Don’t Blame the Cows for Global Warming

It is okay, you can start eating again!

Every week it seems that some self-appointed climate fascists are instructing us that we need to stop eating and drinking in order to “save the planet”. As Global Warming has evolved into Climate Change then Extinction Rebellion, ever-more shrill instructions about how we should live our lives are issued, with the threat of dire consequences should we fail to accede to their demands. Is it only me that observes the same tone of dire-threats and moral righteousness that were so prevalent in the CND anti-nuclear armageddon protesters of a generation ago – or indeed the religious zealots of the previous millennia? Their chant was “do as we say, or you’ll burn for an eternity”, which, come to think of it, is pretty much what the anti-western-economies lot are telling us about temperature change.

Beef cattle enjoy the sunshine

Anyway, back to the topic. For a number of years, agriculture has been blamed for a very substantial proportion of UK greenhouse gas emissions, with as much as 25% of the total quoted as being sourced from farming. These numbers are grabbed by vegan enthusiasts to shriek that we all need to stop eating meat or we’ll burn in hell for all eternity. Okay, so maybe I paraphrased them a little, but the point remains.

However, the science they are using is duff. According to Prof Myles Allen of Oxford University Environmental Change Institute, quoted in the Sustainable Food Trust, the picture is much more nuanced. Back in February, we mentioned that the finger points at the methane released by cows. In the approach used by the International Panel on Climate Change, methane is treated as equivalent to carbon dioxide in its greenhouseness (like my new word?) The true picture is that carbon dioxide is chemically stable and stays in the atmosphere for hundreds of years. Meanwhile, methane breaks down rather quickly, and so has a much smaller impact on the atmosphere. The case against cows has been extensively overstated.

Barry Gardiner, not the voice of reason

At a conference organised by the Country Land and Business Association, Labour spokesman Barry Gardiner suggested that British farming should be part of the solution to global warming by producing less food and planting trees instead. To put it mildly, this approach doesn’t pass even the most cursory scrutiny. (Ha that originally I typed “What a moronic idea!” before professionalism got the better of me). Does Mr Gardiner think that the UK population will eat less? All that his madcap scheme would achieve is more food imports. So the food production leads to the same emissions, just somewhere else in the world. Then the food is transported to the UK, with all the emissions entailed. Mr Gardiner’s scheme actually would increase global emissions. We do like the idea of more tree planting, but to claim that replacing UK food production with forests would reduce emissions is just wrong.

Summary

Agriculture is not the huge emitter of greenhouse gases that the hysterical brigade would have you think. Carry on eating healthy nutritious meat and dairy products, comfortable in the knowledge that locally sourced food has low airmiles and supports high-quality, high-welfare British farming.

Brexit Election Double Bluff Could Avoid No-Deal

Cripes, doesn’t Boris love poking the hornets’ nest with a sharp stick?

Boris – back on the front foot

The reality of his decision to close this Parliamentary session and arrange a Queen’s Speech to initiate a new Parliament is relatively small. Instead of Parliament having a recess for three and a half weeks over the party conference season, the break is five weeks. However, it has acted as a lightning rod for all of the pent up frustration and anger of the Remainers. Suddenly, they can see their case is lost. It was lost before, but now they can no longer pretend to themselves that they still have a chance.

Guy Verhofstadt, with name label to prove it

The greatest endorsement came from Guy Verhofstadt, Chief EU Brexit Negotiator, who branded it a ‘sinister development’. Clearly, many in Brussels have been relying on the Remainers to weaken the UK position. The strength of Boris’s move is reflected in their dislike of it.

The Nuclear Option

So now the Remainers have only one option left – win a vote of No Confidence next week and force an election before the end of October. This would be welcomed by the Boris team, as discussed yesterday, who have developed a suite of policies on which to campaign, and have clearly judged that such a poll would be winnable.

Our view is that;-

  1. The Remainers will not be able to win a vote of No Confidence

  2. It is far from clear that Mr Corbyn will even dare to call one (see 1. above)

  3. The EU will have to sit up and realise that the Remainers will not postpone Brexit

  4. The EU needs to avoid blame for No-Deal, and so see a deal as necessary.

 

Suddenly, to us, a No-Deal Brexit seems less likely than it did 24 hours ago.

Brexit Election Bluff or Double Bluff

We enjoyed the great mutterings in the press since the weekend about whether the Tories secretly want to have an election BEFORE Brexit day on Halloween.

It appears to have been started by Tim Shipman in the Sunday Times, who suggested that the Government would quite like to have an election on 17 October. However, recognising voter-fatigue, they want Labour to take the hit from the Brenda-of-Bristols who are annoyed at “Not Another One”. The thinking goes that Boris is far ahead in the polls, and so could attend the Euro summit the next day with more power to his elbow, and really give the EU leaders what-for!

The polite word to describe these rumours is bunkum. (The less-polite word also begins with B and has two syllables.) There are two major flaws with the plan. The first is that 18 October is way too close to Brexit day, and so no matter how much power there is at Boris’s elbow (or anywhere else on his anatomy) there just isn’t time for a deal to be pulled together and approved in all the places in which it needs to be passed. Also, two weeks before B-day is just about the worst time to be holding an election – project fear will be in full swing and the media will be full of the impending doom. Boris and his team certainly need to be planning on how to win the peace after B day at that point, but the public may have more pressing matters on their minds.

The Anti-Brexit Forces Are Too Split to Perform

Another week and another proposal from the anti-Brexit brigade. Part of their problem is that they all have agendas so different that they cannot agree on a shared approach.

Mr Corbyn has dreams of No 10

Last week, it was J Corbyn’s dream of rounding up support to propel him into No 10. That wasted another 7 days of precious time. However, putting Mr Corbyn into No 10 was a suitable objective for only Mr Corbyn.

This week, the rebels seem to have dropped the idea of an early no-confidence motion. So perhaps the Sunday papers’ double bluff about the Tories wanting such a thing was successful after all? The latest plan is to take control of Parliament and pass legislation to force Mr Johnson to extend Brexit. The trouble is, all of the people involved are playing politics, working out whether such a step helps their own person ambitions. However, despite Mr Bercow’s self-belief, the Government controls order papers, and can easily string out any arguments about procedure – perhaps reminding Parliament that they are not in the business of dis-obeying instructions from the electorate.

Frau Merkel in better health

Meanwhile, Frau Merkel’s sarcastic comment to Boris suggesting he should try to solve the Irish backstop in 30 days (when it hasn’t been closed down in over 30 months) has held open the prospect of a last minute deal, taking away some fire from the stop-No-deal faction of the anti-Brexit rabble.

 

 

What Will Happen?

In our view – remember, we are almost as clueless as the next person, depending on who that next person happens to be – Boris has got B-day in the bag for 31 October. It feels like there will be too much egg-on-face for the EU to renegotiate, and so a No-deal Brexit seems the most likely outcome. However, this time there has been ample warning, and so trade will keep flowing, people will continue to travel, and most of the strain will happen behind the scenes. This is kind of the inverse of the fig-leaf Brexit we forecast in the spring, when we thought a net-curtain of a deal would happen to save face. Now it looks like both sides will rush towards No-Deal, for the message that will send to their own electorates, but behind the scenes everything will function!

Corbyn for PM – The Ultimate Silly Season Story

Corbyn the great statesman

Hahahahahahahhahahahahha. Hats off to whoever thought of proposing Jeremy Corbyn to be Prime Minister. Perhaps the most fundamental question about having the Labour leader in charge of a “Government of National Unity” to solve the Brexit dilemma is, does anybody know what Mr Corbyn’s ideal Brexit would look like? So far the only clear Labour policy has been to oppose whatever Mrs May tried to get through Parliament. That was opportunistic politics, not conviction-based positioning. It is widely believed that Jeremy himself is in favour of Brexit, but it appears from the sketchy plans seen so far that the National Unity Government would actually be a Parliamentary Unity Government whose sole purpose was to delay Brexit and call a General Election. It is tough to see how frustrating again the 52% of leavers would lead to any unity within the country.

There cannot be many Tory MPs who want an election: and there must be even fewer who would want to face even their constituency party, let alone the electorate, after putting a Marxist in No 10. Then there is the difficult issue of Scottish Nationalism. Would Corbyn and Co be prepared to sanction another Scottish referendum as the price of SNP support? That would make the £1bn bung to Northern Ireland to buy DUP support look rather cheap. Even with the SNP, there is zero chance of Mr Corbyn building a parliamentary majority. Even some of his own MPs wouldn’t back him.

What is most revealing about this whole farrago is that St Jeremy bought into the idea hook, line and sinker. He truly believed it could work. Like a first year schoolboy persuaded by the sixth form to stand for Head Boy, he seemed to genuinely hope that it could happen. Oh yes, come to think of it, that’s how he became Labour leader – the outsider added to the ballot paper for a laugh.

 

Silly Season Story No.2 – Ken Clarke for PM

Ken Clarke after 49 years in Parliament

Come on Ken, surely you must have seen that one coming through the cigar smoke? At least you had the nous to claim no involvement until the fuss died down. Thus you saved some of your dignity.

 

Silly Season Story No. 3 – Donald Trump Wants to Buy a Country

Leader of the Free World

Well it would be the real-estate deal of the century – and you know what, he could still pull it off. Going public may well be a tactic to soften up the Danish people into selling off an asset they cannot exploit to someone who can!

Hey….. wait a minute. If Donald J wants to buy a rugged, freezing, mountainous country with too much snow and ice…… well we know he loves Scotland! Call Boris, I’ve got an idea!!

FTSE Weak Until Christmas – Then Rebounds in the New Year

It’s that time of the month when we take out our crystal ball and forecast where FTSE 100 will be in 6 months time, February 2020.

Stock Prices green for up, but we think down

Before giving away too many of our thoughts, gut-feels and sheer guesses, let’s look at where we are now. Six months ago, in February this year, we thought FTSE would continue the upward trajectory sine the start of 2019, Brexit would have been and gone, and FTSE would be just over 8000. What’s actually happened is that Brexit was postponed and so the UK economy has been left dithering over the summer. Last night it closed at 7148. So we got the direction right. At the end of last month, when it was at 7700, we could have forgiven ourselves a little smugness.

FTSE 100 with date of forecast shown

For the last three months, as the implications of the Brexit delay became apparent, we have been forecasting FTSE up to 7500 in July, and then a retreat to 7200 by November. Well, we got to 7500 in July, but back down to 7200 a little early. Our suggestion last month that the market was riding high but vulnerable to bad news was brought to life by President Trump’s step up of the tariff war with China.

So where to now?

As we noted last month, the global economy looks weak, and the UK could be in a technical recession by Christmas. (See our article last week, A Bleak Midwinter Brexit Recession By Christmas) Our central forecast for Brexit is that it will be a soft No-Deal, in that another Withdrawal Agreement will not be reached, but enough accommodations will be made to keep things ticking over. This outcome will scare the market further.  However, FTSE tends to look 6 months ahead, and by February, it should become clear that the UK economy will be okay, and the world economy could be over its wobble.

So we think the worries of a No Deal will send FTSE down to 6800 by November, but that in the 6 month time horizon of our forecast, we think it will be back to 7200 by Friday 14 Feb 2020

A Bleak-Midwinter Brexit Recession By Christmas

Oo-er, suddenly the UK economy ain’t looking so good!

The news media are full of speculation about Brexit, and not many of the stories are looking forward to how wonderful the country will be once/if Brexit happens. We can expect more of the same for the next twelve weeks until Halloween.

Are we heading for No-Deal?

At the moment, both sides are digging in, trying to create a tough stance for the benefit of their populations (I hesitate to use the word electors when we are discussing the EU, but you know what I mean). Behind the scenes, it can be assumed that the diplomats and civil servants will see themselves as the grown-ups in the room, and thus be at least looking for common ground.

However, it seems unlikely that a comprehensive new Withdrawal Agreement will be crafted by October. But we can expect enough co-operation to keep the world turning.

So what’s the problem?

The problem is that investment is collapsing. The worst thing for businesses in uncertainty. Life has enough risks when it comes to business investment, without an unseeable future being only 12 weeks away. Similarly, house-buying and car buying are likely to miss out on their usual autumn surges this year.

And after Brexit day, will there suddenly be clarity and light? Nope. There will be hysteria in the media for a few weeks as every little shortage and business malady is blamed on you-know-what. And the effect of this – more hand-sitting and less spending.

What else is happening?

Leader of the Free World

The US is starting to suffer from Mr Trump’s tariffs, to the extent that Jerome Powell has cut interest rates despite full employment. Meanwhile, China is suffering a marked slowdown from the trade war. This has now spread to Europe, which is also teetering on the edge of recession.

Conclusion

The UK is heading for recession – and it is difficult to see when it could end. Domestically, we’ll probably pull out next spring…. but that depends on what the rest of the global economy does. If things keep softening elsewhere, it could be a big one!

PS. The slowdown in Q2 announced today was no surprise, given the stockpiling in Q1 for the original Brexit day, and the factory shutdowns brought forward to April in case of Brexit delays.

Theresa the Timid

PPS. The coming recession will be a direct result of Mrs May’s and Parliament’s timidity over Brexit. If they had gone ahead on 29 March, we’d be pulling out of it by now. The delay to October has just increased the uncertainty and halted the economy for 7 months, tipping us into a recession we need never have had.

Whaley Bridge Dam Lies, Statistics and Climate Change

The drama in Whaley Bridge over the weakened Toddbrook Reservoir Dam has captivated news audiences. One struggles to imagine how stressful it must be for owners and occupiers forced to leave their homes without notice.

Toddbrook Reservoir

However, this crisis is NOT the result of Global Warming/Climate Change/Extinction Rebellion or whatever it is called this week.

The High Peak area of Derbyshire had some quite heavy rain showers last week. But thunderstorms are no more proof of Climate Change than they are of the existence of fairies. The dam was not overwhelmed by a biblical downpour.

As an aside, if by biblical rainfall, are we talking about total flooding which requires an ark to be built? One can only think that comparing a bit of a summer cloudburst to the flooding of all the land in the world as perhaps over-exaggerating.

Anyway, back to the dam. What happened was that there was heavy rain, and the water rose enough to flood over the spillway, as it was intended to do according to the 1831 construction, and has done so many times before.

What was different was that the sealing of the concrete slabs on the spillway failed, allowing the water to run underneath the hard surface, and wash away material that formed part of the structure of the dam.

BAD MAINTENANCE!

The weakening of the dam was nothing to do with climate change, it was simply the result of bad maintenance of the spillway. One has to wonder why the BBC was so convinced in its news programmes that this POTENTIAL CATASTROPHE could be attributed to Climate Change?

Not once was it suggested that it is the Canal and River Trust – owners of the reservoir – who are responsible for lack of maintenance.

Unfortunately, by falsely linking every weather-related event to Climate Change, the BBC has become labelled as creating another Project Fear, this time about Climate Change. To us, it is impossible to access clear and unambiguous data about Climate Change. Also, there is so much variance in the weather that it takes decades to accurately assess changes to the average. However, we take the view that it would be prudent to address some of the worst potential triggers in human activity. But it would be wrong to reduce western civilisation to penury, just to fight what might still be a collective hysteria.

As we have written before, we are not fans of the BBC, and this event illustrates how they continue to twist their news reporting with political interpretation.

Summary

  1. The Whaley Bridge Dam Drama is not about Climate Change

  2. The damage to the reservoir was caused by bad maintenance by the Canal and River Trust

  3. The BBC and other media have let Climate Change hysteria politics affect their reporting

 

PS. Nice politics by Boris, visiting and looking concerned!

Are Autonomous Cars Just Around the Corner?

Three years ago, we all believed that autonomous cars were just around the corner – and we felt that was a good thing. Retain human control for the fabled blast in the country, but let the machines take on the drudgery of commuting and long-distance motorway work – and getting us home from the pub!

Range Rover Sport that managed to drive the Coventry ring road

So what’s changed?

It was shocking to read, in Autocar, that Andy Palmer, boss of recently floated Aston Martin, quoted as saying “The idea of full autonomy being widespread in my lifetime is absurd. Full Level 5 systems are a moonshot.” As an aside, Mr Palmer was also scathing about Brexit, confirming that the delay was the worst of all worlds, preferring a decision, any decision, to be made to close down the uncertainty.

Andy Palmer of Aston Martin

We have some doubts about the direction of Aston Martin Lagonda Ltd as a company, but we respect Andy Palmer as a well-connected, senior car-industry figure. So when he says that full autonomy is a pipe-dream, we listen.

Another issue revealed to us is the autonomy “big accident” risk. When autonomous cars crash, they tend to be large ones! If humans have crashes, mostly they will realise that something has gone wrong and slam on the brakes at the last split-second. Whilst this does not prevent the crash, it does mean that some deceleration occurs before impact, and so the crash happens at much reduced speed. Typically, crashes in autonomous cars happen because of a failure to correctly interpret the surroundings of the vehicle. And thus the autonomous car hasn’t noticed anything wrong – so it ploughs into the obstruction at full speed! Ooops.

There have been two famous crashes, where Teslas have sped straight into the side of juggernauts parked across the highway. Speculation among the online community (oh dear, not the most reliable source then) is that the crashes happened because seeing a juggernaut sideways is such an unusual occurrence that the AI-developed software interprets the sight as an overpass bridge and so ignores it.

Finally, there is the fabled issue of how can one let a computer decide whether to swerve away from a man in the road, if that then endangers two children on the pavement.

However, we are not convinced that these issues will prevent autonomous cars. At its present stage of development, it appears that sensors, processing power and software are not quite there. But these are engineering problems that are easy to define and will be solved.

  1. Computers are very good at measuring distances and heights. Therefore, interpreting a truck as a truck and not a bridge can be pre-programmed. Likewise, new types of sensors will be developed so that cars will know much better than human drivers what is going on around the vehicle. Add to that car-to-car connectivity, so that each car knows the intention of all the vehicles within half a mile, and suddenly an autonomous car is much better placed to co-ordinate its movements with those of all the surrounding cars.

  2. We do not agree with the idea that humans are better at split-second, morally loaded decisions than computers. In a crash situation, the choices made by a driver will be essentially random, or pre-programmed by their normal reaction. Given a little forethought by the software programmers, 99.9% of situations can be managed for an optimal result rather than the vague human output.

  3. Convoys of communicating vehicles can travel closely together, allowing for more efficient use of roads, and greater fuel efficiency.

  4. We wonder if Mr Palmer’s reluctance over self-driving cars is that it removes a key justification for buying an Aston Martin – and that providing such systems is also beyond the capacity of a relatively tiny car company?
  5. However, combining human drivers with convoys of autonomous vehicles could be tricky.

It is this last point which is exercising us! We believe that fully autonomous roads will happen within the next 10 years. Our worry is that will the take over of roads by autonomous vehicles mean that car enthusiasts in their old-fashioned, petrol engined “classics” are banned from going out at all eventually?

Brave Bold Boris Boosts Britain

Boris’s First Cabinet. (Photo by Aaron Chown – WPA Pool/Getty Images)

What a great start he has made! Mr Johnson has his critics, not to mention his complex private life. But the change of mood since Wednesday has been palpable. It feels like a spring back from the doom, gloom and managed decline of the 1970’s (Mrs May’s dour attitude) to the sunlit uplands of Tony Blair’s Cool Britannia in the 1990’s. For an in-depth review of the new cabinet, we recommend the Politico website.

 

This is what we see Boris as having done well;-

  1. A wholesale new government, with everyone pulling in the same direction. This is quite a change from the try-to-appease everyone approach of the May administration.

  2. Stamping his authority on the cabinet from Day 1 by standing up to Jeremy Hunt

  3. Putting Michael Gove in charge of No Deal preparations and funding him properly. This is a sign to all that the new Government will take No Deal if a better alternative is not forthcoming.

  4. Surrounding himself by a team of advisers who are known to mean business.

  5. Announcing a raft of other policy initiatives – for example putting money into extra police, focussing on the Northern Powerhouse, and spending on defence. Suddenly, it looks like the Tories have spending plans based on conviction rather than just trying to react to Mr Corbyn’s ideas. This is signalling also that if a General Election comes, the Conservatives have a manifesto in waiting.

  6. Keeping Carrie out of the limelight to avoid distracting headlines.

  7. A bravado performance in Parliament, answering questions assuredly for more than two hours. Boris seemed positive, competent and inspiring. We can only imagine his political opponents were downcast, and several of his doubters in the Conservatives were starting to be won over. Nothing improves one’s political fortunes as much as appearing to be a winner!

  8. Making telephone calls to other World Leaders, but travelling first around the UK to ensure his interest in the provinces can be seen.

We agree with the Team Boris analysis that there can only be one of three outcomes over the next 4 months;

  1. No Deal Brexit

  2. The EU blinks and negotiates

  3. A general election.

Opening deep talks with the US at this stage shows a much more determined approach to negotiating with EU. Brussels clearly has disdain for the choice of the British people, but they will not want the UK moving from the EU’s orbit into that of the Americans. So playing off the two powers against each other is a very smart move. Suddenly, No Deal has a geo-political angle rather than just being a punishment for UK.

Summary

Boris has had a great start and now has the political momentum (with a small M!!). He could well prove unstoppable by the time Parliament reconvenes in September if he keeps this going over the summer.

Unlike most of the media, we see Boris’s start as making No Deal less probable, because his strength will more-likely make the EU re-open talks.

Aston Martin Still Has a Mountain to Climb*

* Which is kind of ironic given that it was named after Aston Clinton Hillclimb!

An Aston Martin – climbing a mountain

Since we yanked on the handbrake for AML shares in March, and again in May, how have things been? Initially, almost as soon as we made our most recent forecast, the pesky management went and bought a few shares for themselves, and the price rallied £2. Not the best of starts.

AML ugly price chart – and it’s down another £1 today

Since then, more teasers of the make-or-break DBX SUV have been released.

DBX on test in Sweden

Autocar are carrying a report that the order-books are to be opened next month at Pebble Beach. Despite our view that we have seen peak SUV, the DBX fits into the mould. To be fair, it’s not as ugly as a Bentley Bentayga, nor the Rolls Cullinan. To us, it looks rather like a Porsche Cayenne with an Aston-shaped grill nailed on to the front. So it should sell well initially, though we continue to fear that sales will fall off a cliff-edge in 2 or 3 years time as EV’s take over.

And the latest news?

Talking of sales falling off a cliff-edge, yesterday it was announced that deliveries to dealers in the second quarter were down 22% in UK and 28% in EMEA. Over the twenty four hours since then, the shares have collapsed from £10 to £7, which we can disclose is a 30% fall (see, we’ve always had a natural flair for numbers).

Our view remains that at some time, the shares of this iconic brand will represent good value. But it is not yet. There remains huge delivery risk on the crucial DBX project. And just too many variables in the world luxury car market.

As before, we recommend BUY THE CARS, SELL THE SHARES. Is it time for my bonus yet? (Ed. NO!)