I spent Thursday in London watching England playing Pakistan at cricket at Lords and intended today to pen a light-hearted review of the new British government. I woke up, however, to news of yet another horror visited upon the people of France by some fanatical idiot.
Thus I open today with the assurance that, although I voted for Britain to leave the EU, I did not vote for it to leave Europe which, without some geological miracle, it can’t do anyhow.
Over eighty lives wiped out by a weapon of which there are millions of licensed examples spread across the world. Of course we were all told by our driving instructors that we were being let loose in public with a lethal weapon but I don’t think that any of us thought to go as far as did that murderous truck driver last night in Nice.
I had had in the back of my mind a line about French Foreign Minister Jean-Marc Ayrault being quoted as saying that new UK Foreign Secretary Boris Johnson is a liar. The point was to be that one politician calling another politician a liar is tantamount to one professional footballer accusing another of being overpaid. Given the circumstances it might be more appropriate to point out to M. Ayrault that during Mr Johnson’s eight years as mayor of London, the city was safe and no major incidents of a terrorist nature took place.
Boris might play the buffoon from time to time but he is still a product of Eton and Oxford and not the back-street racist that many of his detractors would like to paint him as. His recent best-selling biography of Winston Spencer Churchill has not only made him pretty wealthy but it has shown that he is anything but a fool. Nothing is further from my mind than to compare “Winnie” to “BoJo” but I would like to humbly point out that the former, also a parliamentary maverick, was regarded by many of his contemporaries as a loud-mouthed buffoon who went on to be voted the greatest ever Briton.
Cabinet maker
Theresa “Kitten Heel” May’s cabinet looks very different to the one I had envisaged as I had thought that she might leave George Osborne in place. Instead she has brought Philip Hammond to the Treasury and as “Big Simon” McClean kindly pointed out last night, we have a May and a Hammond; all we need now is a Clarkson and the British government will be roaring off in Top Gear.
With George Osborne gone, I wouldn’t have given a fig for Mark “The Magician” Carney’s survival chances at the Bank of England until, much to my surprise and my satisfaction, the MPC chose not to ease rates at its meeting yesterday. If there is one thing that central banks are short of, it’s monetary policy ammunition and what is left needs to be used carefully. When interest rates are at 5% or 6% or even 2%, it is easy to make grand gestures by cutting but when one is at 0.5% the air is thin and the impact of halving rates to 0.25% can’t be all that obvious. The occasions on which I agree with the governor’s words and deeds have been few and far between but I can only applaud his decision to pass this time around. Why, on the other hand, he chose to leave the markets and the press with the impression that it was his intention to lower rates is a different matter entirely. I approve of the outcome but not of the path by which we arrived there.
If ever there was a time for the incumbent governor not to behave as though he owned the shop, yesterday was the day and he seems to have got that message. Maybe under Hammond and without Osborne constantly singing his praises he will finally show us what we are paying him £879,773 per year for.
Meanwhile, and supported by the MPC’s choice not to ease, sterling continues its recovery and sterling opens this morning at €1.2055, up from its intraday low of €1.1592 which it hit Wednesday last week. The pound has been whipped and driven by some strange forces since the referendum and I suspect there might be room for further recovery - this is not an investment recommendation as envisaged by the Market Abuse Regulation but an observation based on thirty-odd years of watching hundreds and hundreds of cross-asset bungee jumps – as the principal players lock in their profits and take a few chips off the table.
Bulls in China
News out of China indicates that the world has not come to an end and that the rot might well have begun to stop. We were treated overnight to a significant raft of data, not least of all second-quarter GDP figures which slipped in just ahead of forecasts. Annualised GDP growth was 6.7%, ahead of the expected 6.6%. New lending for June was also well ahead of forecasts as were all measures of money supply. To back this up, June industrial production and June retail sales were also both stronger at 6.2% (5.9% expected) and 10.6% (9.9%), respectively. Chinese equity markets went nowhere on the news, which is good as it indicates that investors are not discounting any imminent stimulus which in turn would mean that they guess the government is pleased with the situation and in no hurry to pump things up again.
Alas, it is that time of the week again and all that remains is for me to wish you and yours a happy and peaceful weekend. Of course I still have Nice spooking around in the back of my head so I suppose all I can say today is that I wish all of those among you who will be departing on holiday with the kiddies tomorrow a relaxing holiday and a safe return. After the “7/7” attacks on London 11 years ago last week people abroad asked me whether I was fearful of being out and about in town. I said at the time that although the bastards killed 52 innocent Londoners, they missed some 8 million of us. No one ever said that democracy is a free gift. I know it’s a pain but please, when travelling, show tolerance towards all those who represent the state and who are doing their very best to keep us safe.