Good morning,

Trump can definitely take credit for the latest stock market move, as his almost-concession further opened up risk appetite and sent the Dow Jones through 30,000 for the first time ever. The ‘sacred level’, according to Trump, is a pretty big deal and with markets crossing a big psychological threshold with five weeks left to go to the year end means that we could close comfortably above it come December 31st and that in turn would then provide a great level of support for when the January blues kick in and investors aren’t so optimistic.

In the UK, according to a report cited in The Guardian, things could be at the other end of the optimism spectrum: They’ve seen a Cabinet Office briefing that runs a number of “reasonable worst case scenarios” and warns of an increased chance of “systemic economic crisis” from a hard Brexit, mid-pandemic. Additionally, they warn of possible confluence of severe flooding, influenza and possible limited availability of produce in the event of disrupted supply chains. This could lead to unrest and industrial action and we’re less prepared to deal with these than we were because stockpiles have been reduced over the pandemic, as has the financial resilience of a large numbers of businesses. It almost feels like scaremongering to write all of this, but it’s all there in the link, so is worth a read to form your own opinion on the likelihood of any of this coming to fruition.

We’ll be talking about some of the planning that we’ve been helping clients undertake around Brexit – both good and bad outcomes – tomorrow at 11am.
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Some better news: It’s being reported that Keir Starmer is going to instruct Labour MP’s to vote for pretty much any type of deal that Boris brings to the Commons. This is a play from Labour to try and win back Northern voters who switched their votes to Conservative to see that Brexit got done but it’s a huge benefit to Boris, who can now potentially take a softer stance knowing that he won’t have to get the harder Brexit faction of the Conservative party onboard to get a Commons majority. The news is being reported in The Sun.

In Europe, some positives for equity indexes is that banks are likely to be allowed to pay dividends again in 2021. The ECB put a ban on dividend payments and share buybacks at the start of the pandemic to preserve banks’ capital and maintain their resilience. The problem the central bank faces now is how long they can maintain this ban without it being legally challenged, as such we might see them take the lead in confirming that the ban will expire, rather than risk litigation and defeat.

Today is going to be a busy day for us in the UK: Rishi Sunak provides the highlights, with his autumn spending review as well as the report findings of the RPI reform study that we spoke bout yesterday being published. Add to that that we’ve got some updated economic forecasts from the OBR and there’s going to be a fair bit to digest before lunch. In the afternoon session we’re going to see US jobless claims, GDP numbers and our financial ‘highlight’, minutes from the last Federal Reserve meeting.  We’ll also see Trump make an appearance in Pennsylvania to talk about election fraud, but this isn’t likely to move the needle on the markets’ position that he’s out in January.

Have a great day

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