 How do you like your PMs cured ...
Not long to wait ... the next Prime Minister of Great Britain will be in office on Wednesday. Boris Johnson is odds on favorite to win the Tory vote. This man will accept the poisoned chalice, to get Britain out of the EU. Such are the twists and fortunes of the Brexit challenge, Boris could be out of office by the end of October, if things go badly. The task is urgent. Another horrific tale of Brussels bureaucracy was revealed this week. Vacuum packed kippers sent through the post, must be accompanied by a plastic ice pillow, Boris revealed. Producers in the Isle of Man, are furious at the extra costs involved, a result of another useless layer of EU red tape. Leaving the EU would allow the UK to end this "damaging regulatory overkill". Putting kippers back onto a fair cost, eco-friendly platform, a key item in the Johnson agenda. "Pointless,expensive, environmentally damaging health and safety. When we come out we will be able to end this damaging regulatory overkill and do things to boost Britain's economy. We will be able to establish an identity as a truly global Britain and get our mojo back." Johnson explained. Are yes our mojo, that "Magic charm, our talisman, the object, an inscribed ring or stone, thought to have magic powers and to bring good luck." Boris as Prime Minister, will be on a quest for the holy grail of challenges, the search for the missing British mojo. A challenge akin to extracting the "Tory sword of Damocles from King Arthur's stone" begins with taking the plastic pillow from beneath the head of a smoked herring. It shouldn't be too difficult. The Isle of Man is not part of the EU and "the case described by Mr Johnson falls outside the scope of EU legislation, it is purely a national competence" explained Anca Paduraru, a European Commission food safety spokesperson. A yes national competence ... never in doubt ... we can send the pillow packing, packing in or out of the EU ... Retail Sales Rally in June ... More good news on the economy this week. Retail sales bounced back in July. Sales volumes increased by 4% in volume and value in the month. The number of people unemployed fell again in the latest data to just under 1.3 million, the unemployment rate held at 3.8%. Earnings are on the rise. Growth in average weekly earnings increased to 3.4% for total pay (including bonuses) and 3.6% for regular pay (excluding bonuses). In real terms (after adjusting for inflation), total pay is estimated to have increased by 1.4% compared with a year earlier. Regular pay is estimated to have increased by 1.7%. The growth in real earnings is expected to be maintained. The latest inflation data CPI based suggested the headline rate of 2% in May was maintained in June. Underlying inflationary pressures are weak. Manufacturing prices (output based) were up by just 1.6% in the month, input costs were negative, assisted by the weakness in oil prices. The blot on the landscape for the UK economy appeared late in the week. The borrowing figures for June revealed an increase in borrowing of £7.2 billion compared to £3.4 billion prior year. For the three months of the new fiscal year, borrowing was up by £4.5 billion to just under £18 billion. An increase in government spending largely to blame, the prospects for the year will not be enhanced by the announcement of public sector pay increases ahead of inflation. The government target of £30 billion borrowing in the current financial year is now at risk. Phillip Hammond has already warned there is little or no money to fund the Johnson tax promises. This week the OBR warned a no deal Brexit would lead to recession and an increase in borrowing of over £30 billion by 20/21. The search for the lost Mojo, may well be hampered by lack of funds. The new administration faces daunting challenges to achieve a Brexit exit by the 31st of October. It is an impossible task. A snap election no way to gamble the Number Ten dream. For the moment the prime task is to become prime minister. Once overnight in Downing Street, time then to reveal the strategy of "one bed, many dreams" ... Market Watch ... Sterling on the rack this week, the Pound closed below $1.25 against the dollar having tested $1.24 in the process. The prospect of a no deal Brexit spooked markets, the threat of a snap election will not help. In the U.S. the Fed is expected to cut rates by 25 basis points next week despite strong jobs growth and consumer spending data. Markets were confused by the speech from New York Fed President John Williams suggesting the Fed raised rates ahead of the curve. Williams suggested "more aggressive and preemptive action is warranted when the economy is weakening". Markets began to price in a higher rate cut. The New York Federal Reserve issued a rare clarification. The speech was not intended as a market signal, more an outline of twenty years academic research. Markets closed lower. "We have not seen anything like this before and we are not sure what they are thinking" said Neil Dutta, head of economics at Renaissance Macro research. It was left to the President to explain the process. "Because of the faulty thought process at the Federal Reserve, we pay much higher rates, our interest costs are much higher than other countries, when they should be lower. We must stop with the crazy quantitative easing. We are winning big, it is no thanks to the Federal Reserve" Jerome Powell, lock him up, or send him back ... drain that swamp, take back control, Taylor rules OK ... That's all for this week, have a great weekend. We will be back with more news and updates next week!
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 Sleep is the answer ...
The government is set to offer official guidance on how many hours citizens of the U.K. should sleep every night. The suggested guide lines will vary according to age and the degree to which voters have confidence in the incoming Johnson administration. In the event of a no deal Brexit, the guidelines will not apply to Brits living abroad or Remain voters. Matt Hancock, the health secretary is thought to be working with the Alexa app, to ensure the strict guidelines are followed in bedrooms around the country. Macbeth described sleep as the "chief nourisher in life's feast" according to the Times today. Famously, Margaret Thatcher survived on just four hours sleep.Trump digests just three hours sleep and a packet of Provigil allegedly. Steve Brine, a former public health minister, explained, working in government, "we are all familiar with the notion of being tired and grouchy", lack of sleep just one of many reasons. Matt Hancock is the man for the challenge. A man of conviction, Hancock was the first to jump his own ship and join the Boris bandwagon. Hancock's planned introduction of a sugar tax on sodas and milk shakes, hit a sour note this week. Boris Johnson, declared he was opposed to the extension of any action to extend the levy. The contradiction in policy may generate sleepless nights in cabinet for the health secretary. A man of conviction, Boris Johnson reaffirmed his commitment to leave the EU on the 31st October. Prerorgation of Parliament, sequestration of the Queen, a front with Farage, all steps will be taken to ensure Johnson secures election in the current Tory voting round. Jeremy Hunt on the other hand, thinks Brexit will all be over by Christmas. Boris, the historian is well aware, difficulties in Europe tend to take much longer ... Back to work in May ... Good news on the economy this week. The car industry went back to work in May. The Brexit shutdown, over for the moment, business went back into action. Let's not get too excited. Manufacturing output in the month was flat compared to prior year. This marked a recovery from the one percent drop prior month. In the second quarter of the year, we expect a modest fall in manufacturing output compared to prior year. Construction output is likely to expand by 2.3% in the quarter compared to a 3% plus rise in Q1. Service sector growth is expected to rise by just under 2% in the current three months. The data suggests growth could be around 1.4% in the second quarter. A slow down perhaps but still consistent with growth for the year overall of 1.4%. The trade deficit continues to be a problem for the UK economy. The trade deficit in goods was around £12 billion in May. £36 billion is the likely deficit for the quarter. This would be a significant reduction from the £47 billion recorded in the first quarter of the year when stock building ahead of the March 31st deadline, accelerated the shortfall. For the year as a whole we expect a deficit of over £150 billion. Leaving the EU without a deal, will compound the problem. Boris and Brexit is becoming the major concern for voters and business. Survey data suggests investment and hiring decisions are being postponed ahead of the hurdle date in the Autumn. Trump and Tariffs, Boris and Brexit, the challenges loom large for business in the UK and around the world ... Trump will get his rate cut ... Jerome Powell, chair of the Federal reserve gave the clearest indication yet, base rates will be cut later this month. Trump will have his way in the development of monetary policy. In a statement before Congress this week, Powell explained ... “Since June, uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook." James Bullard, president of the St. Louis Fed, a dove, said, “Sitting here today I would argue for a 25 basis point cut at the next meeting,” Bullard wanted to see a cut in June but lost that fight. “I put 50 basis points worth of reductions by the end of the year. So that would mean this cut plus another one at some point later in the year.” Powell made clear the independence of the Fed from political interference is of paramount importance. Despite intense criticism from the President, the chair made it clear he had no intention of resigning. Markets reacted with a strong Wall Street rally. The S&P, Dow and NASDAQ pushed to new highs. The Fed remit to nurture markets continues. Powell explained, “Our baseline outlook is for economic growth to remain solid, labor markets to stay strong and inflation to move back up over time to the 2 per cent objective". The Fed is moving ahead of the curve. The twin deficits will emerge as the major problem for the U.S economy in the medium term. At that stage the need for rate hikes will become more urgent. No need to squander ammunition now. The Fed believes downside risks to the economy have “increased significantly”. Latest forecasts suggest growth in the USA will slow to 2.5% this year, from over 3% in the first quarter of the year. Trump and tariffs the major concern. The White House may blame the Fed for the slow down. The Oval Office alone is witness to the major culprit. That's all for this week, have a great weekend. We will be back with more news and updates next week! John  It's the Boris sausage machine for sure ...
Hang on to your apron strings ... Boris Johnson is set walk into Number Ten as the next Prime Minister of Great Britain. Johnson is set for a landslide victory according to the latest poll numbers. He is backed by 74% of Tory voters. Jeremy Hunt, is supported by just 26% according to a YouGov/Times poll. Significantly, 90% of believe Boris Johnson will force through a no-deal Brexit. Just 27% think My Hunt would push through the no deal resolution. "Boris and Brexit" is emerging as the second greatest threat to the world economy. We have "Trump and Tariffs" in top spot despite the sound bites and photo ops emerging from the President's visit to the East last week. The race to find a personality for Hunt just ran out of time, despite the substantial resources committed to the project. The candidate declared last week, he was "happy" for people to hunt foxes with horse and hound. The Hunt campaign position on cock fighting, bear baiting and bare knuckle fighting was not revealed. What is it about the Tories and fox hunting? You may recall Theresa May decided to include a review in the Tory manifesto in 2017. Hardly a vote winner, the Hunt campaign team appear to have forgotten completely the irrelevance of this anachronistic pastime, to the majority of voters. Boris Johnson is on a winning rampage. So proud to have a sausage named after him this week, the "Boris sausage" man has put his weight behind plans to erect an enormous sausage overlooking the AI(M). It could dwarf the angel of the North, it is said. It would be a firm, long lasting, commitment to the Northern Powerhouse at least. The New Prime Minister, promises to make Great Britain Great again, unify the country and deliver a no deal Brexit. In office on the 22nd of this month, the one hundred day honeymoon, would continue until the 30th of October. Just one day, then remaining to deliver the deal, well good luck with all that ... Not being taken for suckers ... Trump declared in Osaka last week, the US is not "being taken for suckers anymore", a great transition since he entered the Oval Office as president. Not being taken for suckers? The world is perplexed by the mixed messages from inside the Oval Office. This week, the President enjoyed his military parade. The 4th July celebrations, were high jacked by the White House. The Trump speech included a reference to the great success of the American soldier in the revolutionary wars of 1775 to 1783. A success most heroic augmented by the President's claim "Our army, manned the air, it rammed the ramparts, it took over the airports, it did everything it had to do." Yeah like taking over airports, flying planes, great planes and things ... history never a strong point for the 45th President of the United States. Trump and Tariffs, trade wars are weighing on the world economy. Mark Carney Governor of the Bank of England warned this week, trade tensions triggered by Donald Trump’s tariff policies could “shipwreck” the global economy. "They are having a chilling effect on growth." World leaders are confused. Kim Jong-un received an invitation to the White House last week. This week the North Korean leader warned the U.S. is hell bent on hostile acts. How else to explain the invitation to the White House coinciding with the call to the U.N to implement tougher sanctions on Pyongyang. China made the position clear this week, the U.S. must remove all the tariffs placed on Chinese goods as a condition for reaching a trade deal. “If the two sides are to reach a deal, all imposed tariffs must be removed,” Ministry of Commerce Spokesman Gao Feng said on Thursday. “China’s attitude is clear and consistent.” Korea, China in confusion, Trump turned on Vietnam. The President expressed displeasure when asked about unfair trading practices, calling Vietnam “almost the single worst abuser of everybody.” The U.S. Commerce Department imposed duties of more than 400% on steel imports from the South East Asian country in response. The Trump administration took a shot at Scotch whiskey in the latest trade spat with the E.U. A $4 billion catalogue of European goods is now threatened with tariffs on products including Scotch whisky and Edam cheese. The latest world trade data confirms volume growth has stalled in the first quarter of 2019 compared to a 3.4% growth last year. The slowdown became evident through the year as manufacturing growth slowed around the word. Trump and Tariffs, Boris and Brexit, the two biggest threats to world growth. Lessons from history, so true, self imposed injuries are always the worst ... E.U. open for business ... Job growth in the U.S. this week confirmed the economy will continue to enjoy the ten year plus period of economic expansion. The trade deficit increased in May, despite the imposition of tariffs. The President continued his assault on the Federal Reserve."If we had a Fed that would lower interest rates, we would be like a rocket ship". A rocket ship overheating and heading for a crash. The President's grasp of macro economics is as well grounded as his grasp of aeronautical history. The European Union on the other hand has decided to just "get on with it". While the Trump administration walks away from trade deals and throws up ever more barriers to free trade, the rest of the world is racing headlong to deepen globalization, according to Foreign Policy magazine. U.S. consumers are paying higher prices at home, and U.S. producers are facing greater obstacles for their exports. “We reinforce multilateral agreements whilst others rip them up,” EU Trade Commissioner Cecilia Malmstrom said on Twitter Wednesday. After 20 years, the EU and four Latin American countries making up the Mercosur customs union finally completed a sweeping trade deal covering almost $100 billion worth of bilateral trade a year. Days later, as the Trump administration sanctioned Vietnam, the EU and Vietnam announced a new free trade deal. The Mercosur countries of Argentina, Brazil, Bolivia and Paraguay, together with the EU, are set to become the world's biggest trade bloc by the end of the year, dwarfing the free trade area between, the E.U and Japan. China will look to Europe as a great trading partner. The world is not dependent on the U.S. The period of adjustment may be a little painful in the short term. The E.U. has an ambitious free trade agenda. The U.K would benefit from a Brexit deal which includes membership of the single market and the customs union ... no need then for the Northern Ireland back stop ... The UK needs more than a free trade deal with the Faroe Islands ... That's all for this week, have a great weekend. We will be back with more news and updates next week! John  China and US make progress ...
Great new from Osaka this week, the trade talks between China and the USA are back on track. "Good Trump" was on display in Osaka. The President, following "excellent talks" with President Xi, promised no further tariffs for the moment, eased the pressure on Huawei and agreed to meet Kim Jong-un in the Korean DMZ on the way home. Earlier in the week it hadn't looked so good. Days ahead of the crucial G20 meeting, China’s state media ramped up the rhetoric. US Secretary of State Mike Pompeo was described as the “source of all chaos” in international affairs by the Global Times. “It is extremely rare for a world power to have such a crazy person as their top diplomat" claimed the tabloid, "Pompeo has become a person who threatens world peace and adds fuel to flash points between countries with conflicts.” Pompeo may well be flattered, talking an obvious hit for the President. He may also feel badly done to, the "bad boy" role is usually assigned to National Security Advisor John (the mustache) Bolton. North Korea had previously made clear the regime views on Bolton. “Crooked sound will always come out the mouth of a man who is structurally flawed. It is best this defective human product goes away as soon as possible.” It is not clear if Bolton will accompany President Trump to the Demilitarized Zone. Donald Trump has declared US trade negotiations with China to be “right back on track” after the highly anticipated meeting with Xi Jinping on the sidelines of the G20 summit in Osaka. Trump said the US would not impose further tariffs in a trade war that threaten the global economy. The world’s two biggest economies will restart negotiations on a trade deal. The tariff policy is facing increasing pressure at home. More than 300 companies were in discussions with government officials in Washington this month. The trade war between the U.S. and China has been detrimental to business. As Best Buy's merchandising director explained ... “American manufacturers may lose share almost immediately to foreign competitors whose products are not made in China and, therefore, not subject to price increases in the form of tariffs.” Apple, having warned of the potential threat to competitiveness last week, announced this week, the decision to move the Mac Pro assembly out of the U.S. and into China. It is a clear blow to the President's policy on trade and tariffs. The President is obliged to ease back on the aggressive trade stance. The new deal includes a promise to farmers they would win back lost markets as a result of the revived talks with China ... Vauxhall issues warning ... In the U.K, Boris Johnson may be committed to leaving the EU on the 31st October with or without a deal but Vauxhall issued a clear warning this week. French carmaker PSA Group has made it clear, it will only build the new Vauxhall Astra at Ellesmere Port, if the UK avoids a no-deal Brexit. PSA said, “The decision on the allocation to the Ellesmere Port plant will be conditional on the final terms of the UK’s exit from the European Union.” No deal means no new Astra. The new line will be headed for Poland instead. The Society of Motor Manufacturers and Traders also warned this week, a no deal Brexit could deliver a “knockout blow” for UK car manufacturing. Frictionless trade with the EU is essential to maintain markets and supply lines. Border delays could cost the industry up to £50,000 a minute if the country were to leave the European Union without an agreement. Projections released by the society suggest that British automotive producers and suppliers would face costs of up to £70 million a day. Disruptions at the border would fracture just-in-time manufacturing lines. The industry generates a turnover of £82 billion. It made about 1.3 million vehicles for export last year, the majority of which are destined for Europe. The outlook for the UK and world economy is threatened by Trump and Tariffs on the one hand and Boris and Brexit on the other. We cannot be sure if the President is really going to be capable of a long term detente on trade. Neither can we be sure, the next Prime Minister of the UK will be able to deliver an exit from the EU on the 31st October with or without a deal. For the moment, the prospects for progress, appear to be more promising from the President but then ... G20 looks on ... In a G20 declaration issued at the end of the two-day summit, the world leaders committed themselves to realizing “free, fair and non-discriminatory” trade and to “keep markets open”. The declaration avoided criticism of Trump style protectionism. On climate change, all G20 nations except the US reiterated their determination to implement the Paris agreement. A separate note stated Washington intended to withdraw from the agreement “because it disadvantages American workers and taxpayers”. Fears that disagreement over the climate crisis could sink the G20 declaration were overcome with a compromise that again left the US isolated in international efforts to reduce greenhouse gas emissions. The lack of progress on the climate emergency, despite it being flagged as a priority by the summit’s Japanese hosts, drew an angry reaction from campaigners. Kimiko Hirata, international director of the Kiko Network, said Japan’s prime minister, Shinzo Abe, had “raised expectations that he would use this G20 moment to take bold action for the planet. Instead, the Japanese Prime Minister falied to build a clear majority of support for climate action. “Prime Minister Abe and other G20 leaders need to get serious about their climate commitments and make sure they don’t show up empty-handed for the climate action summit in September.” The Kiko network is a non-governmental organization (NGO) supported by individuals, organizations and regional networks from all over Japan. The primary goal is the practical implementation of the Kyoto Protocol and the prevention of dangerous climate change. So some progress on trade in Osaka, little progress on climate change. The Japanese government seized the moment to re launch the whaling fleet. Japan has withdrawn from the International Whaling Commission which banned hunting. Japan will send out its first official whaling fleet next month, in local waters of course. That's all for this week, have a great weekend. We will be back with more news and updates next week! John  Central Bankers Hold Fire For Now ...
Drama in the air ... Donald Trump held back on a missile attack on Iran this week. "We were cocked and loaded, ready to retaliate" tweeted the President, "When I asked how many will die, 150 was the answer. Ten minutes before the strike, I stopped it." The Iranians had shot down a US unmanned drone earlier in the week. The President considered 150 deaths would be disproportionate to the loss of a $250 dollar flying machine. Capable of many things, the Iranians claimed the drone was flying in Iranian air space. Not so, according to Trump, the drone was flying in "international waters". A "submersible" flying drone, versatile indeed. "We had the evidence" said Trump "it was scientific evidence, not just words". The Iranians had the evidence, bits of the RQ-4 Global Hawk drone were on parade. There was some suggestion the shooting was executed by a rogue command rather than a regime call. Hence the Trump reprieve. US protocols have been amended to ensure the death toll is assessed before launch buttons are pushed next time. In similar news, central bankers were "Cocked and Loaded" but decided to hold fire for now. Mario Draghi received a standing ovation. He told the European Union that additional monetary stimulus and a much more expansionary fiscal policy may be needed to overcome persistent economic weakness. The President of the EU Central Bank promised once again, to do whatever it takes to support the growth objective. In the UK, the MPC voted to keep rate changes on hold. Noise from the hawks, including Ben Broadbent and Andy Haldane, was offset by the UK inflation slow down, announced earlier in the week. Headline inflation CPI basis slowed to 2%. Andy Haldane's call, to nip inflation in the bud, appeared premature for now. In the US, the Fed also held rates but signaled the possibility of a rate cut later in the year. The first cut could appear as early as July. The Fed appeared to forego the pledge to be "patient" in formulating interest-rate policy. The Fed Chair Jerome Powell appears to be promising to cut rates if need be, to extend the recovery into 2020. Markets rallied, bond yields fell. Stocks rose to records, bonds surged, oil prices jumped and gold rose above $1,400 dollars an ounce. The fundamentals in the US economy remain strong. The risk of the Trump trade policy remains the chief threat to growth this year ... in the US and around the world. Retail Sales ... Blowing in the wind ... In the UK, retail sales growth slowed to 2.3% in May. Cold wet weather kept shoppers from the high street. Clothing and footwear sales fell by 4.5% the biggest drop since July 2015. Online sales growth slowed to just over 8% accounting for almost 20% of total sales in the month. The pressure on the high street continues. Some slow down was to be expected. Total sales volumes had averaged 5% in the first four months of the year. Consumer confidence remains firm. Real income growth continues as the inflation data demonstrated this month. We still expect overall growth of around 3.5% this year. The level of inflation CPI basis eased back to 2% in May from 2.1% prior month. Service sector inflation fell back to 2.6%. Goods inflation increased slightly to 1.5%. Inflationary pressures remain subdued. Oil prices remain weak, despite the slight rally to $65 dollars Brent crude basis this week. Manufacturing prices fell in the month. Input costs pressures fell significantly. Cost price rises slowed to 1.3% from 4.5% in April. Output prices slowed to 1.8%. No pressure on the Bank of England to increase rates for the moment. The MPC will await developments in the Brexit debacle before making any significant move. Borrowing figures for the first two months of the fiscal year were released this week. Public sector borrowing was £5.1 billion in May, £1 billion higher than during the same month last year. In the first two month, borrowing was £1.8 billion up on prior year. Markets expect an increase in the current financial year to around £30 billion from £24 billion last year. The result is broadly in line with expectations. Tax receipts rose by £1.9 billion, or 3.5 per cent, to £56.7 billion on the back of higher income tax revenue and national insurance contributions. VAT receipts rose by £500 million over the same period. Corporation tax revenue fell by 0.8 per cent. Expenditure, in the month increased by £2.5 billion, or 4.2 per cent, to £61 billion. The task of the Chancellor made more difficult as austerity eases slightly. Global Economic Growth is Slowing ... Around the world further evidence appears of a slow down in global growth. Trump’s trade war is damaging business investment, confidence and trade flows across the world. The slow down in Europe and elsewhere, coincides with Trump’s intensified trade fight with China and other partners. A further escalation of tariffs on Chinese goods or levies on EU autos, could slow global growth to a crawl. French wine came under attack as the President railed against protective tariffs in the EU. Weakness in China, driven in part by fallout from the trade war, has damaged the economies of Germany, Australia and the Asian block. Exports from Singapore fell by 16% in May as sales to China and Hong Kong fell by 25%. Japan, South Korea and Taiwan are “highly exposed” to the Chinese economy, supplying goods for the mainland market and re-export. Trump may think "tariffs are a beautiful thing" but others including US business are not so sure. Retaliation is inevitable. India imposed higher customs duties on a raft of U.S. goods this week, in response to similar measures taken by Washington. Apple has warned the tariff war with China could harm the company’s international standing and reduce its contribution to the American economy. Imposing an import tax on the iPhone and other products assembled in China, will “weigh on Apple’s global competitiveness”. Toy makers, telecom officials, port workers and shoemakers kicked off a seven-day hearing in Washington this week. The warning is simple. Trump’s plan to impose tariffs on nearly all Chinese imports would raise costs for consumers, disrupt supply chains and potentially force them to lay off employees or go out of business. Trump may think the Mexicans will pay for the wall and China will pay for the tariffs. Tariffs are in effect a domestic consumption tax, impacting on US growth. Tariffs and trade wars are a real threat to world growth. Just as Brexit is a clear and present danger to UK and European business. In the UK frustration at politicians has morphed into outright anger in the three years since the referendum. Companies continue to lose customers and delay investments, it is said. “It’s not that the Brexit uncertainty and fear of no deal is going to have an impact in the future, it’s having it right now,” said Carolyn Fairbairn, director general of the Confederation of British Industry. Trump launched his election campaign this week. It was much of the same. "Build that wall, drain that swamp, lock her up". Make America Great Again has been updated to "Keep America Great". It may not be so easy. Good news for the White House. The President may soon have friends in Downing Street to help the cause. Johnson is set to walk in to Number Ten. A snap election, followed by a deal with the Brexit Party could then see Farage next door as Chancellor ... That's all for this week, have a great weekend. We will be back with more (Shock) news and updates next week ... John  Causes Shock to Output ...
Manufacturing output fell in April. Latest data suggests activity fell by almost 1% year on year. The car industry shutdown grabbed the headlines. A 7% drop in investment and capital goods the major reason. It is a continuing story of lost exports of investment goods, as world activity slows. The trade in goods deficit was £12 billion in the month. A reversion to the mean, following the stock build augmented £47 billion deficit in the first quarter. It remains a huge deficit and a significant drain on growth. Service sector growth in the month was 1.7%. Construction activity was up by 2.4%. The job market continues to reflect growth in the economy. The unemployment rate in April was unchanged at 3.8%. There were 1.3 million unemployed and almost 840,000 vacancies. Excluding bonuses, average weekly earnings for employees in Great Britain were estimated to have increased by 3.4, a 1.5% increase in real earnings. The ONS fast figure estimate for growth in the economy was 1.3% in the month, compared to 1.8% in the first quarter. Most analysts expect growth of 1.4% for the year as a whole, in line with the prior year figure. The Bank of England Monetary Policy Committee meets next week. Hawks are beginning to ruffle a few feathers. Deputy governor, Ben Broadbent, suggested the Bank’s latest health check on the UK economy warranted higher interest rates than financial markets currently expect. Chief Economist Andy Haldane said the time was nearing for a rate rise to nip inflation pressure in the bud. The MPC is unlikely to raise rates this month, or this year for that matter. Brexit remains a huge concern for policy makers in the UK. Fears of a global slowdown are haunting policy makers around the world. The Governor is unlikely introduce a rate hike during his tenure. His term in office comes to an end in January. We expect rates to remain on hold when the MPC meets on Thursday next week. Fed Set to Cut Rates ...? Last week, markets were pretty convinced the Fed was set to cut rates this year. As many as three cuts of around 75 basis points were expected. Stock markets rallied, ten year bond yields fell. The latest jobs figures didn't help. Just 75,000 new jobs in April supported fears of a significant slow down, pushing the Fed into action. The IMF reduced forecast growth this year to 2.6%, the World Bank to 2.5%. The Fed has suggested growth may fall below 2% this year. A significant slowdown following growth of over 3% in the first quarter. The White House team are more confident of growth. Larry Kudlow, director of the National Economic Council, said Tuesday that the U.S. economy will continue to grow at a strong pace through the rest of 2019 with or without a trade deal with China. Kudlow also shrugged off the release of weaker-than-expected economic data from last week. “The U.S. economy is very strong,” he told CNBC’s “Power Lunch. “I think we’re in very good shape and I think we’ll maintain a 3% growth pace this year.” “What has changed is lower tax rates, massive deregulation, opening up the energy sector and various trade reforms.” Good news from the Department of Commerce. Retail sales, increased by a seasonally adjusted 0.5% in May from a month earlier. April sales were revised to a 0.3% increase from a 0.2% decline. Indications continue to suggest a strong performance in terms of unemployment, retail sales and consumer confidence. For the moment inflation remains subdued. There is no pressure to hike rates, nor much pressure to reduce rates either. “Fade the futures.” That’s market jargon for going against the financial futures market is gaining traction. The market is betting on multiple reductions in the Federal Reserve’s main interest-rate target later this year. The trouble is, the futures market was just as certain late last year that multiple rate increases were ahead. Ten year bond yields closed up two basis points this week. Technically, a stronger rally may be in play as the Fed is likely to hold off any move this year. China tariffs remain a concern. Trump may consider "tariffs to be a beautiful thing", most economists are not sure. In effect they are tax on consumption supressing consumer demand and inhibiting investment as uncertainty continues. Hopes for a positive development on trade talks soon will be disappointed. At the moment we cannot be sure, the Presidents will meet for talks at the G20 meeting at the end of the month. China inflation on the rise ... In China, inflation increased to 2.7% in May. Food prices increased by almost 8%. Fresh food prices increased by 27%. Pork prices increased by 18%. The swine flu epidemic continued to impact on supply and price. Output is slowing.The latest industrial output figures from China fell short of expectations, with growth dropping to 5 per cent in the year to last month, down from 5.4 per cent in April. Analysts had forecast a modest recovery for May, with a growth estimate of about 5.5 per cent. Forecasts for growth this year have been reduced but not by much. GDP growth is expected to increase by 6.3% this year compared to 6.6% last year. The trade war is a significant inconvenience, not the major disaster Peter Navarro, Assistant to the President, and Director of Trade and Manufacturing Policy would have Trump believe. Author of "Death By China, Confronting the Dragon" Navarro is a super hawk in the implementation of tariffs. Agreement is unlikely to be reached anytime soon. Unless President Xi meets for Dinner with Trump at the G20 meeting, further tariffs will be applied. A rare step in diplomacy and the art of the deal. It all depends on the mood of the President and how much Provigil Trump has imbibed. Reading this week, "The Siege Trump Under Fire" by Michael Wolff, the sequel to "Fire and Fury" Wolff revealed (p 54) “Admiral Jackson was the go-to doctor for the president. Jackson was a popular get-along figure, not least because he was casual about prescribing medication. He kept the president stocked with Provigil, an upper, which Trump’s New York doctor has longed prescribed him.” Interesting. Provigil is a medication that promotes wakefulness. It is thought to work by altering the natural chemicals in the brain. The medicine may impair thinking and or reactions. The warning ... "Be careful if you do anything that requires you to be alert." Stop using Provigil and call your doctor at once if you have, anxiety, hallucinations, unusual thoughts, unusual behaviour, aggression, being more active or talkative than usual. Evidence of overdose ... confusion, rapidly changing moods, agitation or excitement. So much explained and now revealed. Presidents Xi and Putin will have compared notes ... That's all for this week, have a great weekend. We will be back with more news and updates next week! John Our next Brabners Quarterly Economics Briefing will take place on the 25th and 27th June. We are in Manchester at the Lowry Hotel and in Liverpool at the Radisson Blu. Places are limited but you can still register here for the FREE Breakfast session. It would be great to see you there ... J  The Meeting Was Incredible ...
President Trump was in London this week. The visit went well. Major diplomatic gaffes avoided. Trump was keen to reassure Fox News he had not fist bumped the Queen on arrival. The President stayed on message, constrained within a tight script and an even tighter suit and waistcoat for the state banquet. "The meeting with the Queen was incredible" Trump said. "I think I can say I really got to know her because I sat with her many times. We had automatic chemistry. She's a spectacular woman. We had a really great time." "There are those who say they have never seen the Queen have a better time, a more animated time." We just had a great time together". "We had a period when we were talking solid straight. I didn't even know who the other people at the table were." Just the two of them in the room for a state banquet. "I intend to keep the conversation going" Trump promised the nation. Excellent. Trump spent time with Prince Charles. The meeting scheduled for afternoon tea over ran by fifteen minutes. Prince Charles has strong views on climate change. The President considers global warming to be a "Chinese Hoax". Trump has withdrawn the US from the 2015 Paris convention on climate mitigation. Fears of a disruptive meeting were dispelled. The pair discussed a wide range of issues over an extended meeting. No fall out. In an interview with Piers Morgan, Trump said of Prince Charles, 'I'll tell you what moved me is his passion for future generations. He's really not doing this for him. He's doing this for future generations. He wants to have a world that's good for future generations." Not for Trump the thought of future generations, the current timeline is confined to just "four more years". Later Prince Charles revealed he fears it may be too late to save the planet, or the "natural world" at least. Just one meeting with Trump appears to have been enough to accelerate the demise of the planet. Yeah we know the feeling ... Fed Set to Cut Rates ...? Good news from the White House this week-end. The threat of further tariffs on Mexico has been abandoned indefinitely. In a joint declaration both countries said Mexico agreed to immediately expand a program that sends migrants seeking asylum in the United States to Mexico, while they await adjudication of their cases. The country also agreed to increase enforcement to contain the flow of migrants headed to the US, including the deployment of national guard troops to its southern border and a crack down on human smuggling organizations. The threat of further tariffs had risked a back lash in the Senate and Congress with Republicans and Democrats against the move. The White House team had been divided with Kushner, Mnuchin and Lighthizer pleading with the President to avoid further putative action on trade. The US economy is already struggling to shake off the implications of a trade war with China. The imposition of tariffs will lead to higher domestic prices, job losses and a slow down in the economy. The latest jobs data released on Friday confirmed the economy added just 75,000 jobs last month compared to the 180,000 expected. The report also revised previous month's numbers down by an additional 75,000. The US economy is not as robust as first thought. Stock markets rallied and bond yields fell. US ten year rates slipped to 2.06% on close, down 11 basis points. The Fed is now expected to cut rates this year. The conundrum clarified by a bad set of job results. Wall Street couldn’t contain its excitement after Fed Chair Jerome Powell said he’d be open to interest rate cuts. Stocks enjoyed their second best day of the entire year. Last November, the Fed signaled it might raise interest rates three times this year. The flight from Planet ZIRP may have hit a bird strike. It would be a mistake to cut rates at this stage in the cycle. The real challenge is to take the tariff toys away from the President. The world is facing a slowdown in world trade which can be easily avoided. The Bundesbank slashed growth forecasts for the German economy this week to just 0.6%. The World Bank reduced world growth expectations to just 2.6%. The IMF is concerned trade wars could cut 50 basis points from growth unless the trade disputes are ended ... Ford workers devastated ... This week, Ford announced the closure of the engine factory in Bridgend. The loss of some 1,700 jobs will come into effect in the Autumn of 2020. The company blamed changing customer demand and cost structures. Brexit was not attributed to the closure. Bridgend Labour MP Madeleine Moon is not so sure. "The decision is clearly about Brexit. The knock-on effect to the South Wales economy is huge, there are about 12,000 jobs associated with the Ford installation." The uncertainty over Brexit will have been a factor in consideration. A hard Brexit is now the more likely outcome. This week Theresa May resigned as leader of the Conservative Party. The runners and riders to be announced on Monday, will parade their Brexit credentials. The result from Peterborough will not ease the mood. The party was driven into third place in the bye-election with big losses to the Farage Brexit party. The Tories will swing "right" towards the ERG diehards. The Tories will be charged to deliver the "Will of the people". Business will take note and position accordingly. October 31st is not such a long way away. So what of the prospects of a deal with the US? Trump avoided a gaffe on the NHS this week. The NHS will not take part in any "New Deal" on trade with Uncle Sam. Don't expect any favours from the USA ... America’s trade deficit with the European Union has expanded to its widest on record, suggesting that President Trump’s protectionist policy is failing. US imports and exports tumbled in April, a report by the Census Bureau showed this week. The trade deficit is widening, the threat of tariffs against the UK and Europe has been postponed for the moment. The Mexican manoeuvre serves as a warning to all ... That's all for this week, have a great weekend. We will be back with more news and updates next week! John Our next Brabners Quarterly Economics Briefing will take place on the 25th and 27th June. We are in Manchester at the Lowry Hotel and in Liverpool at the Radisson Blu. Places are limited but you can still register here for the FREE Breakfast session. It would be great to see you there ... J  Always gets the best view ...
President Trump has backed Johnson to be Britain's next prime minister. "Mr Johnson would be excellent in the position", the President said. "I have always liked him, he is very talented". More importantly, "he has been very positive about me and our country". Boris Johnson remains the front runner in a race which hasn't started yet. Will the Trump support help? The President believes his personal backing offers a great endorsement to candidates. "I am loved in the UK, my mother came from Scotland, I have three golf courses there". Yep, what's not to like! The Met will deploy snipers, firearms officers, sniffer dogs and 15,000 officers trained in riot control to deal with a potential 250,000 demonstrators traveling to the capital next week. Asked about the leadership election, Trump said, "I have studied it very hard. I know the different players, I think Boris would do an excellent job". Trump also praised Jeremy Hunt, "Yup like him!" Michael Gove ...not so much. Last week, the environment secretary accused the president of sabre rattling over his policy on Iran. Meanwhile the list of runners and riders in the election race continues to grow. Boris Johnson is the odds on favorite. Michael Gove, is next up 7/2 [Betfred]. Dominic Raab and Andrea Leadsom are both on 8/1. Rory Stewart is moving up the table. Confessions of an Afghan opium exploit boosted his odds to 16/1 alongside Jeremy Hunt. Sajid Javid is the outsider in the short pack at 25/1. The candidates are caught on the Brexit tripwire. The EU elections pushed forward the agenda of the Brexit party. The Lib Dems gained support as a plausible "remain" option. The Brexit debate is polarising politics. A recent YouGov poll put the Lib Dems and Brexit party ahead of Labour and the Conservatives. If the Tories were traumatized by UKIP, they will be terrified about the new Farage Brexit Party. Candidates for the Downing Street race flaunt hard line Brexit policies to garner support among the right wing back benches. The CBI warned again this week of the dangers of a no deal exit. In the mayhem of the hustings, the complaints from business groups will be overshadowed by naked political ambition. It doesn't bode well ... Don't say we didn't warn you ... The trade war with China is hotting up. This week the ominous warning "Don't say we didn't warn you" emerged from within the Beijing ranks. The People's Daily, the Communist Party's official mouthpiece, carried a stark warning for the United States. The People's Daily, which often signals official positions with subtle language, uses the phrase sparingly: It famously appeared before China launched border attacks against India in 1962 and Vietnam in 1979. Additional tariffs on $60 billion of US imports were implemented this month. China is considering restrictions on the export or rare earth metals. On Friday, China announced it would establish a blacklist of "unreliable" foreign companies and organizations, effectively forcing companies around the world to choose whether they would side with Beijing or Washington. No sign of a settlement any time soon, The developing tit-for-tat is reinforcing a sense in Washington and Beijing the world's two largest economies are destined to unwind a system of economic dependency built over the past three decades. The Times they are a changing. The Trump administration appears oblivious to the dangers to the US economy of arbitrary trade actions. On Friday night, the Trump administration announced, it would strip India of a special status that exempts billions of dollars of its products from American tariffs. The decision is set to raise trade tensions with the world’s second-most populous country. The move was taken as retaliation for what Mr. Trump said was India’s failure to provide “equitable and reasonable access to its markets.” Earlier on Friday, Trump announced tariffs on Mexico, "On June 5th the US will impose a 5% Tariff on all goods coming into the country from Mexico, until such times as illegal immigrants coming through Mexico STOP. The tariff will gradually increase (to 25%) until the illegal immigration problem is remedied." "Mexico has taken advantage of the United States". "Mexico makes a fortune from the United States". "Mexico has taken 30% of our Auto Industry". "We have a $100 billion dollar deficit with Mexico". The Trump temper tantrum continued on twitter. No thought of the New NAFTA deal, or the wishes of business across the US. Trump had taken the unusual step of linking trade tariffs to an immigration policy objective. The US Chamber of Commerce denounced the move with a consideration of legal action. House Democrats began considering legislative remedies aimed at halting the arbitrary powers of the President to implement tariffs. Border state Republicans expressed concerns. The President of Mexico was confused. "Social problems cannot be resolved with tariffs" his claim. The administration was split on the issue. President Trump's top trade adviser Robert Lightizer had opposed the plan. Jared Kushner had expressed concern ... the chances of implementation look slim ... so what was the real reason for the Trump actions this week ... "The Peach in impeachment ..." Bob Mueller made a statement this week, effectively putting the Democrats on notice to begin impeachment proceedings. Nancy Pelosi is facing pressure from the hard line ranks to take action. The Mueller statement had made it clear this week, there was adequate just cause. "As set forth in the report, after the investigation, if we had confidence that the president did not clearly commit a crime, we would have said so," Mueller told reporters at the Justice Department on Wednesday. "Justice Department policy prohibits the indictment of a sitting president, charging the president with a crime was therefore not an option we could consider," Mueller said, adding that the Constitution requires a "process other than the criminal justice system" to address wrongdoing by a president. He was talking about impeachment of course. There appears to be clear evidence of obstruction of justice by the President of the United States. Trump was infuriated. "The Greatest Presidential Harassment in history. After spending $40 million dollars over two dark years, Robert Mueller would have brought charges if he had anything, but there were no charges to bring." Trump claims Mueller was conflicted and biased against him. "He had wanted to be Director of the FBI," claimed Trump, "I said no." The next day he was appointed special counsel!" The Mueller Story threatened to grab the headlines over the week-end. The White House has a back stop "Wag the Dog" strategy. Wag the Dog is a black comedy film starring Dustin Hoffman and Robert De Niro. The screenplay concerns a spin doctor and Hollywood producer who fabricate a US war to distract voters from a presidential scandal. It's a great movie and a cute strategy. The announcement of "immigration tariffs" against Mexico is diversionary strategy, without logic, merit or substance. What is the value of any trade deal or international agreement made with the USA with Trump in the White House? Markets, the much loved barometer of the President, reacted pushing the DOW, NASDAQ and others across the world lower in response. Trump revealed on Twitter last night, he will be announcing his Second Term Presidential run on the 18th June in Orlando, Florida. Melania and Mike Pence will be there. Mickey and Minnie will not. The venue will be the Amway centre Florida. Disneyland didn't make the cut. The President's best mate Kim Jong-un has expressed support. Last week the Korean regime called Joe Biden "a fool of low IQ" and mocked Biden for thinking he would be a popular candidate. "This is enough to make a cat laugh" the report said. Trump could only agree and did on Twitter of course. West Wing WTF ... it's enough to make a cat laugh ... and it is getting worse ... That's all for this week, have a great weekend. We will be back with more news and updates next week! John  What happens next ...
Theresa May resigned this week as Prime Minister. The second female Prime Minister but "not the last", it was a tearful end to a short statement outside Number Ten. The Prime Minister had been visited by head boy Graham Brady first thing in the morning. The game is up, Brady told the Prime Minister, the boys on the back benches have had enough. It really is time to step down and hand over the keys to Downing Street and Chequers. The Prime Minister had wanted just one more go to secure a Brexit deal though the house. It was never going to happen. Cabinet was in open revolt. Andrea Leadsom resigned from Cabinet this week The Leader of the House was unable to support a deal which "undermined the sovereignty" of this great nation. The Prime Minister has now set the record for the largest number of ministers lost compared to anyone in recent political history. Margaret Thatcher lost 25 ministers in 4,000 days in office. Tony Blair shed 29 in almost as many days. Theresa May misplaced a record 36 ministers in less than 1,000 days. Not quite the legacy record sought by the MP for Maidenhead. So what happens next? Boris Johnson remains the favorite to take over the job, with a commitment to leave the EU on the 31st October, with or without an agreement. To be the bookies best bet, at this stage of the race, does not bode well for the former Foreign Secretary. Tory history suggests a fall at the last fence may well be the fate of those first out of the traps. There will be many seeking the job, which promises to offer a record for the shortest tenure in office. May's successor will take over the impossible task of uniting the Tory party on Europe. Jeremy Corbyn is on hand to ensure cross party support is denied. The odds on election before the end of the year have risen dramatically. The runners and riders for the challenge are likely to be numerous. Graham Brady has stepped down as Chairman of the 1922 committee, to clear a path for the leadership bid. Spending so much time in Number Ten of late, Brady has clearly developed a fondness for the home decor and the house cat. Odds of 20:1 suggest Brady won't make the Downing Street doorstep. Dominic Raab is the best bet, behind Johnson of course. Expect the unexpected, the warning in the Times today ... "The front runner seldom wins the laurels, it pays to be a little coy at first". Coy and the blonde boy ...? Not really! It promises to be an interesting race ... Retail Sales up 5% ... Headlines this week ... British Steel and Jamie Oliver's restaurant chain went into administration. "Newsnight" debated why government should consider a bail out for the manufacturing sector and not for the restaurant trade! Really! Taking Patisserie Valerie and Carluccio's into public ownership doesn't even feature on the Corbyn shopping list. Water and electricity may prove too much for a Labour government to digest, without an additional service charge for Giraffe, Byron and the Gourmet Kitchen bar. Despite the demise of steel, retail sales in April remained bouyant. Volumes were up by 5.2% in the month. Values were up by 5.5%. Online sales increased by over 10% placing additional pressure on traditional retail. Headline inflation edged up to 2.1% CPI basis from 1.9% prior month. Service sector inflation increased to 2.9%, Goods inflation a more subdued 1.5%. Vegetables were up by 5%, Electricity and Transport were up by 10%. The April data is a clear warning, inflation remains a potential threat to growth and a constant challenge to a benign monetary policy. Good news for the Chancellor, borrowing in the financial year 2018/19 was just £23.5 billion. In April, the level of debt creation was just £5.8 billion. That's the lowest start to the fiscal year since April 2007. The full year borrowing last year was the lowest since 2002. Strong jobs growth reported last week, inflation this week, suggests real income growth continues to support the level of retail sales and household spending. Income growth and VAT revenues are supporting the reduction in government debt. Momentum suggests the economy may well return reasonable growth figures this year. But then there is Brexit, political uncertainty and of course President Trump. Yes "Tariff Man" Trump added to the tension this week ... "I am a stable genius ..." "I am an extremely stable genius" the President assured the world this week. Nancy Pelosi is not so sure. The Speaker of the House of Representatives called for an "intervention" by family, friends or staff for the President's own well being. "I pray for the President of the United States and for the United States of America" the concerned acclaim. It had been another dramatic week in Washington. Pelosi had accused Trump of a "cover up" stopping short of an obstruction of justice accusation. The statement just hours before a meeting in the White House to discuss spending plans for infrastructure was a wind up which Trump could not resist. The meeting was abandoned within minutes, Trump appeared at the podium before the press pack. “Instead of walking in happily into a meeting with the Democrats, I walk in to look at people that have just said that I was doing a cover-up,” Trump fumed to the press. “I don’t do cover-ups,” he added. "As everyone will agree, I am the most transparent President in the history of this great country". Transparent as in we can all see though you the reality. There is no doubt Pelosi owns the Trump play book. Pelosi has mastered the art of triggering a Trump Temper Tantrum. The President cannot resist the bait. A press stunt in the White House to announce a farm bailout worth some $16 billion dollar, was overtaken by a Trump rant about "Crazy Nancy". "She's a Mess, She's lost it" said the leader of the free world. "I am an extremely stable genius" the President confirmed. Ms Pelosi responded on Twitter ... "When the extremely stable genius starts acting more presidential, I'll be happy to work with him on infrastructure, trade and other issues". Oh dear, maybe we should all pray for the President of the United States, world peace and an end to trade wars, everywhere ... That's all for this week, have a great weekend. We will be back with more news and updates next week! John  Tories face humiliation in poll ...
Brush up your classics, let the hair fly. Boris Johnson is favorite to be the next prime minister of truly global Britain. "Johnson crushes rivals in member poll" the headline in the Times today. According to a You-Gov poll, 39% of those asked would vote for Johnson. Dominic Raab is the second most popular with just 13% of the votes. Michael Gove fails to hit double figures with just 9%. The new PM could be in office by the end of July. Sir Graham Brady Chairman of the 1922 committee emerged from a meeting with Theresa May this week. He explained a timetable had been set, to establish a timetable, to define the timetable, within which the current Prime Minister would leave Number 10. The timetable is to be managed by Chris Grayling, Secretary of State for Transport. Grayling will also arrange ferry transport across the political Styx for the departing Prime Minister. Phillip Hammond has issued a warning to candidates. Do not promise too much in terms of spending in the election campaign. Someone should advise "Spreadsheet Phil", it's unlikely to be his problem. Hot money must be on a dream ticket with Johnson in Number 10 and Gove next door as Chancellor of the Exchequer. Theresa May will be given one last chance to deliver a Brexit solution. The sadistic streak within the Conservative party runs deep. The Tories face humiliation in the European elections. The Farage Brexit party will be the outright winner, with a clear "Leave" option. The Lib Dems are likely to be in second place offering the only perceptible "Remain" variant. The Tories will surrender third place to Labour as Corbyn's credibility climbs. Following the EU setback, Johnson will have the tough job of uniting the party. It won't be easy. 49% of the party's Leave supporters put Johnson as their first choice but just 10% of Remain voters followed suit. The good news, Mr Johnson is considered by members to be the most likeable across the country. Support however, dwindles across the border. "As far as I can see" said Nicola Sturgeon, "He is a complete and utter charlatan" the prospect of him becoming Prime Minister, is one that will horrify many people across Scotland". The view may not be confined to Scotland. It may be horrifying at times but it promises to be great fun ... Peace in our time ... President Trump dialed back the rhetoric this week. There will be no war with Iran. John Bolton National Security advisor is to be put back in his box. Bolton, known affectionately in Tehran as the "moustache" is a hawk. "Who would have thought" said the President this week. "I would be the restraining influence". "Just give me a call" the President urged Hassan Rouhani the President of Iran, or better still "Just send me a beautiful letter" he could have added. I can add it my collection of beautiful letters from Chairman Kim, President Putin and my great friend President Xi. Yes friends across the world unite for peace in our time. No war with Iran or North Vietnam. I have in my hand a beautiful letter ... The President did something unusual on trade this week. Tariffs on industrial metals from Mexico and Canada were lifted on Friday. Tariffs on steel from Turkey are to be halved. The threat of tariffs on EU cars has been postponed for six months. The North American concession clears a major obstacle in securing passage of the "New NAFTA" deal through Congress. The President needs a win to offset the setback with China. Vice Premier Liu explained to reach agreement, the US must remove all extra tariffs, set targets for Chinese purchase of goods in line with real demand and ensure the text of the deal is "Balanced" to ensure the "dignity" of both nations. The latter difficult to achieve with Twitter as the medium, both sides are digging in. Trump declared another national emergency this week, announcing further restrictions on Huawei. China is ramping up the pressure with further restrictions on agricultural products. The Presidents are set to meet at the G20 next month to discuss the "little squabble" as Trump describes the trade war. The Chinese find dealing with Trump to be frustrating and confusing. No long-term plans, or the ability to think ahead. The President has the long-term decision- making ability of an "empty chair". Not sure if that bit was in the beautiful letter ... Strong jobs data ... Strong jobs data this week. UK unemployment fell below 1.3 million. Vacancies in the economy were 846,000. The unemployment rate was 3.8%. It has not been lower since December 1974. Earnings fell back slightly in the three months to March to 3.2% compared to 3.5% prior month. The slowdown doesn't make much sense. Adjustments may follow in the months ahead. Pay rises remain above CPI inflation. Real income growth continues. The consensus remains for growth this year at around 1.5%. Inflation remains subdued. There seems little or no prospect of a rate rise anytime soon. Sterling fell to $1.278. The cross party talks on Brexit were officially declared dead in the water. Oil rallied, gold fell, Bitcoin crashed. Markets rallied in the US and the West. Markets in the East fell. China badly hit on fears of an acceleration of the trade wars. If only the "Little Squabble" could be resolved ... That's all for this week, have a great weekend. We will be back with more news and updates next week! John |
The Saturday EconomistAuthorJohn Ashcroft publishes the Saturday Economist. Join the mailing list for FREE weekly updates on the UK and World Economy. Archives
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