Covid-19 Lockdown to be Extended and Tightened

Covid-19 sounds lke one of those really technical names scientists develop, having understood the gene type and infection mechanism, doesn’t it?

The sad truth is that it is just a shortening of Corona Virus Disease 2019. How disappointing!! That could have been made up by an arts graduate, not some eminent senior professor!

So far, the Government has handled this outbreak with a shrewd political approach, gradually tightening up things as the public acceptance grew. As the numbers of infections and deaths increased, the official response increased from ‘wash your hands’ to ‘social distancing’. Next, it was ‘closure of pubs and clubs’, until finally we reached ‘lockdown’. This step-by-step tightening meant that the public understood the ever-worsening situation required stronger reactions. However, it was entirely politically driven. The scientific need for a much earlier lockdown was clear for all to see.

History will not be kind to Boris and his team.

It was obvious from China and Italy that containment as soon as possible would reduce the death toll by thousands. Bold decision making was necessary. However, the Government’s dithering almost made Mrs May look decisive and authoritarian. I said ALMOST.

Many many thousands of British deaths could have been avoided and sadly were not. They will happen as a direct result of slow and incorrect decision making. It can only be a matter of time before the population starts to get angry. This will be Boris’s legacy – which is a shame for a likable chap so early into his premiership.

As an aside, we wish BoJo a speedy recovery, and hope he is self-isolating from Carrie, what with her, er, having a bun in the oven.

What now then?

It is clear that the three week lockdown was another of the Tories’ attempts at not scaring the British people. The reality is that from infection to symptoms to hospital to intensive care to death is a 3 or 4 week process. And so at the end of the three week lockdown, the numbers of infections will not be accelerating as quickly, but they will continue at a sickening pace, as the infections before the lockdown was imposed reach their grizzly conclusion. By the three week date of 13 April (Easter Monday), we are likely to be seeing 1000 deaths per day. This is not the background for a relaxation of the curbs. Quite the opposite. Despite the British public’s unwillingness to be bossed around too much, we see tighter controls and a much longer timeframe for the lockdown.

Total Deaths in Italy, from worldometers.info

The sad sad chart above lists the total number of deaths in Italy. Even after three weeks of a proper lockdown, the numbers continue to climb at close to 1000 people per day. This is where we will be in 2 weeks.

Yesterday, 181 people died from Covid-19 in UK. That is the equivalent of an Airbus A320 going down. And yet the numbers didn’t make it into the first 5 minutes of news bulletins. When we reach 1000 people dying per day, that will be like 2 Boeing 747’s crashing in the UK every 24 hours! It is hard to overstate how serious this all looks.

The number of infections per case needs to be reduced from 2.5 each to less than one new case for each live infection. Otherwise, the dreadful growth goes on.

The restrictions will be substantially extended, and will be considerably tightened.

This Recession Will Be Huge

Economists like to talk about recessions being V shaped, U shaped or L shaped – based on the graph line depicting the fall and speed of the possible recovery. This recession is going to be pear-shaped!

If you haven’t read the Imperial College Covid-19 Report, I suggest you do so right now. Okay, have you looked at it? The numbers are pretty startling….. 500,000 deaths in UK if we had done nothing, 260,000 deaths on last week’s strategy. So the Government had no choice but to initiate the latest controls, and thankfully Boris was sensible enough to see that.

Scary Imperial College Covid Image

Under the new approach, critical care numbers may be kept within the capacity of the NHS intensive care system. Deaths will be less than 100,000, and may be as low as 20,000.

However, the worrying part of the report was what happens when the controls are relaxed. Under the mitigation approach of last week, the infections shoot back up to the extent that the epidemic has just been delayed.

Under the latest scenario, we have, say, 3 months of lockdown, then normality is resumed for a month. At this point, infections will start to rise again. So after a further month, we go back into lockdown. This made for simplified modelling. What is more likely is that after 2 or 3 months of low infection rates, people become complacent, contacts rise and infections grow again… then there will be a reinforcement of measures. But remember, the models contain lots of assumptions, and could be rather inaccurate. This is not a condemnation of the scientists, just a reflection of an uncertain data they are using.

Ultimately, this is an open-ended procedure. At some point a vaccine will be developed. But it won’t be less than 18 months away. It could be 3 years of close to house-arrest for the whole population.

We have already seen demand for durable goods fall away and car companies suspending production. We will see bankruptcies of manufacturing and service companies, no matter how much Government support is given. The current £350 billion is way too little. And isn’t it a frightening echo of the Boris Brexit Bus with its £350 million? What is it about £350???

Boris’ Brexit Bus – and another £350 sum. What a spooky coincidence

Even public sector employees, isolated from the worst of the economic-epidemic will save rather than spend. The general public, as is usual in times of trouble, will save or pay down debt. The collapse in retail spending will be truly eye-watering. We may never return to our previous societal norms. Another article will comment on forever-changed political structures. Workers may end up in small, closed communities for their own protection.

Apologies for the lack of jokes and puns in this article. It just is not a funny topic.

Brace yourself folks. This is going to be a humdinger of a recession.

Coronavirus Party Required for Granny

We recommend that you should do your utmost to get your Granny infected now!

Old People Partying

The UK Government’s strategy for coronavirus is to resignedly accept that around 80% of people here will catch it. We know that approximately 1% of those infected will die from the disease. This is an awful, terrible number of people.

However, it has been decided that instead of trying to prevent people from becoming infected, the answer is to delay the spread of infection so that the peak is later and more spread out. In this way, the NHS will have more time to prepare for the rise in demand, and the maximum number of intensive care beds needed will be lower, albeit for a longer period.

Looking at the statistics, most people will be infected, and the bulk of those infections will happen over the summer, when the NHS is fully stretched – and then some – trying to cope with the numbers. The last thing you should be doing is to risk catching it at the same time as everyone else.

So the answer is to get the vulnerable infected now, whilst plenty of spaces are available in intensive care. Why wait until the ICU’s are full to bursting and you might be receiving treatment in a corridor? Get in early.

Coronavirus Parties

Did your Mum take you to a chicken-pox party when you were a child, inflicting an unpleasant, itchy disease on you “for your own good”? Well now is your chance for payback. Ship her out of that old-folks’ home and get her into pubs, clubs, football matches, even the Houses of Parliament. This way, she will be infected and treated before the rush!

You read it here first – now get out there and infect the old and vulnerable people in your life!

Boris’ Historic Election – Thank You EU

Congratulations to Boris! Now perhaps we can go back to having too much food, too much drink and too much indulgence over the Christmas break, without having politics upsetting us all?

Johnson this morning – photo from BBC

This huge victory will set the direction of politics for the next 10 years. Yes, we predict another term for BoJo starting in 2024. I am indebted to my older contact who has already pointed out that by December 2024, Labour will have only had one election-winning leader in 50 years. FIFTY YEARS!!! Step forward Tony Blair. You achieved the success that eluded Jim Callaghan, Michael Foot, Neil Kinnock, Gordon Brown, Ed Milliband and now Jeremy Corbyn. Oh, and John Smith too…… Did I miss any?

Jim Callaghan – never won

Michael Foot – never won

John Smith – never won (though to be fair he never tried)

Neil Kinnock – never won

Gordon Brown – never won

Ed Milliband – never won

Mr Corbyn – he didn’t win either (twice)

Tony Blair – the only one to win in 50 years – and yet they hate him!

And to what can we allocate this massive swing in the vote for the Tory Party? Why, the EU!! What a change for the European project to be assisting the blues! It was the disdainful response of Frau Merkel to David Cameron’s pleas for moderating change that set the ball rolling towards a leave vote. This was compounded by the EU inaction during the referendum campaign. Where were Messrs Junckers and Tusk during the lead up to the vote? They were not in UK sharing the vision and love were they? Their next mistake was to play hardball too much with Mrs May, forcing her on to the defensive at home. One has to surmise that they thought a Remainer-Parliament was their best hope of keeping the UK on board. But they overplayed their hand, sending Theresa back with too much of a surrender bill. This off-hand treatment was compounded by the humiliation and shunning that Mrs May received from the other EU leaders at Salzburg. So the scene was set for Parliament to respond to the lack of co-operation… which led to Boris becoming leader…. which led to the election. One has to hope that they will work with Boris as an equal!

Boris to Win 43 Seat Majority Says Meta-Poll

You’ve heard of meta-analyses, where academics who can’t be bothered to do their own research just nick everyone else’s hard work, crunch the numbers a bit, and come out with a super-accurate result? Well here is our META-POLL. After much reading of the papers, surfing the net, and even talking to people, we have concluded that the Tory party will win. (Bet you saw that coming eh?)

Why do we think that?

  1. Farage folded, as predicted here recently, avoided splitting the leave vote, and crowned the Tories as winners

  2. The Labour manifesto was written to appeal to hard-line left wingers – who would have voted for Jeremy anyway. Only the naïve or those too young to remember the 1970s could think that nationalisation is the answer. (See our earlier report on rail user numbers pre- and post – nationalisation). The “free” broadband idea went down well, but the practicalities are horrible. By the time it is built, at five times the original cost, technology will have made it obsolete. And the big beneficiaries will be the farmers and isolated rural communities – who will not be voting Labour under any circumstances. Meanwhile, their fence-sitting on Brexit feels a bit like “Follow Me….. I don’t know where we are going, but Follow Me!”

  3. The Liberal Democrats have shown themselves to be neither liberal nor democratic. Their reverse Article 50 campaign can only appeal to the most die-hard europhiles. Meanwhile, Jo Swinson has not done well. Her claims to be PM in waiting invite the retort that she’ll be waiting a very long time.

  4. The Tories have avoided a May-style manifesto-suicide-note. Divisive figures such as Rees-Mogg have been kept out of the limelight. Boris himself has picked his battles carefully, with more to lose than win.

So what happens now?

There are still considerable risks for Mr Johnson. Will the left-leaning students be too busy recovering from their end-of-term parties to vote?

Students preparing to oversleep and miss voting

Just how many people were too embarrassed to tell pollsters that they would vote Tory (but will anyway)? Will tactical voting have any impact? Will Mr Trump try to intervene? He is not great at keeping his thoughts to himself is he? That could hurt Boris. In this last week, we expect the Tories to try to refocus on Brexit as the major issue – and Labour to try to talk about virtually anything else!

What does it all mean for Asset Prices?

The market had a lost year in 2019, with too much uncertainty. A Tory win is about 70% baked into the market, so we expect a moderate bounce on 13 December. This will be most pronounced for the likes of BT and other nationalisation victims. Despite longer term trading arrangements still being in the air, we feel that 2020 will turn into a log bull run for equities and commercial property, as investors get back to the serious business of making money.

Farage Must Fold

Gosh, there are so many pics out there of Mr Farage with a pint!

Much as we admire Nigel Farage’s consistency in supporting his cause, his present political positioning is just madness.

Clearly, he could never have thought that Boris would tear up his deal just because it is not No Deal – which seems to be Farage’s target, So what does Nigel want? Most Brexiteers can live with Boris’ deal – and many remainers can live with the withdrawal, as it least it isn’t a crash, and it moves the topic on. The Brexit Party have no chance of power, and in many close marginals, they risk drawing just enough voters away from the Tories to gift the seat to Labour or the Liberals.

Just as in Peterborough and Brecon by-elections, they could well split the leave vote, and let one of the other parties to win, with many fewer than half of the votes cast. Does Nigel really want to be the man who let Jeremy Corbyn into Number 10? We think not. So the only conclusion is that he thinks there may be a peerage in it for him if he backs down. There can be no other logical motivation for Mr Farage to take such an extreme position.

Our Forecast

The Brexit Party will withdraw from all seats except those where the Tories have no chance anyway – ie Northern Labour-held seats. Nigel will magnanimously agree to back Boris’s deal as being better than any of the plausible alternatives. In due time, Mr Farage will enter the House of Lords.

Lord Farage of England! You heard it here first.

FTSE Forecast; Brexit Supports, World Economy Undermines

It is that time of the month when we ritually kick ourselves for making what turned out to be a stupid forecast six months ago – and then, without learning from our mistakes – we go on to make a crazy forecast for where FTSE will be in another half year.

Will go up, will go down, but not necessarily in that order

BUT this time, we weren’t so far wrong. Back on 15 April, we had failed to leave the EU on the second deadline, and a new exit-date of 31 October had been decreed. Wisely, or perhaps by luck, we guessed that on 15 October, Brexit might not be established, or the future might be rather worrying. Quote “So we will work on the basis that Brexit is still on-going by October.

Our forecast for 15 October was 7600, quite a reduction from the 8150 we had been predicting for September. Thus, we got the direction right, and a close of 7212 is pretty accurate by our standards.

The Next Six Months

Now for the next six months. British politics are somewhat unpredictable. We think that Boris might just pull it off and squeeze Brexit through tomorrow. The country (or at least 52%) will rejoice….. so there is no way the opposition will allow an election if Brexit goes ahead. Thus our central forecast is that Brexit happens, but then the minority government struggles on for several months until the demand for an election is overwhelming. This could easily be around our forecast date of 15 April 2020. However, a Brexit Deal will create an optimism and gentle release of pent up demand to support the UK economy over the next six months.  Lack of Government interference with new laws will also help!

However, no country is an island. Okay, well some countries are islands. Malta comes to mind. But economically, the future of UK based businesses, with our new, outward looking trade policy, cannot be but affected by the world economy. We foresaw the potential of a recession by year end, and the data published since then has done nothing to change that view. The global economy, from US to China to EU (in that order) is definitely looking soft.

Where does that leave us?

The UK domestic economy should have a surge, this will be countered by weak global growth.

Re-rating

The UK stockmarket, is at rather low multiples of income, given the interest rate environment. This morning, www.dividenddata.co.uk quotes the FTSE100 yield at 4.53%. If / When Brexit is settled, we see scope for yield compression – and hence price rises – justified by the reduced uncertainty and risk.

In summary, we think UK growth will be supportive, global economics will undermine, but an extra boost will be given by removal of the Brexit factor. From a close yesterday of 7182, we see FTSE100 at 7600 on 15 April. This is an increase from the 7200 we expected for Jan – Mar next year.

What is Boris’s Plan for Brexit?

We are three weeks away from Brexit Day, and yet there is no clarity. This is starting to look eerily familiar!

Boris; buffoon or battler?

We have a PM who is trapped in office, but with no majority he is completely powerless. Meanwhile, the opposition is scared of an election, and is rather enjoying the discomfort of Boris.

It seems that the key date will be 19 October, a week on Saturday, the day when Boris is legally ordered by Parliament to write the letter asking for an extension.

Leo Varadker, Irish Taoiseach

Will he do it? We think not. Since the Benn Act (aka the Surrender Act) was rushed through, Boris has been at pains not to retreat from his ‘do or die’ message about 31 October. We can see why he would do that as background to his negotiations. If EU actually thought he could push through No Deal, then they would be much more keen to negotiate. This has to be true of Leo Varadker, Irish Taoiseach, who has most to lose from a No Deal. Clearly, they have not bought into that idea though.

 

How can these facts co-exist;-

  1. Boris claims we will leave on 31 October, deal or no deal,

  2. The Benn Act says he must ask for an extension in the event of no deal

  3. The Conservatives have stated that they will not break the law

  4. A deal looks extremely unlikely

  5. The EU will agree to any extension request

  6. Parliament will not let BoJo call a quick election?

It seems Boris must believe that there is a mechanism to spring free from the trap. Here is what we think could happen (yep, “could” implies our low level of confidence in our prediction).

The Queen’s Speech next week will essentially be the Conservative manifesto for an autumn election. It will get voted down, but still the opposition will not allow an election.

The big day will be 19 October, in the special Saturday Parliamentary session called by the Government. We see the following votes;-

  1. A vote to lift the Benn Act and allow a No Deal to happen. This will be designed and phrased in terms of progressing or overturning the referendum result, to try to make the opposition look like it is ignoring the plebiscite. Narrowly, we think this will be voted down.

  2. A vote to call a General Election. This will be designed to make the opposition look like it is scared of facing the electorate, especially given that they have earlier voted to “ignore the referendum”.

  3. This is when Boris Johnson resigns as Prime Minister, and where he states that he will not do the usual caretaking role until a new one is appointed. We feel that BoJo has too much political capital tied up to write that letter. It would be interesting if Parliament voted to make him personally write a letter in which he does not  believe. If he does not resign, I see him taking a jail sentence as less politically damaging than writing a letter.

  4. If we have no Prime Minister – and hence no Government – then there will inevitably be a court case as to who can write the letter.

  5. Then there is 14 days for a new Government to be formed. We do not think Mr Corbyn could attract enough support, as the LibDems will see little advantage of positioning themselves as Labour’s poodle.

  6. A government of “National Unity”, which even the media have Christened “National Remainers” also seems unlikely, given how the various factions of the remainers struggle to agree on anything.

  7. Another Conservative would be the natural choice, as they have the largest party…. could that be dragged out for the remaining 12 days?

  8. So we drift towards 31 October……. no Prime Minister, no Government, political chaos.

  9. Away from Westminster, the negative respect for the political classes plumbs new depths.

When the referendum result was declared, the best outcome would have been a clear, firm date three years (or even five years) ahead, for which everyone could plan and prepare, leading to the most seamless transition possible. Instead of which the political classes in London, Brussels and Dublin have screwed it up right royally. By their constant bickering and game-playing, we are now in the worst possible situation. It is no wonder that the general public is coming to despise politicians.

 

Oh, and as for the details of Boris’s Plan, we don’t know.  We’re not even sure that he knows……

Judges In The Dock

Doesn’t the legal profession look decidedly dodgy? A Scottish High Court decides one thing, an English High Court decides the opposite, and the Supreme Court has to jump one way or the other. Having had their verdict so completely reversed, shouldn’t these foolish English High Court judges be called upon to resign? After all, the next level up found them to be completely wrong!

Though for the record, we think that the English decision was the correct one; proroguing Parliament is a political decision, and not a suitable arena for a court to intervene.

Also, more clarity is required from Lady Hale. Click here for the summary judgement. All of the press has quoted her conclusion, that “The decision to prorogue Parliament was unlawful.” So which law exactly did Boris break? He is said to have misled the Queen, but in what way? The process is totally ceremonial. When a Prime Minister asks for Parliament to be prorogued, the Queen doesn’t think a little, scratch her chin and say yes or no, depending on what advice she has heard. She is going to agree. Proroguing Parliament was always in the gift of the PM, and so it remains. To state that he can only choose a time with no political impact is worse than naïve.

Lady Hale has suggested that there is too much going on for Parliament to be stopped – but in reality, Parliament has already prevented No-Deal – and any putative Deal will only come back from the EU summit on 17 October, when Parliament would have already reconvened in time to reconsider it. So what exactly does Lady Hale think could have happened in the meantime, apart from the usual shouting and point-scoring?

To us, this judgement has;-

a) Highlighted that different judges make completely diametrically opposite decisions based on the same facts.

b) The senior judiciary seem to have entered the political fray, supporting the anti-Brexit, elite, establishment side of the argument.

Both of these facts diminish the judiciary.

Additionally, the judges seem to have decided that a PM can only prorogue Parliament when “things are quiet”, and for a less time than 6 days of sitting. There is no precedent for these views, and so the Judges, rather than applying the democratically determined law, seem desperate to make up their own version of what seems sensible. This highlights their unaccountability.

Like Parliament voting against every Brexit alternative, the Judges have not outlined what would have been acceptable practice, merely striking down what they see as unacceptable. How can this be? Since there is no accepted precedent on how long or under what circumstances proroguing can take place, the judges have effectively made up the law. This is unacceptable, and illustrates what a dangerous step the Supreme Court has taken. To avoid highlighting the fact that the judiciary now thinks it can make up the law, they have not clarified when or under what circumstances Parliament can be prorogued, and for how long. Would BoJo have been okay if he had made it for 4 weeks and 6 days rather than 5 weeks? Or if he had prorogued it for the whole summer when they were all on recess anyway? Brexit has been going on for three years now. When would it have been acceptable to have a new Parliament? If the Supreme Court had made these clarifications, it would have made them look as if they saw themselves above Parliament, but without such explanations, they look to be just making a political statement.

Going forward, a wise government will codify these precedents, and start to work on a written constitution, to include who can prorogue Parliament, for how long and under what circumstances. This would at least have the benefit of preventing judges making random interpretations of  what is or is not acceptable. At that time, all sorts of anomalies will need to be addressed, such as our unelected upper chamber and the West Lothian question.  What a can of worms! Woohoo! Politics is going to be fun for years to come!

What an Eton Mess of Manners, Mr Cameron

Eton College

Eton School‘s reputation is for the best education money can buy. Indeed, they have supplied more British Prime Ministers than any other institution. But what happened to “Cameron Minor” when everyone else was being told not to speak ill of people?

My mother (grammar school, northern town) always instructs me that if one can’t say something nice about somebody, say nothing at all. And life has taught me that bad-mouthing people actually reflects worse on the speaker than the target. It is the ultimate in futile, self-harming spite.

And yet, David Cameron, with all those thousands of pounds of education, and numerous examples of how interfering ex-PM’s do not look good – see Edward Heath for how not to do it, Mrs Thatcher for a good example – has chosen to come out making sharp comments about his ex-schoolmate Boris Johnson, and his ex-friend Michael Gove.

Johnson and Cameron in happier times

Two days later, I can’t even remember what he wrote about his two ex-colleagues, but I do recall the fact that David Cameron lessened himself by hitting out. And what a contrast when Boris was knifed in the back by Michael Gove: Boris, also Eton-educated, never said a word in public, though one has to wonder what he said in private! So who has shown more statesmanship?

There is just one more thing though. David Cameron has a book to sell. And the timing is great – the party conference is coming, and Brexit remains somewhat topical. Could it be that this is not the real David Cameron, but manufactured bitchiness designed to sell autobiographies? In some ways, that is even worse!