Has this week’s UK budget merely deferred the difficult decisions?

Michael Hewson (00:00)

Hello, welcome to this week’s podcast brought to you by the Good Money Guide and our sponsors Pepperstone, who are a multi-regulated CFD broker providing trading services in Forex stocks and commodities and multiple destinations. I’m Michael Hewson and joining me once again is Pepperstone Senior Market Strategist, Michael Brown. ⁓ Good afternoon, Michael. Been an interesting week.

Michael Brown (00:22)
⁓ Yes, very good afternoon to you, mate. Good afternoon to our listeners. Happy Thanksgiving to anyone in the United States. It has been an interesting week. Markets have recovered a little bit. We’ve obviously had the budget here in the UK and we’ve had another shambolic episode from the OBR. So plenty for us to discuss this week.

Michael Hewson (00:27)
Indeed.

Yeah, I mean, as you say, we’ve seen a it’s been a decent week for equity markets in general, think largely as a consequence of heightened rate cut expectations, not only from the Federal Reserve, but the Bank of England, also been a decent week for sterling on the back of the budget, gilts and in also, and rallying yields falling. I think you could I think you could just describe the budget. And I did.

There’s a bit of a pick and mix budget. More Sesame Street than Quality Street. Initial thoughts, Michael, before we get to the risk warning.

Michael Brown (01:19)
I think that’s about right, to be honest with you. What I would be clear about is there were no surprises in the budget. Everything that was trialed in advance was announced, albeit 40 minutes early by the OBR. It was this smorgasbord of tax increases that were very, very backloaded and a number of spending increases that are very, very frontloaded. ⁓ Obviously, that is an incompatible and unsustainable policy mix, as we will discuss.

⁓ But yeah, as for the budget itself, think market participants have generally come away from it going, it’s not great, but it could be worse.

Michael Hewson (01:53)
Yeah, I think it is. And I think the fact that she’s given herself a little bit more headroom, whether or not that headroom actually exists in reality, or in her reality or in our reality. The bond markets, I don’t think have really sort of priced that in yet. I mean, it was a big budget, wasn’t it? It’s a big budget in terms of pages. There’s a lot to get through. And I think an awful lot of people are still going through the minutiae, if you like.

Michael Brown (02:14)
Well, it varied.

Yeah, absolutely.

I think there were 80 odd individual policy changes that were announced in the budget, which may not sound like a lot, but I assure you compared to previous budgets, that is a hell of a lot. And as you rightly say, it will take a number of days, if not a week or so, to fully digest all of those changes, both to tax and to spending, and to model the impact that they are going to have. So yeah, the budget may have been announced and Reeves has got a…

photograph holding the red box and all the rest of it but the fallout from this is far from over.

Michael Hewson (02:51)
Indeed. OK, so let’s get the risk warning out of the way and then we can crack on. The information provided here, whether from a third party or not, isn’t to be considered as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any security, financial product or instrument or to participate in any particular trading strategy. We advise any readers, viewers or listeners of this content to seek their own advice. SpreadBits and CFDs are complex instruments and come with a high degree of risk of losing money rapidly due to leverage.

72 % of retail investor accounts lose money when trading spread bets and CFDs with this provider. Okay, so markets have recovered. S &P back above 6,800 as I’m looking at my screen right now. Wiped out pretty much all the losses for November or on course to do that. It’s rate cut speculation. Is that just it or is it anything else?

Michael Brown (03:48)
⁓ I mean, think rate cut speculation is naturally having an impact in that. You know, we have seen a significant dovish repricing of Fed policy expectations since we last spoke. This time last week, markets were pricing about a 40 % chance that the Fed would cut in December. Now we’re up to about a 90 % chance. And that’s been driven largely by New York Fed President John Williams, who said he still sees room for a near-term rate cut.

But I think it might be more what the Fed haven’t said that’s actually reassuring market participants because we all know, anyone who’s been around long enough will know, that the one thing the Fed don’t ever want to do is surprise financial markets. And given that we’re now into the Thanksgiving holiday and the blackout period starts at the end of this week, ahead of the meeting on the 10th of December, I think if the market is pricing a 90 % chance of a cut…

the implicit comment from the Fed is that they’re happy with that because we have not had any pushback on that pricing. So that’s naturally providing a little bit of support. We’ve had some positivity elsewhere. If you look at Google or Alphabet, for example, getting that chip order from Meta, that’s boosted their stock notably. And I think it was very much a case of actually, and again, hindsight’s a wonderful thing as always, the market simply became a little bit oversold. Long positioning lightened up considerably. Dip buyers stepped in pretty much bang on the 100,

moving average in the S &P and the NASDAQ and here we are a week later as if nothing had ever happened.

Michael Hewson (05:17)
Yeah, okay. So ⁓ Bank of England also prospect that has shifted in the wake of obviously yesterday’s wild, or wildly. don’t know which adjective is better, widely or wildly. Widely expected budget. mean, there wasn’t anything in the way of surprises which could spook the bond market.

Michael Brown (05:31)
Well, I think both work to be completely honest.

Michael Hewson (05:46)
And I think that more than anything is probably why you had what I would term a little bit of profit taking, shall we say. I don’t think it was the endorsement of the budget by any stretch. and you said yourself, it’s a buy now, pay later budget or a clan a budget, as I call it.

Michael Brown (05:56)
Mm. No.

Hmm.

Yeah, and I think that’s very much what it is. And we’ll get into the meat of the budget momentarily, I’m sure. But yeah, I think the way that sterling assets have traded this week is firstly a reflection of, as you said, profit taking and probably some short covering in the mix as well. Participants who’ve been bearish on the pound or bearish on gilts.

based on the event risk of the budget itself. We’ve come through the budget and that risk hasn’t really materialised. So it’s understandable that participants are then closing out their positions on the back of that. I think there’s also some technical factors driving the moving gilts as well. If you look at what the DMO, the Debt Management Office, had to say yesterday, they’ve actually shelved three long end gilt auctions. So they’re bringing down supply even further at the long end of the curve where there’s less demand because of the

the changing way of pension schemes, et cetera. And again, that will have helped spur a bit of a rally at the long end of the curve. But I do think that the reaction to the budget, in my mind, is going to be sort of two parts. We’re going to have this initial move that we saw yesterday, on Wednesday, on Budget Day, and that we’re seeing today. And then, as we alluded to, the entirety of the policy measures will be digested. The phasing of the spending increases and the tax hikes will be debated across trading floors.

And also, more importantly, participants will be sat there asking themselves the question, does the budget get us out of the doom loop? And I would say, resoundingly, no it doesn’t. And if the answer to that is no it doesn’t, then quite why you’d want to be long-guilts for any period of time is slightly beyond me.

Michael Hewson (07:42)
Yeah, I mean, think that’s probably the way to frame it. I think the markets were expecting probably a worse budget than the one we actually got. And as a consequence of that, because the worst case scenarios didn’t materialize, there’s been a material repricing of positions in respect of what the Chancellor announced. That doesn’t mean that the markets are endorsing it.

Michael Brown (08:09)
No, no, not at all. And I actually think what we’re seeing is far from an endorsement to the budget, to be completely honest with you. I think it’s notable that the OBR have penciled in effectively double the amount of headroom for Chancellor Reeves, up to 22 billion pounds now compared to the 9.9 billion that she left herself in the spring statement. The problem is, and I don’t want to be uncharitable here, but…

A ⁓ lot of the headroom comes from essentially accounting trickery, if you really dig into the numbers in terms of the timing and the phasing of some of the measures that have been announced. Penciling in tax increases, substantial tax increases for the year before and the year of a general election, assuming the government survived that long.

I mean, if you seriously think that’s credible, then I’ll sell you a bridge or two because I certainly don’t see how any government of any colour thinks that raising taxes and then going straight to the ballot box is an electoral winning strategy.

Michael Hewson (09:14)
especially with the poll ratings as they are now.

Michael Brown (09:16)
Well, quite. I mean, that might be the only way that they could get their poll ratings to go lower.

Michael Hewson (09:20)
Well, I would have thought so too. mean, what is Labour’s poll rating? Are they in fourth place now? Third or fourth. And apparently their idea is that just before they could go to the country, all of these tax rises and the threshold threes, is it going to kick in? Yeah, that’s a winner, that one. It’s a bold strategy, Let’s see how it works out for them.

Michael Brown (09:26)
I think they are third or fourth depending on which pose you look at,

Yeah. Which,

that’s absolutely the way I would frame it. you then look at that and you go, well, hang on a minute. no political strategist or macroeconomist or even the humblest student of politics could think that that’s a good idea. So what is the play here? And the only way that I could look at it is to go, well, hang on, is the gamble that you announce this now and then you hope.

growth is better than the OBR have penciled in, which means you can stand there in 2028 and say we don’t need to do these tax hikes anymore. Maybe that’s the political strategy, but given how anemic growth is in the UK, given that the budget itself contained a precise total of zero measures to boost economic growth here in the UK, I can’t imagine that that strategy is going to pay particularly huge dividends, if I’m being completely frank.

Michael Hewson (10:32)
Well, to be honest, you, hope is not a strategy.

Michael Brown (10:35)
No, absolutely not. actually, I would downgrade the strategy at this moment in time from hope to muddling through, because the budget was very much aimed at one audience, and that audience was Labour MPs. And you can tell that because the way the budget was framed was we are going to spend a lot more in terms of public spending, particularly on welfare, in the short term, essentially to pacify the restless and rebellious parliamentary Labour Party.

It’s probably bought Keir Starmer, the Prime Minister and Chancellor Reeves, another six months. It probably gets them through the local elections in May without the parliamentary party getting too upset about things. But the vibe I get is you’re still just delaying the inevitable. even if you’re not, a sustainable fiscal strategy, a sustainable macroeconomic management is not to just go, here’s a sticking plaster for the next six months and we’ll revisit it.

next spring. That’s not how you manage an economy.

Michael Hewson (11:37)
No, and it doesn’t deal with the underlying issues facing the UK economy, which is productivity, you know, is non-existent. And yet the solution for that is to freeze tax thresholds. I mean, I was actually struck by the fact that the basic rate band is at 37,700 and the upper rate band, or the higher rate band rather, is 50,270. I mean, that’s a very narrow gap. So it’s not surprising that an awful lot of people

Michael Brown (12:02)
Yeah.

Michael Hewson (12:06)
will move from the basic rate band into the higher rate band. So you’re essentially taxing them by stealth, fiscal drag, whatever you want to call it. You know, that is not a vote winning strategy. And when you’ve got minimum age for 18 to 20 year olds up by eight and a half percent, you’ve got minimum national living wage up 4.1 percent. What’s the Bank of England going to make with respect to that? If you want to drive down the cost of living, you don’t drive up the costs of employing people.

Michael Brown (12:23)
Hmm.

No, absolutely. We’ll get on to that in a second. But just to cover your prior point, as you said, productivity, the OBR, long, long overdue downgrading their trend productivity expectations by three tenths of a percent. That’s fair, that’s sort of by the by. In terms of the minimum wage, sorry, fiscal drag was what I was going to cover first of all. The thresholds have been extended until 2031 or the end of that tax year.

By my back of the fag packet maths, the way things are currently going, if you take the median salary in the UK and average annual earnings growth, the median earner will be paying higher rate income tax by 2032. Are you really telling me that a chancellor at some point isn’t just going to go, let’s extend it for another year because it gets me eight billion quid on my scorecard from the OBR? It seems almost inevitable at this point. And at that point, calling it higher rate income tax is slightly folly in my mind. ⁓

This is one thing that the UK actually where we differ quite significantly from European nations, a lot of people say, well, the UK has got a lower tax rate than a lot of countries in Europe. And that’s true. The UK also has a tax base that is much more tilted to higher earners than any other country in Europe. So ultimately, we need to look after these people because if they go, we’re in trouble, if I can put it politely. Going back to your point on minimum wage, this is quite frankly,

ridiculous in my mind. Now let me make it very, very clear, I’m not against people being paid more. I think people should be paid a fair wage for the work that they do. But the problem with minimum wage is that we are getting to the point where we’re actually pricing people out of jobs. 18 to 21 year olds, minimum wage going up by as near as makes no difference, 9 % from next April. When you add that on to the fact that ⁓ these workers’ rights changes mean that the risk of hiring someone is so much higher.

not only the monetary cost, but the intangible cost of making that higher has increased considerably. Well, it’s no surprise that youth unemployment is running at 15%, and it will be no surprise when that’s then at 16%, 17%, 18 % this time next year, to be completely honest with you. And that sums it up. All of the budget just seems very incoherent to me, to be completely honest with you. There’s nothing especially straightforward. There’s nothing…

that screams here’s the message, here’s the plan, here’s the narrative from the government. It all just doesn’t seem particularly well thought through. And they’ve had three months since they announced budget day. They’ve had six months, if not more, to come up with a coherent and comprehensive plan. And they just haven’t done it.

Michael Hewson (15:15)
don’t argue they had 14 years, you know, let’s not go down that rabbit hole. But I mean, for me, think yes, okay, know, 18 to 20 year olds need to be paid a decent wage, but I can remember when I was that age.

Michael Brown (15:18)
Well, yeah, well, there is not as well, yeah.

Michael Hewson (15:31)
I wasn’t worried about so much about what I was getting paid simply because I just wanted the work experience, the soft skills, interacting with other people and basically learning what it takes to operate in a working environment. I mean, I did a Saturday job and a Thursday evening’s job at Waitrose for crying out loud. Was I, you know, was I constrained? Was the employer strained, constrained very much by paperwork?

by what they could and couldn’t pay me and the terms and conditions. And I just walked into the manager with my dad and he walked up to him and he said, you got any Saturday jobs going? He said, yeah, why don’t you come through and we’ll talk about it. And that was that. I started work pretty much a week later. Now you have to jump through so many hoops that you get probably, you probably get giddy as a result of it. It’s just crazy.

Michael Brown (16:24)
Yeah, no, absolutely. Yeah, it’s bizarre. And I think the fundamental thing from the budget for me is that it doesn’t change the UK outlook at all. There is nothing in there that boosts economic growth, as we alluded to. And this is a positive, actually, which is rare for me. There’s nothing in there that should derail the disinflationary trend within the economy, perhaps slower as a result of those wage hikes, but on net.

Michael Hewson (16:49)
Not even in the wages.

Michael Brown (16:53)
But I think

the bigger issue for me is there’s nothing in there that materially reduces the risk that this time next year Reeves or whoever the Chancellor happens to be comes back for a third consecutive significant tax raising budget. And that’s just the thing I can’t get away from at this point. You are promising a lot of spending now. You’re promising a lot of taxation in three, four, five years time. You’re guaranteed to deliver the spending.

the chances are you won’t raise the revenue that you’re expecting to from the taxation. That’s not a sustainable fiscal mix, if we’re being completely honest. Yeah, and that’s the bit that I cannot get away from. There are a number of sort of bits of creative book balancing, if I’m being nice, that have been going on here to make the headroom look much better than it really is.

Michael Hewson (17:31)
I’d put money on that.

Hmm.

Michael Brown (17:47)
⁓ And I think that’s a significant, significant issue that will come to a head at some point in the relatively near future.

Michael Hewson (17:55)
I mean when we were sitting here a year ago, I remember thinking at the time and I think I may have articulated it at the start of this year, that I thought that unemployment was probably going to go to 5 % within the next 12 months. Now we’re already there. It was at 4.3 % in I think in October last year. It’s now 5%.

Michael Brown (18:09)
Yeah.

Michael Hewson (18:18)
I can’t see any of these measures preventing it from going up to 5.5 and perhaps even 6 % by the end of 2026. And that’s even before you account for the fact that amongst the younger population, as you said, it’s nearer 15 than five.

Michael Brown (18:40)
Yeah,

yeah, absolutely. And that just comes back to the point where you go, is there anything in the 200 pages that the OBR have published in the hour or so long speech that Rachel Reeves gave yesterday? Is there anything in that law that makes you go, my UK economic outlook is today, materially different to what it was on Tuesday, whether that be growth, inflation, unemployment, any of the other key variables. And you just go, well, no, it’s not, you know, it’s this

Michael Hewson (19:00)
Mm.

Michael Brown (19:07)
smorgasbord of policies, as you said, this sort of pick and mix budget, and this was how I titled my note yesterday. It’s a pick and mix budget that just doesn’t please anyone. You know, it might keep Labour MPs on side for the next six months, but as we all know, any politician is relatively fickle. Their support can disappear quite quickly. It’s not going to please the electorate because you’re dragging everyone into higher tax bands, and that’s before considering any of the other changes.

And it’s certainly not going to please markets when they wake up and smell the coffee that actually all of the revenue you’ve promised is meant to be coming in four years time and there’s going to be an election that year and you’re to have to go back on your promises. So we’re in no better place.

Michael Hewson (19:43)
Yeah.

And you’re allowing local mayors to bring in a tourism tax ⁓ for hotels and Airbnbs. ⁓ I’m not sure how that’s going to work. if it’s an AirBnB in the city, does that mean that the owner of that AirBnB has to pay a tax? And if the AirBnB isn’t in the city, but it’s in the middle of nowhere, ⁓ does that then necessarily mean they don’t have to pay?

Michael Brown (19:49)
Yeah.

Yeah.

Michael Hewson (20:11)
tourism tax because we stayed in Airbnbs in the middle of Northumberland in the Kielder forest. Does that mean that Newcastle council gets to levy a city tax on an AirBnB in the middle of bleeding nowhere?

Michael Brown (20:25)
Yeah, well and of course the other thing with that and we had this discussion earlier in the week I think pre-budget might have been a Lot of people have been saying well, you know, that’s quite common in Europe and we had this conversation on the desk And yes, it is the difference is in Europe Germany Spain a lot of other European countries They don’t charge VAT or they certainly don’t charge the full rate of VAT on accommodation Whereas yeah, so we’re charging 20 % VAC plus, you know a five or a night for

Michael Hewson (20:45)
It’s lower. It’s a lower level of the AT than the 20 % we charge.

Michael Brown (20:54)
having the tenacity to go and stay in a hotel bed for the night. Yeah, that one doesn’t sit particularly well with me, to be honest with you. The one, I can’t believe I’m gonna say this is a good thing, but the one slight positive that I can take from the budget is that, well, no, actually I don’t think that is a positive, because they’ve messed up the way that they’ve done it. I was gonna say, actually the one thing I’m not,

Michael Hewson (21:12)
stamp J.

No, okay.

Michael Brown (21:20)
hugely against is this pay-per-mile for electric vehicles. I think the administration of it is going to be an absolute nightmare, and the way that they’ve proposed to do it of, know, pencil in how many miles you’re going to drive and your mechanic will verify it, that needs some work. But a government, Labour, Tory, Reform, whoever, a government had to grasp the nettle on that sooner rather than later because people are driving less and less petrol cars, more and more electric vehicles, and the fuel duty take is getting lower and lower and lower.

Michael Hewson (21:24)
yeah, I can get behind that. I can get behind that, yeah.

Michael Brown (21:50)
So someone needed to reform that element of road tax. And I think it’s actually good that they’ve finally bitten the bullet on that. Besides that, I’m really struggling to see any positives.

Michael Hewson (22:01)
Yeah, I honestly can’t see how that will work. I mean, I can see how it will work once the three year window is over and it comes to an MOT because you have an MOT every year once the car is over three years old and there’s an odometer check done then. So, you know, there is potentially a way of doing it that way.

But ⁓ you know as fuel car drivers we pay we already pay road pricing the more you drive the more fuel you use that is road pricing essentially You know so if you use your car a lot you fill the car up more therefore you’re paying more to use the roads Yeah, exactly so all this nonsense about we need to bring in road pricing. It’s just a tax by another name. We’re already paying for that in the form of the fuel duty because

Michael Brown (22:29)
Yeah. Yeah.

Yeah, exactly. It’s paper mile under a different name, isn’t it, basically?

Yeah, think having

it EV only makes a lot of sense.

Michael Hewson (22:52)
It does because essentially, but the thing is with EVs, they’re actually harder wearing, not hard wearing, they impose more damage on the road because they’re heavier than your average road car because of the battery. And it also means that the wear and tear from the tires is greater as well.

Michael Brown (23:03)
Yes. Yeah, that’s a very good point.

Yes, indeed. Do you want to talk about the stamp duty stuff?

Michael Hewson (23:15)
Yeah, I mean, do you see that as a good thing? mean, to be quite honest, the fact that it’s three years, I mean, given with everything else in the stamp duty thresholds, sorry, capital gains tax and dividend income, you know, it’s almost feels like it’s rearranging the deck chairs to a certain extent, they’re fiddling about when they should be being a lot more bold.

Michael Brown (23:36)
Yeah, I think that’s actually a really, really good way to frame it. I’m not going to complain about it because I think it is a good move. And we all know that the imposition of stamp duty on stock trading here in the UK is one of the reasons, one of many, but one of the reasons why liquidity is so impaired. And anything we can do to get rid of that is great. I think the problem is, you know, I would much rather, and I don’t want to be all sort of, you know, have you cake and eat it, but just get rid of it its entirety. Stamp duty on stock trading raises what?

2 billion, 3 billion, it’s not a huge amount. Yeah, and as you said in your, I was gonna say, yeah, it hasn’t changed for getting on for three decades now. I think it’s fine, and I think it will perhaps at the margin improve the listings environment. However, the two things that do concern me are one, it’s temporary, and two, it’s going to create significant market distortions because, know, the, well firstly, the.

Michael Hewson (24:07)
It’s around three and half, four billion pounds. Less than in 2000.

Michael Brown (24:32)
the uplift to the potential IPO price is not going to be as significant as it would be if there was just no stamp duty ever, because you’re going to be thinking, what do I pay in three years time? And the second is that two years, ⁓ 11 months and 30 days after this listing has taken place, everyone’s going to be going, well, hang on a minute, tomorrow, if I trade that stock, I’ve got to pay stamp duty on it. So there are potential distortions that that is going to cause, are unintended consequences, which I don’t think people have sort of…

fully got their head around yet, but it’s a move in the right direction. Hopefully it’s the first step in a journey to getting rid of stamp duty on stock in its entirety.

Michael Hewson (25:11)
I think that’s basically because the Treasury and government is stuffed by people who don’t understand financial markets and incentives.

Michael Brown (25:17)
Yeah.

Yeah, absolutely.

Michael Hewson (25:22)
because if you basically had any ounce of common sense, you’d project forward with respect to human behavior as to what might happen. I mean, I’m looking at the capital gains tax thresholds on any profit over £3,000. You pay 18 % if you’re basic rate taxpayer and 24 % if you’re a higher rate taxpayer. So what incentive is there for you to invest in the stock market full stop?

Michael Brown (25:48)
Yeah, well there isn’t one really from that perspective and that of course brings us on to the subject of ICERs which I’m sure we need to touch on. This whole idea of bringing the cash ICER limit down to 12,000 from the prior 20, with a carve out for the over 65s, they can still keep 20 grand in cash. ⁓ It’s just so half-baked.

Michael Hewson (26:09)
Why? mean, you know, if you’re over 60,

if you’re over 65, you’re less likely to put 20 grand in because you’re on a limited fixed income. How does that work?

Michael Brown (26:19)
Yep,

it doesn’t. It’s another example of, I think, the government trying to please everyone and have policies that are what they would want to view as zero cost. Well, sadly, every policy decision has a cost. It’s just whether that cost is outweighed by the benefits of the policy choice that you’re making. That’s the deliberation that lawmakers and ministers and civil servants have to make.

Again, and we’ve discussed this at length before, so we don’t need to go into it too much, I would imagine, but just by changing the ISA thresholds, that’s not going to encourage people automatically to invest in the equity market, least of all UK equities. With all of these things, you have a carrot and you have a stick. The government have reached for the stick, which is we will beat you into putting less in your cash ISA, whereas they should have reached for the carrot, which is let’s actually tell you what the benefits of investing are and try and pitch it to you that way.

But they haven’t done that and I can’t help but thinking all this will result in is those who would have put the the the eight grand difference in a cash isa previously They’ll either lob it in a savings account and have to pay interest on it and potentially tax on the interest or even worse They’ll just keep it under the bed

Michael Hewson (27:34)
That’s before we even get into salary sacrifice. If you want to encourage a savings culture for ⁓ a cohort of the population who are unlikely to receive the estate pension in 20, 30, 40 years time, one of the ways to encourage people to save for a pension was obviously using salary sacrifice. And…

Michael Brown (27:37)
wow.

Michael Hewson (28:01)
they’ve really reduced the attractions of that. Okay, yeah, it doesn’t kick in until 2029. But for me, salary sacrifice was a very important part.

Michael Brown (28:07)
Mm.

Michael Hewson (28:12)
of how I was able to save into a pension and an awful lot of people of my age or in and around my age in the last 10 years, know, allowed us to funnel any surplus income in there so that we were able to do the right thing because there aren’t no such things as final salary pension schemes anymore because the government made them prohibitively expensive for employers to maintain. And while they still exist in the public sector to some extent,

They don’t exist in the private sector and the private sector is the one that’s going to be most adversely affected by this. And I find it mind-numbingly moronic, if I’m honest, and actually spiteful.

Michael Brown (28:52)
Yeah.

Yeah, and actually I completely agree with you because it just speaks to the entire incoherency of the budget whereby you’re encouraging, well, those two things that we’ve just discussed. You want people to invest, you’re the treasurer, you’re the chancellor, you want people to invest, you want people to trade stocks and shares, et cetera. But probably the most tax efficient and certainly in the long run the most attractive and most efficient way of investing is through your pension.

But if you want to do that, we’re going to punish you for doing it. Well, the left hand is not talking to the right here, guys. And I think this just sums up how, you know, again, the budget is just this hodgepodge of measures which aren’t particularly coordinated. And over time, I think there is a real risk that a lot of this just unravels.

Michael Hewson (29:43)
Well, it’s also going to put employer costs up because ultimately the employer did not pay national insurance on the amount of money that they put into the salary sacrifice scheme of the employee. Now they will have to and it’s likely to deter them from implementing these salary sacrifice packages that were actually very, very popular and are popular.

Michael Brown (29:51)
Mm-hmm.

I mean,

I think I’ve spoken to a couple of people involved in the pension space. I can’t name them, but they’re very close to this. And actually, they’ve both said to me that salary sacrifice is just dead if they do this. Because it’s not worth the admin, it’s not worth the cost, it’s not worth the extra work for employers ⁓ and the extra cost to go through all of these, the rigmarole of implementing it this way. And they’ll just turn around and say, you know, we’ll go back to how it used to be.

Michael Hewson (30:37)
Well, then I would humbly suggest that we are building up an even bigger time bomb.

Michael Brown (30:41)
Of course we are. But from a political perspective they will go, ain’t my problem. That time bomb will explode in 30 years.

Michael Hewson (30:46)
Well, it is their problem because they

are facilitating it.

Michael Brown (30:51)
no, I don’t get me wrong, I fully agree with you, but they will say, you know, someone else will be Chancellor, someone else will be Prime Minister when that bomb explodes and I’ll be long gone, mate. And that’s the short-termism that dominates our politics.

Michael Hewson (31:02)
Yeah and of course they’ve got their

MPs salaries and pensions pretty much gold plated so they really couldn’t give a flying fig about anything else.

Michael Brown (31:12)
Yeah.

So

as they say, I’m all right Jack, whoever Jack is.

Michael Hewson (31:17)
Yeah, indeed.

Jack is whoever they’re not. Anyway, ⁓ okay, I’m trying to think, is there anything else we need to go through with respect to the budget? Because as I say, think we’ve said all there is to, I mean, neatly summoning it. If we were to neatly sum it up, it’s a Klarna budget. And all the spending is front loaded.

Michael Brown (31:21)
Yeah, well yeah, quite. Could be you and me.

Hmm. Yeah.

Michael Hewson (31:41)
and all the tax raising measures are backloaded and at some point over the next six months to a year unless Reeves and the OBR are right then the bond markets will start to think this isn’t flying ⁓

Michael Brown (31:59)
Yeah, completely agree. Last thing on the budget, I know we asked these questions last week, let’s see if our answers have changed. Is that the last one Reeves delivers?

Michael Hewson (32:03)
Hmm, okay.

Yeah.

Michael Brown (32:11)
Yeah, I think it is as well. And we both said that last week, so it hasn’t changed anything.

Michael Hewson (32:13)
I do because

no, I can’t see him surviving. The big concern I have is who replaces her. Well, I think I know who’s going to replace her. But he used to work for the Resolution Foundation. And, you know, there is really nothing that’s off limits to him. But you actually said, I think the Resolution Foundation actually said, with respect to the minimum wage increases, this is stupid.

Michael Brown (32:39)
Yeah,

yeah, you’re absolutely right. Actually, this will be the last word on the budget. You were absolutely right. The resolution foundation themselves, course, Thorsten Bell, who’s now running the treasury, used to run the resolution foundation. They actually came out and said, it’s the first thing I’ve agreed with them on in about a decade. ⁓ And they actually said that this rise in minimum wage basically brings with it more costs than it does benefits. It’s going to price people out of employment. And they’re absolutely spot on, certainly in terms of the younger end of the spectrum. again,

speaks to what we were saying earlier, the budget pleases no one. It doesn’t even please your left-wing metropolitan think tanks.

Michael Hewson (33:16)
Okay well as I say I think it’s bought some time ⁓ and I think that’s merely as a consequence of the fact that it wasn’t as bad as perhaps people were thinking it might be but overall the low productivity low growth ⁓ high cost of living higher unemployment

Michael Brown (33:19)
Hmm.

Michael Hewson (33:36)
that environment still remains and the risks remain to the downside for growth and productivity into the upside for inflation and unemployment, which is pretty much I think what Kimi Badenoch said in a speech yesterday. Only I’ve couched it in much more kinder terms.

Michael Brown (33:55)
Indeed, and before we descend into more unkind terms, shall we move on to other matters?

Michael Hewson (33:59)
Yeah,

what I would say is if anyone hasn’t seen that speech by Kemi Badenoch, watch it because it’s upset all the right people. And the fact of the matter is, there’s an awful lot of hypocrisy with respect to that because these are the same people complaining about the fact she was mean to Rachel Reeves, who are unkind about Liz Truss. So, you know, hypocrisy 101 is still alive and well in certain circles of the politico anyway.

Michael Brown (34:05)
Yes, I would agree with

Yeah.

Indeed.

Michael Hewson (34:28)
Let’s

move on. We’ve had a couple of fairly decent earnings reports this week. One from EasyJet and one from Kingfisher. Both actually better than expected, but I must admit I struggled yesterday and I remember tweeting something to the tune of why is EasyJet 4 % lower? Which prompted a couple of rather predictable

Michael Brown (34:33)
Mm-hmm.

Michael Hewson (34:57)
⁓ responses from a certain person who’s sitting opposite me at the moment and another another Mr. Beauchamp at IG but now they actually recovered all of those losses so maybe I was right maybe there was there was there was a bit of turbulence but they’re now flying higher again

Michael Brown (35:01)
Hahaha

Yeah.

Well, I did tell…

You’re stealing my thunder. You’re stealing my thunder. But yeah, you are absolutely right. They did encounter a little bit of turbulence as those earnings reports were digested, but they have ⁓ recovered by now. And actually, as you said in your tweet, the reaction was a bit of a head scratcher because the results themselves were pretty good. Profits up by as near as makes no difference, 10%. EasyJet Holidays continuing to perform relatively well, or actually very well. And really, this was…

Michael Hewson (35:22)
Sorry mate.

up 27

percent.

Michael Brown (35:47)
Yeah,

really the standout line within the business. And they raised the dividend as well. ⁓ Yeah, and they raised the profit forecast, not forgetting that. know, beat, raised, good guidance, holidays doing well, nothing not to like.

Michael Hewson (36:01)
No, indeed. yet the shares, you know, they’re still around about 480p. I mean, for me, I think when you consider where easy jet shares were pre pandemic, they’re very under priced. I mean, I’m looking at my weekly chart here. And just before Covid struck, they were at £12. And now at £480. And now what’s changed?

Michael Brown (36:25)
Yeah, another four. Yeah.

Michael Hewson (36:31)
since then.

You know, they’re still as profitable, if not more so. In fact, they, you know, I think back then they struggled to turn a profit. Now, you know, it’s very much a case of, yes, the first half of the year generally tends to be difficult, but they more than make up for that in the second half of the year. know, and the guidance is positive. Six percent increase in passenger and ancillary revenues in 2025. Revenues from the holiday business up 27 percent and bookings for Q1 are 81 percent sold.

Michael Brown (36:34)
Mm-hmm.

Yeah, they did,

Michael Hewson (37:02)
So, you know, and they expect the holiday business to grow by another 15%. So for me, I think when you look at easyJet, you look at Whiz Air, you look at Jet 2. Now, obviously, there’s talk about Jet 2 opening a hub at Gatwick, which might prove a little bit of extra competition for easyJet. But, you know, and I have my complaints about easyJet on occasion. They can be very flaky when it comes to late cancellations and what have you.

Michael Brown (37:16)
Hmm.

Hmm.

Michael Hewson (37:29)
but they get you from A to B in a fairly efficient fashion. Yeah, exactly, you get what you pay for.

Michael Brown (37:34)
Yeah, and you know what you’re getting ultimately. ⁓

Yeah, I was just looking at the chart here myself and you know, actually, the stock’s basically gone nowhere for

two and a half years, as near as makes no difference. We’re in a very, very tight range since the start of 2023. Obviously well off those COVID highs. I think there’s probably two things that I would say on that just before we move on. The first is that obviously, and we discussed this last week, one of the things that I think market participants have been a little bit cautious about is the lack of visibility that EasyJet has had on future bookings because the trend has obviously been to book later and later and later. But 81 % sold for Q.

one you can’t complain too much about. The other thing is is that the holidays are underpriced because you know that has really been performing very very well and it’s been sort of backstopping the the results of the business at large and I don’t think the market is is giving the stock enough credit for that.

Michael Hewson (38:30)
Yeah, mean, easy jet holidays, right? The revenues are 1.4 billion and of that 250 million of that is profit. I mean, that’s a fairly decent profit to revenue ratio.

Michael Brown (38:41)
Yeah, absolutely. Can’t complain about that.

Michael Hewson (38:44)
No. Okay, so Kingfisher, B &Q, a really strong quarter. A really strong quarter. And when you consider they got a downgrade from Deutsche Bank at the end of August, which sent their shares sharply lower, the recovery since then has been really, really strong.

Michael Brown (38:49)
Mmm.

Yes, very strong. Sorry, that wasn’t particularly great timing. yeah, for our listeners, I was just taking a sip of water then scratching my head. Yeah, very strong results. And they also raised their profit guidance for the FY 2026. Mainly, it must be said as a result of cost savings as opposed to improve revenues. But nevertheless, you really can’t complain particularly much about anything that they’re doing. And one of

Michael Hewson (39:07)
No, that’s fine.

Michael Brown (39:28)
One of the things we were looking at last week was how the performance of Kingfisher could compare to that of Home Depot or Home Depot in the United States who obviously struggled in Q3. those struggles were not mirrored on this side of the pond, it seems.

Michael Hewson (39:34)
Mmm.

Yeah, like the like sales growth for both B and Q and Screwfix 2.8 % and 3.3 % respectively. Total group sales up by 0.9 % to 3.25 billion. So where was the drag? Well, have a guess.

Michael Brown (39:55)
Well, go on, I know you’re going to tell me, but… always is.

Michael Hewson (39:58)
French business again.

France, like-for-like sales declined two and a half percent.

Michael Brown (40:04)
Hmm.

Michael Hewson (40:04)
and in Poland, like for like sales again, declining there by 1.3%. So the UK was a standout, think largely as a consequence of the decent weather that we saw during the summer. But what I think the only cloud for me, I think aside from the fact that obviously they raised their guidance was that company management warned about a softening of market conditions in recent weeks due to budget uncertainty. Who knew?

Michael Brown (40:31)
Yeah,

well, exactly who knew, but also it’s not exactly surprising because everyone has been warning about that. And also you look at the October retail sales report and they fell for the first time since May. So again, we already kind of had that data in hand anyway.

Michael Hewson (40:46)
Yeah, indeed. And as memory serves me correctly, in October, November and December last year, retail sales declined three months in a row. So I have a feeling we could well be doing it again, unless we see a bit of an uptick in December, because now the budget is out of the way. know, who knows?

Michael Brown (40:54)
⁓ yeah, we’re gonna do it again, aren’t we?

And

actually we’ll preview it nearer the time, it won’t be the new year, but if we were to see an uptick it’s probably just a mechanical rebound from what’s likely to be an utterly abysmal November anyway.

Michael Hewson (41:18)
⁓ October was down 1.1 % which was an absolute shocker because I think the forecast was for 0.2 % positive. How can you get that so wrong? ⁓

Michael Brown (41:21)
Yeah.

Yeah, the cell side didn’t cover themselves in glory on that

one.

Michael Hewson (41:32)
No, indeed.

So I mean looking at the Kingfisher share price, it’s towards the upper end, near the highs of the year.

bit of a barrier around about 320 P but it has does appear to have found a base just above 280. So I think that’s probably likely to be the way of it until perhaps after Christmas or we get some very disappointing retail sales numbers because these sorts of stocks are very susceptible to retail sales or any type of retail sales and consumer confidence data.

Michael Brown (42:06)
Indeed, yeah absolutely.

Michael Hewson (42:08)
Okay, Mitchell and Butler’s has been delayed until tomorrow. They came out earlier this week and pushed it out a day. God knows why. I mean, why push it out from today to tomorrow?

Michael Brown (42:16)
Yeah, I saw that in passing the other day and I did think that was rather odd because usually when you see a firm delay its earnings it’s we’re delaying the earnings, we’re not going to tell you when they’re going to be released and it’s because there’s a huge issue with them. This just suggests, well I’m not entirely sure, but it’s very strange to delay them by a day. You may as well just get them out. anyway, Halfords I suppose.

Michael Hewson (42:39)
Yeah, Halfords, I mean, their shares shot up significantly on the open and are now down 2.5%.

Michael Brown (42:47)
Yeah, very volatile day there. think it’s almost a classic case of they delivered, well, they actually beat on expectations in terms of the revenue and profitability, et cetera. But when you dig into the results, they kept their dividend unchanged, they kept their guidance unchanged. So actually, it’s very much a case of, yes, fine, you delivered on what were probably massage lower expectations that the market had set for you. You didn’t beat those expectations and you didn’t actually deliver any, you know.

Michael Hewson (43:00)
Hmm. Yeah.

Michael Brown (43:14)
bullish guidance going forward. So the bulls are probably a little bit more cautious and that might be why we’ve seen some profits get taken there.

Michael Hewson (43:22)
Yeah, I mean that was the thing. think I looked at the first half revenue and obviously what stood out for me was cycling seeing a 9 % uplift and yet you keep your guidance unchanged despite the fact that you’ve beaten expectations by quite a considerable amount which suggests to me that you think that’s a one-off.

Michael Brown (43:29)
Mm.

Yeah,

they are not expecting a particularly great next quarter or next half. And I think maybe again, is the budget having a role to play there because we spoke about salary sacrifice in terms of pensions. One of the other things that a lot of people, well…

not me and I don’t really need to say that, is a used salary sacrifice for us, these cycle to work schemes. And if there was a lot of speculation, is that going to get changed, whatever, are people kind of front loading their purchases, pulling them forward into pre-budget and then that’s obviously not going to be sales that you make in the post-budget period.

Michael Hewson (44:15)
that’s a pretty good show. Sorry, I didn’t mean it to come across like that. Well, I even go that far,

Michael Brown (44:17)
I do have them occasionally, mate. You don’t have to sound so surprised. Jesus.

I’m not just a pretty face. Well, not that either, so…

Michael Hewson (44:31)
faces for radio the pair of us anyway yeah indeed ⁓ let’s move on to next week unless you’ve got anything else you want to cover for the last few days I mean I think I think we pretty much covered it okay

Michael Brown (44:34)
⁓ well, it’s just as well. This is a podcast really, isn’t it?

Yes.

No, I think that’s probably it. ⁓ mean, the only other thing really

is that market activity has absolutely fallen off cliff today, Thursday, and probably will tomorrow because obviously the US are away for Thanksgiving. But yeah, we knew that anyway. And actually, the calendar for next week doesn’t look that inspiring, if I’m being honest.

Michael Hewson (45:01)
No it doesn’t.

doesn’t. We’ve got ADP payrolls because obviously non-farms has been delayed until the 16th. So actually the Fed meeting is actually on the 10th and not the full… was it? Did you say the 9th and the 10th? Right.

Michael Brown (45:12)
Yeah, the FOMC is on the 10th, the 10th of December,

and then the December jobs report is on the 16th, so almost a week after.

Michael Hewson (45:20)
Right, okay. So they’re not likely to get forward guidance on the numbers because I think when we spoke last week you said you were going to do some homework on that. I bet you forgot, haven’t you?

Michael Brown (45:27)
Yes, I

did forget, but I do know the dates now, which I didn’t know last week, which is very remiss of me. And now that I do know the dates, I can always guarantee that they are not going to be getting the forward look or the advanced site that we thought they might.

Michael Hewson (45:39)
Well, exciting.

Okay, all right. But it does look like they’ll probably get a caucus to vote for a 25 cut, you reckon. We’ve got ADP next week. instructive. We’ve had this discussion before, and I know what you think about ADP, but at the end of the day, that’s all they’ve got.

Michael Brown (45:49)
Well, see this is it.

Yeah. I mean… ⁓

Well, exactly. this is the thing. I’m not the biggest fan of the ADP payroll report. We don’t need to go through that debate again. But it’s going to take on more importance for the second month in a row because we won’t have the official jobs report. In terms of the December FOMC, I was doing some sort of vote counting on this the other day. You almost come out a perfect six-six split in terms of those who are favoring another rate cut and those who are favoring rates to remain unchanged. So ultimately, I think it comes down to what Chair Powell

wants to do and the expectation would be that what Powell does, other members of the committee like Cook, Vice Chair Jefferson, Chicago Fed President Goolsbee will probably vote in the same direction that he does. But we can talk more about the FOMC next week because obviously it will be much closer to the event.

Michael Hewson (46:39)
Mm.

Did you see that Chicago PMI number? Yeah. Do you think that will sway Galsby?

Michael Brown (46:51)
Grim, wasn’t it?

I’m not sure the Chicago PMI would sway anyone these days to be completely honest without wishing to be rude to the people who collect the data. hasn’t been pre-COVID basically something’s broken with it and I don’t quite know what but pre-COVID it used to have a very good correlation with the ISM manufacturing gauge which obviously the nationwide ⁓ metric.

Michael Hewson (47:16)
Mmm.

Michael Brown (47:17)
post-COVID, that just seems to have broken down entirely and the Chicago PMI number is almost too volatile to be of any use, I think.

Michael Hewson (47:26)
Yeah, and

we’ve got the ISM and services next week as well, PMIs. And the ISM, I think, in the most recent numbers, saw services activity rise to its best level since July.

Michael Brown (47:38)
Yeah, they did.

And we also saw the employment metric in that services PMI at its highest level since June, which is obviously a positive as well. And again, what we said about the ADP, where it takes on sort of greater importance than normal because it’s all the Fed are going to have in terms of the data that they can look at in the run up to that next FOMC meeting.

Michael Hewson (47:44)
Hmm.

So that might complicate rate cut bets because if price is paid and employment remains particularly strong, you could see those rate cut bets come back from a 90 % probability and back down to around 50 or 60 again.

Michael Brown (48:06)
Mm.

And of course complicating things even more on that front is that we’ll be in the blackout period. So we won’t have any comments from Fed officials to guide us as to how they’re viewing the data. It will simply be market participants going, well, I think that’s inflationary or I think that tilts the balance of risks in favor of the labor market. So ⁓ get your popcorn ready. It could be a few fireworks on that one.

Michael Hewson (48:34)
Well yeah exactly, I what it’s going to do is it’s going to create volatility in expectations when it comes to stock markets as well as obviously US Treasuries. Okay, we’ve also got UK services PMI for November, we already know that’s going to, you know it’s going to be a fairly difficult one. It’s set the flash sync to a seven month low.

Michael Brown (48:43)
Yeah, absolutely.

Michael Hewson (48:59)
I can’t see that being revised up and it’s rather strange that it was at a 16 month high in August. It’s fallen off a cliff since then. Yeah, yeah, I wonder. Anyway, so that’s that, that’s that UK services PMI data. It’s just going to reaffirm what we pretty much already know. Say the ISM in the services again, third of December and the only earnings numbers of note that we have next week about 4BT, which is a great British success story.

Michael Brown (49:05)
I wonder what’s happened since August.

Hmm.

Every year.

Michael Hewson (49:29)
It’ll be the first quarterly numbers that won’t have Leo Quinn at the helm, I believe. ⁓ Job well done and the shares are again at record highs. We’ve seen some really strong gains this week. Do we know why?

Michael Brown (49:44)
We don’t, but mean there’s obviously the market is becoming rather bullish and rather positive ahead of that earnings release next week, which could mean one of two things. Either those bets are absolutely correct and they deliver a brilliant report or expectations are getting a little bit too far ahead of themselves and potentially there’s room for a reversal. sadly, given that I haven’t seen the results, we’ll have to wait until, when is it, next Thursday.

Michael Hewson (49:48)
One, three,

Yeah, the fourth. They’ve gone from 645, 645p on Friday close. They are now trading at 697p. So just shy of 700p. That’s a strong move. On the basis of not an awful lot.

Michael Brown (50:17)
Hmm.

Yeah, it’s a really strong rally.

Yeah.

Michael Hewson (50:29)
H1 revenue, this is going to be the Q3 numbers, so their guidance was fairly positive, but their H1 revenue came in at £5.15 billion. New orders up £2.9 billion from a year ago to £19.5 billion. So I think for me, the new CEO, Philip Haw, has a tough act to follow. So ⁓ hopefully he’s going to be able to deliver another decent set of numbers for Balfour Beatty and their shareholders.

Michael Brown (50:58)
Yeah, absolutely. And as you rightly alluded to a moment ago, it’s been a really, really strong British success story. And I think we all hope that that can continue.

Michael Hewson (51:09)
I mean, I can remember back in my CMC days back in 2014 when people were worried whether or not the company would actually survive in the wake of the Carilion collapse. And they almost took over Carilion. that was a, I dodged a bullet there.

Michael Brown (51:18)
Hmm.

I was going

say, yeah, they really did dodge a bullet on that one. And since they did dodge that particular bullet, things have gone from ⁓ strength to strength, so to speak.

Michael Hewson (51:34)
I mean November 2014 the share price was 158p now we’re just shy of 700p so that gives you an indication of the job that Mr Quinn has done and hopefully Mr Hall will carry on the good work. Last but not least we’ve got Fraser’s Group, Mike Ashley. Well documented fact it’s been a challenging 12 months for the retail sector but there have been success stories.

Michael Brown (51:42)
Yeah, really cannot complain, can you?

Mm.

Michael Hewson (52:03)
Phrases Group shares are up 2.8 % today. They’re at the top end of their recent range for this year. The highs this year are around about 770p. Currently it’s 750p. So I think the bar here is pretty high. ⁓ Decline in retail revenues. They’ve been cost cutting basically. ⁓ And that’s…

Michael Brown (52:21)
Yeah.

Michael Hewson (52:31)
I think that’s one of the main reasons we saw a decline in retail revenue at the most recent set of numbers. Three year lows for the share price in April, but we’ve seen a fairly decent rebound since then. think the big question is, can we sustain that?

Michael Brown (52:38)
Mm.

Yeah, and that is absolutely the question. I think perhaps in a similar way to what we saying in terms of Balfour Beatty, the stock has been trading relatively well of late, which means that the market’s bar in terms of expectations for what they deliver in that report when we get that next week, next Thursday, is going to be a relatively high one. Although I think it is probably going to be relatively easy as well at the same time to explain away any weakness.

given that we know the retail sector has been struggling in recent months and we know that the retail sector is likely to consti… I can’t get my words out. To continue to struggle in the coming months, which would have been much more eloquently put if I’d have managed to get that out the first time.

Michael Hewson (53:13)
Hmm.

Yeah, I mean, it’s costs basically that are hitting the bottom line here. Yeah, I mean, 25 % increase in operating costs, which translated into a two and a half percent decline in group profits last year.

Michael Brown (53:31)
And we all know where those costs are coming from.

Michael Hewson (53:44)
At end of last year, Fraser said they expected to take a £50m hit as a result of the recent changes to NI and minimum wage levels. So what these new increases will do is obviously add further to those costs. The bigger question is what can they do to mitigate them?

Michael Brown (54:01)
Well, there’s two obvious things they can do. One is to raise prices, which obviously has an inflationary implication. And the other is to cut employment, which has an implication in terms of deepening the labor market slack that we’re seeing. And those choices are obviously not just unique to Fraser’s group. They’re the choices that businesses across the land face. yeah, to tie it all in together with the budget that we were speaking about earlier on, the next six months will show us which choices they make.

Michael Hewson (54:26)
Indeed and you know that’s not to say the retail sector hasn’t had a good year and hasn’t been adept in dealing with these higher costs. You’ve only got to look at what Marks and Spencer’s have done, Next have done and obviously just only just now we were talking about Kingfisher. They’ve done as well so but there’s a human cost to that. The human cost is that people lose their jobs.

Michael Brown (54:47)
Yeah, absolutely.

Yeah, and we shouldn’t forget that. And I know we throw around unemployment rates and all the rest of it, but behind every 10 basis points in the unemployment rate, there are X number of people who are losing their jobs. And we should remain very, very cognizant of that fact. You’re absolutely right.

Michael Hewson (55:05)
Yeah, absolutely.

just wish politicians were cognizant of when they make these policy decisions and think about the long term consequences of them. But that’s another story. US retailers reporting next week. Kroger’s Dollar General, Dollar Tree. Again, that will give us a sense of how the US consumer is doing. And I think the retail sales numbers were out earlier this week, were they? Or were they not? I can’t remember. I think it seemed to be cool they were.

Michael Brown (55:28)
Yeah,

they were out, but they were September numbers. Resale sales rose by 0.2 % in September, but so stale that they’re not really worth the paper they’re written on, I don’t think.

Michael Hewson (55:32)
they were.

a bit like moldy bread. Okay fine. ⁓ Well that’s it for this week ladies and gents once again it’s always been a pleasure chatting to you Michael and we’ll pick this up again same time next week where there’ll probably be a little bit less to talk about but actually we will probably be talking about the Fed.

Michael Brown (55:40)
You

Mm-hmm.

Indeed, always good fun.

Yes

I’m sure we will. We’ll catch you next week. See you later.

Michael Hewson (55:59)
Alright,

cheers, thanks a lot. Bye now.