JAMs (and not of the fruity variety) have been in the UK news this week. The saccharine acronym stands for families who are “just about managing,” and were previously monikered by various politicians as the “squeezed middle,” or “alarm-clock Britain.” This is a key demographic for UK Prime Minister Theresa May and proved to be the focus of the first Autumn Statement to be delivered by new Chancellor of the Exchequer Philip Hammond.
According to our Chief Economist Lucy O’Carroll, “Mr. Hammond did what he could: setting new fiscal rules, highlighting the UK’s long-term challenges, and raising modest additional revenues to address the concerns of the six million JAM households.”
Meanwhile, he described his plan as a way to get the UK economy “match-fit.” Unfortunately, the independent Office for Budget Responsibility blew a bit of a raspberry at the whole affair: it thinks that his fiscal changes will add only 0.1 percentage points to economic growth in 2017-2018.
It’s yet to be seen what the JAMs think of measures such as another freeze on fuel duty and a new way to conserve their wealth (a three-year savings bond with an interest rate of 2.2%). Did the public get what the public wants?
Whether or not it did, investors seemed pretty pleased. Bolstered by hopes that U.S. President-elect Donald Trump’s fiscal stimulus plans for the U.S. will involve lots of spending on infrastructure, shares in mining and commodities companies were among the top performers in the UK and U.S.
The UK’s FTSE 100 index climbed 0.79% for the week to close on Thursday, while the S&P 500 index reached a series of new all-time highs before markets shut up shop for the Thanksgiving holiday.
On Monday, all four of the U.S. major equity indices “partied like it was 1999,” setting new records for the first time since the middle of the dotcom boom. In Japan, the broad-based Topix index made gains for 11 consecutive days. Share prices there have been boosted by the recent strength of the U.S. dollar against the yen, which makes it cheaper to buy Japanese products abroad.
When Doves Cry
While equity markets and the dollar were powering ahead over the week, government bonds were less popular. The market sell-off pushed the yield on 10-year U.S. Treasuries close to its highest level since July 2015. Investors seem confident that Trump’s policies will boost inflation and the overall U.S. economy, and perhaps convince the U.S. Federal Reserve (Fed) to increase U.S. interest rates more quickly than previously expected.
The oil price also rose, with Brent crude closing at more than $49 per barrel on Thursday. Sentiment was boosted by rhetoric from some of the world’s largest producers suggesting that a production cut could be agreed at the Organization of the Petroleum Exporting Countries’ (OPEC) meeting in Austria’s capital next week.
Russian President Vladimir Putin said he sees a “high probability” that a deal to reduce supply can be reached, although Russia is not a member of the cartel. Meanwhile, Iran’s energy minister hinted that he was optimistic about such an outcome.
Although November’s only just drawing to a close, it seems like one fast food company is getting in to the Christmas spirit a bit early. Pizza chain Domino’s* has announced that it plans to reach some of its most remote customers – in the far north of Japan – by reindeer.
A video posted online demonstrates how the process would work. Each Deliver-Rudolph will be kitted out with a GPS tracker in case the myopic Meat Feast-bearers have no eye-deer where they’re going.
*Companies mentioned for illustrative purposes only and should not be taken as a recommendation to buy or sell any security.
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