Issue 195: 2019 03 28: Lens on the Week

28 March 2019

Lens on the Week

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UK

INDICATIVE VOTES:  After the Prime Minister’s deferral of her third attempt to push through her agreement with the EU, the House of Commons supported a resolution proposed by the cerebral Sir Oliver Letwin calling for indicative votes on the various Brexit options.  None of the options secured a majority although a proposal by Ken Clarke which would have meant a continuing Customs Union with the EU came nearest with 264 to 272.  Conservative MPs, excluding cabinet members, were given a free vote and Labour whipped its MPs in favour of that proposal.

Mrs May has now said that if her agreement is adopted she will retire as PM leaving it to others to carry through the trade negotiations.  That has brought a number of Brexiteers, including ex foreign secretary Boris Johnson, onside but not the DUP who say that they will still vote against.  The proposal is likely to be put to the House on Monday.

COVENTRY: The Government is to launch a scheme based on Coventry under which motorists who give up use of their cars will receive between £2000 and £3000 a year towards the cost of public transport.  The scheme has been approved by the West Midlands Combined Authority, and the public money involved is of the order of £20 million.  It may work or it may not but it certainly seems worth a try.

ASSISTED SUICIDE: The Royal College of Physicians has shifted its stance on assisting suicide to a neutral position so that it no longer opposes a change in the law which makes assisting suicide a serious criminal offence.  A survey of medical specialists indicated 49% in favour of leaving things as they are against 41% believing the law should be changed.  That represents a shift of opinion since 2014 when the figures were 58% and 32% respectively.  Any change in the law would involve detailed and probably acrimonious debate as to the safeguards to be incorporated to prevent suicide being encouraged by relatives who hoped to gain an inheritance or to be relieved of a burden, something for us all to look forward to once Brexit is settled.

International

VENEZUELA: Masked and armed security officers arrested Roberto Marrero, chief of staff to the internationally-recognised interim president Juan Guaidó, in a dawn raid on his home.  As he was arrested, he was heard claiming that the arresting officers had planted weapons in his house.  The Maduro regime’s interior minister claims that weapons and foreign currency were found and accuses Mr Marrero of terrorism.

Information on political prisoners being detained by the regime and a secretly filmed video of mistreated prisoners were presented to the Organisation of American States, in Washington, apparently by a naval officer who has recently defected.

One hundred Russian soldiers, 35 tons of equipment and a general (head of the Russian army’s mobilisation directorate) arrived in Venezuela aboard two Russian planes (a passenger jet and a military transporter), according to Venezuelan media.

SYRIA: The SDF (Syrian Democratic Forces – the Western-backed and Kurdish-led troops fighting against Isis) declared final victory against Isis on capturing the town of Baghuz, which was the last scrap of territory being held by the Islamist militant group.  It’s thought that Isis murdered more than 700 hostages as defeat approached.  Some Isis fighters may still be hiding out in tunnels beneath the town; others have escaped to the deserts between Syria and Iraq where the leader Abu Bakr al-Baghdadi might be in hiding; yet others may be posing as civilians and hiding in refugee camps.  The group is still considered to be a terrorist threat even though it no longer holds territory.

USA: Special counsel Robert Mueller has completed his investigation into allegations of Russian interference in the 2016 election and has delivered it to William Barr, the attorney general.  Mr Barr has given Congress a four-page summary.  It clears the Trump campaign of any collusion with Russia, and declares that there will be no charges and no further indictments.  A version of the report will eventually be published once the attorney general has removed classified details and any information potentially damaging to innocent witnesses, but Democrats are demanding to see the full report now.  President Trump is calling for an investigation into officials behind the investigation, who he accuses of pursuing a ‘treasonous’ witch-hunt.

The Senate intelligence committee is still investigating Russian interference in the election, and three House Committees are investigating the Trump Organisation about possible obstruction of justice. Federal prosecutors are investigating allegations that the Trump campaign broke election rules about funding.

Financial 

MANUFACTURING SUCCESS: There’s a clause you don’t often read nowadays.  But congratulations to Avon Rubber, the UK industrials group probably most associated with car tyres though it has a much wider range than that nowadays.  It has just won a contract with the American armed forces to supply specialist biological and chemical masks for troops exposed to hazardous combat duties, including radioactive dust.  This follows a deal announced in January this year for masks for the USA Air Force.  This new deal will run for seven years and has a value of US$246m.  The share price moved up on the announcement giving Avon a value of just over £400m.

CALLING THE TOP:  Not so exciting news at Fever-tree, every sophisticated gin drinker’s tonic.  The company, now listed on AIM and enjoying a run of success which has almost pushed the competition off every shelf (Shhhh…), announced a rise of 40% in revenue last year, taking turnover to almost £240m and profits to a very impressive £75m (try not to think about that next time you tip a whole bottle into your gin).  But the company warned that growth must inevitably slow now it has cornered so much of the market and with new premium mixer competition appearing.  It is continuing to try to find new overseas markets – Europe and the USA are the best prospects but both are more challenging than the gin loving UK.  The share price seemed to be enjoying the ride still though – the price of a share is over £25, compared with £1.34 when launched on AIM.

HEADING TO THE TOP? After signs of slowing and even stagnation last year, the housing market seems to be moving up again, with mortgage approvals on the up, if only by 1%.  That is good for many other enterprises as well, as folk moving homes create much other economic activity, in DIY, furnishings, gardening, and removals, all of which could do with a boost.  But it seems to be a two part market, with growth in the Midlands and north, and a much weaker position in the south and especially in London.  The top of the market – both London and big country houses – is also pretty slow at the moment.  Time to buy the old rectory; but not to sell in Chelsea. 

DEBENHAMS DIRECT: We couldn’t not update you on the Ashley saga;  Debenhams is beginning to sound like a salmon in the claws of an eagle – a golden eagle perchance – as it begs to be set free.  Sports Direct, Mr Ashley’s vehicle for his assault on Debenhams, has now intimated that a cash bid may be forthcoming shortly – indeed under LSE rules Sports Direct has only to 22nd April to make one – as it has had enough of the Debenhams board’s stalling tactics.  That should not be a problem for the Ashley interests – Debenhams stock exchange value is only £27m and that is after a 40% rise in the share price this week, and he owns close to a third already.  The talk is that Mr Ashley may go higher than the current value – as high as £60m – to get a quick and clean deal.  But what could be more onerous is the £200m of debt that the retail chain is carrying.  Mr Ashley has offered an interest free loan of £150m (with some share options), so maybe that will not be a problem either.  But if the creditors owning the £200m debt get hold of Debenhams first, then that could force Mr A out for good – and loose him his 30% of the business.

 

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