Good morning,

The government passed the first hurdle of getting their crime bill across the line, as it was voted through the Commons following the first reading.  Taking a leaf out of China’s playbook, the legislation aims to give broader powers to the police to break up demonstrations if they’re a bit too noisy, among other things –  a lot of other things, as it’s 300 pages of text! Sky News has a good summary of it.

Nat West are facing criminal prosecution over money laundering, after apparently letting £264 million in cash be deposited by a gold dealer.  Anyone that’s tried to pay in more than a thousand pounds and faced the Spanish Inquisition will know what it’s like to get money into a bank, so this already reeks of foul play, but the gold dealer in question, Fowler Oldfield, was able to deposit up to £2m every day! The bank is facing unlimited fines if it is convicted and the reputational damage that goes with it.  Perhaps more seriously would be criminal conviction which could well prevent them from trading in certain parts of the world, as well as likely losing a lot of business with counterparties that understandably wouldn’t trade with them if they had a record. The impact so far has been just a small drop in the share price, with markets understandably used to banks getting fined for misbehaviour – RBS themselves have paid more than $27bn in fines and litigation costs since the global financial crisis – and perhaps a small saving grace is that the taxpayer still owns 60+% of the bank and a massive fine wouldn’t be in their interest, but we can’t see the share price only dropping a couple of percent being the final outcome.

Other UK news:  There could be five million vaccinations in the UK this week as supplies have been replenished and more mass vaccination centres have come online.  This would almost double the current run rate, though unsurprisingly ministers have urged caution that this might not be a long term trend – if it was though, it would mean we’d get 75% of the population inoculated with at least one dose by the 22nd May.

In Europe, the EMA is likely to reach a conclusion on the safety of the AZ vaccine by Thursday and countries will resume their vaccination drive the moment they get the green light.  Most countries have only administered around half of the supply of the AZ vaccine that they have, so a quick resolution should hopefully get them back on track quickly, but there are concerns that this has done some damage to public opinion.  The controversy and the slowdown of administering has led to more gains of Sterling versus the Euro, particularly as we heard earlier in the week that European governments are preparing for prolonged stimulus measures as a result of a slower rollout.

Sterling moving slightly higher is about the only market move of note in the last 24 hours, as the majority of participants are waiting for today’s Federal Reserve meeting outcome and subsequent statements.  There isn’t likely to be a change to policy specifically, so the markets will be extra sensitive to any change in the ‘dot plot’ which is where the Fed sees interest rates over the medium term.  They’ll also be updating their economic projections and inflation forecasts, whilst the most nuanced of signals might be drawn from the wording that Jerome Powell uses when he gives his statement – we’ll be looking for more confirmation that he sees inflation as transitory and that this won’t knock the Fed off their path.  One person that thinks their path will change is Bill Gross, former head and co-founder of PIMCO, the world’s largest bond fund, he thinks that the Fed won’t have the patience to last out a hot running economy and will look to raise interest rates in the first quarter of next year, which is more than a year ahead of the Fed’s own expectations.  He’s not the only one concerned that things will get too hot as a survey from Bank of America shows that Covid is no longer the number one perceived risk amongst investors, inflation is – the FT has the story.

A couple of other stories of note:  Microchip availability is causing Samsung to consider suspending making the Note smart phone this year and Honda have said it’s one of the factors in them having to temporarily cut production in all of its US and Canadian plants – the other factors being port congestion and sever weather that has disrupted supply chains.
China is seeing pork prices rise faster than expected as African Swine Flu outbreaks aren’t being contained.  Last year China posted its lowest pork production numbers since 2000, but the forecast recovery in 2021 isn’t happening as quickly as new strains of the virus are more transmissible and that these new strains might inadvertently have been man made, as they’ve possibly come from illegal vaccinations.

Lastly, a US report says that Russia did meddle in the 2020 US election with a view to benefiting Donald Trump.  Interestingly this may have been offset by Iran meddling on Biden’s behalf and China, who Trump accused of getting involved, have been vindicated and “did not deploy interference efforts”.  Trump gave a 30 minute interview to Fox News who told him that Meghan Markle was in talks about running in 2024!  We’ve missed him.

Be well.


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