Boris spoke yesterday for the first time since Friday night’s exit and took a harder line than many had thought he would when he won such a large majority in December (plenty, including us, thought he’d use his majority to take a softer stance) He now doesn‘t see the need for regulatory and standards alignment, yet still wants a free trade deal for goods. Boris also wants to see services exported to Europe in a free and unfettered fashion and has said that fishing quotas should be negotiated on an annual basis with the EU, based on scientific data and with UK landing the lions share.

Europe has opposing positions on all of the above and unsurprisingly is taking a firm stance.

The Independent talks of Boris’ plans as a ‘levelling down’ of the UK economy, rather than a levelling up and that he needs to prepare people for the realities that we might end up trading on WTO terms – we’ve still got 10 months and 25 days before we get there, so let’s hope not, but the article is well worth a read.

The coronavirus is front and centre of news still, but the tone has shifted from officials, calling the containment of the virus a ‘marathon and not a sprint’. The numbers of confirmed cases in China could be a lot higher than thought, as a case isn‘t confirmed until the person tests positive twice and there’s a shortage of testing kits. 

Chinese authorities used the New Year market holiday wisely and rolled out a massive liquidity scheme yesterday that was designed to prop up markets. The Shanghai composite moved lower on the first day back from the break, but only enough to catch up with its global counterparts. As well as propping up markets, the government has said they’ll offer support on a case by case basis to help get industry back to work as soon as possible.

 

China have also agreed to let US experts in to assist, despite last week accusing Washington of fuelling hysteria after evacuations and flight restrictions. China might well be lobbying the US for some slack when it comes to keeping up with the trade quotas that were signed off in phase one of the trade deal last month. The numbers were ambitious in a buoyant economy, but with what’s on the cards for the Chinese economy they could be too much to meet.

The biggest market victim so far is oil, which is now priced at $50 per barrel. China is the world’s largest oil importer and demand has already dropped by about 3 million barrels per day. OPEC have already said they’re ready to intervene to maintain a steady price but countries will be keen to avoid the yo-yo effect and associated costs with turning production up and down – so we wouldn‘t expect everyone to play by the rules and we wouldn‘t expect this to be the bottom of the market.

Trump’s impeachment went pretty much to plan (if that plan was Republican). He’s due to be acquitted tomorrow and will waste no time in taking revenge on those that tried to help Democrats take him down. John Bolton is top of the list and could well be investigated for mishandling classified material – he’ll be hoping to get his book out ASAP in a bid to get the court of public opinion on his side then. Either way, ‘it couldn‘t happen to a nicer guy’.

Democrats tried to kick off their selection race with the Iowa caucus yesterday. It was a completely wasted effort though as technology let them down and nobody knows the result! You can read the detail in this Business Insider article, but the headline is that it’s important because in the six of the last eight primaries, the person that won Iowa went on to take the Democratic nomination.

Today we get European inflation numbers and probably a few more words from European Central Bankers about how they’d prefer an achievable target, rather than an arbitrary 2% that they’ve been unable to hit for the last decade.

Have a great day.