Good Morning,

Markets are pretty benign and have been for the majority of the week so far, as they await the ‘highlight’ that is the Federal Reserve monetary policy announcements this evening.  Despite the anticipation of the meeting, the reality is that the Fed aren’t likely to change a thing and will leave investors poring over every word of the statement to try and get a handle on when rates might change, or when bond purchases might start to wind down – but there’s no upside for the Fed in setting any renewed expectations for these, as traders have accepted that inflation is going to move higher but be a story for another time.

Another market event today that could prove to be nothing is the release of Joe Biden’s ‘American Families Plan’.  This is phase two of his Build Back Better bailout bet, which is aimed at supporting lower and middle income families with a range of reliefs and incentives, such as universal prekindergarten childcare as well as paid family and medical leave.  The cost for all of this is set to be borne by higher tax rates on people earning more than $400,000 a year, but a problem that the FT reports is that there may be some resistance for this from within his own party: they caution that concentrations of high earning Americans in New York, New Jersey, California and Illinois are all Democratic states.  Having a voter base that would be heavily impacted by these changes might cause the Democratic senators and representatives voted in by these people to resist Biden’s plans and force him to water things down.  We’ll get the full details on what the tax hikes are later today, but expectations are for capital gains and dividend tax rates to double for those earning over $1m and a hike in the highest income tax band to just under 40%.

Closer to home, the main news is political:  Boris’ flat renovations and – invariably out of context, but still poorly chosen – comments about letting bodies pile up rather than impose a third lockdown have taken away some of the dwindling appetite for Sterling.
The DUP leader and Northern Ireland First Minister is apparently facing a vote of no confidence with 21 of the 27 party members that sit in the Assembly backing the vote.  A change of leader in the majority party would come at a difficult time in Northern Ireland and with Brexit protocols coming into effect, to which many argue that Arlene Foster should have taken a harder line against.  This is going to unfold in the coming days and will be one to watch.

The Telegraph is reporting that Scotland receives a ‘union dividend’ of around £2,500 per person, according to research undertaken by the Institute for Government think tank. T hey say that in England people benefit from about £91 more public spending than they pay taxes for, whereas north of the border that rises to £2,543 (Wales benefits by £4,412 and Northern Ireland by £5,118). The extra spending is being put down to the Barnett Formula, which was the mechanism used to calculate how much money flows to devolved governments and though designed as a temporary measure back in the 70’s, it has remained in place as Westminster feared reducing the size of funding would boost calls for independence.  We’re yet to see a detailed spending plan from the SNP for an independent Scotland, but this news will only serve to apply more pressure for them to do so.

Apple is set to face antitrust charges issued by the European Commission over practices in its Appstore business.  The main issue is that they take a 30 percent cut of all appstore sales whilst also promoting their own competitive products, a pracitce that has frustrated plenty of big names in tech for years but that they have so far been unable to do anything about as the appstore is too big a revenue driver for them to ignore. The Verge has more on this.

There’s nothing else out there that you won’t have already seen, so we’ll leave it there for today and update you on the Fed tomorrow.

Be well.


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