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12 December 2018

Brexit on pause as UK PM challenged.

ECJ Article 50 decision means UK Parliament is in control of its destiny

After letters from at least 48 MPs, the UK Conservative party will now hold a confidence vote in its leader later today. If the incumbent UK PM May fails to secure a majority of Tory MPs, a leadership contest will be triggered. The postponement of the Parliamentary vote on May’s Withdrawal Agreement and subsequent day of flying around Europe meeting heads of state, yet appearing to achieve little but photo opportunities has forced the matter to a head. Regardless of the outcome of the confidence vote, the Brexit process is at stalemate with the UK Parliament unable to ratify the only agreement the EU is prepared to offer to date.

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20 March 2018

Social Media’s Dieselgate?.

The risks include fines, increased regulation and a change in consumer preferences

The recent controversy over social media and the use of its user data is likely to persist. Many users may not understand that researchers can accurately profile individuals on something as simple as their Facebook “likes”. The potential for influencing in subtle ways both consumption and more controversially political behaviours through targeted advertising should be clear. Multiple investigations across jurisdictions may now cast a harsh light on business practices which may otherwise have continued under the radar. Global digital titans which have become in effect brokers of user data are therefore under threat on another front, in addition to a recently proposed digital revenue tax.

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9 June 2017

UK election: Another step-up in political risk.

A tactical blunder does not mean the end of Brexit or the Conservative administration

UK PM Theresa May’s strategy of consolidating power when the Labour opposition was seemingly in disarray and the Conservative poll lead unassailable has seriously backfired. The likelihood now is that the UK will be governed by a minority Conservative administration with support from the Democratic Unionist Party (DUP). May’s future as leader of the Conservative party remains in serious doubt following a number of campaign mistakes, not least the failure to recognise importance of appeasing the older voter. Much now remains open for debate over the next few weeks.

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17 October 2016

Sterling: Lower for longer as the EU strikes back.

The UK’s new Prime Minister Theresa May’s honeymoon period is clearly over. Days after emphasising the importance of national sovereignty and appearing to lean towards a ‘hard’ Brexit, a dawn raid on sterling and subsequent weakness has given opponents ammunition to attack the UK’s plan to leave the EU. Furthermore, tough talk from the UK government has been reciprocated from EU leaders and European heads of state. President of the European Council Donald Tusk may even have given the game away by linking the concept of a ‘hard’ Brexit to ‘no Brexit’. For sterling, we believe investors should look through the politics and focus on the economics.

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RSS - Strategic Insight
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29/11/2018
Equity strategy and market outlook - November 2018

In this month’s strategy piece, Alastair George believes that 2018 has been the year that the US Fed normalised US monetary policy. Evidence of this is in the restoration of normal market volatility, lower global equity valuations and a strong US dollar, in addition to higher US interest rates. With Fed chair Powell suggesting in recent days that US rates are just below the broad range of the Fed’s estimates of the neutral level, expectations of a pause in US rate increases have risen, even if this observation is only consistent with previously published Fed projections. Even given the possibility of a further easing of Fed rhetoric in coming weeks, the investment outlook remains difficult to read in our view due to key political risks directly ahead, the most significant of which are the potential for a no-deal Brexit and US trade policy with respect to China. On balance, earnings risk keeps our cautious view on global equities in place. We are mindful of the 2015 experience where the resources and energy sectors continued to decline despite attractive valuations, until earnings forecasts stabilised. We can also see the relative merits of a risk-free 2.8% annual return on US two-year Treasury notes in the circumstances.

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