10th January 2020

Written by Iain Gibson, Associate Partner

Edited by Laura Hamilton, Managing Partner

Good morning,

The hopes for calm didn’t last. It had appeared that, following a tumultuous week, we were on the right path. The Iranians had executed a relatively timid strike – if that is not an oxymoron – on a US base, as revenge for the assassination of Qasem Soleimani. No lives were lost, the damage was not severe. The Iranian foreign minister tweeted that the action “concluded” his country’s activities. Then President Trump ended his TV address later that day by wishing the people of Iran well. You wouldn’t say we’d gone back to normal, but you could sense the relief as all sides looked to de-escalate. Not any more. After initial briefings yesterday from the US that Ukrainian Airlines flight 752, which crashed as it left Tehran Airport on the same day as Iran carried out its missile strike, looked to have been shot down, western leaders including Boris Johnson, Scott Morrison and Justin Trudeau have lined up to support this claim. All stress that the act appears to have been unintentional. Iran continues to deny there was a missile strike at all, botched or otherwise. In the past couple of hours, CNN has published a video of what seems to be the plane’s horrible end. What was initially perceived as a human tragedy is now firmly ensconced in the wider diplomatic crisis. 176 lives have come to a premature halt, just because they were in the wrong place at the wrong time. The grief of family and friends may soon turn to anger and a fear that, as information continues to be restricted, no one will be held accountable. There is good reason to think this, especially if the last comparable incident is anything to go by. In 2014, in another conflict (and one which by coincidence also involved Ukraine), Malaysian Airlines flight MH17 was shot down by Russian forces over Hrabove, who launched a surface-to-air-missile in the mistaken belief that they were targeting a military aircraft. 298 people were killed. Amidst all the horror, the account of the couple who lost all three children, who were travelling with their grandfather, is particularly harrowing. To date, no one has been convicted of this crime, although prosecutions are now planned, even as the Russian state continues to protest the innocence of its military. We will now see if Iran adopts the same tactics of evasion and denial as its ally. The early signs are that it will, meaning the chances of getting the truth about what happened this week, not to mention some form of closure for the affected families, currently look to be receding as each day passes.

News

The British and Irish governments have published the text of a draft deal which aims to restore the Stormont assembly. The move comes three years to the day since devolution collapsed in Northern Ireland and, if agreed, could see the legislature reconvene as early as today. The American House of Representatives has passed a resolution which aims to curb President Trump’s war powers and to give the chamber more oversight of any military action against Iran. The measure passed by 224 votes to 194, although it is a “concurrent resolution”, meaning that it does not carry the force of the law. Lord Ken Maginnis has been reported to police after he called an SNP MP “queer”. Following Hannah Bardell recounting that she had seen the peer abuse security staff at the House of Commons, he told the Huffington Post that “queers like Ms Bardell don’t particularly annoy me”. Lord Maginnis initially said to the BBC that he did not use the word, but HuffPo subsequently released the audio.

Business and economy

Having previously warned that it could move parts of its business out of the UK in the event of a no-deal Brexit, the chief executive of Airbus has said there is now “great potential to expand”. Speaking at the Airbus New Year reception, Guillaume Faury said that the increased likelihood of a deal made his company’s business prospects in the UK more certain. Dutch bank ABN Amro has chosen the former chairman of PwC Netherlands, Robert Swaak, as its new chief executive. He will succeed Kees van Dijkhuizen, who is stepping down after three years at the helm, and will guide the bank through a criminal investigation into potential money laundering and the financing of terrorism. There is a rush from airlines to purchase new flight simulators that can train pilots for the Boeing 737 Max. The aircraft is currently grounded following fatal accidents in the past two years and, following Boeing’s reversal of its earlier position that pilots who expect to fly the Max only need computer or tablet-based instruction, an uptick in orders for full simulators has already begun.

Columns of note

Writing in The Financial Times, the "Undercover Economist" Tim Harford looks at what he describes as the “synthetic statistic” of GDP, noting that it “measures neither the energy and resource consumption that might worry us, nor the things that really lead to human flourishing”. Whilst conceding that the metric can be useful in assessing some progress, he believes politicians do not really understand how to maximise it. He goes on to examine the link between increasing GDP and increasing consumption, offering several reasons as to why the assumption that the former automatically leads to the latter may not be as straightforward as we always think. In The Times, Philip Collins states clearly that the Labour party must “bury” Jeremy Corbyn if it wants to have any chance of winning the next UK election. Thus far, he is not encouraged by the sight of the leading candidates for the leadership all pandering to the far left, including Keir Starmer. Given that there will be plenty of problems in government for the Conservatives over the next few years, the writer believes there is an opportunity for a Labour leader to exploit, but only if he or she starts on the front foot. This means burying the ghosts of the 2019 election defeat and the man responsible for it.

Markets

What happened yesterday?

The so-called “relief rally” that followed the initial de-escalation between the US and Iran was still in effect as markets closed yesterday, with the main indices finishing at record highs. The S&P 500 ended 0.7% higher, led by gains across the technology sector, the Nasdaq Composite was up 0.8% and the Dow Jones Industrial Average rose 0.7%. It remains to be seen if the latest developments in the crisis affect market sentiment today. It was a similar picture in Europe, with the Stoxx 600, Frankfurt’s Xetra Dax and the FTSE 100 all ending the day higher than they began. In commodities, the price of gold was down slightly, which was not unexpected following the easing of demand for so-called haven assets, which always follows a time of immediate stress.

What's happening today?

Trading Announcements

JD Sports Robert Walters

AGMs

Ironveld Plutus Pwrgen

Int. Economic Announcements (13:30) Unemployment Rate (US) (13:30) Non-Farm Payrolls (US) (15:00) Wholesales Inventories (US)

Did you know?

The last film that President John F. Kennedy ever saw was an early print of From Russia With Love, which he viewed in the White House private cinema on 21 November 1963. He was assassinated in Dallas the next day.

Parliamentary highlights

TODAY House of Commons No business scheduled. House of Lords No business scheduled. Scottish Parliament No business scheduled.