Hartley or Tiptree

Next in line

Philip Hammond the latest in a long line of UK Chancellor of the Exchequer’s will present his Autumn Statement at 12.30 today. He or his department have already ‘leaked’ plans for more infrastructure spending and incentives for housebuilders. More importantly they have a identified a whole new class of people known as the ‘JAM’s those Just About Managing. This could lead to a speeding up of the George Osborne plan to take more people out of tax sooner rather than later.

Record indices

The Trump rally in stocks continues apace. At the close all three major indexes finished at record levels with the Dow above 19,000 for the first time. Seems like only yesterday we were cheering the move through 10,000. It was in fact about 16 years ago. Considering the 2007/2008 debacle this is some achievement. 

What will Trump do? He has threated to tear up Dodd Frank, pull out of TPP and increase infrastructure spending massively. Most importantly he has toned down his rhetoric and is beginning to sound like a President rather than a used car salesman. For the time being this is good for stocks and good for the dollar. Maybe in 6 months we will be talking about profligacy, a burgeoning budget deficit and a dollar that is losing its lustre, but for now all looks good; 20,000 here we come.

Political risk in Europe

Conversely the political risk in Europe is on the rise and may not be fully priced in. The referendum in Italy on 4th December and the election of a far right Government in Austria do not appear to have been totally observed.

Despite some minor resistance over the past week or so it would appear that €/$ is heading inexorably back towards parity. This is likely to drag the £/$ towards 1.20 but conversely £/€ back up to 1.20.

Back to the Jam. By the weekend we should know whether Mr. Hammond has earned the Jam award of Hartley’s (Up the workers) or has become a bit of a Tiptree (An Upper Middle Class smoothie). The likelihood is somewhere in the middle. Let’s hope he finds an ally in Paul Weller!