Good Morning,


Here are this mornings headlines:

The summer news cycle has given oxygen to the story that Boris was considering demoting Rishi Sunak. The comment was almost entirely a throw away one but has now made it into the mainstream media and is being jumped on. Just in case this isn’t all hot air, the general view is that Rishi wouldn’t take a demotion to health secretary and would rather head to the back benches. Thereafter, if a leadership contest were to ensue it would probably be Rishi that articulates a clearer vision for a post-Brexit, post-pandemic Britain – with numbers that are more likely to stack up. None of this will be lost on Boris so, again, we don’t think this is anything that’s going anywhere.

Vectura Bidding War
There’s an interesting bidding war heating up for UK inhaler manufacturer, Vectura: The FTSE 250 listed company has attracted bidding from US private equity group Carlyle, but more interestingly the big-tobacco brand Philip Morris International also wants to take ownership of the company. Philip Morris want to diversify their business away from cigarettes – and there’s more than a little irony that they’re doing that with a company that produces products to make breathing easier – and has pitched that their offer is not only more financially attractive, but not part of a buy and flip type private equity approach.

Friday’s payrolls number beat expectations, which has led the market into a wave of dollar buying over the weekend. It’s also hammered the price of gold, with the biggest drop in the price for more than a year. The move lower in gold is the result of investors selling-off their inflation hedge because they are more inclined to think that the Federal Reserve will start to act to nip it in the bud earlier than thought. The Fed won’t meet for another monetary policy meeting until September, by which time we’ll have had the August payrolls numbers too – and if they were to come out strong then the meeting would definitely be considered ‘live’, in so much as the Fed could actively start to taper bond purchases, or at least tweak the types of debt that they are buying.

Looking Ahead
Today sees the release of a much awaited global climate change document from the Intergovernmental Panel on Climate change. (IPCC) The document is going to make for stark reading and will set the scene ahead of the COP26 meeting due to take place in Glasgow later this year. The IPCC is made up of scientists and representatives of 195 governments, so is about as global an approach to the issue as possible. The document is going to be huge, but the 40 page summary released today dealing with the ‘physical science’ will be a great starting point.

Despite the weather, it’s very much a summer session today, with limited data flows and empty trading desks – and without the Olympics as a distraction, this could be particularly quiet!


Have a great week


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