Archive for June, 2020

h1

With five months to go how the US is dividing on the next President

Tuesday, June 30th, 2020
Pew Research poll

So many WH2020 polls are coming out at the moment but virtually all are showing the same big picture – Biden with double digit leads.

Tonight sees the above from the reputable Pew Research which has produced the above graphic on its latest findings which gives a good picture of the divide.

Mike Smithson



h1

TMay is becoming big problem for the Johnson/Cummings regime

Tuesday, June 30th, 2020

The former PM – now her successor’s leading Tory critic

The latest intervention by TMay in the Commons above isn’t the first and won’t be the last time that the former PM is going to make known her views of the current leadership. She’s particularly furious about the sacking of senior civil servant instigated by the lockdown deviant, Dom Cummings.

I thought today’s TMay’s move was smart because she focussed on the issue of national security raising doubts about the capabilities of the Cummings appointment and its possible impact on how secure the country is.

Because of who she is and the powerful way she puts her points she is going to get considerable media attention and it is clear that she will carry on with her approach will carry on. If ever Tory backbenchers start to get concerned about the way their party is being run then TMay could have a role to play articulating the case against the leadership for Tory dissenters.

Looking back over the past 45 years I cannot recall a former PM ever being as effective in their attacks on the current party leadership.

Mike Smithson



h1

How Bernie Sanders complicates the betting on November’s US Senate elections

Tuesday, June 30th, 2020

He may have stood the for Democratic WH2020 nomination but he’s not part of the party in the US Senate

The other really big election taking place in the United States on November 2nd is for the US Senate where currently the Republicans have 53 of the 100 seats. If indeed Trump is ousted on that day the Democratic victory will only be really meaningful if the party takes the Senate as well. This is going to be far from easy.

Every two years about a third of the Senate seats come up for election and senators have a six-year term and this year four or five Senate races could cause the upper house to flip.

Inevitably there is going to be a big betting focus on these elections which is why it is do important to read the specific rules that each bookmaker uses. Betfair has it like this:

A majority of seats requires either party to control at least 51 of the 100 Seats in the US Senate. Independent or any other party Representatives caucusing with either the Democrats or Republicans will NOT count for the purposes of this market.

So Bernie and a Senator from Maine who also sits as an independent don’t under this definition count towards the Democratic party total even though effectively they caucus together and the media would declare the party the overall Senate winner if the Republicans lose four seats.

Ladbrokes and other bookies have their main markets on Republican seats in order to get round this issue.

On Betfair, currently “no majority” is the favourite and that looks a good bet under the above definition.

Mike Smithson



h1

Paying the way

Monday, June 29th, 2020

Christo (who died earlier this month) and Jeanne-Claude were two of our age’s most haunting artists.  Their life’s work – because we can fairly see it as a single piece – entailed the planning, project management and execution of the wrapping of ever more unlikely items.  Balloons, trees, islands, the Pont Neuf, the Reichstag and the gates of Central Park were all subject to a series of superficially short-lived installations.  As one critic said of their work, “to seek ‘the involuntary beauty of the ephemeral’ is to create the advent of surprise”. 

All artists have imitators.  This week Boris Johnson unveiled the Prime Ministerial plane that was wrapped in the union flag for a cost of £900,000.  This is a project every bit as pointless as Christo and Jeanne-Claude’s works, and equally stirring for the intended audience.  Christo used to note that opponents of their projects formed part of the works of art.  The Prime Minister has the same idea.  (To his credit, Sir Keir Starmer has cottoned onto his game.)

The country has far more substantial infrastructure projects ahead of it, and the costs are many orders of magnitude greater.  Some of them, like HS2, already looked eye-poppingly expensive. Since then, the country has been scoured by a pandemic and the government’s finances have been trashed.  

Yet the government signalled this weekend in briefings to both the Mail and the Express that it intends to double down on infrastructure projects. Somehow or other these infrastructure projects are going to need to be paid for – or abandoned.  

 If wishes were horses, beggars would ride.  But the problem of funding large infrastructure projects is not new.  Governments have other options for procuring thoroughbreds.

When times are tight, governments have long sought to enlist the help of the private sector by entering into public-private partnerships.  At least as early as 1430, an Act of Parliament was passed authorising commissioners to collect tolls for a period of three years, in order to finance the proper scouring and cleansing of the bed of the river Lea in east London.  The concept of turnpikes is even older.

In Britain, such partnerships now have a poor reputation.  On the one hand, the government and public opinion firmly believe that the private sector has fleeced it in many PPP deals.  On the other hand, many private sector companies find themselves barely able to make a worthwhile investment on many public sector projects.  When such companies over-extend themselves, as Carillion did, the risk falls back on the public sector, leaving both camps firmly dissatisfied.

Still, the government’s budgets look under unprecedented strain now.  With this in mind, the Social Market Foundation issued a report this month on enlisting private sector investment in infrastructure projects.  It had essentially two big ideas. The first was that governments should promise to take more seriously the need for the private sector to make a profit in infrastructure projects, so that investors could have confidence in the long term, and establishing a cross-party consensus on this and on the infrastructure projects to be pursued.  The other was that the government should look at new funding models – so pension schemes should be knocked together into superfunds so that they could efficiently invest and a new project bond market should be established.

These ideas have much to commend them.  The first of these is, sadly, in the current environment impracticable, while the second needs to be looked at from other perspectives.  

The report tacitly assumes that what is good for the country will be good for the investor.  History has long shown that not to be the case. There are numerous infrastructure projects of great public benefit that were disastrous for the investor.  The Panama Canal, the construction of Britain’s railway network and Canary Wharf are all examples of infrastructure projects that were far better for the public than for their investors. 

Designing investment structures that are appealing to investors requires a recognition that their appetite for risk may be lower than gung-ho politicians would like, with investors like pension schemes often looking for reliable returns rather than speculative longterm bonanzas.  This is very much achievable, as the SMF report states, but there are consequences flowing from this.

One of the chief of these is the need to address the political risk.  If an investor is making a steady index-linked return from an investment, someone is paying them.  In an infrastructure project, that someone is likely to be the general public in one way or another. You only have to see the annual hoo-ha about, for example, rising train fares to see how this could become very political.  

The SMF report sees the problem, but its idea of establishing a long-term cross-party consensus looks fanciful.  The weekend’s briefings are hardly a surprise.  The current Prime Minister has long seen infrastructure projects as a weapon in his armoury.  He has at various times for political advantage proposed an airport in the Thames, a garden bridge, a bridge across the English Channel, a bridge across the North Channel and been a leading proponent of HS2 and the 5G network.  Conversely, he made political capital out of opposing the third runway at Heathrow.  He’s not suddenly going to outsource infrastructure decisions to some cross-party committee.  Candidly, you can see why.

Nor could any putative saintly successor bind their own successors.  Infrastructure investors will remain concerned that political parties may at a later date jump on bandwagons to undercut infrastructure investors.  Populism is having a good run just now.  There’s no reason to assume that it is going to lose its appeal any time soon.

This concern is not easy to address.  You would need to have confidence not just in the current government to honour the terms of investment but in its successors of all stripes.  Many would find themselves reluctant to take even the first step on this road – without a suitable return built in, at least.

Perhaps part of the solution lies in one of the SMF’s recommendations, to accelerate the creation of pension superfunds.  They rightly identify fragmentation as a barrier to infrastructure investment.  A consolidation of investors would separately also act as a political counterweight when the interests of investors are to be considered – the losers from any rewriting of terms would be much more quickly identifiable as other members of the general public who are pension scheme members and not just gnomes from Zurich.

Moreover, a serious weakness of the report is to view this exclusively from the perspective of infrastructure.  Improving Britain’s infrastructure is, of course, a really good idea.  But it isn’t the only really good idea and there are other policy considerations to be looked at.  

The UK pension system works fairly well, all things considered.  There are good pensions arguments for encouraging consolidation into superfunds.  But when you start introducing other non-pensions motives for encouraging “urgent” consolidation, we risk seeing the original purpose of providing pension schemes – to provide for people’s old age – getting pushed down the pecking order of priorities.  For pension schemes, that should always stay the top priority.  Keep the horse in front of the cart.

Alastair Meeks




h1

How in just three months Starmer has changed the political weather

Monday, June 29th, 2020

I am a great fan of the Opinium weekly poll for the Observer. The firm gets its full datasets out at the same time as when the poll is published on a Saturday evening and it has a series of questions in every survey that are always asked with the result that we can compare changes over time.

Opinium also has a range of cross-heads that can really add to our understanding. One group is on CON and LAB leavers and Remainers and another has a seat split with one of those included being seats gained by CON at GE2019. Like all subsets the samples are small but you can get quite a quite reliable picture looking over three to four weeks of polling for a particular cross-tab.

Another feature that I really like is that there are leader approval ratings in every survey which makes it unique in British polling. There is also the weekly “best PM” question the results of which form the basis of the chart above. Historically the problem with the latter question is that incumbents have got a very clear advantage. It is difficult for those sampled to compare the person in Number 10 with the person who only aspires to the the job.

So although Starmer has been hammering Johnson on leadership approval five or six weeks it was only this last weekend that the LAB leader topped the best PM ratings. For an opposition leader to do that is very rare – to have moved to that position in such a short time suggests that he’s really made an impact. The chart above speaks for itself and Johnson’s only comfort is tha the next election is a long tin off.

Opinium was the most accurate pollster at GE2019 getting each of the main party shares spot on.

Mike Smithson



h1

Someone is trying to persuade me that Trump is ill and might not stand in November

Monday, June 29th, 2020

But I can’t believe that PB has a world exclusive

Yesterday I received an email from someone I have never been in contact with before or have any familiarity with which suggested that something might be happening in American politics less than 5 months before the presidential election. This is what it said:

I’m passing on to you what a colleague has learnt from a source in the military. The story about Trump visiting the Sterling golf course yesterday, illustrated with a photo of an armoured vehicle met by about five protestors, and with an old photo of him playing golf, was false. The convoy sent to the golf club was a decoy and Trump was not riding in any of its vehicles. He was taken instead to the Walter Reed National Military Medical Center, aka “Bethesda”, where he still is. His illness is also why his trip to NJ was cancelled. This is why the Betfair price on Pence as Republican nominee has moved how it has. You may have already heard this info. (If you have, perhaps it’s you that’s moving the market!) If so, please forgive this email. But to judge by what I’m hearing the circle is being kept exceptionally tight.

If this has any modicum of truth to it then it has huge betting implications and also would be a massive story round the world. Given how much I personally hate Trump’and fear his re-election I have to be on my guard against believing things because I want them to be true.

Of course Trump is getting old, he is 74, and apparently takes little exercise and from what we are told does not have what many would describe as a healthy diet

I still think irrespective of this, that there is a question mark over both Joe Biden and Donald Trump. So I have had a bet at about 10 to 1 laying Biden Trump being the nominee choice for the election.

Mike Smithson



h1

One of the reasons I’m not entirely confident on calling the Presidential election, because the people in this video have the vote

Sunday, June 28th, 2020

Like David Herdson I’m leaning towards thinking November’s Presidential election will be a comfortable Biden win, certainly that’s what the polling and Trump’s demeanour indicates, a lot of this has been driven by Covid-19 and the administration’s handling of it.

An American friend sent me this video of anti-maskers in Florida losing their poop over being forced to wear masks. My friend pointed out to me that to plenty of Americans Covid-19 isn’t really something to worry about. These are the people who vote, the question is can hold enough of his 2016 vote together to win again?

I think it might be dependent on how the Covid-19 numbers improve or get much worse over the next few weeks.

TSE



h1

The next out of the cabinet betting

Sunday, June 28th, 2020

Ladbrokes have finally put up their next out of the cabinet market and to be honest there’s no value in backing Robert Jenrick. It truly is shameful how shameless Robert Jenrick and the Prime Minister are over this scandal. If Robert Jenrick was a humble councillor he’d had been forced out and facing much worse.

So if not Jenrick then who? I’m wondering whether to place my money on the Frank Spencer tribute act Gavin Williamson. Given how badly he has organised the return to school plans which doesn’t inspire confidence for everything to be fine by September. Whilst Jenrick’s shocking behaviour doesn’t directly impact the average voter the failure to properly reopen the school certainly impacts significant numbers of voters.

If Gavin Williamson messes up the return to school you can see that being a tipping point for Boris Johnson as it would ruin the narrative that the Prime Minister is trying to sell the country that the country is bouncing back from Covid-19.

You could argue that Liz Truss might resign if we get a sub optimal trade deal for farmers and consumers, given her pronouncements this week, but this is a market I’m not going to get heavily involved with. Firstly the dead heat rules could wipe out the value of the bet. Additionally the usual rules of political gravity seem not to apply to cabinet ministers and their advisers which is something that will eventually catch up with the government, I’m just not sure when though.

TSE