Jess Wooler

The World In A Week - Getting Our Priorities Straight

The UK Supreme Court ruled that the prorogation of Parliament by Boris Johnson was unlawful, which resulted in a swift restarting of Parliament last week. It would appear the battling forces within British politics are becoming more entrenched and the cross-party support needed to strike a deal with the EU fading. A request to extend the deadline for Article 50 is now most likely, after which we can expect an election or fresh referendum.

Politics escalated even further in the US, with an announcement of the start of an impeachment enquiry into the actions of President Trump. This is centred around a telephone call with President Zelensky of Ukraine, in which it is alleged that Trump asked for an investigation into the activities of the son of Joe Biden, who just happens to be one of the front runners for next year’s Presidential election.

The process is as much political as it is legal, with proceedings needing to pass through both the House and the Senate; the latter being controlled by the Republicans, with a two-thirds majority. It is worth remembering that a President has never actually been impeached; although it was a close shave for President Nixon, who resigned before Congress could vote him out of office.

So, with global data suggesting that growth is slowly dissipating and in much need of both fiscal and monetary stimulus, the governments either side of the Atlantic seem to currently prefer the distraction of playing politics.

by Jess Wooler

The World In A Week - Judgement Day

Geopolitical tensions escalated last week following the attack on Saudi Arabia’s oil production facilities. It has been estimated that the attack destroyed c.50% of Saudi production, although there were assured statements from the capital that oil exports would be maintained, and lost capacity would be expediently rebuilt. Following a huge initial jump in the oil price, volatility in the commodity subsided towards the end of last week. However, while the volatility in the oil price subsided, new US sanctions against Iran meant that tensions in the Middle East increased markedly with the US also pledging military support to Saudi Arabia to boost their air and missile defences. Iranian-backed Houthi rebels have claimed responsibility for the drone and missile attacks although Iran denies any involvement. We expect tensions to remain elevated.

The Federal Reserve moved in line with consensus last week, cutting interest rates by 25bps; Trump was quick to lambast Chairman Powell for lacking “guts”. While a twitter outburst from Trump is of little surprise, what is surprising is how the decision to cut interest rates has caused division with the Federal Open Market Committee; seven members voted to cut, two members voted to maintain, and one member voted to cut further. Powell cited that a second cut was necessary due to slowing political growth and worsening trade tensions however, the dissent within the committee will make it more difficult to decipher the trajectory of interest rate policy, resulting in polls for further rate cuts falling from 100% to 80%.

Several weeks ago, we wrote about the suspension of parliament, titled “Prorogue” and in the UK, parliament remains suspended as a result of the invocation of prorogation. In the week ahead, we expect a decision from the Supreme Court over whether Boris Johnson acted unlawfully by suspending parliament; to be clear, this is not about Brexit, it is a legal argument. After all, there is no one place where all the rules of government are written down, which means the Supreme Court must decide between the competing legal arguments, providing a stress-test of another kind, that of our unwritten constitution.

by Jess Wooler