Dr Fox has diagnosed the problem ... Dr Fox is off to a great start as Champion of business. Fat, lazy and too interested in playing golf on a Friday afternoon, the criticism of UK business executives.
“What’s the point of going out looking for new markets, if we don’t have the exporters to fill those markets” said Liam Fox, to the Conservative Way Forward group this week.
It’s a fair point from an ex GP politician with no experience of business, exporting, sales and marketing. Always best to find the markets for which we do have products and manufacturers as a general rule.
“Companies were not ready to take advantage of the trade deals he was planning to negotiate.” he added. No need to rush. It’s going to take ten years to get the deals in place. Lot’s of time for a few more holes yet.
Charm offensive continues ...
The Fox charm offensive continued with the attack on the Foreign Office this week. “My world view is better that yours, Fox told the Foreign Office”. Too interested in politics and diplomacy at the expense of trade, the criticism.
Fox is evidently prepared to cede diplomacy to the foreign office. Obviously not his strong point! Trade missions abroad should fall within his remit and his alone.
History tells us diplomacy and trade are intertwined. “Trade Follows the Flag”. Or rather, traders advanced under the protection of the British Army and “Gun Boat Diplomacy”. Oh for the glory days. Civis Brittanicus Sum, how Palmerston must weep to see the days of glore long past. Dr Fox is now on the case. “Companies should start thinking of exporting as a duty” … excellent.
Governor and the Treasury Select Committee …
Duty called for the Mark Carney this week. The Bank of England gave evidence to the Treasury Select Committee. It promised to be a great grilling. The MPC had clearly mistimed the move to cut rates, expand QE and begin the corporate bond buying programme.
Surely Jacob Rees-Mogg or Chairman Andrew Tyrie would give the Governor a tough time? It was not to be. Being savaged by a dead sheep was the cruel retort from Dennis Healey on criticism from Geoffrey Howe in 1978. The two hour session on Wednesday had a similar feel. Was the Governor ruffled? Not at at all.
“In light of all the events since the referendum I am absolutely serene about the decisions which were taken.” Absolutely serene … calm, peaceful, and untroubled, the full meaning. It was a great escape undertaken at a strolling pace!
Good news continues ... PMI Markit Service Sector ...
The MPI Markit survey for the construction industry was released this week. activity bounced back in August. The index climbed to 52.9 in July from 47.4 in July. A rise in activity and new orders suggests the July data was a blip. The bank acted too quickly to make the move in response. Are we on the brink of recession? Of course not ...
Car Sales August ...
New car sales increased by over 3% in August. It’s a low month for sales ahead of the September rush. Fleet sales up by 7% were the main factor in the increase. Car sales up 3% year to date, September registrations will be critical in assessing momentum into the final quarter.
Manufacturing Output ...
Manufacturing output in July increased by 0.8% year on year. Total production increased by just over 2%. We expect the total year out turn (manufacturing) to be 0.7% for the year as a whole following revisions and our latest forecast projections.
Construction output …
Construction output fell by 1.5% year on year in July. Public sector cuts in housing and infrastructure largely to blame. Strong growth in private sector housing and commercial activity was partially offset by a fall in industrial activity. For the year as a whole we expect construction output to be flat at best. Infrastructure and housing spending are expected to feature in the Autumn statement, following the Hammond review.
Trade in July ...
Trade received a boost in July according to the latest figures from the ONS. The deficit trade in goods fell to $4.5 billion in July compared to the £5.6 billion reported prior month. One month does not mean much! For the year as a whole we expect the trade deficit to increase to £138 billion, up from £126 billion last year. Despite a boost to tourist activity in recent months, the service sector surplus of £88 billion will be flat year in the year. The overall trade deficit, goods and services will increase to £50 billion compared to £39 billion last year. The deficit at -2.6% of GDP is incompatible with base rates on the floor. The madness of life on Planet ZIRP continues. Nothing serene about that!
So what happened in the U.S.A.
Markets became convinced late week, the next move in rates would be up. Despite the soft US jobs data in July, the ECB decision to keep rates on hold, suggested central bankers were running out of options. Equity markets edged lower, bond yields increased as reality dawns ...
So what happened to Markets?
Markets, were mixed - The Dow closed at 18,182 from 18,016. The FTSE closed down at 6,776 from 6,894.
Sterling moved down against the Dollar to $1.326 from $1.330 and moved down against the Euro at €1.181 from €1.192. The Euro moved up against the Dollar to 1.122 from 1.116.
Oil Price Brent Crude closed at $48.00 from $46.91. The average price in September last year was $46.52.
Gilts - yields moved up. UK Ten year gilt yields closed at 0.86 from 0.75. US Treasury yields moved to 1.672 from 1.62. Gold closed at $1,330 from $1,321.
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