Trump and Xi stick to their guns

This week, Peak Pegasus, a US cargo ship full to the brim with soybeans, raced across the Northern Pacific to beat a 25 percent import duty on one of the States’ most lucrative exports to China. Unfortunately, it arrived late, making it the latest casualty in the global trade war which now seems to be properly underway. As widely anticipated, the US imposed 25 percent duties on $34bn worth of annual imports from China late in the week, prompting this like-for-like retaliation from Xi Jinping’s government. We are likely to see a bit more of this back and forth before the situation improves. 

Elsewhere, Theresa May is retreating to Chequers to try to get her warring cabinet ministers to back a Brexit strategy which would keep the UK more closely-aligned to the single market and customs union. The outcome will likely be too soft for the Brexiteers and too hard for the remainders, and probably something already rejected by Brussels as unworkable. The leading Tory Brexiteer in classic Rees-Moggian style, has already announced that the plan could leave the UK “a vassal state in chains”. We will have to wait and see whether these talks force any more ministers to resign.

Read what the team at FE consider to be significant over the current week.

Conte makes a splash at EU summit

This week European leaders gathered in Brussels for the EU summit. While we might have expected Brexit to be the main topic of discussion, most of the drama has centred on how to handle the large numbers of migrants coming across the Mediterranean. This was in no small part the making of the new populist Italian Prime Minister, who basically threatened to derail the event unless the issue was addressed. Migration is also causing trouble for the German Chancellor, who is facing a small rebellion over the issue back home. The summit has provided an important reminder that the leaders of EU countries have their own problems to deal with and their own domestic politics to consider and may be thinking less about Brexit than we imagine.

Elsewhere news emerged of a planned summit between Donald Trump and Vladimir Putin in July. This followed on from the release of satellite images of North Korea which suggest that after talking a good game in Singapore, the rogue nation is continuing to develop its nuclear capability. While this doesn’t necessarily mean the agreement was a bust, it will no doubt come up in Trump’s appraisal next month.

Read what the team at FE consider to be significant over the current week.

Brexit "peace deal" eases UK political risk

This week the government won a hard-fought compromise in its Brexit negotiations. Following a series of standoffs and late-night crisis talks, it finally found some middle ground and with a dose of pragmatism, managed to come away with a win. Unfortunately, this wasn’t with the European Union but its own MPs over what comeback they would have in the event the Government screws everything up. While there has been no progress on the customs union, single market or the Irish border, at least now there will be a debate on their proposed solutions to these issues. It is worrying that until now they were expecting to agree to the final terms without telling anyone what they were.

Meanwhile, on the continent, there was some good economic news. Eurozone growth figures released this week have shown an unexpected uptick, driven by France and Germany. With everyone focused on Italy it is easy to forget that the Eurozone’s core comprises the 4th and 5th largest economies in the world. While many parts of it might be dysfunctional, and at times imploding, ultimately its performance will be driven by these two countries.

Read what the team at FE consider to be significant over the current week.

Exploring retirement choices at 55

I went to see a prospective client today and that meeting brought home the complexity of choice that now faces someone aged 55 with some private pension provision. Before Pension Freedoms various issues conspired together so there were few decisions to make before you took an (inadequate) annuity at State Pension Age. Not all changes are down to Pension Freedoms, the removal of a compulsory retirement age means that normal pension ages of 60, 65 or 75 have less meaning and there are more people still working in their 70s and 80s.

So, imagine you are Pete Evans, recently 55 years old, a builder earning £27,000 per year and you have an old conventional personal pension with £75,000 accumulated, a small deferred civil service pension and a current workplace pension on stakeholder terms in the default fund. You were divorced about 10 years ago and still have some debts, £15,000 at an average APR of 15% and a modest mortgage of £30,000 at 4.9% APR. You have got some arthritis in your joints and manual work is becoming a proper “pain”, so much so, that going part time or taking a lower paid office job is looking attractive.

Trump receives boost to approval rating following Kim summit

This week saw the historic meeting between Donald Trump and Kim Jong-un in Singapore. The summit, which had been cancelled, delayed and negotiated through oversized envelopes during the run-up, appeared to go well. There was a vague commitment to de-nuclearise the Korean peninsula, albeit with little substance to the document itself. Although it will be some time before we see if the agreement has any teeth, this is still probably Donald Trump’s finest hour; the world is safer now than it was this time last week, and that is quite an accomplishment from this president.
Elsewhere, in what was decidedly not his finest hour, Donald Trump did major damage to the Western alliance at the G7 summit, which culminated in a public spat with Canada and a refusal to sign even the blandest of communiqué. Additionally, the US announced a further $50bn of tariffs on China on Friday. With Trump burning bridges both east and west, he needs his negotiations with North Korea to go well. They may end up being his largest trading partner.

Read what the team at FE consider to be significant over the current week.

"Collective responsibility" in action

This week, Brexit Secretary David Davis has taught us that the best way for a senior cabinet member to secure a date with Theresa May is to threaten to quit. What he wanted was a firm end date for the backstop customs agreement that will be put in place if a permanent one cannot be made with the EU by December 2021. Davis got his date but in classic Theresa May style it was far from firm. This nicely complements her inability to take a firm stance against members of her own cabinet. More importantly, it does little to crystallise the post-Brexit Irish border and UK-EU trade relationship.
Elsewhere, trade and geopolitics have taken centre stage, with markets having the G7 and Trump-Kim summits to worry about. They seemed to take this all in their stride for much of the week, only for Chinese and German stocks to drop sharply on the morning of the first day of G7 talks in Canada. All this geopolitical risk has at least been good for global money market funds. In the week to Wednesday, net inflows were the largest since the fourth quarter of 2013.

Read what the team at FE consider to be significant over the current week.

Italy's troubles take centre stage

This week saw the return of two summer traditions, flash flooding and a European market crisis. Italy has been understandably dominating the news, with the president dramatically vetoing the new coalition’s nominee for finance minister. The markets were already on edge following the forming of a populist coalition and the additional chaos was enough to tip them over. Thankfully it has been short lived, as a new set of ministers have now been approved to take up their posts. While political instability is very much part of Italian life, Spain has also got in on the act, losing its prime minister to a vote of no confidence, further upsetting markets.
Elsewhere, the US has made the EU’s week even worse by finally imposing steel tariffs. The global steel market is horrendously oversupplied, and there is perhaps some legitimate grievance to be had against China in this regard. The EU however has broadly even terms with the US and appears to be collateral damage in Donald Trump’s scatter gun approach to trade wars.

Read what the team at FE consider to be significant over the current week.

Brinkmanship is back all right

“I felt a wonderful dialogue was building up between you and me, and, ultimately, it is the only dialogue that matters”. Trump’s letter to the North Korean leader cancelling their long-awaited rendezvous at times reads more like a Dear John letter than official correspondence to the world’s biggest nuclear threat. While no one should be that surprised Trump has pulled out (think NAFTA, the TPP and the Iran nuclear deal) it nicely complements the administration’s less predictable act of brinksmanship this week – an investigation into car imports from South Korea, Japan and Europe which seem likely to result in even more tariffs.
Elsewhere, the ONS has added more uncertainty to the path of UK interest rates by announcing that inflation fell unexpectedly to 2.4 percent in April, causing the pound to plummet to its lowest level this year. While the impact of the Brexit vote on inflation seems to have finally dissipated, the impact on national defence is less clear, with the UK and EU this week trading strong threats over post-Brexit arrangements in the areas of space and security.

Read what the team at FE consider to be significant over the current week.

Oil hits $80 a barrel for the first time in four years

This week we’ve seen a significant jump in the oil price, no doubt to accommodate the production of souvenir plates and tabloid pull outs for the royal wedding. Lower than expected US oil production might also be part of the picture. The development makes life especially difficult for the Bank of England, which backed down from a widely expected rate hike in May on the back of weaker economic data. An increase in inflation from the higher oil price will no doubt put that decision under increased scrutiny.
Elsewhere, there has been deadlock in Italy as the country’s two main populist parties, consisting mostly of outsiders and amateurs from a politics standpoint, struggle to agree on a coalition deal. In a similar vein, the UK cabinet have finally agreed on what they want from a customs arrangement with the EU. At the risk of being labelled a “remoaner”, we think that might have made a better opening move than a closing one. We hope the government can now do a better job of negotiating with the EU than it has with itself.

Read what the team at FE consider to be significant over the current week.

The price of convenience is being forever vigilant

Last month, I came within a couple of key strokes of giving fraudsters access to my bank account and it only because I have a suspicious mind that I did not fall for it. The process was so polished, I feel I should spread the word to keep others from falling for a phone scam.

Early on the 20th April 2018, I received a message on my home Mac computer that someone in a Chinese province was trying to log into my Apple ID. I pressed “No”, so that stopped and thought little more of it.

At 12:31 on the same day, I received a text, reportedly from “Barclays”, that said:

“Your Debit Card payment to Tesco Online Store for 1,720 GBP has been referred to us for further verification. If you have not made this payment, please contact Fraud Prevention on 03330220692 as a matter of urgency. No text reply.”

This was followed immediately by an advertising image from “Personal Banking – Barclays”, that matches their current advertising.

This text was on my smart phone, (Apple iPhone SE), so the underlined telephone number is a hotlink and will dial automatically, so it would have been very easy to have rung THAT number and speak to someone, believing them to be from Barclays Fraud Prevention.