Boris Johnson made it into Number 10. Tory votes were cast two to one at the expense of Jeremy Hunt. The promise to "love bomb" opponents and detractors was cast aside. A cabinet purge ensued. Macmillan's night of the long knives was made to look like a rearrangement of the cutlery draw. Seventeen cabinet members were removed from office as the transition team moved into action.
Sajid Javid, became Chancellor of the Exchequer, Priti Patel moved into the home office, Liz Truss, became secretary of international trade, Andrea Leadsom is down for business, Dominic Raab moved into the Foreign Office, where big maps on the wall will explain the importance of Calais and Dover.
Jacob Rees-Mogg became head boy and leader of the house. The guardian of Victorian values immediately issued a staff guide for internal missives. Matters of state to one side, there must be a double space after a full stop, no comma after "and", and no full stop after Miss or Ms.
Banned words include "unacceptable", "disappointment", "lot" and "got". Banned phrases include "no longer fit for purpose". Why would that be?
Imperial measures are to be preferred, monetary measures must include the sixpence and for the avoidance of doubt there are three asterisks in "f*** that".
Boris Johnson announced the search for the British Mojo will be assisted by an additional 20,000 police officers on the street. Stop and search will be escalated to provide more knives for cabinet sessions, plus there is always the chance someone somewhere may be hiding that missing mojo in a hoodie.
More money for the North, a train set for the Leeds Manchester link. Austerity is over. The quest to stay in office begins. Johnson made progress with Brexit, the Irish backstop must be removed before talks can resume.
So yes we are off. It promises to be very exciting. The Queen was mystified. "I can't believe anyone would want the job", Boris revealed in a breach of palace protocol. "I can't believe I got the job", the probable reply. Not to worry, it could all be over by Christmas ...
U.S. Economy slows ...
Latest data from the Bureau of Economic Analysis, suggests growth in the US economy slowed in the second quarter.
Growth was just 2.3% in Q2 compared to 2.7% in the first three months of the year. Problems with trade and investment largely to blame ... the White House dream of 3% growth this year is dashed. Most estimates now assume growth will be around 2.5% for the year as a whole.
Given the tax cuts and spending plans in process, the achievement is a grave disappointment. Trump believes the Fed is to blame, with over an aggressive monetary policy the problem.
"Q2 GDP Up Not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck. Almost no inflation. USA is set to Zoom!" Trump Tweeted.
Consumer spending increased by 2.6% in the quarter compared to 2.5% in the first three months. Fixed investment growth slowed to 3.5%, exports increased by just 0.4%, as import growth continued at 3.2%.The US economy is slowing, Trump trade policy partly to blame. The Fed is set to cut rates by 25 basis points as ten year gilt yields move towards the 2% level.
Congress and the White House agreed an extension of the debt ceiling this week. The $22 trillion limit has been extended beyond the 2020 election date. An increase in spending and a limit of proposed cuts will ensue. The US budget deficit is set to exceed 4% of GDP over the next two years, the dollar deficit heading for $1 trillion as the trade deficit continues to grow.
U.S. ten year bond yields closed at 2.07% this week. The yield of ten year Greek bonds closed at 2.07%
The Trump administration decided this week, not to engage in currency manipulation to undermine the strength of the dollar.
White House hard line trade adviser Peter Navarro presented President Donald Trump on Tuesday with ideas on how to devalue the United States dollar to gain an upper hand in the trade fight with China.
The president, who has regularly accused other countries of unfairly devaluing their own currencies, quickly shut him down and dismissed the proposals, this time ...
Hasbro leaving China ...
Hasbro announced this week, the company is relocating manufacturing facilities away from China. Vietnam and India are becoming the preferred destinations. Production on the mainland will account for just 50% of total production by the end of 2020.
Trade wars are damaging the prospects for world trade the IMF has warned again this week. Growth in China may slow to just 6% for the year as a whole as exports and investment are hit.
Nevertheless, no trade deal is expected until after the U.S elections. Trump may be forced to feel the pain before the voting round. The economic cycle is not moving in favor of the President. China is in no rush to make the deal with the U.S.A.
Trade for China will pivot further to the Asean group of countries over the medium term. The Regional Economic Comprehensive partnership will include 26 nations across the region including India, Japan, South Korea, Australia and New Zealand.
Trade with the Asean group increased by 4% in the first six months of 2019. The largest trading blocks of the future will be Asean, European and North American, in that order ... Trump's trade policy no longer fit for purpose but then it never was ...
That's all for this week, have a great weekend. We will be back with more news and updates next week!
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for updates on the UK and World Economy.
|The Saturday Economist
The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.