As we do at the end of every month, CL News looks back over the month just ended. In some ways, November is the ‘calm before the storm,’ with the UK’s crucial Brexit vote due on Tuesday, December 11th. But there was plenty of news as well, as Paris burned, the mid-term elections were held in the USA and countries around the world started to worry about the security implications of Chinese telephone systems. Oh, and a man in Holland decided he was not getting enough dates on Tinder…
By Mark Richards.
Please note that nothing in this Economic Round-Up should be taken as financial planning advice: it is for general information and interest only.
The big story
As I have mentioned above, the UK seems to have slowed down – apart from the Christmas adverts – as we wait for the verdict on the Prime Minister’s deal with the EU. But it was a founder member of the EU that made the headlines in November, as the worst civil unrest since 1968 broke out in France, with three dead since the protests began.
Monday morning’s headlines had French President Emmanuel Macron threatening to impose a state of emergency and demanding new police powers as he struggled to contain civil unrest, with 75,000 people estimated to have taken part in the action over the weekend.
The Gilet Jaunes (Yellow Jackets/Vests) movement began three weeks ago as a protest against Macron’s climate change inspired fuel tax rises. But in reality, it goes deeper than that as protesters claim that Macron is a ‘president of the rich’ who does not care about the concerns of ordinary French people and the higher living costs they are facing.
A recent poll showed that Macron had broken new ground by becoming the most unpopular French President ever at this stage of a Presidency – he is roughly 1½ years into a five-year term – with populist leader Marine Le Pen (whom he beat in the Presidential election) now more popular.
Quite where Macron goes from here is anyone’s guess. It is not just the fuel protests: growth in the Eurozone has slowed to a four year low, and France still has a high level of unemployment – 9.3% in August, which is far closer to the 9.7% of Italy than it is to the 3.4% in Germany.
What happened in the UK?
As details of Theresa May’s deal with the EU leaked, so a steady stream of ministers resigned and – at the time of writing – it seems difficult to see how she can avoid defeat on December 11th.
Despite the political chaos, there was plenty of good news for the UK in November with figures for the third quarter (July to September) confirming that the economy had grown at 0.6%, three times faster than the equivalent rate in Europe.
There was more good news as figures showed that wages rose by 3.2% in the three months to September, the fastest rate of wage growth for almost a decade. However, people did not appear to be spending the money on the high street, which once again lost out to online shopping in the Black Friday/Cyber Monday bonanza. And there was more gloom for town centres as Thomas Cook issued its second profit warning in two months, blaming the record-breaking summer. Whatever the weather, I simply cannot remember the last time I booked a holiday in travel agents…
In financial news the UK’s FT-SE 100 index of leading shares fell slightly during the month, dropping 2% to 6,980. The pound had a relatively quiet month – despite the continuing uncertainty over Brexit – and ended the month trading at $1.2748.
Countdown to Brexit
In 1942, as the tide of World War II finally began to turn in the Allies’ favour, Winston Churchill said,
“It is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
Is that where we are now with Brexit? Theresa May has done a deal with the European Union. According to the campaign group, Leave Means Leave it is ‘the worst deal in history’ seeing the UK paying £39bn and getting nothing in return.
According to Downing Street, it is the best possible deal and a triumph for the Prime Minister’s dogged diplomacy. Her very convenient tick-box exercise sees it winning out over Canada or Norway-style deals, the dreaded ‘no deal,’ or staying in the EU.
Well, a week tomorrow we shall see when the MPs vote on the deal. At the moment it looks likely to be defeated: quite possibly it will be heavily defeated and the Opposition will table a motion of no confidence in the government, leading to a General Election.
Quite possibly there will be more late night meetings and trips to Brussels and a new deal will come back to parliament. Quite possibly Theresa May will be replaced as Prime Minister. Quite possibly we could have a second referendum – the so-called ‘People’s Vote.’
So no, it does not look like we have reached the beginning of the end or even the end of the beginning. The picture may be a little less murky by the end of December, if only because some options – almost certainly the current deal – will have been ruled out. At the moment we are still due to leave the European Union on March 29th next year: I have written previously that I could see that date being pushed by to allow ‘more time for constructive talks with our European partners.’ That still appears to be one of the more likely scenarios…
What happened in the rest of the world?
One of the big stories in the US – which we covered in a separate article – was the fall from grace of Apple, as investors worried about falling iPhone sales and what would happen in the event of a protracted trade war between the US and China. In the event, it looks as though tensions – and quite probably the tariffs – are going to be scaled down. But with Amazon facing ever more competition from Chinese companies such as Huawei, it still appears vulnerable to action by the Chinese government.
Huawei though has problems of its own as an increasing number of governments impose a ban on its telephone networks amid security fears. New Zealand has just followed Australia in taking this action, with Tom Uren, of the International Cyber Policy Centre at Australia’s Strategic Policy Institute, saying that the Chinese government had “clearly demonstrated the intent to steal information over many years.”
In the US, President Trump had signed a defence funding bill in August that blocked US federal agencies from purchasing any Huawei or ZTE equipment.
However, the US mid-term elections brought him less favourable news as the Democrats clawed their way back to a measure of power, gaining 40 seats to take overall control of Congress. The President nevertheless hailed the results as a “triumph” and a clear vindication of his policies and right now certainly looks set to run again in 2020 – most probably against Beto O’Rourke or Kamala Harris for the Democrats.
November was a relatively quiet month for world stock markets. The best places to have your money invested were Hong Kong, which was up by 6% in the month and India, up by 5%. And the worst investment in the month? Just keep reading…
Having fallen by just 1% in October and appeared to be a grown-up, stable currency, November was a catastrophic month for Bitcoin. It opened the month at £4,945 and closed it at £3,107 – a fall of 37% and one of the worst months in Bitcoin’s history.
The cryptocurrency broke through several ‘key support levels’ during the month and each time it happened another wave of selling was triggered. We have written previously about ‘Bitcoin mining’ – using hugely powerful computers to solve hugely difficult maths problems and in so doing creating new Bitcoins – and it appears that in November several large-scale mining operations ‘threw in the towel’ and switched to other cryptocurrencies.
Is this the beginning of the end for Bitcoin? November has historically been a bad month for the currency and plenty of people are predicting a rally (coincidentally, the same people who sell you Bitcoin). As we have written previously, the next five years will almost certainly see a cryptocurrency running alongside ‘traditional’ currencies: whether it is Bitcoin remains to be seen.
Is it me, or is the world getting slightly madder? There were once months when I struggled to fill this section of the Round-Up, but now it is a question of what to leave out…
The month kicked off in good style as Bradley Stoke Town FC of the Bristol and District League signed a player called… Bradley Stokes. Queues of hopeful middle-aged men are now changing their names to Manchester United…
Meanwhile in Holland Emile Ratelband – presumably unable to find a team called FC Ratelband – contented himself with bringing a lawsuit to lower his age. “We live in an age where you can change your name and change your gender,” said 69-year-old Emile, “So why can’t I change my age?” Being 69 is, apparently, harming Emile’s chances on the dating app Tinder.
Still young, but clearly with plenty to worry about, are the students of Leeds Trinity University. Lecturers there have been told to avoid capital letters in their handouts as they can ALARM STUDENTS and ‘scare them into failure.’
Fortunately, the students do not live in North Korea where there are only 15 haircuts for men and women approved by the state. And no, you are not allowed to sit in the chair and say “I will have a trim Jong-un, please.” No-one is allowed to have a haircut like the beloved leader…
Finally a nod of acknowledgement to the state broadcasting corporation in China which has introduced virtual reality newsreaders powered by artificial intelligence. My sources tell me that the BBC will not be following suit. I can understand that: after all, there would be no-one left to appear on Strictly…
And our Person of the Month award goes to San Antonio in Texas where engineer Jessie Carabajal has finally found a way to make Amazon’s Alexa interesting – by wiring her up to singing fish Billy Bass…