7th January 2020

Written by Scott Reid, Associate Partner

Edited by David Gaffney, Partner

Good morning,

We’re just about past the point when predictions for political trends in the year ahead are redundant. But if you’ll humour me, I’d like to offer up the dead cat strategy. ‘Deadcatting’, as Wikipedia helpfully informs us, is nothing new. Boris Johnson pointed out back in 2013 that if “there is one thing that is absolutely certain about throwing a dead cat on the dining room table”, it is that “everyone will shout, ‘Jeez, mate, there’s a dead cat on the table!’”. The point being that whatever you were talking about before is suddenly no longer important. For dead cat, also see shiny object. And if the first seven days of 2020 are anything to go by, I’d say the dead cat is, well, alive and kicking. The latest feline reincarnation, of course, is conflict in Iran, lobbed onto the table by an antsy President Trump as he eyes the prospect of an impeachment trial during an election year. Whether events have gone well for the president since his ordering of a successful drone strike on Iranian military commander Qassem Soleimani on Friday is neither here nor there. Disregard yesterday’s mass demonstrations in Baghdad, or the Iraqi parliament’s vote on Sunday to expel US troops from its soil. Or Reuters’ reports last night of a leaked military letter which suggested the US was gearing up to comply with the order, albeit in the language of strategic “repositioning”. In short, the past week hasn’t been a roaring geopolitical success for the president. But does that matter? I’d wager not. Wartime presidents historically do well when tested at the polls. The story I’m sure he will have had a closer eye on this morning is news that his former national security advisor, John Bolton – unceremoniously unseated by the president in September – has said he will testify if subpoenaed by a Senate trial on Trump’s impeachment. As of this morning, there is no guarantee we will get to that point. House speaker Nancy Pelosi has yet to forward any articles of impeachment amid fears that Republicans, who hold a majority in the upper house, will trash the process in favour of waiting out the Democrats until November’s presidential election. Their thinking being that crying ‘witch hunt!’ is surely the quickest avenue to incentivising the president’s 2016 supporters to get their guy over the line once more come November.    If Trump’s latest gambit is indeed a shock tactic, then those of us hoping for a peaceful resolution in the region have cause for concern. Of all the bad gags in the president’s playbook, it’s hard to think of another which better sums up his tendency to act now and think about the consequences later. Cool heads, it seems, are not helped by dead cats.


The new leader of the Labour Party will be announced on 4 April, the party’s ruling body has announced. Six MPs – Clive Lewis, Rebecca Long-Bailey, Lisa Nandy, Jess Phillips, Sir Keir Starmer and Emily Thornberry – have so far entered the race with nominations due to close on 13 January. A ballot of party members, who can be registered up to 20 January, will take place from 21 February. Transport for London has said it does not expect the £18 billion Crossrail line to open before autumn 2021. Speaking to the London Assembly Budget and Performance Committee yesterday, TfL commissioner Mike Brown said the link’s latest section between Paddington and Abbey Wood in southeast London will now open between September and December 2021. TfL had earlier admitted delays had cost the organisation £1.3 billion in lost revenue. The Spanish parliament is expected to approve the country’s first coalition government in modern times in a vote later today. The coalition, led by Socialist prime minister Pedro Sánchez, will also include the far-left Podemos party but will not command a majority in parliamentary seats and is instead expected to rely on the abstentions of nationalist and regionalist parties in order to pass motions. (£)

Business and economy

Chancellor Sajid Javid has announced that the government’s first Budget since the election will take place on 11 March. The Treasury has said it will “prioritise” the environment and rebalancing regional inequalities and will consult independent economists and regional mayors when making its spending allocations. The announcement also indicated the possibility of sweeping administrative change, including the creation of new ministries that sit within the Treasury. The UK financial industry paid a record £75.5 billion in tax receipts during 2019, equivalent to one pound in every 10 given to the Treasury. Publishing its report of tax returns to the end of March last year, the City of London Corporation representative body said the contributions underlined the primacy of the sector in looming Brexit trade negotiations and called for continued frictionless access to the EU bloc. Sony has become the latest technology firm to unveil a design for a fully-automated passenger vehicle. Speaking ahead of the CES technology expo in Las Vegas later this week, Sony CEO Kenichiro Yoshida also predicted that mobility will become this decade’s “mega-trend”. The car, called Vision-S, uses 33 artificial intelligence monitors to detect and recognise people as part of a personalised journey experience.

Columns of note

In The Times, Hugo Rifkind writes in praise of Jess Philips’ honesty in her candidacy for the Labour leadership. He points out that “speaking your mind” has been successfully used by the likes of Nigel Farage, but has yet to find an outlet among liberal politicians. Rifkind concludes that honesty might make for great headlines, but is unlikely to be a popular style of leading. (£) In the Financial Times Lombard column, Matthew Vincent calls for a rethink in the received wisdom that guides executive pay. He points to recent research from Belgium’s Vlerick Business School which shows that better performing firms do not necessarily pay their CEOs more; and rather, that it is profit performance, not share prices, that determine long-term investment returns and job creation. (£)

Source: The Telegraph


What happened yesterday?

The London market was hit by mounting geopolitical tensions yesterday, leading the top-flight FTSE 100 down 0.62% to close at 7,575.34 points. The pound, meanwhile, was up 0.71% on the dollar at $1.32 and by 0.38% on the euro at $1.18. Gold prices also hit their highest level since early 2013, rising to close at $1,591 as investors sought a safe haven in commodities. The price of a barrel of brent crude was also 0.45% higher at $68.91. Benefitting from the rise in commodity prices were oil giants BP (+2.03%) and Royal Dutch Shell (+0.46%), while miner Polymetal International (+0.95%) benefitted from the higher price of gold. Supermarket Morrisons (-3.34%) fell ahead of its Christmas trading update later today after sector peer Aldi reported a slowdown in sales growth over the holiday period.

What's happening today?


C4x Discry Hdgs Safestore

Trading Announcements

Morrison (WM)

Int. Economic Announcements (10:00) Retail Sales (EU) (13:30) Balance of Trade (US) (15:00) Factory Orders (US) (15:00) ISM Non-Manufacturing (US)

Source: Financial Times

Did you know?

Donald Trump’s father’s full name is Frederick Christ Trump (the middle name derives from his German-born mother’s maiden name).

Parliamentary highlights

TODAY House of Commons Oral questions HM Treasury (including Topical Questions) Legislation European Union (Withdrawal Agreement) Bill: Committee of the Whole House Adjournment Role of UK special forces in Iraq and Afghanistan - Stewart Malcolm McDonald House of Lords Oral questions Supporting the repair of Hammersmith Bridge - Lord Dubs Protecting opportunities to work in Europe for British citizens resident in the UK and abroad - The Earl of Clancarty Conservative party manifesto commitment to deliver 50,000 more nurses in the NHS - Lord Hunt of Kings Heath Reported rise in hospital admissions for eating disorders - Baroness Parminter Debate on the Address Foreign affairs, defence, international development, trade, climate change and the environment Debate Report pursuant to section 3(5) of the Northern Ireland (Executive Formation etc) Act 2019 - Lord Duncan of Springbank Scottish Parliament Topical Questions (if selected)

Local Government and Communities Committee Debate Empty Homes in Scotland Committee Announcements Inquiry into Construction and Procurement of Ferry Vessels in Scotland Members’ Business Celebrating the Work of the Levern Valley Defibrillator Community Partnership – Tom Arthurs TOMORROW House of Commons Oral questions Scotland Prime Minister's Question Time Legislation European Union (Withdrawal Agreement) Bill: continuation of proceedings Motions Section 2 of the European Union (Withdrawal) (No. 2) Act 2019 and Section 13 of the European Union (Withdrawal) Act 2018 Section 3(2) of the Northern Ireland (Executive Formation etc) Act 2019 Adjournment SPAC Nation and the alleged exploitation of young people - Mr Steve Reed House of Lords Oral questions Planning for the future of upland farms and tenant farmers - Baroness McIntosh of Pickering When the integrated security, defence and foreign policy review will report on the UK’s place in the world - Lord McConnell of Glenscorrodale A broader definition of research and development in the creative industries - Baroness Bull Debate on the Address Home affairs, justice, constitutional affairs and devolved affairs Debate Motions pursuant to section 2(2)(b) of the European Union (Withdrawal) (No.2) Act 2019 and section 13(6)(b) of the European Union (Withdrawal) Act 2018 - Lord Callanan Scottish Parliament Members’ Business Research Projections into Place of Death in 2040 – Miles Briggs Women, Peace and Security – Emma Harper Scottish Government Debate Improving the Lives of Gypsy/Travellers