Charles Gillams

WOLF IN SHEEPS CLOTHING - FRIEND OR FOE?

MORE ALL-TIME HIGHS

We have two types of bull market running, possibly both are fakes. But one is a belief in faster rate cuts to avoid a recession, the other is faster earnings to avoid rate cuts.

They are very different. Meanwhile Reeves is talking hard, but doing nothing, Kemi is doing a lot but keeping quiet. History tells us that the latter wins.

While markets near all-time highs make investors nervous. 

Basic Schematic of a way to look at markets – © Charles Gillams

In the US the release of animal spirits, the destruction of red tape, cutting of government jobs, firing of obstructive regulators, plus reasonable earnings, are juicing the indices. And independent growth forecasts are shifting up nicely from the Biden days. But that keeps interest rates punitively high. As do tariff tantrums.

But in the UK (and arguably in Europe) it is a relief rally in the face of slumping or stagnant growth. The resulting rapidly falling interest rates, caused the UK market to shoot up mid-week, on the dual promise of more rate cuts and a falling currency (making dollar earnings more valuable), as estimates of economic growth collapsed.

KEMI THE SILENT

What of Kemi? There are still plenty in the Tory Party who either resent her, or fail to see any future for her. At a London conference last weekend, the problem of too many politicians chasing too little work and money was very clear, but no one was accepting the blame for their diminished position.

They have lived too long on the coat tails of Westminster to understand how long the path to redemption is. For that group, the resurgence of Reform is especially bitter. There had been a sudden burst of hope last year, as the victorious Labour hordes were found to have feet of clay. That hope is dissipating.

However, there was some great information on London polling, high quality, in depth, but the stage was so full of defeated (and ill disciplined) politicians, the real data got half shown, ignored  and shunted into the rush for lunch.

WHO CARES ABOUT BIG BAD NIGEL?

As Kemi knows well, she won’t be fighting anyone for four years, and when she fights, the ground campaign matters. She was in no rush to select candidates, noting no need for social gadflies, if when free school meals needed cutting, they wimped out.

Cleverley was sounding realistic too, in London the ground game needs to be there, to attract a good general. Just asking good generals (like him), if they wanted to run, with no money raised, was getting the process back to front.

And what a shambles London Tory politics is. The London Assembly is a joke, the last two Mayoral candidates came from its ranks, indeed were on stage, but were bafflingly poor. If the LA has a purpose, it is holding the Mayor, to account, but as he is directly elected, they have no weapons, (much as they seek more, see this report). They just fill endless posts and talk in an echo chamber. The power remains in the London Boroughs and the political associations that match them, who pick the MPs.

It a system almost designed to be vacuous and needs a rethink, as does the structure of opposition to it.

CCHQ staff numbers have collapsed, 75% have gone, the money spent on a lost election will cripple the party for years. Donors are heading for the hills, after watching Sunak burn their cheques. While associations are being told to merge, sell their drinking clubs, agree confederations, to allow a few paid staff, a recipe that was singularly unappealing in the hall.

ANY STRATEGY?

The big issues for 2029 look to be Net Zero and the Euro. Which matter little to most people, but they are the fault lines. Reform is clear on both. Nothing concerns younger Tory members as much as Net Zero, nothing concerns older ones as much as the EU.

Rather than worry about “uniting the right” it may be far more important strategically to split the left. Already half of Labour is happy to send us back to the Stone Age if Net Zero requires it, half can already see it creates inflation and destroys union jobs. In both major parties, there is a love of Brussels, as a gentle, civilised place, but in both a visceral hatred of the Euro.

So yet again, attack the fault, are Remainers serious about the Euro? If not, they are like the Scots Nats at the Independence Referendum, when challenged on keeping sterling – they had no answer, no credibility.

As for Reform, it is upset over deferred County elections, but should not be. A strong showing would generate funds, keep momentum building, but that was not on offer. They have no ground game, candidates have been parachuted in, associations cobbled together; far better to wait. They will have time, will (if real) pick up by-election seats and likely do better next year.

Importantly, every seat in the new unitary authorities will lack a true incumbent: in local elections incumbency counts. The old parties will be split by the bitter infighting between too many councillors for too few seats. And while they may not care, two tier councils are as bad as two tier policing, and should go.

If Kemi needs to care about Reform, it can wait. Insurgent parties frequently split and media attacks will follow. Rather than be fearful of the noise they create, she can wait to see if any of it has substance.

She can rely on getting her votes out, cutting defections, having clear policies, on message candidates, and rebuilt coffers. If that is achieved, she clears the stay at home ‘sofa voters’ and has a fighting chance.

Everyone knows that another leadership change before the next election will likely be fatal.

And if in London, do catch the King’s Gallery show of Renaissance Drawings, till 9^th March, as others have noted, only the Uffizi can rival this collection. Casually shown, little publicised, but full of gems.

by Charles Gillams