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Past and present

On this Columbus Day, the mixed legacy of Christopher Columbus—who both discovered a new world and was responsible for the death and enslavement of untold indigenous peoples—parallels our own conflicted feelings about our current batch of political leaders. Donald Trump is perhaps the easiest to criticise due to his many public untruths and deplorable personal episodes, but from a policy perspective he has been just the right cup of tea for many on the right. 

With many polls placing Joe Biden in a hefty lead within the last 30 days of the election, it’s important not to underestimate the power of the incumbent. The President has recently woven a captivating narrative about his episode with Covid-19, most recently claiming immunity from contraction and spread of the virus which prompted a Twitter warning about misleading statements.  During the debate, Trump also refused to abide by the outcome of the election, which signals that no ploy is off the table when it comes to winning. With liberal media focused on his Covid shenanigans, the real story is the upcoming confirmation of his supreme court nominee Amy Coney Barrett. Barrett is a staunch religious conservative who could swing narrow decisions, for example, having the potential to overturn the Supreme Court ruling in Roe vs Wade (which protects a woman’s liberty to choose to have an abortion). If that happens, you can expect a large swing of support for Trump before the election from his religious conservative base. His dominance in the public communication arena is likely to give him the blame-game edge in the nearly dead second fiscal stimulus package as well.

Likewise, Boris Johnson has a patchy reputation, starting with his misleading antics during the 2016 referendum through to today’s Covid policy confusion and Brexit gamesmanship. The Brexit negotiations have failed yet again and the PM has signalled a 15th October deadline if no substantive progress is made on the last key component of a trade deal, fishing rights. The obvious counterpoint to this hard-line tactic is the growing disagreement from Scotland, which feels disenfranchised in these proceedings and is raising the call for another referendum on Scottish independence. Speaking of unhappy constituents, an entire block of northern Conservative MPs are rebelling over reduced employment assistance under Chancellor Rishi Sunak’s recently unveiled multi-billion-Pound spending effort. Some say this turnabout is a betrayal of his previous pragmatic stance on Q4 fiscal tightening and is likely to hurt more than help the flagging small business sector.

Bottom line: Looking below the surface at the policy is the key in both cases. Donald Trump, as ever, portrays the fool, but both of his ploys seem calibrated to win on policy objectives and in the court of public opinion. Given that it’s nearly impossible for the left to ignore the song and dance, he seems likely to pull closer towards Joe Biden in the coming weeks, though how much that helps in a predominantly absentee voting process is debatable.

Boris Johnson is in a very different position, where his Brexit ploy seems likely to lead to a reasonable deal, his handling of public policy has been a disaster. On balance, retrieving a trade deal is likely to lessen the regional gripes, which are longer-term issues in any case. The vague phrasing of the deadline leaves the PM many ways to continue the farce for the next few weeks in the attempt to reach a deal. The 180-degree turnaround on the autumn Budget which shrugs off assistance, is perhaps much more damaging for the administration. The Chancellor’s recent stimulus effort is unlikely to be popular, regardless of its composition, due to the much more limited spending it can shoulder. At the same time, it provides dubious benefit for small business and distorts effects to the social safety net (e.g. it does nothing for businesses that are suffering from lockdown, only business that are temporarily closed) which is likely to be a net policy loser for the administration.

The week ahead


Despite a deteriorating Covid situation and EU negotiations that have so far failed to present a trade deal, Sterling trades at four-week highs on a trade-weighted basis, and above 1.30 against the US Dollar at this week’s open. The trade-weighted index opens the week just below its 50-daily moving average—a level that provided resistance last week during Sterling’s rally. For the week ahead, Boris Johnson will outline a new three-tier system of lockdown measures and Thursday’s EU summit is Johnson’s self-imposed deadline for a trade deal to be reached before walking away. However, EU leaders are not convinced. Bank of England Governor Andrew Bailey will be speaking on Monday afternoon before Monetary Policy Committee members speak on Wednesday and Thursday. Recent discussions of negative interest rates could hit the headlines again, adding to the downside risks for Sterling.

  • The UK unemployment rate for August is released on Tuesday morning with expectations being for a 4.3% reading up from 4.1% in July.


Last week was rather uneventful for the Euro as its trade-weighted index closed the week just 0.5% higher, tracking a flattening 50-daily moving average. However, a weaker US Dollar drove the common currency back above the 1.18 figure where we opened this week. Although current volatility in the Euro’s index is low, rising Covid cases and lockdown measures across Europe, Brexit negotiations, and upcoming US elections are risks to the broader market sentiment which will continue to affect the Euro.

  • On Tuesday, Germany’s October ZEW Sentiment Surveys are expected to indicate improvement; the Current Situation Survey is forecast to change from -66.2 to -60.0, while a deterioration in the Expectations survey from 77.4 to 72.0 is also predicted.

  • The Eurozone’s Industrial Production for August is expected to show a slowdown on Wednesday, with a modest 0.7% growth in the sector, down from 4.1% in July.

  • On Friday, the final Eurozone aggregate reading for the September Consumer Price Index is forecast to show 0.1% for the month and -0.3% year on year, both unchanged from previous estimates.



The Dollar index posted its second consecutive week in the red, closing below its 50-daily moving average as risk appetite climbed across asset classes. The Federal Reserve is in wait-and-see mode ahead of the US election in just three weeks, as new fiscal stimulus from the White House remains uncertain. Negotiations for the proposed $1.8tn package of new stimulus are expected to continue this week and could further boost risk appetite, typically driving the Greenback lower, if it gets closer to agreement. Investors are expecting even more stimulus in 2021 from a Biden administration, so an extension of a Biden lead in the polls may add to this market dynamic.

  • On Tuesday, September’s CPI figure is forecast to show 0.2% growth, down from 0.4% in August, while the year-on-year reading is expected to tick higher to 1.4% from 1.3% in August.

  • Thursday’s Empire Manufacturing Index for October is predicted to tick lower to 14.0 from 17.0 last month.

  • Initial Jobless Claims are forecast to show 825k new Americans claiming unemployment, slightly lower than last week’s 840k.

  • Friday’s Retail Sales data for September is expected to show an upswing in consumer activity with 0.8% growth, after 0.6% expansion in August. However, the core reading, which excludes automobiles, is forecast to come in at 0.4%, down from 0.7% last month.​​​​​​​​​​​​​​​​​​​​​

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