Good morning,

Andy Haldane blurred the lines between central banker and government lobbyist over the weekend as he used his position as chair of the Industrial Strategy Council to call on the government to do more to get businesses making the most of technology to increase productivity. Mr Haldane wants to see companies taking their experience in having to quickly adopt tech to allow people to work from home and continue to expand on this, with support from the government in the form of tax breaks, think tanks and support hubs, to bring in advanced technology that helps them ”tech up to grow out”. The Daily Mail has the story.

The more immediate challenge for business could be a second lockdown along with the end of furlough and business support loans. There are rumours that Rishi Sunak will extend his covid loan schemes, but so far nothing has been announced on any furlough extension or tweaks, at a time when the country is seemingly preparing for anther lockdown, or at least much more stringent controls on our way of life. The Centre for Economic and Business Research says that country faces an economic hit of £25m per day from a second wave of covid and that’s without a nationwide lockdown. London could have measures imposed as early as this week, as Sadiq Khan meets council leaders today to send recommendations to the government on what should happen next. Over the weekend he warned that London was days behind the North of England in terms of case growth.

Sir Graham Brady might make life a bit harder for the government in imposing short notice lockdowns, as he wants to insert a clause into the temporary provisions act, due to be reauthorised this week, that would see any future restrictions having to go to a parliamentary vote. In his words “We know that the NHS coped well with the challenge of the virus and parliament has been sitting largely since April. There is now no justification for ministers ruling by emergency powers without reference to normal democratic processes”. The Telegraph has the story.

Overnight we’ve seen a large data leak that once again shows banks behaving badly. Reports show that HSBC and Barclays knew about money laundering and illicit transactions and let them proceed anyway. This only broke last night and the papers are still being trawled through, so it’s likely that more names will be named and fingers will be pointed, so we will watch what happens in the coming days. For now, here’s the BBC’s take on what’s gone down.

In Europe, there’s one story that caught our eye in the FT: The EU is considering making available new powers to be able to penalise and possibly even break up large tech companies. The new rules, which would only be used in extremis, would possibly even be able to exclude them from the single market altogether. The leader of the review, Thierry Breton, has said “there is a feeling from end users of these platforms that they are too big to care”. We’ve long said that regulation would need to come from Europe over the US, as the risk-reward from big tech in Europe is asymmetrical, because of the lack of tax revenues to compensate for some of their less favourable behaviours. It will be interesting to see if and when these new powers get approved and used.

Across the Pond: Following the death of US Supreme Court Justice Ruth Bader Ginsburg at the weekend and Trump’s plans to move without delay to fill the seat, political pundits are starting to question what this might mean for the election. The answer, as we see it, is ‘not a lot’. Trump will install a new judge to the supreme court which will tip the balance in a conservative direction, which will please conservative voters that may not be particularly pleased with Trump but are happy at the lasting contribution Trump will have made to conservative values. From the Democratic side it’s likely to galvanise support for Joe Biden – and he’s already seeing that, with micro campaign donations hitting record numbers over the weekend – and bring more people out to the voting booth. So what we’ll end up with in the short term is an awful lot of air time on the subject, to the detriment of other issues in the campaign, which might feel like Trump has dodged a bullet, but if anything it has just brought out more support on both sides of the divide.

The wider issue is what a conservative leaning Supreme Court would mean for the US in the many years to come. The job is an open ended appointment and with the average age currently sitting just 63, there is potentially a decades long run of a conservative majority, regardless of who is sitting in the White House. Trump may have just got the lasting legacy that he wants, gifted to him.

Trump has approved the Oracle-TikTok deal, which also has Walmart thrown in as a shareholder for good measure – not too sure what they bring to the table there – the deal is likely to be seen as a risk positive move for equities, which will be welcome following last week’s sell off. Investors will take it as a small positive in the scheme of things with US-China relations. Another ‘win’ for relations is that a US court has placed an injunction on the government, preventing them from banning WeChat, the Chinese social media giant, in the US. The move takes more pressure off relations for the time being and should now see us through to the election without any more of Trump wanting to pay hardball with Beijing.

The week is reasonably quiet from a data perspective, but what we do get will be interesting: Today we’ve seen house price information from Rightmove, which shows record prices and demand for three and four bedroomed houses and overall Rightmove estimate there to be 40% more sales underway now than at this point last year.
Tomorrow sees UK government borrowing data and also European consumer confidence – the first will be an insight into just how much tax receipts have diminished and government spending as increased. The estimate is £40bn of borrowing for the month of August.
Later in the week we get to look forward to PMI numbers, oil inventories and a litany of central bankers speaking on their monetary policy decisions, riveting.

Have a great week.

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