The Sunday Times and Croissants – Osborne on the rack but not toast yet.

The Sunday Times and Croissants 24th Feb

There is something special about Sunday morning, the Sunday Times, hot croissants with honey and butter, excellent.

Headlines –  “Osborne on the rack as sterling set to tumble” - makes the headlines.  George Osborne is on the defensive amid fears Britain’s historic credit downgrade could spark a turmoil in the currency markets. The Chancellor’s reputation is in tatters, having staked so much of his reputation on maintaining a AAA rating, some back benchers suggest “shares in Gorgeous George” should be suspended, to protect the downside. If Ed Balls were not so openly scathing about credit rating agencies, the political damage could be much worse.

What about the damage to Sterling? As we explained yesterday in The Saturday Economist, the shorts are off, testing the downside on bonds and sterling anyway. Enough damage has been done by errant comments from the Governor and MPC lackeys to put the currency in play. The AAA rating is a volatility event, something to create trading action rather than fundamental adjustment to value.

And what of fundamentals, talk of Sterling Euro parity or testing the Nelson 1.11 misses the point. True value for the currency based on FEER or Triple P assessment pushes sterling back above 1.20 and maintains the dollar in a 1.50 – 1.60 range. Look through the technical market play and watch the basic values, the guideline this week.

It’s tough at the top, Lord Patten’s handling of the Jimmy Savile matter is putting the Peer under pressure. Some Tories have never forgiven Patten for handing over Hong Kong. “Knives come out gently for Patten” the headline. Yeah gently into that good night, Chris, knives come out gently, as in “shot with a soft nosed bullet”. Don’t worry, a small prick doesn’t hurt.

David Smith, is on holiday but my good friend Andrew Sentance presents the Economics Outlook this week. “Central Bankers are no masters of the universe” argues the senior economic advisor to PwC. A pity really, because incoming Carney is presented as something of super hero eating Kryptonite and currency markets for breakfast. Andrew should know, he was a member of the MPC, arguing frequently and often against the benign neglect of sterling. The key sentence – monetary policy alone is not enough, without supply side reforms on tax, regulation, infrastructure, education and skills. Quite right, there must be a book in there somewhere – soon!

Economics news, this week, Britain loses triple A rating, plus bad news on borrowing  and earnings but good news on jobs. Check out The Saturday Economist for more information.

Back to the day Job – Monday team meeting in the morning, planning continues for the excellent Business Conference on March 22nd – don’t miss that.

Tuesday, I am in London for meetings with Andrew Sentance at PwC, they have new offices in “More London” why call it “More London” as if there was not enough already. Catch a boat to Westminster to have lunch with Simon Kirby at NIESR, then meet up Max White at Berenberg Bank. Founded in 1590, that’s the bank not Max, incredible history and performance, a great chance to see analysts and traders in action. Finally meet up with the excellent Chris Cummings, CEO at TheCityUK. I am invited to join the City Economists Group, recognition at last. TheCItyUK do a great job to defend and promote the banking and financial industry around the UK.

Wednesday - New Economy briefing session in the morning, following the extensive research on the business base in Greater Manchester, also a chance to catch up with Mark Hughes the new CEO of the Growth Hub. Lunch as part of the Duff & Phelps Economics series, then film interview with Sir Howard for the Conference in March. Sir Howard keen to pursue the Budget for GM.

Thursday - Board meeting in the morning. Lively meeting as indeed they should be. Later it is the Corporate Finance lunch, over 160 for the event and the “Big Four” panel session. In the afternoon, Clive Memmott and Chris Fletcher are in to discuss the Budget for Greater Manchester presentation. The GM Chamber of Commerce budget wish list an important addition.

Friday, Chris Maguire from Insider is in the office for a catch up. Later in the afternoon, David Allinson, from CEBR and the Arndale centre is in to talk about the Conference and the new retail and e commerce sector group.

Saturday, working in the morning, the day starts as usual with tea, the FT, and the Economist app. The Economist leads with “Syria, death of a country”. As Syria disintegrates, it threatens the entire Middle East.

In the afternoon, tennis, it’s a shock  3 – 6 loss. I am dumfounded but take comfort in the England win over France, later in the day.

Hope all is well, more news next week,

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