someone else.

Still, it looks like Brazil is heading toward a radical regime. Their potential president a misogynistic homophobic racist, touting social conservatism, change and a tough-on-crime message: sound familiar? 

News 

Donald Trump has claimed that the accusations against new Supreme Court judge Brett Kavanaugh were a “hoax” and “a campaign of lies” before apologising over his “unfair treatment” and falsely referring to him as “proven innocent”. The Senate elected Mr Kavanaugh on Saturday, after a string of sexual assault allegations were made against him. He vehemently denied them and said yesterday that he was not bitter. Kavanaugh’s nomination ensures a majority conservative Supreme Court for some time to come and represents a victory for Trump.

The IMF has urged the UK to increase public spending and ease taxation in the event of a hard Brexit, to cushion the economic fallout associated with crashing out of the EU. The IMF’s suggestion of flexible monetary policy and lower interest rates contradicts the Government’s position on available fiscal stimuli and comes as chancellor Phillip Hammond prepares for a challenging budget statement at the end of the month. (£)

A military doctor has been named as the second Salisbury attacker according to investigative website Bellingcat. Alexander Yevgenyevich Mishkin allegedly travelled to the UK in March under a false name to carry out the attack against Sergei Skripal, which left one woman dead. This development comes less than two weeks after his accomplice, Colonel Anatoliy Chepiga, was unmasked and both are thought to be operatives for the GRU, Russia’s military intelligence agency. (£)

Business & Economy

Jaguar Land Rover has planned a two-week shutdown of its Solihull plant at the end of this month. It was widely reported last week that new car sales have fallen by 20 per cent in the UK. Coupled with a decline in demand for diesel vehicles and Brexit uncertainty and the car manufacturer is facing a crisis. In a statement the firm said: “as part of the company’s continued strategy for profitable growth, Jaguar Land Rover is focused on achieving operational efficiencies and will align supply to reflect fluctuating demand globally as required”.

Google has vowed to shut down its social network, Google+, following an undisclosed data leak. It is thought that Google failed to release information about the leak amid concerns of “political backlash”, although the firm denies this. Google claimed that the information was not vital and they couldn’t ascertain which users were affected, describing the leak as a “bug” that let outside developers see profile information of up to half a million users. This comes as tech companies come under increased scrutiny over data practices in the aftermath of the Facebook scandal and is likely to have reputational consequences. (£)

British high streets have seen a fall in profits and sales, “bringing a close to the World Cup-inspired summer spree”. The British Retail Consortium and accountancy firm KPMG saw growth in total sales drop to the weakest level since October 2017. Retailers will look to make up for the downturn in the coming months as the key winter shopping period approaches and Black Friday boosts sales of gifts and electrical goods in November.

Phillip Hammond is facing increased pressure to introduce a digital tax in the budget this month, following reports that Facebook paid only £7.4 million in corporation tax last year. Facebook’s results yesterday were met with backlash and a cross-party call for a crackdown on the taxation of Silicon Valley companies. The chancellor floated the idea at the Conservative Party conference earlier this month, declaring that “the time for talking is coming to an end and the stalling has to stop”. (£) 

Markets

What happened yesterday?

It was a cautious start to the week on the FTSE 100 yesterday as it closed almost 1.2% lower at 7,233 points. This mirrored falls in Frankfurt, Paris and Milan after Italian stocks and bonds were sold off amid budget worries.    

Meanwhile, it was a mixed day for the US markets with the Nasdaq falling 0.67% in its third consecutive day of declines. The S&P closed slightly higher at 2,887.92, while the Dow Jones Industrial average finished up 0.15%.

In stark contrast, the Sao Paulo stock exchange climbed 6% following Jair Bolsonaro’s victory in the first round of Brazil’s presidential elections. Investors are enthusiastic about the prospect of ultra-liberal economic policies as the currency also gained almost 3% against the dollar yesterday.

The oil stocks were also hit yesterday, with Brent falling over 1% in the morning, before almost fully recovering by the end of the day.

Things were looking brighter on the currency markets, with the pound finishing up 0.17% against the dollar at $1.31 and up 0.01% against the euro at €1.14. 

Finals   
Ceres Power Holdings
Kin and Carta
Mysale Group
Transense Technologies
YouGov

Interims
LiDCO Group 

Trading Announcements   
Greggs
Robert Walters

AGMs
Kin and Carta

EGMs
Bagir Group Ltd. (DI) 

Intl. Economic Announcements
(07.00) Balance of Trade (GER)
(07.00) Current Account (GER) 

Columns of note

Matthew Lynn takes a scathing look at John McDonnell’s proposal for a four-day work week in The Spectator. While the plan is gaining momentum on the left, Lynn argues that we should learn from France’s 35-hour work week disaster, which contributed to mass unemployment. (£)

Melanie Phillips tackles feminism in The Times, claiming that the tendency to blame men for everything is extremely damaging. Her comment comes after Mary Beard observed that “men sometimes installed women in temporary positions of power so that when these women mucked it all up”, men can come to the rescue. She calls Beard’s notions “an ideology of victimhood” as the assumption that women are manoeuvred and exploited in every circumstance removes us of our own personal agency and autonomy. (£)

Did you know?

People in Victorian Britain who couldn't afford chimney sweeps dropped live geese down their chimneys instead. 

Parliamentary highlights

TODAY

House of Commons
Oral questions
Justice (including Topical Questions)

Ten Minute Rule Motion
Assaults on Retail Workers (Offences) – Alex Norris

Backbench Business
General debate on baby loss awareness week – Antoinette Sandbach

General debate on children’s social care in England – Tim Loughton

Adjournment
Reforming the business rates system for small retail businesses – Sir Geoffrey Clifton-Brown

House of Lords
Oral questions
Implementing the forthcoming National Accident Prevention Strategy - Lord Jordan

Government plans for the UK Voluntary National Review on the UN Global Goals for Sustainable Development - Lord McConnell of Glenscorrodale

Proportion of goods sorted for recycling by households in England eventually ending up in landfill - Baroness Neville-Rolfe

NHS funding for treatment of people with type 2 diabetes and management of their increased risk of developing cancer - Lord Morris of Aberavon

Legislation
Counter-Terrorism and Border Security Bill - Second reading - Baroness Williams of Trafford

Scottish Parliament
In recess until 23 October

TOMORROW

House of Commons
Oral Questions
International Development (including Topical Questions) 

Prime Ministers Question Time

Ten Minute Role Motion 
Criminal Records (Childhood Offences) 

Legislation
Agriculture Bill - second reading

Money Resolution 
Agriculture Bill

Adjournment
Role of youth services in tackling youth violence

House of Lords
Oral Questions

Action ministers are expected to take when they receive adverse reports on costs or progress from the Infrastructure and Projects Authority - Lord Berkeley

Ensure the NHS has sufficient staff following Brexit - Lord Clark of Windermere

Outcome of the Government's last meeting with the European Union Commission to discuss Brexit - Lord Dykes

Legislation 

Non-Domestic Rating (Nursery Grounds) Bill - Committee stage - Lord Bourne of Aberystwyth

Tenant Fees Bill - Second reading - Lord Bourne of Aberystwyth

Orders and regulations

Armed Forces (Terms of Service) (Amendments Relating to Flexible Working) Regulations 2018 - Motions to approve - Earl Howe

Draft Armed Forces (Specified Aviation and Marine Functions) Regulations 2018 - Motion to approve - Earl Howe