8th January 2020

Written by Juan Palenzuela, Associate

Edited by David Gaffney, Partner

Good morning, They had a failsafe plan: if he can’t get in, he can’t get elected. Simple, but effective. 

At least that was what the Venezuelan government thought, facing on Monday the re-election of Juan Guaidó, leader of the legislature and the opposition, who also claims the presidency of the Republic.

And they succeeded, at least partially. Despite Guaidó’s best efforts to break the police cordon and climb over the parliament’s fence, the session carried on without him, with another parliamentarian supported by the government elected instead as president of Venezuela’s national assembly. 

As is customary, the governing party’s propaganda channels were quick to Jesuitically rationalise what just happened. “Guaidó did not want to enter the chamber because he did not have the votes” said one. Hours after, opposition lawmakers convened in another location in Caracas to carry out the vote anyway, electing Guaidó for a second term.

But yesterday, when the assembly was scheduled to reconvene, Guaidó and other opposition parliamentarians who were denied entry on Monday managed to finally break the security cordon and enter the chamber, taking control of the parliamentary business, at least nominally. 

All in all, not the smoothest start to the year for a country that wobbled and tottered its way through 2019 due to political instability. 

Being Venezuelan has taught me that things can always get worse, no matter how hopeless you believe the starting point is. Vaguely following the fortunes of Scotland’s national men’s football team since I moved here has only served to confirm that theory. But in spite of all this, on a Christmas trip home to Caracas, I found a city that to my surprise is managing its tragedy quite well. 

People are feeling increasingly emboldened to try out some of the city’s new bars, restaurants and fancy food trucks; while entrepreneurs have come up with fintech solutions to bypass the rampant inflation and facilitate payments. Immerse yourself in a conversation with a group of locals and you could easily forget the country remains mired in political and currency crises. It almost feels normal. Unlike at the height of the crisis a year ago, Venezuelans seem to have managed quite quickly to accept the desperate nature of the situation and learned to live with it. 

As Brexit looms closer and tensions rise in the Middle East, it's a reminder that day-to-day existence somehow muddles on for most people while the cities, countries, and continents around them shift and mutate.

News

Iran conducted a ballistic missile attack on two Iraqi bases hosting American forces last night in retaliation for the killing of Qasem Soleimani on 3 January, stepping up tensions between the two countries. No casualties have been reported from the attack. US president Donald Trump tweeted “All is well!” and is expected to make a statement in the next few hours. 

While the ballistic missile attack was taking place, a Boeing 737 crashed last night shortly after taking off from Tehran’s international airport, killing all 176 passengers. The plane was bound for Kyiv and most of its passengers were Iranian citizens. An investigation has been launched into the incident. 

SpaceX successfully deployed a batch of 60 satellites for its Starlink network yesterday, bringing the total number of satellites in the network to 182 in order to provide a global broadband internet service. The new additions mean SpaceX now operates more commercial satellites in orbit than any other company, with permission from regulators to launch up to 12,000 platforms.

Business and economy

Tesla yesterday delivered its first Model 3, a mass-market car, from its Shanghai factory to a Chinese customer, marking a turning point in the manufacturer’s efforts to dominate the electric vehicle industry. The factory is the first fully foreign-owned car plant in China. It is putting direct pressure on traditional manufacturers to move faster towards offering Chinese consumers similar high-quality, battery-powered alternative vehicles. 

Anglo American has made a takeover bid for Sirius Minerals, a British listed miner, reportedly offering 5.5p a share, which would value the company at almost £386m. Shares in Sirius closed at 4.1p on Tuesday. Anglo has previously expressed interest in Sirius, particularly because of its potash project on the North York Moors. 

Carlos Ghosn will hold a press conference today in Beirut after escaping trial in Japan for using Nissan’s assets for his personal benefits while he was CEO. Many questions remain unanswered after his escape.

Columns of note

Jane Fuller in the FT argues that it is time for Big Four accountancy companies to rethink the purpose of auditing. Fuller says high profile UK failures such as Carillion, Thomas Cook and BHS expose the conflicts of interest the Big Four audit companies face when they sell other non-audit consulting services to many of their clients. In fact, audit accounts for only one-fifth of their revenue these days. Auditors should be encouraged to look outwards, beyond company executives, to give industry bodies and regulators alerts if they have concerns about a company’s financial viability. Due to the size of some of these companies, this is ultimately a matter of public interest, argues Fuller. 

Also in the Financial Times, Brendan Greeley argues that the US is testing the limits of monetary policy. While the Fed can stimulate and help drive the economy through a downturn, it cannot single-handedly end one merely through monetary policy. And yet the Fed’s chair Jay Powell has repeatedly pleaded for structural policies that increase America's ability to grow over the long term, regardless of the ups and downs of the business cycle. Unfortunately, argues Greeley, these may be expressions of concern about the state of the economy. 

Source: The Times

Markets

What happened yesterday?

Equity markets in the US and UK receded as ongoing tensions between the US and Iran increased, with Aston Martin tanking on the back of a profit warning. 

The FTSE 100 closed yesterday down 0.02% at 7,573.85, as the pound weakened 0.42% against the dollar to trade at $1.3116, but strengthened 0.14% on the euro to €1.1777. 

In the US, the Dow Jones Industrial Average was down 0.42% at 28,583.68, while the S&P 500 was 0.28% weaker at 3,237.17 and the Nasdaq Composite saw out the session 0.03% lower at 9,068.58. 

Stocks in mainland Europe were nonetheless modestly higher, as investors there shrugged off the rhetoric and focused on company performance. 

By the end of trading, the benchmark Stoxx 600 had added 0.25% to 417.67, alongside a 0.76% jump to 13,226.83 for Germany's Dax and a gain of 0.60% to 23,723.38 for the FTSE Mibtel. 

What's happening today?

AGMs Conygar Trading Announcement Greggs Sainsbury

Intl. economic announcements (07:00) Factory Orders (GER) (10:00) Economic Sentiment Indicator (EU)

(10:00) Industrial Confidence (EU) (10:00) Services Confidence (EU) (10:00) Business Climate Indicator (EU) (10:00) Consumer Confidence (EU) (12:00) MBA Mortgage Applications (US)  (15:30) Crude Oil Inventories (US)  (20:00) Consumer Credit (US) 

Source: Financial Times

Did you know?

Australia has hundreds of thousands of feral camels.

Parliamentary highlights

TODAY

House of Commons Oral questions Scotland Prime Minister's Question Time Legislation European Union (Withdrawal Agreement) Bill: continuation of proceedings Motions Section 2 of the European Union (Withdrawal) (No. 2) Act 2019 and Section 13 of the European Union (Withdrawal) Act 2018 Section 3(2) of the Northern Ireland (Executive Formation etc) Act 2019 Adjournment SPAC Nation and the alleged exploitation of young people - Mr Steve Reed House of Lords Oral questions Planning for the future of upland farms and tenant farmers - Baroness McIntosh of Pickering When the integrated security, defence and foreign policy review will report on the UK’s place in the world - Lord McConnell of Glenscorrodale A broader definition of research and development in the creative industries - Baroness Bull Debate on the Address Home affairs, justice, constitutional affairs and devolved affairs Debate Motions pursuant to section 2(2)(b) of the European Union (Withdrawal) (No.2) Act 2019 and section 13(6)(b) of the European Union (Withdrawal) Act 2018 - Lord Callanan Scottish Parliament Members’ Business Research Projections into Place of Death in 2040 – Miles Briggs Women, Peace and Security – Emma Harper Scottish Government Debate Improving the Lives of Gypsy/Travellers

TOMORROW

House of Commons Oral questions Exiting the European Union (including Topical Questions)

Business Statement Business Questions to the Leader of the House of Commons

Legislation European Union (Withdrawal Agreement) Bill: conclusion of proceedings (remaining stages)

Adjournment Effect of VAT rules on hospital improvement plans

House of Lords

Oral questions

Debate on the Adress Economic affairs, business and public services

Scottish Parliament

General questions

First Minister questions

Member's Business Commonwealth War Graves Commission

Ministerial Statement Enhancing Scotland’s Digital Connectivity

Portfolio Questions

Stage 1 Debate Scottish Biometrics Commissioner Bill