Another Day ... Another Minister Quits. Yesterday Sam Gyimah, the Universities Minister resigned. "It has become increasingly clear to me the proposed deal is not in the British national interest". Oh Dear. The new exciting Chapter for the British people may yet be unread.
"To vote for this deal is to set ourselves up for failure, we are surrendering our voice, our vote and our veto" claimed the minister. The deal leaves us "poorer and weaker".
Jo Johnson, Transport minister resigned earlier in the month with a call for a second referendum. Sam Gyimah echoed the call. It now seems impossible for the Prime Minister's proposal to be accepted in just a few weeks time.
The Prime Minister has succeeded in uniting Remainer and Brexiteer against the deal with the EU. The former, hope for a second referendum to overturn the 2016 decision. The latter quite happy to accept the no deal option, crashing out of the EU, the single market and the customs union in the process.
Business is in favour of the deal because it provides continuity on trade within the customs union and the promise of a single market to follow. Given the option of a second referendum, with a remain vote the outcome, the CBI and others would gladly accept a return to the ballot box.
Michael Gove warned back benchers this week, voting down the deal could mean Brexit would be "by no means guaranteed". The Times reports today, eight cabinet ministers including Michael Gove and Phillip Hammond have held discussions about joining the European Free Trade Area.
The Prime Minister is in Argentina this week-end, reprimanding Mohammed bin Salman on the one hand and drumming up support for the EU deal on the other. Why bother? Back at home, confusion continues. We are heading for a second vote in Parliament and perhaps a second referendum in the country as a whole. The call must be for a FREE Vote in the house, only then may we discover what Labour party policy really is.
Obligingly, the EU have offered to delay the Article 50 exit by several months. Why so? to accommodate the timetable for the second referendum of course ... why else?
Canada Plus ...
The Bank of England released the latest prognostications on life without Europe this week. A no deal scenario, could lead to GDP down by 8%, House Prices down 30%, Commercial Property down 50%. Unemployment up 8%,Inflation up 6.5%, Sterling down by 25%, to 90 cents on the dollar, Government Borrowing soars and interest rates rise to 5.5%.
In other news, the Governor is obliged to stay in the job for a further three years, John McDonnell becomes Chancellor of the Exchequer and Theresa May is elevated to House of Lords.
The good news, the banks and the banking system will be OK. Important to note, the projections are not forecasts. They are worst case scenario planning as part of the "stress test" for the banking system and the British people. Stress tests opportunely released, just ahead of the critical vote in the House of Commons.
*Is the Governor biased ? "People think you just don't want to leave Europe" the Mark Carney challenge this week. "Rubbish" the response "Most days I regret moving over here. If it wasn't for Brexit I would be back home by now. As it is I just have a massive salary and the ability to print money to make up for it. *Extract from My Week Mark Carney in the Times today.
This week, the Treasury released the long term economic analysis of the EU exit. It doesn't make for great reading. It's 90 pages long for one thing. A no deal scenario (with tariffs) could lead to an 8% drop in GDP, a Free Trade deal would lead to a GDP drop of 5%, and EEA deal would lead to a drop in GDP of around 2%.
NIESR have suggested the proposed deal would lead to a drop in GDP of some 4% by 2030 at a cost per individual of £700 to £1,000 in each year.
Either way the forecasts don't make for great reading. We will be substantially worse of leaving the EU in what ever form. There was never an economics case to leave the EU. There was never a business case to leave the EU. The social case was always about immigration. EU citizens are already making the decision to leave. The political case was always about "Who governs Britain" ... always a great question ...
Trade hopes rise at G20 meeting ...
The G20 leaders are in Buenos Aires this week-end. Trump made a great play of signing the NEW NAFTA agreement. It's a good-bye to the old NAFF NAFTA agreement.
The US will be able to sell more chicken, eggs and turkey to Canada. More dairy products will head North. More car components will originate in the region. Higher pay levels in Mexican factories will result. The punitive tariffs on aluminum and steel will remain, imposing a price hike on US manufacturers and consumers in the process.
Trump arrived in South America haunted by the Mueller investigation and the latest revelations from Michael Cohen. The former lawyer and advisor to Trump admitting to lying about plans to expand the Trump Tower empire into Russia. Discussions continued into 2016. The offer of a $50 million dollar apartment to President Putin included. Trump decided not to meet with the Russia President during the visit, allegedly because of latest transgressions in the Ukraine. Nothing to do with the latest confessions from Cohen of course.
The President is due to meet with President Xi Jinping during the trip. In fact they plan to meet over dinner this evening. World leaders are hoping for a de-escalation of the trade tariff wars between the two nations. World trade is slowing. European exports are suffering. The Trade war is bad for all parties, the USA included.
The problem of course, is Trump is so unpredictable and subject to mood swings. The more implacable leader of the People's Republic of China is far more adept about dealing with dissidents, Trump included. Let's hope for progress and trade peace in our time ...
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 week started so well for the Prime Minister. Tory rebels failed to muster the necessary 48 votes to force the no confidence vote. The withdrawal agreement had proven unacceptable to all parties. The saving grace ... the no-deal option appeared to be even worse. Staying in the EU was becoming a more favoured option.
Theresa May had made it clear she would exhaust all options, herself included. The performance on Radio 5 live evidence of the long haul. Mrs May has the "emotional engagement of an answering machine", claimed Patrick Kidd in the Times today.
Press 1, if you want a facilitated customs arrangement; Press 2, if you want to avoid a hard border down the Irish Sea; Press 3 for tariffs; 4 for another vote; Your call is important to us, just keep those questions coming!
"Is your deal better than the one we have already, staying within the European Union?" asked Michael from Kent. Was this Heseltine? Who knows ... "Don't be absurd" the PM wanted to reply but held the line. "It will be a different world but a good one, I genuinely believe there is bright future for this country". Taking back control, a truly global Britain, seeking a rightful place in the world, on the edge of Europe, that sort of thing.
The EU plans to meet this week-end. Angela Merkel is planning to veto the session unless France and Spain get into line. "Fish and Gibs" on the menu. The French reluctant to let go of the fishing quotas, the Spanish requiring additional assurances on the future of Gibraltar.
It all seemed so clear last week-end, an ambitious free trade agreement the outcome at the end of the withdrawal agreement. We get to keep the fish, save some money, expats get to stay in the sunshine. Then came the fudge ...
"Britain and the EU "envisage having a trading relationship on goods that is as close as possible with a view to facilitating the ease of legitimate trade." Plus ...
The French just won't let go of the fish. the EU boats will continue to seek access to British fisheries. Both parties have agreed to use "best endeavours" to conclude and ratify a fisheries agreement no later than July 2020. It's a fix and a fudge, agreeing not to disagree, the basis of agreement once again.
For the DUP, the deal is worse than Jeremy Corbyn in power. For Dominic Raab, the deal is worse than staying in the EU. For all parties, Brexit is like the battery advert, Theresa May the Duracell bunny.
Last one standing, in the end we may all say ... "Look whatever you agree in the end is fine with me ... especially if that means "status quo ante referendum". Yep get them to vote on that ... status quo ante referendum ... we have exhausted all other options ...
Where next for oil prices ...
Oil prices Brent Crude closed below $60 dollars this week-end. WTI closed at $50 dollars. Demand is slowing, stocks are rising, the Saudis continue to pump oil above quota for now. President Trump thanks Saudi Arabia for pushing prices lower in a tweet. "Thank you Saudi Arabia but let's go lower".
Energy bills in the Trump Hotel Group the main beneficiary. Not so the shale oil producers of America, with an average cost of production at around $50 dollars. US output will be slashed. The nodding donkeys will be put to sleep and soon.
We expect a 20% drop in the oil rig count if prices stay at current levels. The correlation between the count and prices is high, 0.9775 with a 16 week lag. The US and Russia are just as much the price governors as OPEC. Lower prices will mean job losses in oil and coal! The good news ...
It seems unrealistic for prices to remain at current levels on fundamentals. With so much troubled oil on the waters at any given time, futures trading may yet push prices lower. We have seen this in the recent past and could do see it again in this short cycle.
Back in the UK, there was a slight setback for the Chancellor this week. Borrowing in October came in some £1.6 billion higher than prior year. Receipts were up by just 1.2%, spending in the month was up by almost 8%. Austerity is over, the pay caps have been released. Borrowing for the year to date was £26.7 billion down by £11.2 billion prior year. For the year as a whole we expect borrowing to be around £28 billion. Total government debt was £1.8 trillion around 84% of GDP. Over on the U.S.A. ...
Let's be honest ...
President Trump was in great form for Thanksgiving this week. Recovery from the mid term election set back was evident. “I made a tremendous difference in this country,” he said. “This country is so much stronger now than it was when I took office and you wouldn’t believe it and when you see it, we’ve gotten so much stronger, people don’t even believe it.”
Leaders around the world say to me when we meet, "You have made such a tremendous difference, your country is so much stronger now than it was when you took office apparently. We don't believe it."
In many ways they are right to have their doubts. Despite strong GDP growth this year, the stock market gains have been eradicated as markets fret about tariffs and trade wars. Fears for growth in 2019 materialize as Trump policies generate domestic inflation and hit job prospects.
The President no longer claims credit for the strength of the stock markets, blaming Fed Chair Jerome Powell for the rapid rise in rates. This week he attacked Steven Mnuchin, the Treasury Secretary who made the Powell appointment in the first place. Mnuchin, Mattis and John Kelly may be on the way out.
The President pardoned "Peas" the Thanksgiving Turkey this week. It is a tradition bordering on farce with an element of tragedy. The average life span of a turkey with a Presidential Pardon is less than two years. Over fed and over weight, life on the farm is not rich in longevity. Two years at best. 'That's better than the average life span of a senior official in the White House!
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update, we will expand further on market moves ... and assess the fortunes of our "Empires of the Cloud" tech fund ...
"We are leaving the EU on the 29th March" claimed the Prime Minister this week.132 days to go, we have a deal. It's a good deal, the best that could be secured. We actually get to keep the fish and to leave the Common Agricultural Policy. It gets even better.
We "take back control, with an end to unfettered immigration". We will stay within the customs union until December 2020. The lure of a generous free trade deal to follow. Citizens rights will be protected in mutual territories. Planes will fly, fish will swim. Champagne and Prosecco will flow for many Christmases to come. It's a great deal ...
It's a soft Brexit, hard Brexit avoided. The CBI applauded the deal. Take the offer now! Who would have thought the EU would offer the concession, cherry picking free movement of goods, without free movement of labour. OK, there are a few complications. We will pay €40 billion euros to settle outstanding obligations. The European Court of Justice will monitor MPs expenses. We will be allowed to leave the customs union but only with the agreement of our European partners.
Four hundred and eighty five pages of complicated cross reference devoid of executive summary. Something for everyone not to like and so it proved. For Dominic Raab, the Brexit Secretary it was all too much. The shock of discovering Britain was dependent on sea ports for the movement of goods had been a huge setback last week. So much dependent on the Calais - Dover route particularly, who would have thought? Yes Proximity trade models rule. The Brexit Secretary resigned from Cabinet, the shock of it all.
For Esther McVey it was also five hundred pages too far. The Works and Pensions Secretary explained in her resignation letter, "The deal you put before the Cabinet yesterday does not honour the result of the referendum. You have said that we must regain control of our money, our borders and our laws and develop our own independent trade policy." That isn't happpening. I am back off to Tatton.
Come on Esther, two out of three isn't bad. Business doesn't really want an "independent trade policy" anyway. What a load of nonsense. They are quite happy with the status quo thanks.
More resignations, the Cabinet wobbling. What would happen to the Brexiteers in Cabinet, particularly what of Michael Gove? The drama was unfolding but ERG was about to strike …
My right honourable friend ...
A vote of no confidence in the Prime Minister appeared as an option once the deal was published. Forty eight is the magic number of Tory MPs needed to secure a vote of no confidence. The ERG (European Research Group) was to lead the charge.
Jacob Rees-Mogg at the vanguard spoke in the house. "What my right honourable friend says and what my right honourable friend does, no longer match." "Should I not write to my honourable friend the member for Altrincham and Sale West".
The latter of course a reference to Sir Graham Brady, Chairman of the Conservative back bench committee. The writing, a letter of no confidence which duly followed. The temperature was rising the number of letters submitted did not. MPs were in constituency on Friday and will be over the week-end. They will test the appetite for a challenge to the Prime Minister and the prospect for a leadership election.
Forty eight the number to force a vote, then 158 the number to force the Prime Minister out of office. Then what? The ERG charges forward without any idea of strategy to follow. Boris Johnson, David Davis, Michael Gove, Esther McVey, Amber Rudd ... the list is not inconsiderable for options to rule the party. Really?
It is a tragedy of course. The Prime Minister is trying to secure the best deal for the "British People" and for business. There is no self interest, no idealogical prejudice. The negotiator has returned from the ring with a solution to the deal. Three hours explaining the deal in the house, then a battering from colleagues of every hue for the remainder of the day. The reward, an evening of baked beans on toast and a large whisky to end the day. Yes husband Phillip poured the drinks, made the toast and did the washing up. A gent!
The Choices Before US ...
All eyes were on Michael Gove as Raab and McVey left government on Thursday morning. To lose Gove at that stage would have been a cruel blow to the Prime Minister at a particularly vulnerable moment.
The DEFRA Secretary was offered the job of Brexit Secretary. He declined but agreed to stay in cabinet, as one of "Five Brexiteers" pushing for am improvement in the final deal. Andrea Leadsom, Chris Grayling, Penny Mordant and Liam Fox remain in government for now. Cabinet ranks amplified by the return of
close ally Amber Rudd and arch remainer Stephen Hammond. Stephen Barclay becomes the new Brexit Secretary.
So what happens next? Boris Johnson has been strangely silent to date. Better to wait post week-end to see which way the winds blow for Boris, always the man of pragmatic principal.
Monday we will learn if the challenge to the Prime Minister is to be made, let's hope not. The EU are set to approve the agreement on the 25th November, there may be a few tweaks wither side before the deal is done.
Either way we are set to leave the EU (after a fashion) at the end of March next year. To leave without an agreement would be a disaster, to remain within the EU is now an impossible dream. The deal on the table is a good deal for the UK and for business. It is not perfect, there is something for everyone to dislike. On the other hand there is something for everyone to welcome, hard Brexit avoided, most of all ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update, we will expand further on market moves ...
Brexit is turning out to be a lot more complicated than anyone thought. Listening to Dominic Raab, the Brexit Secretary, it's easy to understand why.
"I had not quite understood that everything that comes to Britain has to cross the sea" explained the Brexit secretary this week.
"It's a function of the way the UK is a peculiar, geographic entity"
he explained. Lessons from history: RIchard II, Act 2 scene 1 ...
"This royal throne of Kings, this earth of majesty, this other Eden, this demi paradise, this fortress of nature, this blessed plot, this realm, this peculiar geographic entity." Yes the Brexit Secretary has realised Great Britain (not the UK) is an Island ... a sceptred Isle in fact.
"“I hadn’t quite understood the full extent of this", he said on Wednesday ... "but we are particularly reliant on the Dover-Calais crossing. You know that bit where England is closest to France." Well now we know. The White cliffs of Dover offer a Brexit reality shock and a lorry park extending to the M25.
To be fair, Government can be difficult, often offering a steep learning curve. Karen Bradley Northern Ireland Secretary had explained, “I didn’t know that Nationalists and Unionists wouldn’t vote for each other." Well who would have thought? Someone should have explained the complexity of office before taking the job, you have to think, culture and sport may have offered a better option.
David Davies had promised the easiest deal in history. Jo Johnson now suggests "the easiest deal in history is leading to the biggest gaffe since Suez and the greatest crisis since the Second World War."
Yes Jo Johnson, transport secretary, resigned from Government this week. Brothers Johnson are united in abandoning Downing Street. It's a bit like that moment in the disaster movie. All the birds fly in one direction, the animals run from the jungle, something horrible and implausible is about to appear from the shrubbery but you are not sure exactly what that is.
It turns out to be The Prime Minister's Brexit deal. It is 99% agreed ... with husband Phillip at least. A few details still require ironing out. Taking back control appears to refer to Brussels and not to Westminster. We will stay within the customs union until we don't, then there will be a backstop.
Some matters are purely technical, how to you paint a border on the Irish Sea? How do you stop fish swimming across the Channel? A deal is close. It should all be over by Christmas, but which Christmas? The deadline is looming, business cannot afford to wait.
This week, CME Group. said it’s moving its $240 billion-a-day short-term financing market to Amsterdam from London. German ball bearings maker Schaeffler announced the closing of two of its three British plants. Surgical appliances manufacturer Steris said it plans to move its corporate base to Ireland from the U.K.
Panasonic is moving to Amsterdam ...
Brexit is complicated, now they tell us ...
UK Growth up by 1.5% in third quarter ...
Good news for the Chancellor this week. The economy grew by 1.5% year on year in the third quarter following growth of 1.2% and 1.2% in the first and second quarters.
Manufacturing was up by just 1%. Construction output was up by 2%. Service sector expansion was up 1.7% with hot spots in financial services, distribution and leisure. For the year as a whole we expect growth of 1.4%.
In 2019, the EU has suggested growth will be just 1.2%. The OBR forecasts average around 1.5%. The Bank of England has forecast growth of 1.8%. The giveaway budget suggests growth could well be 2% or higher assuming a satisfactory basis for Brexit is achieved. Jobs growth continues as earnings increase, the outlook remains positive for the UK despite the short term nerves.
House prices increased by just 1.6% in October according to Nationwide and 1.5% according to Halifax. Housing market transactions remain relatively low. There were 1.2 million transactions in the 12 months to September 2018,
Car sales fell by 3% in the month and 7% in the year to date according to the SMMT. For the year as a whole, diesel sales were down by 30%, petrol sales were up by 7%. In 2018, registrations are expected to fall by just over 6% to a level of 2.4 million. The short term position remains mixed.
The IMF continues to warn of the damage to world trade of tariffs and the threat of a China - US trade war. We expect trade volumes to slow to less than 4% this year following growth of 4.6% in 2017.
This week the Fed voted to keep rates on hold. Markets expect a rate rise in December with more to follow in 2019. Rising dollar rates will place pressure on emerging markets, exacerbating the challenge of serving debt and accelerating capital outflows.
Grumpy Trump arrives in Europe ...
As expected, the GOP lost control of the house, the Republican hold on the Senate was extended. It was a setback for the President but ...
Trump announced a great victory, fired Jeff Sessions and excluded Jim D'Acosta from the White House Press Corps.
The President talked of working with the Democrats on a bi-partisan basis, assuming there will be no pursuit of impeachment nor difficult "investigations" of course.
A Federal judge blocked construction of the Keystone XL oil pipeline. A disgrace said Trump. A recount was called in Florida, another disgrace said the President. A grumpy Trump traveled to Europe opening up a rift with President Macron on arrival with more to follow no doubt.
It's going to get tough for the President. A siege mentality will grip the White House. Pressure will increase as the President's tariffs disrupt expansion in the USA and the Democrats flex their muscles. Much to follow ... but ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update, we will expand further on market moves ...
Budget Day on Monday! The Prime Minister had announced an end to Austerity. The Chancellor talked of austerity coming to an end. "Not so much the end, nor the beginning of the end but the end of the beginning of the end."
Actually, it wasn't really about austerity at all. It was all about Brexit. A softening up of the back benches; a preparation for the difficult discussions ahead.
It was the beginning of profligacy of huge dimension. Blood on the spreadsheets for spreadsheet Phil. The rabbits out of the box, genies out of the bottle, leaks laid out on the despatch box. It was huge fun. £84 billion for the NHS, £15 billion for personal allowances, £5 billion for Universal Credit, £4 billion for house building, £1 billion for business rates.
Money for the High Street, Money for infrastructure, Money for Brexit, Money for potholes, Money for investment, Money for defence, yes there was even Money for public toilets. "Rate relief for those providing relief", that's a Hammond joke. A review of police budgets and money for schools, £400 million for "those little extras" like books and teachers.
Money for the regions, for the Northern Powerhouse, the Midlands Engine and Cornish Pasties. Money for the Nations, for Scotland, Wales and Northern Ireland including the DUP of course. Money everywhere. Funded by Digital Services Tax on the FAANGS like Facebook, Apple, Amazon, Netflix, Google and Satan.
Money everywhere funded by increased borrowing. In the current year, borrowing is expected to fall to less than £26 billion. That's down by £14 billion from prior year and £11 billion lower than the PBR had projected in March this year. It does make you wonder why so much attention is based on the OBR numbers at all! The forecasts aren't that great. The OBR expects GDP growth to average around 1.4% over the forecast period.
Borrowing is expected to average £20 billion in each and every year. A fiscal stimulus equivalent to equal to 1% of GDP. Based on current trends and without the spending spree, the government could have balanced the books within three years. Now the plan is to spend over £100 billion to settle nerves ahead of the Brexit move. The Chancellor explained he has a further £15 billion if needs be if things get tough. He may have to spend some of that on the Fixed Odds Betting Terminal Taper, a delay, probably not a gamble worth taking in the end …
Inflation Report ... worried about Brexit ...
Inflation report this week, the Bank is more upbeat about the economy than the OBR. Growth is expected to average 1.75% over the forecast horizon. Earnings are expected to rise above 3%. Job prospects remain buoyant, inflation is expected to remain over target but will return to the 2% level by the end of the timescale. Interest rates will rise gradually and a limited extent. Base rates are expected to rise to 1.5% at most within a three year horizon.
It's all pretty much the same stuff as usual but the Bank is concerned about Brexit. The forecasts are postulated on a mid term scenario. The range includes a smooth Brexit with continued access to the single market within the customs union. The most extreme scenario, would be a hard Brexit. No access to the single market, outside of the customs union, trading within the WTO framework. The Chequers deal, is scored about 6 plus. Canada Plus (a return to the colonies by The Governor), would mean, a job well done in Threadneedle Street, rate rise avoided during term in office.
The Inflation Report had been produced without access to or knowledge of the Autumn Budget. A profligate Chancellor boosting spending by 1% of GDP in each and every year over the next five years had not been included in any calculations. A fiscal relaxation of such dimension would lead to a higher growth forecast to over 2% in each year. An economy already experiencing supply side constraints would be subject to greater inflationary pressure than in the current outcome.
The Bank will assess the impact of the latest budget measures in the model forecasts. Expectations must surely include a revision of forward guidance on interest rates. Ten year gilt yields moved to 1.5% this week. We would expect a further rise to 2.5% within six months. Assuming a smooth Brexit, interest rates will increase much more rapidly than market expectations currently. 1.5% will be the projected level for base rates within twelve months, with a further 1% rise on the cards in 2020.
Buckle up. We are leaving Planet Zirp and will move into orbit with our North American cousins sooner than expected. Strangely, the Governor has suggested interest rates could rise in the event of a no deal scenario with the EU. What's that all about?
The Bank fears a supply side shock post Brexit, supply interruptions as a result of border disruption. More significantly a relocation of capacity out of the UK, within the customs union could occur in certain sectors. Excess demand over supply would lead to an acceleration of inflationary pressures exacerbated by softer currency. The reaction function for monetary policy would lead to a faster hike in base rates than currently expected. It wouldn't make sense, set against a scenario of rising unemployment, higher inflation and a real income squeeze.
In the case of a hard Brexit, an expansionary fiscal policy already outlined would be met by a more passive approach for monetary policy. With little or no capacity for rate cuts, interest rates would still be expected to rise gradually and to a limited extent. The Chancellor has indicated he still has some £15 billion of provisions which could be made in the event of a significant slowdown. The economy would slow, inflation would rise and the debt burden would increase ... but no need to worry, Dominic Raab is on the case …
Eye on the prize ...
Mid terms week. Trump has admitted the GOP may lose control of the House. "Well I can't be everywhere" he explained modestly.
Probably just as well. The President has forgotten the basic mantra, it's the economy stupid". Growth of 3% this year, a strong jobs market, real earnings rising, medium term problems for the economy obscured, Democrats should be out of the frame when it comes to voting.
Project Fear should have been based on the risk to recovery and jobs if Trump loses control of the House. Instead the President focused on the threat of an invasion on the Southern border of huddled masses yearning to breathe free.
"Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!"
No lamps by the Golden Door. Trump is lining up the National Guard and the Marine Corps by the Great Wall with a "Shoot to Kill" Policy if as much as a stone is lifted in anger. Separation of mother and child the back stop policy. Just as well the masses will arrive after the mid terms, the photo ops would not have been flattering.
The army projects less than 20% of the current caravan will make it to the Southern Border. With 15,000 troops in wait, that's ten soldiers for every would be arrival. No need to lock up your daughters of the South.
Trump has been surprised by the constraints of the office. He has had to learn how to deal with Congress, congressional leaders and the constitutional constraints on the executive branch. If Democrats take the House, he will be further shackled. Let's hope that will include tariffs. There are serious concerns in the Republican Party, the White House is not fully attuned to this. Surely Fox news would have provided a briefing.
The good news this week. Trump will sort out the deal with China at the G-20 meeting in Argentina. Tariffs are hurting in Trump's homeland. Unintended consequences include relocation of domestic manufactures outside of the USA. A deal with President XI is on the cards. Trump has an eye on the real prize. A Trump Tower in Beijing, Shaghai and Pyongyang ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update this week, we will expand further on market moves ...
Budget Day on Monday! Whatever next. It was tough accepting the abolition of the Spring Budget. OK, the origins were based on a land tax in a predominantly agrarian society. Even so
tradition demanded a Wednesday delivery at least. It has been on a Wednesday every year since 1962. It hasn't been on a Monday since beyond the temporary introduction of income tax in 1799. Probably for good reason.
Chancellor Philip Hammond was ready to deliver the budget on Wednesday 31 October. Treasury aides pointed out to him that it's actually Halloween. With an average age of 31 years, HM Treasury staff had other plans presumably. Pity really it would have made for some spectacular headlines. Now we must speculate on the "trick or treat" contents of the Red Box.
The Chancellor is off to a good start with borrowing for the current year expected to be well below forecasts. In the first half of the financial year, borrowing was just £19.9 billion compared to £31 billion last year. Retail sales growth of over 5% in the period had generated VAT revenues up by 6%. Income and Capital Gains Tax revenues were up by over 7%. For the year as a whole, borrowing is expected to fall to less than £27 billion compared to £40 billion last year. Within two years it seems plausible the books could be balanced, assuming ongoing growth of around 1.5% in this year and over the next two years.
Herein lies the first dilemma for the Chancellor. It is the delicate matter of Brexit. A hard or soft outcome could affect the growth and revenue figures in the year a head. According to NIESR, their soft Brexit central forecast for GDP growth is 1.9 per cent in 2019. Under a hard Brexit scenario, economic growth slows to just 0.3 per cent. The spread is equal to £10 billion in potential or lost revenues to the Exchequer.
So what can we expect in the budget? Herein is the second dilemma. Hammond would love to offer a balanced budget within a two year horizon. The Prime Minister has promised some £20 billion for the NHS and an end to austerity. One Nation Tories are demanding a fix for Universal Credit of around £2 billion to £3 billion. Hints of £1.5 billion to ease high street rates and development plans in town centres have emerged over the week-end. More money for potholes in the North and for big holes in the South East is expected. Backbenchers would like to see a cap on Fixed Odds Betting Terminals at a cost to the Treasury of £0.4 billion.
So how to bridge the gap? The Americans have warned this week against a tax on US tech giants. A freeze on fuel duty has already been announced. The Chancellor would be wise to cancel the corporation tax cuts from 19% to 17% saving some £5 billion. What is so special about a 19% tax rate anyway. A reversion to 20% would save some £8 billion in total. Better that, than an unwise attack on pension contributions and pensioners specifically.
Growth is the solution to the Chancellor's dilemma. The Brexit impact will not be as severe in the first year as NIESR suggests. Revenues will be higher next year but spending must be increased. Austerity has run it's course. Voters in every income bracket are concerned about a break down in law and order and the availability of first line emergency care. An expansive budget could push growth to 2% in 2019 and 2020. No need to worry about Brexit as the transition process drags into the next decade ...
US economy up by 3% in Q3 ...
Preliminary figures suggest the US economy grew by 3.0% in the third quarter of the year, following growth of 2.9% in the second quarter. We expect growth of around 3% for the year as a whole. The White House tax cuts and spending plans are fueling growth.
Consumer spending was up by 3%, spending on durable goods was up by 6%. Investment increased by over 5% in the quarter. Investment on capital goods was up by 6%. It's all good news for President Trump ... or is it?
Government borrowing is taking a hit with borrowing set to hit the $ trillion dollar level in the current financial year. The trade deficit is also taking a hit. In Q3 imports of goods and services increased by almost 6%. Goods imports increased by 6.5%. Exports in comparison, were up by just 4%. There may be some element of front running ahead of tariffs in the data but strong growth in the US will result in a higher trade deficit despite the introduction of trade barriers with China and the rest of the world.
So far the evidence on tariffs is mixed. Caterpillar warned the US trade war with China was driving up the costs of raw materials and overshadowing the outlook for growth in the medium term "Material costs were higher primarily due to increases in steel prices and tariffs." the claim.
Ford warned of a deteriorating outlook for sales in China. BMW announced plans to take control of the Chinese joint venture and to expand production on the main land. Harley Davidson announced earlier in the year, plans to relocate some production outside of the USA.
Trump's tariff plans will create problems for the US economy. The trade war with China will not provide any solutions for Uncle Sam in the short or medium term. Exports to China are founded on agriculture and raw materials. Soybeans, cotton and corn feature along with copper, coal and aluminum. Aircraft, vehicles and machinery account for 40% of exports. Relocation to China and South East Asia will figure in forward plans for manufacturers, as new alliances are formed in the largest trading block in the world. Tariffs will push them into relocation.
The Largest Trading Block in the World ...
Prime Minister Shinzo Abe was in China this week along with a big trade mission from Japan. From competition to co-operation the mantra, the two nations signed a broad range of agreements including a $30 billion currency swap pact.
Japanese firms including Toyota are planning on a normalisation of ties with China. They seek to compete with US and European rivals as diplomatic tensions ease between the two nations.
The prize for all is the unification of Korea within an economic trading block at least. This week the scariest place on earth just got a little less scary. North and South Korea removed all weapons and ammunition from the Joint Security Area. South Korean President Moon Jae-in and North Korean leader Kim Jong Un have vowed to turn the entire DMZ into a peace zone. Earlier this month the leaders agreed to begin the re connection of road and rail links promising easier passage for families, friends and tourists!
Economic co-operation would accelerate growth and equalization. South Korea has a population of 51 million and a GDP per capita of $33,000 dollars. The North has a population of 26 million and a GDP per capital of just $600 dollars. A move to equalization, would ensure, the Korean peninsula would become the eighth largest economy in the world. Together, China, Japan and Korea would form an economic area larger than the USA, Canada and Mexico.
Australia, New Zealand, Malaysia, Singapore and Vietnam would form part of the new South East Asian trade block. China, with growth of 6.5% this year is the second largest economy in the world. With a population of 1.4 billion, China still struggles to enter the top 50 in the world in terms of GDP per capita. The potential is huge.
Leaders around the world are concerned about the vagaries of the White House administration. Policy lacks coherence. Trump's tariff tantrums are becoming irrelevant as the world makes alternative plans. The move in South East Asia is so significant. Next Russian membership of the European Union. Where then would sit Uncle Sam ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update this week, we will expand further on market moves ...
Nick Clegg will be the next head of of global affairs at Facebook. He will be moving with his wife, Miriam Gonzalez and their three children to California. Ms Gonzalez will pack in her job as a partner at the international law firm Dechert. It must have been a tough decision.
According to the Times, two years ago Sir Nick said "I'm not especially bedazzled by Facebook". "I find the messianic Californian new worldly touchy feely culture of Facebook a little grating." It is suggested Nick Clegg turned down the initial approach.
It took a phone call from Sheryl Sandberg and a subsequent meeting at the home of Mark Zuckerberg to clinch the deal. Two hours in the garden with the Facebook founder must have been the turning point. Stock options and a hefty salary may have helped. The average pay of a senior FB exec last year was $25 million dollars. Sir Nick's salary has not been disclosed. He will surrender his UK £115,000 a year parachute after losing his seat in the latest election.
The social media giant faces several challenges in the geo-political sphere. Interactions with sovereign government are increasing in relation to taxation, data security and political message manipulation. It's a great move to bring in a politician, a former deputy Prime Minister of the UK as head of global policy and communications. Yes and he is even quite liked in Europe! What's not to like!
Borrowing falls ...
A great boost for the Chancellor this week. Borrowing fell at the half year stage to £19.6 billion. This compared to £30.6 billion last year. Despite the sluggish growth in the first half of the year, revenues were boosted by higher tax receipts. Spending plans were constrained, producing a radical improvement in the underlying financial performance.
For the year as a whole, borrowing could fall below £28 billion compared to almost £40 billion last year. It may even be lower if largesse is constrained in the budget statement later this month.
The Prime Minister has promised an end to austerity. The Treasury is challenged to find an extra £20 billion for the NHS. Government debt is around £1.8 trillion (84% of GDP). Despite the improvement in the borrowing figures, there is little scope for a radical boost to spending plans in the absence of significant tax rises.
The latest job figures confirm the economy is tracking well. Unemployment fell to 1.36 million in August. The unemployment rate held at 4%. The number of vacancies in the economy was steady at 833,000. Sector pressures were most evident in the hotel, food and beverage sectors along with retail, health and social care. It is entirely unclear how government immigration policy is set to address the fundamental structural problems in the UK jobs market.
Wages are increasing. Pay levels suggest 3% growth will be the norm into the final quarter. Good news for households, as the headline rate of inflation fell to 2.4% in September. Goods inflation and service sector inflation fell back from prior months levels. Real wage growth will boost spending in the run up to Christmas. Retail sales in September were up by 3% in volume terms and almost 5% in value.
The UK economy is holding up well. We expect growth of 1.5% this year. A boost to government current and capital spending would push the growth rate higher. An improvement in productivity would be the reward. And then of course, there is the rather difficult question of Brexit …
Round and Round we go ...
Sterling closed above the $1.30 mark this week. Strange really. Ten year US bond yields closed at 3.2%. The inflation data will make it difficult for the MPC to move rates in the short term. UK gilt yields fell to 1.5%.
The Fed will push US rates higher in December and through 2019. We expect 3.5% could be the level of US base rates by the end of next year. The yield curve will push bond prices lower. 4.5% will be the next US yield target. The Transatlantic spread should be pushing the "Greenback" higher and the Pound lower.
Sterling is floating on a Brexit Breeze, baffled by noises off. Positive news pushes the pound higher. Negative news places pressure on the rally. The $1.30 level holds. Barnier suggest a deal is 90% agreed. The Prime Minister has offered to stay within the Customs Union indefinitely. The transition process may be extended for a further year beyond the existing two year horizon.
Unfortunately, the Prime Minister, "Primus Inter Pares", is operating "Ultra Vires" in an attempt to get an agreement with the EU. It would appear neither cabinet, nor back benchers nor the opposition party are in agreement with May's moves.
"Backbenchers Tell May To Justify The 'Betrayal" the story line in the Times today. The Prime Minister will be hauled before the 1922 committee this week to explain concessions made to Brussels. Another tough week in office lies ahead. Perhaps a job as head of Global Affairs for Twitter could be the future, once the deal is done! Either that or a spot on Strictly Come Dancing. Life is just a preparation for what lies ahead ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update this week, we will expand further on our market views ...
The UK economy expanded at a slightly faster rate in the three months to August. Growth was 1.5%, up from 1.2% in the first quarter of the year, according to the latest ONS monthly tracker,. Construction output was flat. Manufacturing output was up by 1.3%. Service sector growth increased by a modest 1.6%.
For the year as a whole, we expect the economy to expand by 1.4% or 1.5% at best in the absence of any major data reviews.
This week, Jaguar Land Rover announced a two week shut down following a sales slump in the UK and overseas markets.
Britain's largest carmaker will close its Solihull plant for two weeks later this month, following a near 50 percent fall in sales to China. China's automobile sales have been falling in recent months. Sales fell by 12% in September. It was the third consecutive month of falling sales. For the first time since the 1990s, the industry may experience a drop in car sales year on year. The economy is slowing. Trade frictions are making consumers cautious about spending on big ticket items
In the UK, new car registrations fell by 20% in September. Diesel sales were badly hit. New regulatory requirements hit availability in the month. The impact on manufacturing in the sector and related industries may impact on third quarter growth overall.
As fears over Brexit increase, manufacturers may seek to augment stock levels of raw materials and components to offset continuity of supply risks in the short term. The impact on growth is expected to be minimal in the short term. Any impact on output would be largely offset by a deterioration in the trade deficit.
IMF issues world trade warning ...
The IMF has cut it's growth forecast for the US next year, warning that Trump’s protectionist trade policies will harm growth domestically and around the world.
In the World Economic outlook, released Monday evening, Global growth is expected to be around 3.7% for 2018/19 down from an earlier forecast of 3.9% just a few months ago.
The U.S. economy is expected to grow 2.9 percent this year and 2.5 percent next year. In April, the IMF forecast the U.S. economy would grow 2.7 percent in 2019.
“If you have the world’s two largest economies at odds, that’s a situation in which everyone is going to suffer,” said Maurice Obstfeld, chief economist at the IMF. The IMF also reduced its growth forecast for China next year to 6.2 percent because of the trade war.
The IMF repeatedly singled out Trump’s trade actions as disruptive to global growth and prosperity, especially the imposition of tariffs on roughly half of the goods that the United States imports from China.
The US trade deficit with China is increasing despite Trump's tariff war. China enjoyed a record high $34.1 billion trade surplus with the United States in September, taking the surplus for the year to date to $225.8 billion. That’s significantly higher than the $196 billion recorded between January and September last year.
Trump keeps and eye on crazy Fed ...
Trump has been outraged by the actions of the Federal Reserve blaming Fed Chair Jerome Powell for causing the turmoil in stock markets around the world. According to the New York Times this week ...
"President Trump responded to falling stock prices on Thursday by continuing to throw rocks at the Federal Reserve. He described the Fed as “crazy,” “loco,” “going wild” and “out of control” for slowly raising interest rates against the backdrop of a booming economy."
No other modern president has publicly attacked the Fed with such venom or frequency but someone has to take the blame. Trump has been riding the economy hard, bragging about job creation, tax cuts and reduced regulation, and claiming credit for the rise of the stock market. Now that the market has lost 5 percent of its value in the last week, Mr. Trump is insisting someone else is to blame.
The American economy continues to grow, prompting the Fed to raise interest rates and drawing the president’s anger. The Fed’s chairman, Jerome H. Powell, has said that the economy is in a “particularly bright moment”. He sees no clouds on the horizon.
Despite the criticism, Trump has said he doesn't want to fire the Fed Chair. It is not even clear if he could. Markets would react badly to any move to politicize the central bank. The Federal Reserve Act of 1913 established the Federal Reserve as the central bank of the United States to provide the nation with a safer, more flexible, and more stable monetary and financial system. "Safe in their hands" is not a mantra one would associate with Trump in control ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update this week, we will expand further on our market views ...
Plus! Don't Miss the pro-manchester economics conference on the 18th October. I shall be anchoring the "show" and providing an update on prospects for the UK and World Economy. Book Now We have great agenda and line up of speakers on the day as we discuss the "Economics of Greater Manchester".
The Prime Minister danced onto stage at the Conservative Party Conference this week. I say dance, it was more an expression of limited movement, a bit like the approach to negotiations with the EU.
Bouyed by the success of the African tour, Theresa May appears to be angling for a spot on "Come Dancing" in a celebrity life post Number Ten.
We may have to wait some time. Despite rumblings on the back benches, the Prime Minister shows little signs of quitting.
"Britain's best years are still to come" assured the PM. It could have been a reference to her own career. "The end is in sight for austerity" Hurray! "We must be the party for everyone." OK.
The remarks will come as a bit of a surprise to those households set to lose £200 quid a week as a result of Universal Credit roll out. The comments will also come as a bit of a surprise to the Treasury, set to find £20 billion to $30 billion quid to fund post austerity largesse.
There were several major announcements, primarily the Chancellors begrudging freeze on fuel duty for the ninth year in a row; removal of the cap on how much councils can borrow against their Housing Revenue Account; and commitments on health care and cancer care specifically.
Most of the conversation in conference was devoted to the difficult issue of Brexit.The highlight was
of course Jeremy Hunt. He compared the EU to the Soviet Union, accusing it of becoming “a prison”, vowing to “fight” for the Brexit deal Britain wants. Excellent diplomacy, never a strong point for Foreign Secretarys of late. "Gunning for the Gulag" may become the new negotiation strap line.
Well if only we knew what we want. Canada Plus or Canada Dry? The deal from that place in the Chilterns that rhymes with wreckers. "Chuck Chequers" had become such a slogan for the Brexiteers, the term "Chequers" was dropped altogether from the Prime Minister's speech.
The Prime Minister will plough on with the plan despite resistance from Brussels and her own party. A beefed up agenda may yet win the day. "Chubby Chequers" would be my personal favourite with a "Twist Again" them tune to bodge the problems of the Irish border.
Jean- Claude Juncker, late this week, suggested an agreement could be achieved in weeks! Donald Tusk was less optimistic, it was ever thus …
House Price Steady, Car Sales Slump ...
House prices were steady in September despite headline news of a fall in prices. According to the Halifax HPI, house prices were up year on year by 2.5% in the month. The average house price was £226,000 approximately.
Russell Galley, Managing Director of the Halifax said "Mortgage approvals and housing completions remain broadly unchanged". A pick up in wage growth has eased issues of affordability slightly.
It was a similar story at Nationwide. House prices increased by 2% in September. Prices are expected to increase by just 1% for the year as a whole according to Robert Gardner, Nationwide's Chief Economist. Pessimistic? Perhaps. In general we would expect house prices to move in line with earnings. A rise of 2% to 2.5% may be possible assuming no real setbacks for the UK economy.
Setbacks for the Motor trade were evident, as new car registrations fell by 20% in September. It's the big month too! Car sales fell to 339,000 from 426,000 last year, a fall of 20.5%. Year to date sales were down by 7.5%. Diesel sales were down by 40%. The big drop was largely blamed on supply side restraints.
Manufacturers are struggling with the timetable of tougher emissions targets and regulatory approvals. The situation should ease through the rest of the year. Business confidence and consumer confidence are also overhanging sales performance in the year to date figures.
Sterling closed higher this week against the Euro and the Dollar. Excitement about a deal with Brussels pushed the currency higher ... if only ...
Strong Jobs Growth pushes markets lower ...
Strong jobs growth data in the U.S. pushed markets lower around the world. The unemployment rate fell to 3.7% as 134,000 jobs were added to the payroll. The data may have been affected by Hurricane Florence. Retail, leisure and hospitality jobs fell by almost 40,000, sectors most vulnerable to hurricane setback.
In August the payroll gain was revised up. August was already reported to be strong, but now looks to have been a blockbuster month for job creation. The previously reported 201,000 jobs added has been revised up to 270,000. Despite the strong jobs creation, wages and inflation remain muted for now.
Markets were spooked this week despite the goods news on NAFTA. The Amazon commitment to a $15 dollar per hour minimum wage disturbed as fears for earnings and prices escalated. Ten year bond yields moved higher to 3.2%. We expect a further rise to 3.5% in the short term. The Fed is committed to at least one additional rate rise this year, with more to follow in 2019.The yield curve is not inverting, long rates are rising, to offset the short rate move. The yield curve is returning to norm after years of life on Planet ZIRP, expect 3.5% rising to 4.5% over three years.
Stocks have nothing to fear from rising yields and Fed rate action for now. The moves are a reflection of strong growth in the U.S. set to expand by over 3% this year and next. Expansion will be good for earnings and share prices for some time to come ... the downward moves have been overdone ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update this week, we will expand further on our market views ...
Toyota warned of a shut down this week if Britain fails to find a solution to the Brexit negotiations. “If Britain crashes out of the EU at the end of March, we will see production stops in our factory,” said Marvin Cooke, the managing director at the firm’s plant in Burnaston, near Derby.
Asked how long the production stoppages would last, he said: ”We can’t predict, it could be hours, days, weeks, even months.”
The Japanese car manufacturer is the latest in a list of foreign car companies to say there could be temporary stoppages and maybe even job losses if there are checks at Dover and Calais as a result of no deal. Toyota follows warnings from Honda, BMW, JLR and more.
Firms across the UK are beginning to build stocks of raw materials and components ahead of the March deadline. Even the NHS has plans to stockpile ambulances ahead of the critical date. An “urgent” £9 million order for 112 new ambulances has been placed by health chiefs amid fears none will be available after Brexit. Built by Mercedes in Germany and finished off in Ireland, the vehicles are desperately needed by London Ambulance Service.
Brexit is looming with firms in a quandary about the implications for business and investment. According to a survey by the British Chambers of Commerce this week, A fifth of businesses surveyed (21%) will cut investment if there is ‘no deal’, 20% will move part or all of their business to the EU and 18% will cut recruitment.
Larger firms and those who are internationally active are the most exposed to the ramifications of ‘no deal’. 28% of firms with over 50 employees and 24% of those who export or import internationally say they would cut investment plans.
Latest figures released by the ONS, suggest growth is grinding to a halt. In the first half of the year, growth was around 1.2%. Investment fell in the second quarter, government spending was flat. The trade in goods deficit increased to £34.7 billion compared to £32 billion in the first quarter. The consensus forecast for growth this year is just 1.3%. Growth boosted by an element of stock build perhaps at the expense of an accelerated trade deficit.
Chequers or Canada Plus? It's hard to see a proposition which is acceptable to the Tory party let alone the EU. Six months to the deadline with no solution in sight. Rollover Brexit may be the only way to avoid a roll-on roll-off crisis at the docks …
Block at the Dock ... The Future of Trade ...
Fears are increasing in the transport industry of a post Brexit crisis for trade. Delays at the ports are inevitable according to experts in the Road Haulage Association.
The industry already faces a driver shortage of some 45,000 at present, forecast to increase to 60,000 in the near term. UK drivers cannot be sure they will be allowed to drive in Europe in the event of a no deal Brexit. Many small business owners are now forced to review their commitment to international trade.
European firms are taking a similar negative view on forward contracts into the UK in 2019. Shipping goods into the UK will be expensive, subject to additional paperwork and vulnerable to inevitable delays. Transport firms in Germany are reviewing options. Polish contractors are deciding transport within the EU, will provide a simpler, less expensive, logistic free solution to building an international business. Who wants to be stuck in a lorry park in the South East of England, with perishable goods on the back of the truck. Freight rates are rising already, as the squeeze begins to take shape.
The Brexit timetable is accelerating. Decisions are now being made which will affect the UK over many years ahead. The reality is dawning, no deal is looming, with all that may entail.
Free to trade with the rest of the world, doesn't look to be such an attractive option as US tariffs begin to disrupt the pattern of trade. The WTO warned this week, Escalating trade tensions and tighter credit market conditions in important markets will slow trade growth for the rest of this year and in 2019.
The WTO anticipates growth in merchandise trade volume of 3.9% in 2018, with trade expansion slowing further to 3.7% in 2019. The new forecast for 2018 is below the WTO's April estimate of 4.4%. Trade growth in 2018 is now most likely to fall within a range from 3.4% to 4.4%.
Does the White House have a plan? It doesn't appear so, according to David Dollar in the Washington Post,
"I don’t think the administration knows clearly what it’s doing. Other countries are confused. We’ve launched a lot of trade measures against other countries and sent a signal of withdrawal from the world.”
Brexit, Trump Tariffs. with Boris Johnson on the doorsteps of Number Ten, many challenges ahead for business in the run up to March 29th 2019 ...
Fed raises rates ...
Jerome Powell avoided pressure from Donald Trump this week and made the decision to raise rates by 25 basis points. It seems clear a further rate rise will follow in December with more to come next year.
No longer will monetary policy be "accommodating" the Fed is forecasting US growth of 3.1% this year, as consumer confidence, business investment and jobs growth remain positive.
The Fed "Blue Dot" forecast suggest U.S. rates could rise to 3.5% by 2020. Ten year bond yields fell slightly to 3.04% this week. Is the yield curve inverting? Probably not. We expect long yields to rise to maintain the spread, if short rates follow the path currently predicted by the Federal Reserve. The Fed Chair was in bullish mode ...
"As the year has gone on, the economy has come in stronger than we expected. And that’s a really good thing. … Some of it is, no doubt, the effect of the fiscal policy changes, the tax cuts and the spending changes. That’s got to be part of the story. Part of it may be higher oil prices which are calling for more investment in the oil patch. But the growth picture is very much supported by very high readings of household confidence, business confidence. So it’s a particularly bright moment. If you look back over the last decade, this is a pretty good moment for the U.S. economy."
"A pretty good moment", which is not sustainable. The trade deficit is increasing, a result of strong growth. The internal deficit is increasing, as result of tax cuts and spending plans. Funding costs for the deficit are heading for over $1 trillion dollars, soon to become the biggest spending item in the government budget. Soaring debts and deficits, it's a long haul back to fiscal probity. Never a strong point on the Trump agenda.
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update this week,
Don't Miss the pro-manchester economics conference on the 18th October. I shall be anchoring the "show" and providing an update on prospects for the UK and World Economy. Book Now We have great agenda and line up of speakers on the day as we discuss the "Economics of Greater Manchester".
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