Written by Katie Stanton (Associate)
This morning, Katie Stanton evaluates the implications of the new Prime Minister's appointment, and calls attention to a rising trend in risk-averse behaviour in organisations from the IMF to Disney.
Our new prime minister and I have something in common: Boris Johnson, like me, is a hot mess. A kipper-wielding, zip-wiring, lady-killer who will later sashay into Number 10, equipped with a wild pack of promises, a penchant for false truths and a miniature bus collection. Hopefully he proves me wrong, but his premiership seems a touch risky at a time when we’re just a garden bridge from recession, a Brexit bus from full-blown riot, another racist quip from international laughing stock (or have we won that prize already?) Then again, we need a shake-up. Perhaps I’m being too risk averse. Having seen my boyfriend cartwheel down the side of a mountain on an ill-fated skiing trip earlier this year, I am no longer interested in going off-piste. I’ve witnessed first-hand exactly what it gets you: two dislocated shoulders, an eye-watering medical bill and GoPro footage worthy of a trigger warning. But am I alone in my quest for stability? If you look at the International Monetary Fund’s latest growth forecast, it is clear that I have company in my anxiety. Apparently risk aversion, partly as a result of Brexit uncertainty, has caused investors to think twice before putting all their eggs in the British basket. And it seems that entertainment companies too are playing it safe, sticking to their lane in favour of the easy route to literally buckets of cash. Disney, for example, is on a remarkable mission to recycle their back catalogue. This year alone we’ve had a new Dumbo, a reinvigorated Lion King and a renewed Aladdin. To top it off, Marvel released yet another Avengers film. They know the recipe to success and they’re cooking up a storm. Frankly, it seems to be going quite well. The Lion King opened with $191.8 million in weekend sales at North American theatres, nudging Disney towards a record $1 billion year. Avengers: Endgame is now the highest-grossing film of all time. So maybe predictability is not just better for our nerves; it’s a legitimate path to success.
Crack on with that ham and cheese sandwich, relish in that holiday to the same old place you’ve been 11 times, delight in your well-worn dad jokes. Playing it safe is back in fashion. Let’s hope we remember that next time we head to the polls…
Boris Johnson will take office this afternoon following an audience with the Queen at Buckingham Palace, and shortly thereafter begin the process of forming his government. After entering Downing Street this afternoon, he is expected to announce a small number of senior cabinet roles, such as chancellor of the exchequer and home secretary. Yesterday a South Korean fighter jet fired 360 warning shots at a Russian spy plane in the Sea of Japan, after it violated its airspace. The encounter also embroiled the governments of China and Japan. Russia denied in a defence ministry statement that any warning shots had been fired, adding: “had the Russian pilots felt under threat, the response would not have been long in coming.” (£) China has blamed the “black hands” of the US for recent unrest in Hong Kong. The foreign affairs ministry and state media have accused the US of seeking to bring down the region: “violent incidents have happened in Hong Kong and throughout it all the US has encouraged it.” Beijing has ramped up its rhetoric in recent days, after protests escalated over the weekend. Three swimmers are missing in the river Thames after hundreds took to the water to cool off during a bout of hot weather. A police search is currently underway. Elsewhere in the UK, emergency services found the body of a man in a lake at Cotswold Water Park near Cirencester.
Business & Economy
The government has been accused of prolonging the national housing crisis by failing to sell enough land for affordable and social housing. The Public Accounts Committee said the UK would miss its 2020 target of public land sales “by a wide margin”, adding that the government: “has wasted a once-in-a-generation opportunity to alleviate the nation’s housing crisis”. The power of technology giants such as Apple and Amazon will be called into question as the US Department of Justice announced a broad antitrust investigation into the leading online platforms. The agency said it would look into how the platforms had achieved their market power and whether they are “engaging in practices that have reduced competition, stifled innovation or otherwise harmed consumers”. (£) Metro Bank’s controversial chairman and co-founder will step down just two weeks after saying he would “probably die” in the role. The high-street lender will announce it is launching a search for a new chairman when it posts its half-year results tomorrow.
What happened yesterday?
Global stocks advanced yesterday after well-received earnings reports in Europe and the US. In the US the S&P 500 ended near session highs with a gain of 0.7%, its biggest one-day lift since the start of the month. Among US companies, Coca-Cola raised its forecasts for 2019 and shares in the giant rose 6.2% to a record high as a result. In London, the FTSE 100 was up 0.6% despite the announcement of Boris Johnson as prime minister and increased likelihood of an imminent no-deal Brexit. The rise was mainly due to a significant drop in the pound, which sent internationally-exposed stocks higher. Sterling slipped 0.29% against the dollar to $1.24 but was up 0.25% against the euro at €1.15. There was also relief for Europe’s troubled car industry after component maker Faurecia stood by its profit guidance, boosting shares by over 11 per cent. The Stoxx index tracking the sector rose by 3.8%.
Whats happening today?
Totally Van Elle
Aptitude Croda International Drax Glaxosmithkline Informa ITV Quartix Hlds Tullow Oil
UK Economic Announcements
(09.30) BBA Mortgage Lending Figures
Int. Economic Announcements
(09.00) M3 Money Supply (EU) (12.00) MBA Mortgage Applications (US) (15.00) New Homes Sales (US) (15.30) Crude Oil Inventories (US)
Antofagasta Brewin Dolphin Britvic Empresaria Group Marstons Paypoint Weiss Korea Opp
Aquila Srvs Grp Arkle Res Caledonia Experian Fidelity China Special Situations Mediclinic International Mporium Grp Qinetiq Trifast Ultimate Sports Motors Water Intel. Wizz Air
Columns of Note
In the Financial Times big read, Leo Lewis and Kana Inagaki address Japanese mistrust and what it means for the future of payments. Japan’s reliance on cash is merely a part of a grand parable: the country is in permanent tension between a high-tech image and an ageing population. Having invented two of the key cashless technologies, the country remains one of the most cash-obsessed on the planet. How then will the government embark on the cash-free revolution that could save Japan $15 billion a year? (£) Con Coughlin argues in The Telegraph that the Iran shambles proves Britain has had a lucky escape from Jeremy Hunt. Having watched the hijacking of a British-registered oil tanker operating in international waters as part of his brief, Hunt then compounded his error. Instead of joining Trump’s effort, Operation Sentinel, he promoted the fatuous notion of creating a “European Maritime Mission” to afford better protection to shipping operating in the Gulf area. Coughlin argues that May’s administration has been too nervous to protect Britain for fear of upsetting the Iranians and placing the nuclear deal at risk. The result is that we look incredibly weak on the international stage. (£)
Did you know?
To offset the carbon dioxide emissions from one return flight from London to New York, you would have to recycle everything in your house for eight years.
House of Commons
Oral questions Scotland Prime Minister’s Question Time Ten Minute Rule Motion Dockless Bicycles (Regulation) – Daniel Zeichner General debate The role and sufficiency of youth services Adjournment Water safety and tampering with life-saving equipment – Alison Thewliss
House of Lords
Oral questions Independent Review of the Foreign and Commonwealth Office’s support for persecuted Christians – Lord Singh of Wimbledon What assessment the government has made of the human rights situation in Bahrain over the last two years and whether that assessment was made independently of the government of Bahrain – Lord Scriven Impact of climate change on the livelihoods of people in the Sahel region of Africa – Baroness Sheehan Ensuring that the costs of the High Speed 2 rail project remain within its budget – Lord Berkeley Legislation Birmingham Commonwealth Games Bill [HL] - Report stage – Lord Ashton of Hyde Short debate Contribution of Members of the House of Lords to the work of the Council of Europe – Lord Balfe
On recess until 1 September
House of Commons
Oral questions Environment, Food and Rural Affairs (including Topical Questions) Church Commissioners and the House of Commons Commission and Public Accounts Commission and Speaker’s Committee on the Electoral Commission Business statement Business Questions to the Leader of the House – Mel Stride Debate Matters to be raise before the forthcoming Adjournment Adjournment Treatment of spinal muscular atrophy – Sir John Hayes
House of Lords
Oral questions Introduction of Sharia-compliant student finance – Lord Sharkey Final Judgment and Summary of the Independent Tribunal into Forced Organ Harvesting from Prisoners of Conscience in China, published on 17 June – Lord Collins of Highbury Association of Directors of Adult Social Service Budget Survey 2019 on the state of adult social care – Baroness Wheeler Debate Availability of NHS dentistry services – Baroness Gardner of Parkes Needs of women in the criminal justice system – Lord Farmer Short debate Leaking of confidential messages from Sir Kim Darroch and their subsequent publication – Baroness Quin