Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Be my, be my Bibi

Written by Iain Gibson, associate partner
Edited by Kevin Pringle, partner
27 November 2020

Good morning,

Any other week, or perhaps that should be any other year, it would have attracted far more attention. 

Just last night we got about as much of a concession as we are likely to get from Donald Trump, and in recent days we have had more progress (and indeed questions) on the Covid-19 vaccine front, plus finally some indication that the UK-EU negotiations will bear some kind of fruit.

However, the news that trickled out earlier this week, namely that the prime minister of Israel, Benjamin “Bibi” Netanyahu, and the crown prince of Saudi Arabia, Mohammed bin Salman al Saud, held a meeting in the northwest of the Kingdom, is momentous and deserves a small cheer.

For most of the past 70 years, a time that has encompassed countless wars, skirmishes or diplomatic incidents, Arab nations have refused to recognise the Israeli state. Until very recently, only Egypt (1979) and Jordan (1994) had normalised relations. Saudi Arabia was a ringleader in ensuring that this small country in the south of the Levant is isolated from most of its neighbours. There had been some progress, and some contact, in recent years through the back channels, but nothing like this.

Under the mediation of US secretary of state Mike Pompeo, the two men appear to have met in the Red Sea city of Neom. We have no details from the meeting yet, and the official line from the Saudi government – though not its Israeli counterpart – is to deny it even happened.

Neither of these Middle Eastern leaders has an especially good global reputation at the moment, but that rather misses the point. The fact that, after so long, two old enemies are willing to forge some kind of path together is encouraging. And of course there is a geopolitical reality lining this path – both countries are terrified of Iran, and are also nervous about how incoming US president Joe Biden will receive them, after both cosied up to Donald Trump in different ways. It makes sense for them to thaw relations, and we should consider that the ends justify the means, or the motive.

It is also indicative of a wider trend. The United Arab Emirates normalised relations with Israel in August, and Bahrain followed suit in September. Saudi Arabia, as a close ally of the UAE and the main patron of Bahrain, has watched the reaction carefully. It is not yet ready to jump in, but it is taking small steps in the same direction. We can reasonably hope that other nations may now begin to reconsider their position.

Bilateral relationships are fluid, not static, and new alliances are always possible. For example, European city states and then European nation states existed in a state of near constant mutual aggression for centuries, yet now largely work together peacefully under the EU umbrella.

We might be over-optimistic that the same eventuality occurs for Israel and Saudi Arabia, but with a slightly bleak winter ahead of us, perhaps we can turn to sunnier climes and a long-troubled region, and dare to hope.

News

Donald Trump has told reporters that he will leave the White House if the electoral college votes for Joe Biden when it meets on 14 December. He added, however, that if this happened, the electoral college would have “made a mistake”.

There is growing concern about the reliability of the results put forward by AstraZeneca and the University of Oxford relating to its Covid-19 vaccine, following an admission that there was a mistake in the vaccine dosage received by some participants. AstraZeneca’s defence is that the dosage error was made by a contractor and that tests continue.

The UK government revealed yesterday the tiers that local authority areas in England will go into once the lockdown there ends next week. A number of Conservative MPs are unhappy with the new measures and have called for more evidence to justify this move – the government has promised to publish an impact assessment before MPs vote on the new rules next Tuesday.

Business and economy

An FoI request by the BBC has unearthed that 842 British employers told government in October that they had plans to cut 20 or more jobs, putting 51,000 in total at risk. This is double the number compared to a year earlier.
 
British company Dyson will invest an additional £2.75bn on developing technologies and products over the next five years, as part of a push into artificial intelligence, robotics and energy storage. (£)
 
Amazon announced that it would spend more than $500m on one-time bonuses for its frontline employees who work during the holiday season in the US. Fulltime operations staff employed between 1 and 31 December will receive $300, and part-time roles will be given $150.

Columns of note

In The Times, James Forsyth looks more closely at growing anger amongst Conservative MPs about the tiers their constituencies will be in after 2 December, potentially until March 2021. Whilst he cites the easing of restrictions at Christmas as a real concern for the government, noting that infection rates have soared in Canada since its October Thanksgiving holiday, he also observes that what might be the final phase of the pandemic could do the most damage to Boris Johnson’s relationship with his own party. (£)

Writing for The Financial Times, Philip Stephens argues that the UK government’s planned immediate post-Brexit foreign policy belongs to “the Rule Britannia school” and is too wedded to the country’s imperial past. He adds that, as a top-ten global economy, the UK still has much to offer a liberal world order, but only if it adapts to the realities of this century.

Cartoon source: The Times

Markets

What happened yesterday?

With American markets closed for the Thanksgiving holiday, European equities were either flat or edged slightly down yesterday, as tightening covid restrictions across nations, coupled with a surge in cases in the US, cancelled out the vaccine-driven optimism of earlier in the week.

The Stoxx was down 0.2% and the FTSE declined 0.4%. Germany’s Xetra Dax ended the day flat. In currencies, sterling was down 0.2% against the dollar, at $1.3353, and in commodities, brent crude oil fell 1.8% to $47.73 a barrel.

In company news:

  • Online fashion retailer Boohoo has appointed former High Court judge Sir Brian Leveson to investigate its business practices, following allegations earlier in the year that one of Boohoo’s suppliers was paying workers less than the minimum wage.
  • Brazilian-US investment group 3G Capital has informed its investors that it will be holding onto their money for longer, as Covid-19 uncertainty delays its next big deal. The firm is currently sitting on about $10bn of deployable funds.
  • Ernst & Young has been referred to the German prosecutor over its alleged role in the collapse of payments operator Wirecard AG.

What’s happening today?

Finals
Benchmark Hlds

Interims
Carclo
HarbourVest Private Equity

AGMs
Hotel Choc
Murray Inc.tst.
Quadrise Fuels
Sylvania Pl

UK Economic announcements
(07:00) Nationwide House Price Index
(09:30) Mortgage Approvals
(09:30) M4 Money Supply
(09:30) Consumer Credit

Int. Economic announcements
(10:00) Services Sentiment (EU)
(10:00) Consumer Confidence (EU)
(10:00) Economic Sentiment Indicator (EU)
(10:00) Business Climate Indicator (EU)
(10:00) Industrial Confidence (EU)
(15:00) U. of Michigan Confidence (US)

Source: Financial Times

did you know

At the same time as the first James Bond films were released in the early to mid 1960s, there was an actual British intelligence officer named James Bond operating in Cold War Poland.

Parliamentary highlights

House of Commons

No business scheduled

House of Lords 

Orders and regulations
 
Audiovisual Media Services (Amendment) (EU Exit) Regulations 2020 – Baroness Barran

Legislative Reform (Renewal of Radio Licences) Order 2020 – Baroness Barran

Supplementary Protection Certificates (Amendment) (EU Exit) Regulations 2020 – Lord Callanan

Product Safety and Metrology etc. (Amendment etc.) (UK (NI) Indication) (EU Exit) Regulations 2020 – Lord Callanan

Scottish Parliament 

No business scheduled.

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