I wandered lonely as a cloud ... just don't call me nebulous ...
Theresa May was back in Brussels this week, a modification to the Northern Ireland back stop sought. A sort of boundary to the back stop within an oval of consensus, outlined by a legal framework to be confirmed within a timescale as yet to be determined.
Agreement was close but in the end denied. Jean-Claude Juncker was hand-bagged by the Prime Minister at breakfast. You called me "nebulous and imprecise" an outraged Prime Minister accused. I want to make this clear I am not nebulous (nor imprecise for that matter).
A sheepish Juncker denied all. "I did not, I did not", the President of the European Commission cowered. "It was late at night and I had a few scoops", would have been an honest response. "Nébuleuse and Imprécis" the actual wording. Donald Tusk and others had seized the microphone before too much damage could be done. All too late, for want of a few, the deal was lost. The Prime Minister returned to London empty handed, full of hope, in a state of denial.
The key vote promised last Tuesday, had been pulled at the last moment. Jacob Rees-Mogg and his turncoats of many colors were frustrated. In a fit of pique without strategy, the misnomered European Research Group submitted the 48 letters required to call the no-confidence vote. The renegades expected a drawn out debacle over days on main media.
Instead, it was all over in 24 hours. Two suspended MPs were returned to the whip. Sext messages to barmaids overlooked in a time of crisis. The PM secured 200 votes to beat off the challenge to leadership.117 votes against, a clear democratic signal the Prime Minister should resign claimed the Mogg. A clear message to go on, claimed the Prime Minister, agreeing to step down as party leader before the next election as a sop to dissident remainers,
So what happens next? Christmas first, then a possible vote on the May deal in the New Year. Just one vote, that's all it takes as we explained last week. No deal an option, an extension of the March deadline probable. A second referendum now in the running. Multiple choice for the electorate or simple in or out deal the first question. Or a general election ... there's always the chance of a general election.
Business is in despair for lack of clarification as to what happens next. Labour remains silent watching with glee as the Tories tear themselves apart over Europe again.
So what happens next, I have no idea. I want to make it clear I am not "nebulous" just totally confused about how we got into this mess ...
Christmas Fears for Retail ...
It is the season of good will and warnings of dire Christmas sales in the days ahead. Mike Ashley issued a warning to retail, Christmas shopping has been so bad it will literally dash them to pieces. November trading was the worst on record. Retailers cannot take that kind of November. Don't panic.
John Lewis had warned of sluggish sales, Superdry issued a second profit warning in two months. Primark cautioned of sluggish trading conditions as fewer shoppers visited stores.
Mike Ashley was so concerned about Debenhams, he offered a £40 million loan to see them through the winter crisis. Conditions attached to philanthropy, the loan would see the Sports Direct share stake increased to 40% and a potential merger with House of Fraser one step closer.
Consumers are worried about Brexit the apparent story but is this really the case? With two week-ends of full trading before the 25th of December, there is still plenty of time to ring the tills ahead of New Year trials. This year Christmas is late! Lot's of time for sales and traffic to perk up before the end of year.
Earnings on the rise ... ?
The latest jobs data confirms employment remains high, unemployment is low and earnings are rising. Whole economy earnings were up by 3.3% in the three months to October. The 3% hurdle rate long anticipated, jobs compression is finally delivering the rise in pay we all expected. Private sector pay was up 3.4%. Public sector pay increased by 2.7%, (up from 1.7% in the same period last year). Construction pay was up by 3.5%, leisure sector pay was up by 3.6%.
Vacancies increased to 850,000 with just 1.4 million unemployed. Recruitment difficulties most apparent in hotels, restauraunts, health and social work, the very sectors under challenge from government immigration policy.
Real earnings are increasing as pay accelerates. In the month of October, whole economy earnings were up by 3.9%. Private sector pay was up by 4.2%. Pay should offset any Brexit concerns in the short term. The paradox will be presented to the Bank of England.
The economy is expected to grow by just 1.4% this year. Inflation remains subdued. Earnings increasing towards the 3.5% threshold would normally force the MPC to act. Uncertainty over Brexit will forestall any increase in the short term, all eyes on what happens next when parliament returns in the New Year ...
"Roll Up ... Pay Up ..."
"Don't ring John Kelly" our headline last week. This week, President Trump confirmed Kelly is out. Budget director Mick Mulvaney will become acting White House Chief of Staff. Acting Chief of Staff, the President wants to remain some form of flexibility, according to White House Press Secretary Sarah Saunders.
The President's first choice and several others had turned down the role. It all made for a difficult week for the White House. Michael Cohen former counsel to the Donald Trump was jailed for three years. "My weakness was a blind loyalty to Trump and a sense of duty to cover up his dirty deeds."
According to Mr Cohen's lawyer, his client had the "misfortune" of being the president's personal lawyer, business partner and all-around fixer for more than a decade. When investigators began digging into his actions, they uncovered a variety of chargeable crimes.
The President appears to be complicit in the crimes. Present in the room when payments were agreed to Stormy Daniels and others. Now concerns are expressed about the President's inauguration fund. President Donald Trump's inaugural committee is under criminal investigation by federal prosecutors in Manhattan for misspending some of the $107 million it raised from donations. Much of the funds were paid over to Trump businesses allegedly.
The investigation, which is reportedly in its early stages, is also looking into whether some of the committee's top donors gave money to gain access to the incoming Trump administration. This would be a violation of anti-corruption laws. It will also make for a great story into 2019!
That's all for this week, have a great week-end. Don't Miss Our Monday Morning Markets ... we expand further on market moves ... and assess the fortunes of our "Empires of the Cloud" tech fund ...
The Saturday Economist
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