As today is 11th November, it is of course Remembrance Day and this Sunday, King Charles III will be laying the Remembrance Day wreath at the Cenotaph in Whitehall, London, with this being a time to honour those who have lost their lives in conflict and for many, it is also a time of reflection and remembrance for all those who are no longer with us. I am sure this will be very close to the heart of King Charles III, who I understand has chosen to pay tribute to his Mother, the late Queen Elizabeth II and her Father, King George VI.
It should also be a time when we remember those suffering in current conflicts around the world, including of course, the Ukraine.
When I wrote my last News Letter at the beginning of October, little did I know that pantomime season was about to go into full swing somewhat earlier than usual, and I’m thinking here about the UK political scene.
On 14th October, the Daily Star started to video a head of iceberg lettuce that had a supposed shelf life of 10 days, and they asked the question whether it would last longer than Liz Truss as Prime Minister! As we now know, the lettuce won the contest with the resignation of Liz Truss just 1 week later on 21st, having fired her Chancellor (and supposedly best political friend), Kwasi Kwarteng for his mini Budget, which of course, was as much her doing as his!
I remember raising the question in last month’s News Letter ‘do Liz Truss and Kwasi Kwarteng know what they’re doing?’ You may think the answer is now clear – what is certain, is that when they said it was too much too fast, they were right in terms of how markets reacted, and this has to go down in history as one of the most humiliating political own goals of all time.
Whilst it is good to see that markets have stabilised in the terms of the UK’s long term borrowing costs and value of Sterling, which today is back to $1.17 from its low point of $1.03 last month, it would seem the installation of Rishi Sunak as PM, with Jeremy Hunt continuing to hold the purse strings has been accepted – at least for the time being. My concern is that we will swing from the gung-ho attitude of Truss all the way back to Project Fear that we became all too familiar with previously.
In in one his first speeches as PM, Sunak said ‘the UK is facing a profound economic crisis’ – designed I think to launch Project Fear once more.
Unfortunately, this tends to lead you to believe all the problems are UK based and we know that this is simply not the case. There is no doubt that the UK is facing tough economic times right now, but this is a global problem, largely being driven by inflationary concerns, some of which clearly emanate from the war in Ukraine, but we should not forget, we are still experiencing some of the Covid legacy in supply chain issues.
Central Banks face a major dilemma, as they traditionally use interest rates as a means to control inflation but over aggression will undoubtedly lead to or deepen recessionary influences.
I have previously expressed that I believe we have already seen the peak in core inflation, and it is only a matter of time before this will be seen in the headlines.
Yesterday, Stock Markets around the world reacted very strongly in a positive way to inflation figures published in the US that were lower than those anticipated by the markets. To my mind, this demonstrates strongly how hungry the markets are for good news and whilst I’m not suggesting that we’re out of the woods yet, it does go to show how a little good news can have such a major impact and as we go forwards, I believe we will see this repeating.
Politics of course is not confined to the UK and at the time of writing, I am currently in the US, where this week, we have seen the mid term elections with results still coming in. At the time of writing, the Democrats have 48 seats in the Senate and the Republicans 49, with 3 more results to come. In the House, we have a similar position with the Democrats having 192 seats compared to the Republicans 211, with a total of 435 seats.
Whilst the Democrats are therefore looking likely to lose the House, the Senate remains too close to call, although it is being widely publicised that the Democrats have not fared as badly as they might and the red wave has not been as strong as the Republicans had hoped.
I’m pleased to say, I don’t really understand US politics and therefore, I cannot get drawn with any personal comments, even though it would appear that a stalemate is possible, and this may hamper much progress over the next couple of years. As an aside, it was interesting to see that Ron DeSantis had an overwhelming majority in Florida where we are staying, and he is flagged as being a likely candidate for the 2024 Presidential election. That having been said, Donald Trump is expected to make an announcement shortly and has taken to referring to the Governor of Florida as Ron DeSanctimonious – so it would seem the gloves are coming off already!
Moving away from markets and politics, we were reminded this week what a huge country of contrast the United States is. Whilst we were aware of very wet and windy weather back in the UK, 2 days ago, as we watched the weather forecast with Tropical Storm, soon to become Hurricane Nicole, approaching our part of Florida, they were also forecasting up to 12” of rain in Los Angeles, 48” of snow in the Sierra Nevada and tornados in Oklahoma, whilst Tucson, Arizona remains in the worst drought for allegedly 1,200 years.
The next big event in the US will be Thanksgiving and then it will be full steam ahead to Christmas, with the shops already filling with decorations and Christmas music. We’ve already seen Christmas decorations going up outside various houses where we are staying, which does seem remarkably early. I’m sure in many ways, we will all be pleased to put 2022 behind us and look forward to a brighter future next year.
As always, stay safe and our best wishes from all at Alexander Bates Campbell