If Ben Broadbent’s Daily Telegraph interview last week was the launch of a bid for the governorship of the Bank of England, then it spectacularly misfired. The deputy governor’s use of ‘-menopausal’ to describe an economy past its productive peak — damned by the Guardian as ‘un-abashed misogyny’ even though his awkward metaphor, on closer inspection, was also about loss of male potency — has significantly lengthened the odds on Broadbent succeeding Mark Carney in June next year.
Indeed, even though he has the golden qualification of a decade at Goldman Sachs, I hear he’s no longer the favourite even among the four current deputy governors and their immediate predecessors. Ex-Treasury official Sir Jon Cunliffe has quietly built a big reputation in the City, as has Andrew Bailey of the Financial Conduct Authority. Sir Paul Tucker, an unlucky faller after the financial crisis, still has his admirers, as does Charlotte Hogg, who was briefly a deputy governor before she resigned in a tangle over an undeclared conflict of interest. A Hogg comeback is a long shot, but the elegant Egyptian-born Dame Minouche Shafik, currently at the LSE and having previously served at the IMF, would tick every possible box if she entered the running.
Female candidates will garner all the more attention because Broadbent’s faux pas has brought a spotlight on the BoE’s gender imbalance: none of the current deputies, just two of 12 members of the Court of Directors and one of nine Monetary Policy Committee members are female. Stand by for a rush of whispers as Downing Street (where the new governor will be chosen) tries out names to see how the City and media react. Among them will be Baroness Shriti Vadera, once Gordon Brown’s feared enforcer, said to be doing a good job these days chairing Santander UK; she’d certainly be a match for Labour’s John McDonnell if he ever becomes Chancellor.
One safe bet is that the present Chancellor, Philip Hammond, won’t repeat his predecessor’s gambit of headhunting a hotshot from abroad; history looks unlikely to judge Carney’s trip over from Canada a success. So this will be a domestic race, but Broadbent has unintentionally made it a more interesting one.
It was ‘trade tensions’ between the US and China that drove the FTSE100 to a 15-month low below 7,000 in late March; and it was the latest ‘trade truce’ — in which China has agreed in principle to buy more US food and energy commodities — that provoked new highs above 7,800.
The share index also benefited from the weakness of the pound, which at $1.34 was at its lowest since December, boosting the sterling value of FTSE companies’ dollar earnings. And there are many pundits, including several of my most learned readers, who believe a further radical fall in the exchange rate would transform the UK’s international competitiveness — just as other serious pundits believe today’s exuberant share markets are overdue a sharp downward correction.
The other factor in the global equation is the oil price, which — boosted by Trump’s belligerence towards Iran, and chaos in Venezuela — has climbed back to $80 a barrel from below $30 in 2016. It may not go higher for the time being, because the Saudis apparently don’t want it to and because at $80, US shale oil production becomes more viable. But sustained into the autumn and winter and combined with a weaker pound, $80 oil means another blip in UK inflation — with higher fuel prices cutting into consumer spending.
So the picture, though benign in several aspects, is as mixed as ever; and it would be unwise to read new FTSE100 peaks as harbingers of joy.
The scent of Ocado
When the online grocer Ocado launched on the stock market in 2010 at a float price of 180p, I advised private investors to steer clear of a venture, founded by a trio of ex-Goldman Sachs traders, whose ‘dangerous whiff of financial sophistication’ made its shares suitable only as a plaything for seasoned professionals. For a while I looked wise as the shares slumped, short-sellers made merry and Ocado’s share of a UK grocery market dominated by Tesco, Sainsbury’s et al remained modest. Then I began to look potentially foolish as the business broke into profit in 2015, 15 years after it was founded, and now I’m regretting not betting my pension pot as the shares stand proud above 900p following a deal with the US retail giant Kroger to buy Ocado’s warehouse technology.
In stock-market perception, Ocado has niftily shapeshifted from a minor grocer to a major ‘tech disruptor’ with the most advanced robotics in online retailing. The recent price surge puts the shares on a valuation comparable with Amazon’s, at many times the comparable multiples for Tesco and Sainsbury’s — and co-founder chief executive Tim Steiner, having pursued his vision for 18 years, stands to collect £110 million. Financial sophistication is still his way of business but let me graciously acknowledge: Ocado is finally smelling of roses.
Not staying in touch
With one state-imposed compliance exercise after another getting in the way of business, no wonder our productivity looks permanently sickly. The EU’s General Data Protection Regulation, which takes effect this week, has imposed a huge bureaucratic burden on companies and charities — as well as, for those that do it properly, a sacrifice of valuable data — following hard upon the UK government’s demand last month for ‘gender pay gap’ statistics from every entity with more than 250 employees.
On the other hand, what a rare pleasure it has been to delete so many GDPR-driven ‘Click here to stay in touch’ emails from people and organisations I never had any wish to be in touch with in the first place.
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