The Month That Was……November 2018

If October disturbed me (greatly), then November made me laugh……a lot. Not in a good way though. Definitely not in a good way. MP’s have turned our political system in to something that resembles a pack of hungry drunk dogs scrambling around on ice trying to get a bone dressed in poorly fitting pinstriped suits.

 

And that ladies and gentlemen is Brexit.

 

There really is very little else aside from Brexit that is having such an impact on our economy, investment markets, private sector business performance, employment, consumer confidence, etc., etc., so on and so on. Hence the reason so much of our media / news platforms are obsessed with it.

 

So, just where are we up to……

 

Brexit (Part 1)

Theresa May and advisers created 500 + pages of legal jargon to form the proposed Brexit agreement terms with the EU. She then took this draft to her own cabinet, who were severely divided on the proposal and there were significant resignations on the back of it.

 

Firstly, Esther McVey resigned as work and pensions secretary. “It will be no good trying to pretend that this deal honors the result of the referendum when it is obvious to everyone it doesn’t.”

 

Secondly, Dominic Raab resigned as Brexit Secretary (after 6 minutes in the role). "I cannot in good conscience support the terms proposed for our deal with the EU. I cannot reconcile the terms of the proposed deal with the promises we made to the country".

 

In case you missed it, let's get this right……Dominic Raab who was responsible for negotiating the draft agreement with the EU has resigned because he can't support an agreement he helped negotiate. Brilliant.

 

You really couldn't make it up could you? What a complete and utter shambles and waste of time! This Brexit show just keeps getting better and better. The entertainment is absorbing. I’m convinced there’ll be a movie made about this……Dame Judy as the PM is a given.  

 

Such has been the high volume of appointment / resignation turnover, it’s got to the stage now that I don’t know who is in the cabinet any more until they resign. Are the best people in the right position at the top end of politics……far from it.

 

The best summary of the situation I read on the proposed EU agreement was this……

 

I am trying to sell a car to Theresa May priced at £6,000 but she said the deal was rubbish. After 20 months of negotiation I now accept £7,000 for the car, retain ownership of it and agree that she can’t drive it without my permission……and it was only months ago she said she’d rather walk than buy a car from me!

 

Funny……if it wasn’t so close to home.

Brexit (Part 2)

Bizarrely, this was the easy bit. Theresa May took the draft agreement to Brussels and the EU leaders approved the proposal on the UK's withdrawal and future relations.

 

Easy? After 20 months of negotiations, the 27 leaders of 27 countries gave the deal their blessing after less than an hour's discussion. That’s just 60 minutes. X-Factor lasts longer……and they simply debate who needs to leave a show that we will have forgotten about by Easter.

 

Which suggests that the UK has given in to the majority of EU demands or they are just not taking it seriously. My money is on the former.

Brexit (Part 3)

The EU were overjoyed with the draft proposal as it paved the way for an “orderly withdrawal”……assuming it gets through UK Parliament (the ‘meaningful vote’). And that is where the problem is and what will dominate your news media platform of choice for December.

 

Trying to get MPs to agree on this is difficult……when so few want to be guilty by association. It’s a huge conflict of interest for MPs who need to decide what is right for Brexit against that of their own political career.

 

Prediction?

 

Expect Theresa May to go on a tour to every far flung corner of the UK to explain to all that this is absolutely the best that can be negotiated and far better than no deal. She will be hoping that constituencies then put pressure on MP’s to agree to the deal.

 

She will fail……there seems a very evident realisation that MPs will reject the deal when given their meaningful vote on it.

 

But MPs would then stare into the abyss, recognise that a no-deal Brexit would be a disaster, another referendum too risky and would then approve the deal (perhaps slightly modified) when brought back to them a second time.

 

This is the ‘TARP model’.

 

For those that have a life and are not obsessed with this……TARP was the US scheme to bail out bust banks after the crash in 2008. It was initially rejected by Congress, which caused the stock market to collapse. At that point senators and members of the House of Representatives panicked and voted through a modified version of the scheme.

 

What Theresa May, her supporters and chief whip are banking on (see what I did there – you’re welcome) is that as and when MPs reject her Brexit plan, the stock market and sterling (in particular) will tank. This will then scare MPs and they would then be persuaded to recant and back May's deal. It is all very plausible. It is also very dangerous.

 

Brexit was supposed to be all about taking back control……forever. It would be profoundly unhealthy for confidence in our democracy if what many see as a degraded Brexit was adopted merely because our MPs panicked in the face of a market rout.

 

We shall see.

Elsewhere # 1 - Rank Bank

The long-awaited report by Britain’s Information Commissioner’s Office, which has been investigating the misuse of personal data by political campaigns, said an insurance company owned by Arron Banks, broke British law when it used customer data to aid the Brexit effort.

 

Banks, sometimes described as the ‘godfather of Brexit,’ was the main backer of Britain’s campaign to leave the European Union,

 

According to the commissioner’s office, his company, Eldon Insurance, shared private email addresses to be sent campaign messages on behalf of Leave.EU (a pro-Brexit group), months before the 2016 referendum on Britain’s membership in the European Union.

 

The finding also adds to legal and political scrutiny of Mr. Banks, who was the single largest donor to the Brexit campaign. His dealings with the Russian ambassador ahead of the referendum have separately raised questions about whether the Kremlin sought to reward important backers of Britain’s exit from the European Union and prompted UK election officials last week to ask for a police investigation.

 

‘Ask’ for a police investigation? His actions are illegal on every level……yet we are going to ‘ask’ for a police investigation. I naively assumed that it would have been mandatory!

 

And now for the farcical bit……Banks’s insurance company and the Leave.EU campaign are facing total fines of £135,000. Oh, that will teach them.

 

Elsewhere # 2 - Trump Flump

The mid-term elections are a pretty big deal in the US. It is in effect a vote of confidence (or not) on the first two years of The Trump’s rule……and the results were not good for him.

 

Whilst Donald Trump’s Republican Party retained the Senate, the Democratic opposition won a majority in the House of Representatives. This is not a big deal……it is a HUGE deal.

 

Firstly, The Trump will struggle to get anything passed in the House of Representatives now that the opposition will hold the power. Secondly (and most importantly), the House of Representatives now holds the power to launch investigations into The Trump’s ‘behaviour’ which could ultimately lead to impeachment.

 

Given the scandals involving Russia, tax avoidance, extra marital affairs, et al, there is plenty to concern The Trump. An abundance in fact. 

 

The past two years of The Trump’s presidency have been fascinating……the loss of the House of Representatives will make the next two years truly compelling.

November’s Biggest Loser……Option 1 – Arron Banks

No publicity is bad publicity……so the saying goes. The £135,000 seems a snip to get the Leave Campaign even more column inches.

 

Why does democracy bring out the worst in so many?

November’s Biggest Loser……Option 2 – Donald Trump (again).  

Having lost the power in the House of Representatives to the Democratic Party, The Trump’s tweet on the night of the results……“Tremendous success tonight”. Baffling. Very baffling.

November’s Biggest Loser……Option 3 – Ivanka Trump (new entry)

In 2016, Donald Trump accused Hillary Clinton of putting the US "in danger" over her use of a private email account while she was Secretary of State. He said it was “bigger than Watergate" and he used it as part of a huge campaign to discredit her during the Presidential election run in. And it worked.

 

Fast forward to 2018 and The Trump’s daughter, Ivanka Trump, has used a personal email account to send hundreds of messages discussing official White House business in her role as senior adviser to the President. 

 

One can only assume that The Trump sees this as just as big an issue as 2016. We shall see. Breath not being held. 

And Finally……

Just when you thought our Government had exhausted all the ways to embarrass and demean Britain......they find another one. They're bringing out a Brexit 50p coin. Brilliant. It will be due out in one year's time……correction two year's time……nope 5 five year's time... Hang on, my mistake it's a Euro.

Regardless, it will take a lot of Brexit 50p coins to pay the Brexit bills.

The Month That Was……October 2018

October disturbed me, greatly. It will leave a mark on my soul forever. My eyes can never undo what they have seen. I was physically sick. Our children will forever ask why we ever let it happen. We have failed as a kingdom (apparently) united. The month of October 2018 will forever be painfully remembered for……Theresa May dancing on to stage at the Conservative Party Conference to Abba’s Dancing Queen.

 

She broke social media and ‘Maybot’ was born……unfortunately.

 

I have two questions that whirl around in my head constantly and I just can’t shake them off……

 

Firstly, having failed twice at traditional local ‘dancing’ in South Africa in the summer when she simply looked like a very uncomfortable constipated robot, exactly why did her many advisers think that it was a good idea that she should dance on to stage with as much movement as a plank of wood needing a suppository. You just know this is all about lining up Strictly in 5 years. The joy.

 

Secondly (and most importantly), Dancing Queen was my ‘go to’ song at family weddings when I had (finally) plucked up the courage to dance awkwardly with my very agile and rhythmically savvy wife. Nobody puts Stevie in the corner. Thanks to Maybot, I can never hear that song ever again let alone get my groove on. Completely ruined. Exactly what am I supposed to do now? Very frustrating.    

 

Elsewhere in October 2018……

Conservative Partaaaaaay Conference

Theresa May has never spoken well in public, but her address at the Conservative Party Conference was a good speech……perhaps the most significant of her lifetime in Tory politics.

 

It was an address that achieved three things.

 

- It confirmed that she is sticking to her Chequers Brexit strategy - not that she even once uttered the controversial "C" word.

 

- It planted the Tories at the centre of politics, with a pledge to end austerity and loosen the borrowing cap if you back her Brexit plans. Who isn’t going to buy in to better public services? Clever, very clever.

 

- She in effect told her party they will have to send in the bailiffs if they want her out of 10 Downing Street any time soon. Her ‘not very subliminal’ message was that she is enduring the huge personal stress and grief of delivering Brexit and if she pulls that off, she believes she will have earned the right to shape the post-Brexit future of the UK.

 

Deal or No Deal

Whilst May's speech at the Party Conference mattered, she has the hand of Brexit history on her shoulders and it will define her place in history. No biggie then!!!!

 

I could devote the remainder of this blog to what May has, has not, could have, got close to but didn’t….negotiate with the EU. But by the time you have read it, all will have changed again.

 

What appears concrete (at the time of writing) is that the mooted extra months in ‘transition’ isn’t really an extension. It is an ‘option’ of an extension and the right to have an extension. Still with me? Dare I suggest……‘Brextension’. I know, I’ll get my coat.

 

And YES before you say it, I too am losing the will to live as these Brexit talks descend from giant geopolitics to nightmarish illogical puzzles.

 

What it is likely to mean is (a) we will spend longer in transition than the current period agreed and (b) we will pay billions more to be in the EU for the longer transition period. Or to put that another way, we have to pay billions and get nothing back in return.  

 

These are dangerous times for the PM and could result in her opponents triggering the fateful no-confidence vote to oust May. But here’s the thing……nobody else wants the job because they know it will be a career killer.  

 

What a mess.

 

 

Budget 2018

As history has shown us, Chancellors and Prime Ministers are always bound together……Theresa May and Philip Hammond are no exceptions.

 

Neither of them are flashy politicians. In fact, they are like a well-to-do middle-aged couple. Phil is at the leather wheel of a Jag and they are gently bickering over the directions, whilst Theresa holds a tin of travel sweets. The car journey is more likely to descend into frosty silences and raised eyebrows, rather than having a blazing shouting match. They are grimly determined that they will arrive at their destination by persevering, never indulging in too much drama.

 

Not ‘too much drama’ was a perfect summary of the 2018 Budget. It contained all of the usual and little surprise (or enterprise). There were winners and losers……there always are. There was use of key phrases in the speech designed to force newspaper headlines. Let’s not forget the all important increase in spending to crucial public services. Then there are the usual tax giveaways which are aimed to win lower / basic rate taxpayer support but the biggest winners are always higher rate taxpayers. 

 

Whilst the speech was hoping to manipulate headlines, it will not have gone unnoticed that Frugal Phil said “austerity is coming to an end”. This compares with Manic May’s declaration at the Tory Party Conference that “austerity is over”. So which is it? Now that’s the headline grabber.

 

All in all, the only real surprise was that there wasn’t another ISA launched to confuse the already confused masses! Not too much drama……but given the current situation with the EU, how could there be?

 

Philip Hammond gave his last Budget before the UK leaves the EU (apparently). Time will tell whether it is his last Budget anyway.

 

 

October’s Biggest Loser……Option 1 – Theresa May Dancing

Maybot. Enough said. My eyes are still bleeding.

 

 

October’s Biggest Loser……Option 2 – Donald Trump   

Aside from Brexit, ‘Trade Wars’ has been a fixture in the news over the past 6 months as the two largest economies battle it out. US v China has had many around the world fidgety.

 

Trump declares war on China (economically speaking) by slapping huge tariffs on exported goods into the US from China. He has done this to the tune of $300 billion of China’s exports that have been imported (about 11% of China’s exports have been hit) and he has declared this a “massive success” for the US economy.

 

FAKE NEWS!

 

What Trump has failed to tell those that don’t understand the maths (including himself) is that at the same time as imposing the tariffs on China, China have purposely devalued their currency against the dollar.

 

The increase in the US tariffs means that China’s exports are 2.3% more expensive. However, China devaluing their currency means that the goods are now 10% cheaper. As a consequence of Trumps tariffs to discourage China’s exports, they are now 10% more attractive.

 

Basic maths surely. You couldn’t make it up……and Trump calls this a great success for the American people!

 

October’s Biggest Loser……Option 3 – Philip Hammond   

This was the most pointless Budget in living history. By his own admission, Philip Hammond stated that there would need to be another Budget if there was ‘no deal’ with the EU or if the terms of Brexit were not overly favourable.

 

The purpose of the Budget is to set out how the UK will balance the books over the next 5 years and detail how this will be achieved. Clearly, the biggest financial threat to the UK is Brexit and we can’t understand the implications until a deal is known.

 

Yet the implications of the Budget are far reaching as they impact so many people. Purely from a business perspective, changes to tax creates vast work and associated costs. Then there are the Government agencies that are impacted in delivering support services to the masses.

 

Holding a Budget that is in essence ‘temporary’ and may well need to be repeated when Brexit is clearer is simply delusional on so many levels and lacks common sense if not empathy. Holding a wet finger in the air would be an equally successful Budget strategy.

 

And Finally……

Donald Trump’s visit to the UK in July cost ‘us’ £18 million according to the National Police Chiefs’ Council, with over 10,000 officers used from around the country.

 

If was effectively a weekend away playing golf in Scotland (on a course / hotel that he owns), whilst popping in for a chat with Maybot and afternoon tea with the Queen at Windsor Castle. That’s it. Nothing else. That’s what £18 million buys you.

 

Unbelievably true.

The Month That Was……September 2018

Aside from the compulsory pictures of anyone under the age of 14 returning to school in their highly polished shoes being plastered all over social media (I must confess to a selfie or two with a semi-embarrassed 4 year old offspring!), the subject of Brexit was kind of a big deal in September. 

 

Regardless of whether you are bored with it, agree with it, understand it, voted for or against it……Brexit has dominated the news pretty much every day during September. Always up for a challenge, The Trump has done his best to muscle in on the news action also.

 

So how will September 2018 be remembered?

Jobs, Growth & Income  

Economic growth hit 0.6% for the last quarter, the best gain since July last year and incomes are up 2.9% (a figure that has not been bettered since July 2015).

 

With inflation for the month at 2.4%, real wage growth rose to 0.5% above inflation. High levels of employment could finally be passing through to our incomes as firms compete for our work.

 

It will take a long time to repair the damage to incomes over the decade since the financial crisis. But with economic growth stronger and the possibility of some form of Brexit deal rising, this is certainly better news for the economy overall.

 

Higher wages can feed through to higher levels of consumer spending. And consumer spending drives around two-thirds of what happens in the economy.

 

Solid figures and a solid start. Now to sustain it!

 

Wrexit

Theresa May headed to Salzburg to meet with EU leaders to thrash out some middle ground that we could all agree on.

 

However, what she actually got was a huge cold shoulder and a hard line from those overseas. No negotiations, just a simple “no” (nein, nao, non, etc.) to our starter for ten.

 

The deadline for the proposed exit terms is the end of October, which is then to be implemented from 29 March 2019. Not looking too good is it!

 

Expect the amount of press and media coverage to increase dramatically during October as a consequence. Expect endless politicians to wheel out their expert opinion on what the Prime Minister is doing wrong, without actually offering anything concrete to assist.

 

Ah……UK politics at its best.

 

I couldn’t help but smile at the French Presidents summary of the situation. Macron said, “Brexit is the choice of the British people... pushed by those who predicted easy solutions... Those people are liars. They left the next day so they didn’t have to manage it.”

 

Summed up perfectly. C’est bon!

 

Trumping

A similar story was recorded in the US.

Annual wage growth hit a nine-year high in the US last month and the economy created more jobs than expected. When the largest economy in the world has more money in its pocket, consumer spending will ultimately be the outcome. Given that the US is the biggest consumer driven economy in the world (after the UK), all roads lead towards a prosperous few years.

And you can guess who is taking all the credit for it……‘Trump’eting his own tune!

 

Wronga

Wonga announced this month that it is officially in administration.  With pay-day loans back in the headlines this once again throws up a couple of recurring questions about the personal finance market. 

Why is it that people continue to take out loans at an APR of around 1,500%?

 

Why is it that personal finance is so poorly understood in the UK?

 

The first question is the easy one to answer……good packaging and marketing can sell a bad product, and Wonga has been one of many firms using glossy, brightly coloured adverts to…obscure some of the more pertinent facts.

 

The second question is tougher. Surely introducing personal finance into the school curriculum is now a must.  It is a stinging indictment of the UK system that most young people are still bereft of the basics in personal savings – regardless of their level of education.  Not everyone needs A levels or a university degree……but everyone in the UK at some point will need to know how interest works (whether for saving or borrowing).

 

If adding this to the curriculum is simply too revolutionary, the minimum we should expect is a warning about the power of compounding interest on debt being mandatory on television adverts.

 

It’s a travesty on so many levels.

 

 

September’s Biggest Loser……Option 1 – Boris Johnson (he is pretty much an ever present)

Boris Johnson was a key player in the ‘out’ campaign yet he has been the most ineffectual player since. He is simply causing chaos in the Conservatives and he keeps ‘throwing rocks’ at Theresa May’s Chequers plan.

 

And the more rocks he throws, the more publicity he gets to ignite the flames to continue being obstructive. Describing the Prime Minister’s Brexit plans as a “suicide vest” sums up his position perfectly.

 

But here is the thing……he has not come up with a credible alternative. His whole agenda is to get Theresa May to change her plans by throwing rocks rather than offering a decent alternative that might make her change her mind. Just a thought.

 

September’s Biggest Loser……Option 2 – Christine Lagarde (new entry)  

The International Monetary Fund’s managing director, Christine Lagarde, has warned that a “no-deal Brexit in World Trade Organisation terms would entail substantial costs for the UK economy”.

 

Wow……18 months into negotiations and stating the bleeding obvious is all she can offer? As someone with such a prominent position that is independent of the EU, Christine Lagarde has the power to smooth the battleground out and speed up Brexit negotiations.

 

Alternatively, she could just throw a few rocks, albeit smaller than Boris’s.

 

Mindboggling.

 

September’s Biggest Loser……Option 3 – Barclays (again)

Having been hit with billions in compensation because it couldn’t trust itself, staff and working practices to sell PPI appropriately, Barclays has apologised for giving wrong information to tens of thousands of customers who started compensation claims but were told by the bank that they did not hold PPI policies……yet they did.

 

Is it just me or is the process of asking banks to judge if compensation is merited a bit like asking an arsonist to put out a fire?

 

I am sure there is some logic to it……I just can’t find it!

 

And Finally……

Never one to miss a self-promotion opportunity (even in the face of death and devastation)…… during his address to the nation on the hurricane that hit the US, President Trump said "the hurricane is one of the wettest we've ever seen from the standpoint of water".

 

He really is the gift that keeps on giving. I know he has set the bar pretty high but that statement is one of the dumbest I’ve ever heard, from the standpoint of words.