7th November 2019

Written by Adam Shaw, Associate Partner

Edited by Kevin Pringle, Partner

Good morning,

The fact that my first reaction to seeing the phrase “Ok boomer” was to question the missing comma would suggest that I am more likely to be the target of the term, rather than someone who might deploy it. For those of you unfamiliar with the expression, it is the condescending riposte some younger millennials and members of Generation Z aim at baby boomers, whom they blame for wealth inequalities and the climate emergency: the direct counter to “snowflake”. While it appears to be mostly an American phenomenon so far – I can’t be completely sure as someone pushing 30 and so therefore ineligible for the Snapchat updates – it will no doubt reach these shores soon. Particularly considering that the anger is not entirely misplaced, as evidenced by the second edition of The Pinch, which was published earlier this week by Lord Willetts. In an update to the thesis he first published in 2010, Willetts – the former Conservative minister and president of the Resolution Foundation’s Intergenerational Centre – argues that the generational inequalities he highlighted nine years ago have widened, not improved.  According to the analysis, baby boomers born in the mid-1950s, are set for a “welfare dividend” of £291,000 over the course of their lives. By contrast, millennials born in 1996 are set to receive a far smaller dividend of £132,000 typically. Of course, these are average numbers and there are wide gulfs in wealth within generations as well as between them. However, throw in increases in house prices that have rapidly outstripped wage growth, disproportionately affecting young people; Brexit which most younger people did not vote for, and the climate emergency, and you can see why there is a sense of injustice. Animosity between the generations is, obviously, not the answer. The focus instead should be carefully considered policy with a long-term view, combined with the political will to make the difficult choices on issues such as building the necessary housing, supporting immigration to boost the working age population, reform of social care, and the sustainability of the pensions triple lock. It’s not a catchy phrase that will fit on a hoody. But it’s what is required to address the issue, even if I’m not hopeful it will happen any time soon.

News

The Liberal Democrats, Plaid Cymru and the Green Party have agreed to an anti-Brexit electoral pact and will not stand against each other in dozens of seats in the forthcoming election. Exact details are to be announced later today but the agreement is expected to cover between 60 and 70 constituencies, including 11 in Wales. Tom Watson, Labour’s deputy leader and MP for West Bromwich East since 2001, is stepping down from both his party position and parliament. In a letter published late yesterday, he said that the decision was “personal, not political”. However, Watson has had several well documented clashes with Jeremy Corbyn over Brexit and Labour’s handling of antisemitism, and in September there was a botched attempt by Corbyn allies to remove Watsonby abolishing his position. In an interview on the Today programme, Ian Austin, now independent MP for Dudley North after resigning from Labour earlier this year, said that Tom Watson’s decision was hugely significant and that Jeremy Corbyn was unfit to be prime minister. He urged people to vote Conservative and also confirmed that he would not be seeking re-election to parliament. Two former Twitter employees have been charged by US federal prosecutors with spying for Saudi Arabia. The two men – one a Saudi national, the other a US citizen – are accused of using their access at the social media giant to gather sensitive and non-public information on dissidents of the Saudi regime. The allegations are likely to put the spotlight back on tech companies’ ability to protect the privacy of their users.

Business and economy

Sainsbury’s has reported a 92% drop in half-year pre-tax profit and a decline in sales. The supermarket’s interim results highlighted the challenges it faces as it looks to recover from the failed merger attempt with Asda, which was blocked by the Competition and Markets Authority in April. Chief executive Mike Coupe said: “We have set out our plan to create one multi brand, multi-channel business. This will make the combined Sainsbury’s and Argos offer much more accessible for customers and gives us the opportunity to make our business more efficient.” The new chairman of the Financial Reporting Council has called on the government to break up the Big Four accounting firms. In an interview with theFinancial Times, Simon Dingemans, who started his role at the audit watchdog last month, said that the enforced separation of audit and consulting at PwC, Deloitte, EY and KPMG was a “critical” measure to improve audit quality, comparing his recommendation to the ringfencing of high street banks. (£) The Association for Financial Markets in Europe (AFME) and the Investment Association (IA) have written to the London Stock Exchange and other trading floors to call for a review of trading hours across Europe. The trade bodies say this is intended “"to improve culture, diversity and wellbeing on trading floors and create more efficient markets".

Markets

What happened yesterday?

It was a mixed picture on the global equity markets as investors digested the latest developments on US-China trade talks and European economic releases. Reuters reported that a meeting between President Trump and his Chinese counterpart, Xi Jinping, to sign a “phase one” trade deal may be delayed until December as talks continue. However, there is optimism that an agreement will be reached. The S&P 500 was up 0.07%, however the Dow Jones Industrial Average fell fractionally and the Nasdaq dropped 0.29%. In Europe, the IHS Markit Eurozone Composite PMI came in at 50.6 for October, exceeding expectations – it had been anticipated that it would remain unchanged on the previous month at 50.2. This led to all the main European indices making gains: the FTSE 100 rose 0.12%, the CAC 40 was up 0.34%, and the DAX climbed 0.24%. In London, Imperial Brands Group was the biggest riser on the FTSE 100, rising 2.39%, followed by Centrica which gained 2.2%. BT Group led the day’s fallers, shedding 4.67% on the back of news that Virgin Media is to end its £200m-a-year deal with BT’s mobile network EE and transfer its three million mobile customers to Vodafone. On the currency markets, the pound fell 0.02% against the euro to €1.1614 but was up 0.04% against the dollar at $1.2855.

Source: FTSE 100, Financial Times

What's happening today?

Interims

3i Infrastructure

Great Eastern

Halfords

Jz Capital

Renewi Plc

Sainsburys

System1 Group

Q3 results

Bank of Georgia Group

Trading Announcements

Flutter Ent

Purplebricks

AGMs

Supermarket Inc

UK Economic Announcements

(12:00) BoE Interest Rate Decision

Intl. economic announcements

(07:00) Industrial Production (GER) (13:30) Initial Jobless Claims (US) (13:30) Continuing Claims (US) (20:00) Consumer Credit (US)

Columns of note

In the Financial Times Big Read, Daniel Dombey looks ahead to the Spanish election on Sunday – the country’s fourth in as many years – and the significant challenges any future government faces. Spain is suffering from social and political polarisation due to the question of Catalonian independence, division over the legacy of the Franco regime, and political fragmentation. With polls suggesting that, once again, no party will win a majority, and there never having been a coalition government in modern democratic Spain, the impasse looks set to continue. (£) Writing in The Atlantic, Jeffrey Webb – who formerly worked in digital advertising for Google – explores Twitter’s decision to ban political adverts, arguing that others should not follow suit. To do so would be “to declare the problem insoluble—a fatalism the tech companies should reject”. He goes on to highlight that for tech companies, political parties and candidates are no different to consumer goods from a revenue generation standpoint. However, while policies on abortion and immigration are clearly far more complex than toasters and razors, Webb contends that simply banning political ads would favour incumbent candidates over less well known and more innovative ones. Instead, tech companies should improve digital political ads by increased transparency with larger, clearer labelling and making it easier for people to tell they are being targeted. 

Cartoon source: The Times

Did you know?

The Waffle House Index is an informal metric used by the US Federal Emergency Management Agency (FEMA) to determine the effect of a storm and likely scale of assistance required for disaster recovery. This is based on the reputation of Waffle House for staying open during extreme weather, or reopening quickly afterwards.

Parliamentary highlights

TODAY House of Commons No business scheduled

House of Lords No business scheduled

Scottish Parliament

Parliamentary bureau motions

General questions

First minister’s questions P

Portfolio questions: Rural economy

Stage 1 debate: Referendums (Scotland Bill)

Financial resolution: Referendums (Scotland) Bill TOMORROW

House of Commons No business scheduled

House of Lords No business scheduled Scottish Parliament

No business scheduled.