Issue 143: 2018 03 01: Lens on the Week

1 March 2018

Lens on the Week

UK

WEATHER: The UK is “enjoying” the worst week of weather for five years with airports and schools shutting up and down the country.  Very cold weather coming in from Siberia has particularly affected the North East with the effective temperature being lowered further by windchill.  It is expected that later in the week moisture flowing up from Storm Emma, currently affecting Portugal, will turn to more snow as it arrives in the UK.

BREXIT NEWS: Recent developments include an announcement by Mr Corbyn that the Labour Party now supports the idea of a Customs Union, giving him an obvious line of attack on the Government’s negotiating policy.   A similar line has been taken by a group of 11 Conservative rebels led by Anna Soubry who have indicated that they will only support the Government’s plans if a Customs Union is imcluded.  If they combine with Labour they would be able to defeat the government on a vote.

Meanwhile, Northern Ireland remains a major sticking point.  It has been agreed that there should be no hard border between the North and the South, but so far no satisfactory way of implementing this has been identified.  The suggestion favoured by the EU seems to be that the North of Ireland remains within the Single Market, but the Democratic Unionist Party, on whose support the government depends, would withdraw that support if Mrs May accedes to that proposal.

Mrs May is to set out the UK’s current negotiating position in a speech on Friday.

UNIVERSITIES STRIKE: Staff at 64 universities are striking over reductions in pension entitlement resulting from changes proposed by the  Universities Superannuation Scheme to tackle a shortfall.  As ever the dispute is the result of contributions being insufficient to fund benefits although the contribution made to the fund of 18% of remuneration is twice the private sector average.  Students are considering suing universities over lost tuition.

MOLLYCODDLING: The Headmaster at Gresham’s School has adopted a policy of candour towards the pupils and the parents; he has complained of “mollycoddling”.  If a pupil is not working hard, he will say so bluntly.  He has received some criticism for being forthright, but apparently he has received much support – and not just from those who were at the school, but from head-hunters and businessmen.  Whether other schools will follow his lead remains to be seen, but it makes you wonder what the rest of them do.

GIZMOS: There are many people in the UK (& elsewhere) who have voice-activated gizmos (Amazon Echo & Google Home).  It appears that these devices will be used for shopping.  The consumer will tell the machine what he or she wants to buy and the machine will order it.  This is called “voice shopping”.  If a consumer is not sure what to buy, the machine can recommend a product.  The race is on for manufacturers to purchase “choice status” from companies such as Amazon.  This means that their products would be recommended before those of other companies which did not have that status.  It makes you wonder what George Orwell would have thought.

International

RUSSIA TRIUMPHS AT THE WINTER OLYMPICS: Reports from Pyeongchang suggest that Russia has come top of the tables for cheating (a formidable achievement as Russia wasn’t even taking part in the Games, having been banned for institutionalised doping).  Two OARs (Olympic Athletes From Russia – Russian athletes allowed to compete, under the Olympic flag rather than the Russian flag, because they have a clean ‘no doping’ record) tested positive for illegal performance-enhancing drugs. They were banned, stripped of a medal and sent home; before their disgrace, there was talk of the IOC letting the OARs march behind the Russian flag at the closing ceremony, but the failed tests put paid to that.  According to US officials, Russian intelligence officers scored another Russian gold for cheating by hacking into the computers of the organisers of the Winter Olympics in an attempt to disrupt electronic traffic, steal data, attack the Olympics web-site, sabotage the opening ceremony and cause chaos for anyone trying to buy tickets or attend events – and then putting the blame on North Korea by using North Korean IP addresses.

CATALUÑA/CATALUNYA: The Spanish police – whose heavy-handed tactics against citizens trying to vote in the (illegal) Catalan independence referendum did so much to aggravate the crisis – distinguished themselves again this week.  Following reports that the fugitive separatist leader Carles Puigdemont had been seen on the streets of Madrid, six police officers tracked the man down and arrested him. He wasn’t M Puigdemont, however, but a well-known satirist – Joaquin Reyes – who was playing the part of the exiled Catalan leader in a sketch being filmed on the streets of the Spanish capital.  The police also searched a private jet belonging to Manchester City’s manager Pep Guardiola when it landed at Barcelona, but didn’t find M Puigdemont there either.  So they searched it again a few days later – and didn’t find him then either.  So they searched a car in which Mr Guardiola’s daughter was travelling – but didn’t find him there either. Meanwhile another Catalan separatist leader Anna Gabriel managed to give them the slip and escape to Switzerland the day before she was due to be questioned in the Supreme Court.  And the police officer at the head of the anti-drug unit at the port of Barcelona has just been arrested on suspicion of working for a cocaine-smuggling gang from South America.

CHINA: Oh dear, China really is storming ahead.  Just as it was reported here that pole-dancers (albeit more decorously-dressed than usual) have been entertaining residents at an old people’s home in England, the Ministry of Culture in China trumped the story by revealing that a trend for strippers performing at funerals is sweeping rural China.  Just as a report was published here in the UK criticising conditions inside our prisons, the South China Morning Post trumped that by announcing that the infamous Quincheng prison is jam-packed full; since President Xi came to power six years ago, so many high-ranking politicians have been arrested and found guilty of corruption and imprisoned for life in there that there isn’t room for any more.  And just as it looks as if Theresa May might well survive another twenty-four hours as prime minister, China’s governing Communist Party announced that it’s scrapping the clause in the constitution that limits presidents to two five-year terms – so the way is open for President Xi to be president for life.

They’ve even started to take on the USA at American football; the White House revealed that Chinese government guards and security officials initiated a hard physical game against the visiting White House team on a tour of Beijing’s Great Hall of the People during President Trump’s visit to China last November.  The Chinese managed to momentarily separate the football-carrying US military aide from the president, but prompt counter-play by chief of staff John Kelly ensured that the military aide escaped before the opposition could get possession of the ball.  The ball was in fact the briefcase (which is indeed known as ‘the football’) containing the codes for launching the USA’s nuclear weapons, and must be within reach of the President at all times.  “Most foreign heads of state visiting China have a similar scuffle with a Chinese security official during their visit” tweeted a Mexican diplomat and ex-ambassador to China.  “It can get sporty” added a former US defence department official.

Financial

ON FULL CHARGE:  The oncoming march of the electric car and the demise of the diesel engine seems to accelerate almost daily.  Latest manufacturer to announce that it will cease making diesel powered cars is the FIAT group, one of the largest car makers in the world, which includes not just FIAT and Alfa Romeo, but also Jeep and Chrysler, and a few others.  Not that they intend just yet to go all electric – the choice will become either electric or petrol; the car maker says that the cost of amending diesel engines to comply with likely legislation over pollution and to enable them to achieve compliance on emissions targets is much too high to justify the likely revenue – consumers would not pay the extra for the improved diesel vehicles.  That’s making an assumption of course that the price of electric powered cars is likely to fall rather than increase, which many car industry specialists have so far been rather assuming.

Whether that is a valid assumption may soon be challenged though. The other car story this week is that the cost of car battery components is likely to move sharply upwards.  The problem with the current generation of batteries is that they do not take a car very far.  To get the sort of mileage that many motorists will need means more powerful power sources – which can be done, but requires some specialist metals and raw ingredients – top of the list being that rare metal, lithium.  Lithium can be made by electrolysis of sea salts, or does occur in some natural solutions such as brine (we related a few weeks ago that Cornish tin mines, flooded by sea water, may be a new source).  Increasing demand, especially by Chinese investors and manufacturers, is driving up the price and commentators expect it to move much further up in the next few months.  Horse and buggy, anybody?

BRICKS AND CARRIER BAGS: Another sector said to be under threat is retail property.  Well, maybe not so, says specialist retail landlord, Hammerson plc.  Hammerson owns not so much the shop in the high street as the whole high street, or more accurately, the replacement to the high street, the retail mall.  Its assets include Brent Cross in north-west London, Cabot Circus in Bristol, the Bull Ring in Birmingham, and Bicester Shopping Village, the largest discount centre in the UK.  For 2017 rents were up 1.7% – slightly ahead of a predicted 2%, on an occupancy rate of a remarkable 98% (giving a profit of £413m, up 28% on 2016 on a comparable basis). That is not bad, looking at the increasing problems of many retailers, especially in the fashion sector, and increasing pressure from tenants to push rents down as their margins shrink. Hammerson put its shareholder’s money where its mouth is late last year when it agreed to buy rival, Intu, owners of, amongst others, Covent Garden in central London.  That deal has yet to proceed, waiting shareholder votes in April, but if it goes through will confirm Hammerson as the largest mall owner in the UK with a portfolio worth over £21bn.  However, whether the shareholders want their money put into more shops is perhaps a moot point – the shares fell 2% on the announcement of the results, making a total fall of 21% over the last year.  That may take the company out of the FTSE100, not just a prestige point, but also one which affects the appetite of some of the largest institutional investors to invest in the shares – potentially leading to further declines; not good news when trying to do an all paper deal to take on Intu.

 

 

 

 

 

 

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