Thursday, 30 June 2016

Brexit Post Mortem

The FTSE100 is down less than almost any other market, it is dominated by large multinationals that benefit from the lower pound, looking at the FTSE250 which focuses on domestic British companies we see a drop of around 10%.

The German and French markets are down by about 8%, they represent the heart of the eurozone. The 8% declines in Germany and France represent fallout damage and the UK is not directly impacted by this.

China actually went up, but they tend to follow their own rules, don't go there.

The FTSE250 did especially poorly on Monday [compared to other markets], which fits the political chaos theory, as the media portrayed the British government as being clueless about how to handle the situation. Things were a bit better on Tuesday and considerably better on Wednesday as the shorters were finished with their business.

What must be realised is this little six day [four business days] break has been a god send to shorters who saw it coming. The Smart Money sold their stock on Thursday during the vote [at it's peak] saw it plummet and then bought it back. They all have the same stock holding they had before but have made a cash bonus from the buy/sell exchange.

This general market pattern was somewhat predictable, prior to the Brexit vote, we’d seen markets rise on optimism that “Remain” would win, and so it was possible to clearly see how investors thought a Brexit vote would affect various markets. Of course hedgers would be betting against this and for a leave win, while they contemplate this scenario they would realise that it is the perfect time for a short session. This is why they are called the Smart Money.

Tuesday, 28 June 2016

It Continues

It might be Wimbledon fortnight, but you would hardly realise it as the only news available is politics.

The Conservative [split party] fight has been put well into the background as the Labour party is heading towards oblivion. Nearly every single member of the shadow cabinet has resigned and the leader has spent the day recruiting new staff by simply giving out jobs to anyone who says yes. Some of the choices cause more trouble than could have been imagined, for example Diane Abbott has been given Health and as it was announced most of the junior ministers in that department resigned. Hardly conducive to a forward looking efficient, professional political unit.

At the end of the day it was being rumoured that Labour might split, so SDP part II was possible. All this venom is directed towards the leader Jeremy Corbyn and to all accounts it appears to be a rout.

The rebels have criticised his performance in the EU referendum and he faces further resignations from the junior frontbench ranks amid fresh calls for him to stand down as leader. He has categorically refused to stand down today saying that if a leadership election was to take place, he would stand and win. Very strong language from someone who appears to have very few standing beside him.

The deputy leader Tom Watson returned from Glastonbury and had a meeting with Jeremy Corbyn and informed him of the state of play. The talks between the two men were described as "civil" by a spokesman for the leader, but a senior Labour source said Mr Corbyn was left in no doubt he had lost the support of the Parliamentary Labour Party. To be honest Corbyn never really had great support from the PLP [Parliamentary Labour Party] it was the membership that he excelled in. As it is possible there might be a general election before the end of the year, it is clear that the PLP need to have someone else at the helm that will allow them to win back government.

This all happened in one day, what next?

Monday, 27 June 2016

It Begins

Will the EU now fall apart?

After the UK Brexit vote handing out a 52/48 Leave result, what do the other 27 countries think?
The first one to watch surprisingly is France. President Fran├žois Hollande seemed very worried when he made his statement and hardly surprising as he has to face elections next year and Marie-Le-Pen came straight out and welcomed the Brexit result.

However, the German Chancellor Angela Merkel offered Britain an olive branch in the form of an offer of time to exit gracefully. Talking of Chancellors, has anyone seen ours, George Osborne seems to have gone to his room with a big bag of snacks and closed the door.

The markets did flip out spectacularly on Friday, Sterling had it’s biggest fall for decades, apparently and even Government gilts came under pressure although self correction and a statement form Mark Carney the Governor of the Bank of England did make a strong, positive statement that probably helped.

Back home here this weekend has seen one of the most turbulent political times ever in the history of Britain as not only is the Government split and fighting, the opposition seems to have joined in with a mass resignation of the shadow cabinet and all the figures pointing at the leader Jeremy Corbyn. The political press are having a field day.

Then when we have enough news to fill a week, never mind a day, The UK's European Commissioner Lord Hill is to stand down, saying "what is done cannot be undone" after the UK voted to leave the European Union. He will be replaced by Latvian politician Valdis Dombrovskis, currently European Commissioner for the euro.

I promise I am not making this up.

Wednesday, 22 June 2016

BBC Debate

Last night [Tuesday 21-Jun-2016] there was the 'great' EU debate hosted by the BBC in the Wembley Arena.

It was divided into three sections, economy, immigration & Britain’s place in the world, no small feat. What did we learn?

Did the leave side guarantee success after the vote, no, did the remain side guarantee success after the vote, no.

The audience appeared to applaud both sides equally during the three sections, so after two hours one could assume that the country still has not decided, with only two days to go that is not good.

David Cameron the British Prime Minister announced on 20-Feb-2016 the date for the EU Referendum will be on 23-Jun-2016, however the idea for a referendum started after the 2010 general election and the Prime Minister said it would be held before the end of 2017. I find it nearly incredulous that people still have had not enough time to decide which way to vote, and use the weak excuse that politicians should decide.

Mishal Husain had a separate section of 'experts' that unfortunately had their own agenda and did not contribute to the peoples debate that evening.

David Dimbleby did well to hold this gathering together, no mean feat, however did the majority of people listening at home get what they need to make the all important decision for Thursday?

Personally I had decided when David Cameron first announced that there would be an EU Referendum before 2017 and nothing I heard last night or in the past few weeks, months, years has changed my mind, I shall continue to place my ‘X’ in the leave box on Thursday 23-Jun-2106.

Monday, 20 June 2016

Future of MPs

After the death of Jo Cox last week, a lot of attention is now being put into MP security.

While I will happily admit that MPs need their own security as it should not be the place where MPs are open to any type of assault no matter how trivial or serious they are, however, the first thing I think of is a phrase 'security bubble'.

Most MPs if not all will admit that one of the best parts of the job is mixing with the public in particular their constituents. This could become more difficult if they are placed with a security bubble.

If you imagine the position of Judges [and an old adage which might be incorrect] that are transferred from their homes to court on a daily basis have nearly no contact with the public and as a result have absolutely no idea what the public thinks of their decisions.

If this was to happen to MPS our democracy would suffer.

Now how are they going to get the balance right and protect MPs from today’s rough 'n' tumble without going over the top on costs but still allow them free access to the public?

Thursday, 16 June 2016

Jo Cox MP

On Thursday 16-Jun-2016 Labour MP Jo Cox was murdered outside her constituency surgery in Yorkshire.

The incident happened at lunch time but the death announcement was not until late afternoon, presumably certain details had to be confirmed, people informed etc., Up till this time everyone had been posting shock, upset, support for her & family.

Then it began.

Both sides in the EU referendum started making references and comparisons to the incident with the event of 23-Jun-2016.

Lets be fair, it is not right to make political capital from someone's tragedy, people like David Cameron [remain] and Michael Gove [leave] have not said or done anything that can be used by others to promote actions that are cruel and devastating. The media have been given a bashing for the way the referendum has been reported and yet I have seen so many trying to give both side a fair chance, like the Daily Politics for example.

As time moves on other reports appear and the latest is he [the attacker] shouted a phrase before he struck and the phrase has been linked to a political movement. The next questions are political motivation or mental health issues, hardly likely to establish answers to these on the first day, so speculation is rife.

Then terrorism raises it’s ugly head  with statements like “You kill a person because they do not share your beliefs? Last time I heard about something like that, it was called terrorism”. These phrases can be very inflammatory and hide the real reasons behind the facts. I just do not understand how anyone can think someone's opinion about if we are to remain in the EU or leave the EU is worth more than their life.

Jo Cox was, by all accounts as I am not part of the Westminster bubble, a fine parliamentarian and a fine woman. She has been taken from her family and her constituents but her death takes something from all of us as well. Are our MPs going to become more insular then ever in future, will it become virtually impossible to see an MP without an armed guard, is this really how democracy will evolve to?

I hope not.

Tuesday, 14 June 2016

Post Office Home Phone

I get my broadband services from the Post Office, it is called

Some of you might think this is a bad idea.

Yesterday I was receiving ping 12 ~ D/L 12Mbps ~ U/L 0.9Mbps pretty usual for the PO considering what they charge, today I am receiving ping 39 ~ D/L 3.1Mbps ~ U/L 0.4Mbps pretty rubbish.

While I am testing this the phone and consequently the broadband goes off, so I phone them on their 24hr technical support line 0345 600 3210 at 21:22 BST to find a message saying our support line is now closed please goto the website.

If only I had broadband running so that I could go to the website!

What a complete farce.

Monday, 13 June 2016

Persimmon Plc

Persimmon has an executive pay plan which could see top executives at the house building group share approximately £600m over the next five years.

The scheme, one of the largest ever at a FTSE 100 group outside the banking sector, could see group chief executive Jeff Fairburn earn more than £100m. Under the plan, which began as the housing market began its recovery following the 2008 financial crisis, the London-listed company gave approximately 150 managers the chance to earn shares worth 10% of the group's value, provided they hit a number of targets.

Persimmon have said the plan was running comfortably ahead of its targets and shares in the company have soared from £6.20 to £20 and the house builder has defended the scheme, indicating it has returned £1bn to shareholders and invested more than £2bn since the plan was first implemented.

The current housing crisis in the UK requires about 500,000 new homes to be built each year, the current figure being 200,000 but with an estimated 300,000 new migrants entering the country each year the real figure is probably about 1 million new home will be required.

Apart from the immigration issue which is top of the list on the leave / remain campaigns agendas another problem not easily satisfied is how easy it is fro developers to wriggle round local councils. Councils and developers have long been engaged in what amounts to a grand haggle. Developers examine a council’s affordable housing target and then make an opening offer, which is likely to be much lower. It is up to the planning authority to determine whether the basis for the calculations is fair and correct and a battle of the experts often ensues.

Frequently, the developer has not yet bought the site from the landowner, which gives them a significant negotiating advantage because there is a constant threat that if the negotiation doesn’t go their way, they could back out of the deal and the landowner could sell the site for commercial use instead. The local council risks losing not only the affordable homes, but all the homes.

This is a single issue that the Westminster government should get hold of irrespective of the EU referendum.

Friday, 10 June 2016


Her Majesty’s Revenue and Customs has lost public confidence.

Just like any other relationship in life, once the trust between two parties has been eroded it is very difficult to restore, making the association a difficult one to carry on with. This is what has happened with HMRC’s relationship with taxpayers over decades of time.

Amidst all the recent revelations and scathing criticism of HMRC, how can trust in HMRC be restored, particularly when a body such as the [PAC] Public Accounts Committee said it did not have enough information to be able to gauge what HMRC had done about fraud. This, despite the PAC having been presented with the [NAO] National Audit Office’s report on what HMRC had done to combat fraud!

It is fair to say, for those of us who are forced to deal with our tax authority, public confidence in HMRC is not the best and not just because of all the negative press the department has received. This is not just a matter of public perception but the reality is that HMRC is an increasingly faltering government body.

In the good old days, tax advisers and taxpayers alike were able to work closely with their local tax inspector but that was a time when the Inland Revenue, as it was then, was a decent government department that contained well trained staff who possessed a sound knowledge of tax. Today the ever increasing move to force taxpayers to deal with HMRC entirely electronically is ensuring that all personal contact vanishes.

With HMRC on course to reducing its staffing numbers and forging ahead with Making Tax Digital the restoration of public trust in the Revenue seems an unlikely prospect which is a dangerous scenario.

Trust is a two-way process and requires both parties to know that the other is reliable.

Thursday, 9 June 2016

Minimum Wage

It has been said that if the minimum wage increases automation that is a good thing, because obviously automation is good. However, it is important to understand why automation is good, and when it is not.

The most important thing to understand is that automation is not a good thing per se. There is no reason to prefer machines to do a job rather than people. The reason automation is usually good is because it lowers the cost per unit of output. We can get more stuff using less resources. It is not automation that is good, but productivity.

This suggests an easy case where automation would not be good: if the automation doesn’t allow lower costs per output. If a firm automates and replaces £100 worth of labour costs with £110 worth of capital costs and output stays the same, then this is not really anything to celebrate.

But why would a firm do this? Why would this kind of automation ever happen? Perhaps because laws ban the use of cheap labour. If the minimum wage leads firms to automate, but that automation  decreases the cost of output, then this automation does not increase productivity.

That is not to say that all automation that the minimum would generate would increase total costs, especially given the potential for positive spill over from innovation. But it does suggest that when a government mandate generates automation it is not the same thing as automation that is driven by the profit maximising firms seeking to minimize costs and utilise resources efficiently.

It is entirely possible that high minimum wages lead to a much more automated industry that nonetheless produces much less output because costs are higher. Walking into a restaurant and seeing a touchpad for ordering is not necessarily a sign of economic progress. It could be a sign that businesses are being prevented from using the profit maximising mix of labour and capital. This would be especially inefficient, wasteful, and unfortunate if the workers who lost their jobs are not re-employed. With minimum wage at £7.20 rising to £9, this is certainly a risk in many places.

Tuesday, 7 June 2016

US Elections

You thought the Real Donald Trump was bad.

A former State Department IT expert has refused to answer questions about his work on Hillary Clinton’s private email server, keeping its operations shrouded in mystery.

Bryan Pagliano’s legal team have said that he would remain silent during a deposition with the conservative watchdog Judicial Watch, originally scheduled for Monday but now delayed until further notice.

His decision increases the odds that Clinton herself will be forced to testify in the case, and because of quirks of the legal system, his decision to stay quiet could be seen as an implicit confirmation that he or the State Department had done something wrong. Unlike in a criminal case, judges in civil cases such as Judicial Watch’s can draw ‘inferences’ about someone’s guilt from a witness’s decision to plead their rights under the Fifth Amendment. For lawyers, there is a reason to go through the motions and ask questions, even if the response is the same over and over again.

Even if Pagliano doesn’t say a word during the deposition, he will impact the case moving forward.

The open records lawsuit launched by Judicial Watch is aimed at determining whether Clinton and her top staffers thwarted the FOIA [Freedom of Information Act] through her use of a personal email address and private server at her New York home. Pagliano is believed to have set up and maintained the private server, and is likely the one man with a detailed understanding of how it worked and why.

His continued silence has fuelled months of speculation about how Clinton’s email was set up, its digital security and whether it was designed to thwart transparency laws. For Clinton, that means no relief from a political headache that has dogged her campaign for more than a year.