Market Round Up: Brexit’s Cabinet Chaos, 3Ds of Deflation, Car Emissions
Brexit’s Cabinet hokey cokey
Following UK Brexit minister David Davis’ resignation, Foreign Secretary Boris Johnson also quit, both disgruntled about Brexit’s shift towards a soft landing and weakened negotiation position. All this further weakens Theresa May’s authority and majority in Parliament. With both posts now replenished, May will be holding a crisis meeting with a new Cabinet – hoping to overcome this internal obstacle even before it reaches European counterparts for negotiation.
As expected, the Pound has taken another Brexit-related knock, but the FTSE100 remains in rude health; partly because of positive second half company results coming through.
With only 8 months until a key deadline on leaving the EU, political pressures could lead to another general election.
The 3 Ds of Deflation
Today’s deflation is being driven by the 3 Ds: Tech disruption, ageing demographics and debt.
Technology just seems to feed itself with more and more disruptive products coming out of Silicon Valley; artificial intelligence, virtual reality, electric vehicles, potentially impacting the supply of labour (robots) and reducing wages.
Meanwhile ageing demographics is increasing at a pace. For instance, it is expected that by 2025 the working population of Russia will fall by 9 million people, that of Japan by 6 million and Southern Europe by 5 million.
Finally, debt remains at an all time high. Global debt is currently at $233 trillion, or 31% of global GDP.
We live in interesting times!
False car emissions set to run
After the recent naming and shaming of auto manufacturer’s false car emission statements, you would think the air would be cleared by now. Unfortunately not.
Nissan has admitted that it has uncovered falsified data from car exhaust emissions tests at most of its Japanese factories. Meanwhile Germany’s Daimler has temporarily halted deliveries of a truck engine after finding that in certain driving conditions its nitrogen oxide emissions could exceed legal limits.
The consequences are that motorists are facing delays to order new cars as manufacturers struggle to clean up their act and get to grips with tough new emissions tests. All at a time when car sales are dipping.
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