House of Commons
In recess until 1 September
Written by Iain Gibson, associate partner
Edited by Kevin Pringle, partner
18 August 2020
Louis DeJoy? Nope, me neither.
At least, not until the past few days. There is every chance however, that we will all become a lot more familiar with him in the coming months.
Quick biography: DeJoy is a self-made millionaire from Brooklyn, New York. He turned his father’s ailing truck business into New Breed Logistics, which he ran for 30 years and then sold to XPO for more than $600m in 2014. He subsequently founded his own real estate, investment and consulting company. He is a Republican party donor and fundraiser, even serving as one of its deputy finance chairmen in the recent past.
So far, so meh. There are plenty of successful business people who dabble in politics. Except earlier this summer, to a few raised eyebrows, DeJoy was appointed postmaster-general by president Donald Trump. While you could argue that a background in logistics holds some relevance for shepherding the US Postal Service (USPS), there is widespread concern that he is part of an effort to tarnish the upcoming presidential elections.
In recent months, with his planned re-election campaign derailed by a poor response to the pandemic, Trump has focused on how greater use of mail-in balloting will taint the result and leave it open to question. He claims that more mail-in voting will increase chances of fraud – despite experts deeming it to be safe – and even open the process up to foreign interference; a slightly ironic rejoinder given the help he allegedly had from Russia in 2016.
Sowing doubt, creating confusion, laying the groundwork for a fight. All classic Trump tactics. But they also require some practical action, and this is where DeJoy comes in.
Since taking the job two months ago, DeJoy has started implementing cost-saving measures that greatly affect productivity. He has prohibited overtime, changed the process for late-arriving mail, limited the trips mail carriers can make, and begun removing some large-scale equipment from major offices. Tellingly, this appears, according to The Economist’s Intelligence podcast, to be causing the most significant postal delays in Ohio, Michigan, Pennsylvania, Wisconsin, Florida and Texas – all battleground states.
Some of these measures had already been recommended by USPS’s watchdog, to try and stem its heavy financial losses, but the rush to make changes now is notable. The president has openly admitted that he is blocking money to USPS, which would make the organisation’s job of processing a surge of mail-in ballots all the more difficult.
The alarm has been sufficient for Congress to reconvene and discuss legislation to protect USPS, with speaker Nancy Pelosi labelling what is happening as a “domestic assault on the constitution.” DeJoy has been asked to testify before the House Oversight Committee on 24 August, a request that in recent hours he has confirmed he will adhere to. We can also expect a number of senior Democrats to highlight this issue at the party’s national convention in Milwaukee this week.
Such a response is encouraging. Just as Trump is creating a narrative to be able to say, should he lose, that the vote was stolen from him, his opponents are ensuring that he does not have the stage all to himself. This in itself is a marked change from the race of four years ago, where they tried to stay above Trump’s tactics.
Meantime, we will watch to see if these latest efforts to divide a nation contaminate the election for the most powerful job in the world.
Administrations at Westminster, Cardiff and Belfast have followed the U-turn from the Scottish government and accepted teacher assessments for A-Level and GCSE results. The same approach will be applied for results across the UK, as universities prepare to deal with large numbers of calls from students whose results now meet the criteria for entry.
Baroness Harding, who currently runs NHS Test and Trace in England, will be the temporary head of the UK government’s new Health Protection Institute. The entity replaces some of Public Health England’s responsibilities for the pandemic, and Baroness Harding will oversee it until a permanent appointment is made.
Leslie Evans, the permanent secretary of the Scottish government, will appear at the first evidence session of the Scottish parliament committee tasked with overseeing the botched handling of complaints against Alex Salmond. The Committee on the Scottish Government Handling of Harassment Complaints is already embroiled in a row with the Scottish government over access to information, some of which is not being disclosed.
Business and economy
Oracle is reportedly set to enter the race for TikTok’s US business, weighing up a counter offer to Microsoft. Last Friday, President Trump ordered ByteDance, TikTok’s Chinese parent company, to complete a sale within 90 days.
Citigroup has asked a federal judge in the US to force hedge fund Brigade Capital to return $176m it was allegedly sent in error. The bank accidentally sent creditors of Revlon $900m and, as part of this, Brigade received £174.5m more than it was supposed to.
Columns of note
In the Financial Times, John Thornhill calls on large institutional investors to help make public markets more welcoming for start-ups. He argues that institutional investors would benefit from these wholesale changes as well, as it would open up opportunities beyond the increasingly crowded private market space. (£)
In The Times, Stephen Bush examines the problems with overreliance on algorithms to make certain decisions, but also the problem when their benefits are not communicated properly. Whilst this year’s exam results would always have been controversial, he argues that a better explanation from UK administrations of what they were trying to do would have taken the edge off an already tense situation. (£)
What happened yesterday?
The S&P 500 closed within a few points of its record high, up 0.3% for the day, following a rally from Chinese equities after a stimulus package was unveiled in that country. The Nasdaq Composite ended 1% up. Across the Atlantic, the FTSE 100 gained 0.6% and the Stoxx 600 a more modest 0.3%.
The stimulus measures also had a predictable positive impact in eastern markets, as Hong Kong’s Hang Seng rose 0.7% and China’s CSI gained 2.4%. In Japan, the news was not so good, with the Topix down 0.8%, driven in part by data showing an 8% contraction for the Japanese economy in Q2 2020.
Gold was up more than 2% to $1,985 a troy ounce and silver increased almost 4% to $27.49 an ounce.
In company news:
Marks & Spencer has announced this morning that it plans to cut 7,000 jobs over the next three months, predominantly in its central support centre, regional management, and UK stores.
Robinhood, the free trading app for stocks, raised another $200m in funding, pushing its valuation to $11.2bn. This is an increase of nearly $3bn from the valuation of the last funding round a month ago.
Aviation American Gin, which counts actor Ryan Reynolds amongst its investors, has been purchased by Diageo, a global leader in beverage alcohol, for $610m.
What’s happening today?
TBC Bank Group
Psjc Polyus S
Tatton Asset M.
Int. economic announcements
(13:30) Building Permits (US)
(13:30) Housing Starts (US)
According to Ringo Starr, the Beatles turned down $50m for a reunion show in 1976, because the promoter wanted the warm-up act to be a wrestling match between a man and a great white shark
House of Commons
In recess until 1 September
House of Lords
In recess until 2 September 2020.
Parliamentary Bureau Motions
Scottish Government Debate: Internal Market
Parliamentary Bureau Motions