The UK’s New Brexit Chief
Following the surprise exit of Sir Ivan Rogers earlier in the week, Theresa May has appointed Sir Tim Barrow as the UK’s ambassador to the EU.
Editor’s Remarks: With Sir Rogers quitting on Tuesday, accusing the Conservative government of ‘muddled thinking on Brexit’, May has moved quickly to appoint a successor who was previously ambassador to Moscow between 2011 and 2015. Sir Barrow will now be in charge of the negotiations for Britain leaving the EU, particularly the upcoming triggering of Article 50 of the Lisbon Treaty. Despite Sir Barrow’s strong track record of securing extensive UK objectives in Brussels, critics have cast a light onto May’s leadership, and as to whether she actually has a clear plan on Brexit.
What to watch: Article 50, FTSE 100, Brexit Negotiations, Theresa May
Eurozone’s Fastest Growth Since 2011
The Purchasing Managers’ Index for the eurozone has hit a 67-month high rising to 54.4, from 53.9.
Editor’s Remarks: The PMI is regarded as a barometer for the health of manufacturing and services sectors, with the eurozone performing well due to the weaker euro. There were also positive signs of economic expansion from the top four nations, with Spain leading the way, closely followed by Germany. The eurozone is off to a solid start to 2017, coupled with the ECB’s December decision to prolong its asset purchase program through the end of the year, which creates some momentum despite the uncertainty that lies ahead with upcoming Brexit negotiations.
What to watch: EUR/USD, EUR/GBP, Brexit Negotiations, Eurostoxx 50, German Inflation Rate
Tesla’s Gigafactory Turns On
Tesla has announced that it has met its most recent goal of producing batteries at its Gigafactory in Nevada.
Editor’s Remarks: Whilst Tesla missed its guidance for 2016 vehicle deliveries, delivering 76,230 cars instead of 80,000, the news about its battery production sent the share price to a 3-month high. The 2170 cells, which were jointly designed between Panasonic and Tesla, will be used to power Tesla’s energy storage products and in its new Model 3 vehicle in the second quarter. Additionally, Tesla has managed to keep its promise to back up the grid in California and include software upgrades to its Autopilot. The progress at the Gigafactory puts Tesla/Panasonic two years ahead of schedule, something Wall Street had initially shrugged off as impossible.
What to watch: Tesla Share Price, Panasonic Share Price, GM Share Price, Global Energy Prices
SoftBank’s Vision Fund Hits $100bn+
SoftBank has surpassed its $100bn goal weeks ahead of schedule, with investors ranging from Larry Ellison to Apple backing the record-setting technology fund.
Editor’s Remarks: The Vison fund was announced in October by SoftBank following the support of Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman, who agreed to also invest up to $45bn via the Kingdom’s Public Investment Fund. The immense appetite for the fund seemingly ignored criticism of overinflated valuations and the unicorns failing to live up to their promises in the tech world. The fund, run by Rajeev Misra, could speed up the development of technologies ranging from Artificial Intelligence to the Internet of Things.
What to watch: SoftBank, Silicon Valley, Private Company Valuations
UK Consumers Borrowing At Record Levels
According to the Bank of England, consumer borrowing in the UK increased by its fastest rate for more than ten years last month.
Editor’s Remarks: Consumer credit rose by £1.9bn in December, growing 10.8% since January 2016. Mortgage approvals also surged, bypassing the slow summer when changes to the buy-to-let tax treatment were implemented. This is a sign of strength for the UK economy, indicating consumer spending has not slowed down, despite the economic uncertainty following the Brexit referendum. This view is also supported from an industry standpoint, with the Purchasing Managers Index expanding for the fourth month in a row.
What to watch: FTSE 100, GBP/EUR, UK PMI, UK Housing Market