Marc Kitten

Sir Keir Starmer recently travelled to Germany to meet with Chancellor Olaf Scholz. His aim was to start to ‘reset’ the UK’s relationship with Europe four years on from Brexit. The two leaders discussed a new treaty likely focused on defence-related issues, foreign policy co-operation, and movement of people between the two countries. Germany is the UK's second-largest trading partner. Strong trading relationships are important. They help to support investment, while exports can also build economic diversification and resilience. This is especially important for the UK, which has experienced low levels of productivity and productivity growth for the last 15 years. Looking forward, labour force growth is likely to slow. As the UK population ages, productivity growth becomes ever more important for future economic growth and living standards. The UK has experienced almost two decades of weak productivity growth relative to other major advanced economies such as the US, Germany, and France. Productivity growth in this case is measured as GDP or output per hour worked. The reasons for the UK’s ‘productivity puzzle’ are complex, but can be boiled down to three factors. Firstly, the chart shows a big negative impact on UK productivity between 2007 and 2009. This can be explained by the global financial crisis and its impact on productivity growth in the financial sector. Before 2007, high levels of leverage generated a lot of growth, with deposit and loan volumes growing quickly. After the crisis, lower leverage has been an important contributor to reduced productivity. Secondly, from 2010, public and private sector capital investment in equipment and structures was relatively weak, contributing to slower productivity growth. Uncertainty and transition costs linked to Brexit may also have had an impact. Finally, the flip side of lower investment in capital was a period of high employment growth, as firms chose to increase output capacity through hiring lower cost workers instead. If these are the main reasons for the UK’s extended period of weak productivity growth, what are the potential solutions? Higher rates of government spending on infrastructure and housing, stronger trade ties and support for exporting companies, and new generation technologies such as artificial intelligence. None of these are quick or easy remedies.

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FD I didn’t know that… Our Foreign Direct Investment (FDI) group have written the first article of a two-part series exploring the key areas of which investors, and those active in M&A, need to be aware. In this first article, we consider topics relevant to the initial considerations when assessing the need to make FDI filings. Click here to read: https://bit.ly/47nkOJc #ForeignDirectInvestment #MergersAndAcquisitions #JointVentures

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UK Economic Assessment: May 2024 1. Probabilities of Recession The UK economy is currently navigating a delicate path. The British Chambers of Commerce (BCC) reports that the UK experienced a (mild) technical recession in the latter half of 2023, marked by two consecutive quarters of negative growth. The BCC anticipates modest growth for 2024 and 2025, at 0.5% and 0.7% respectively, with a slight improvement to 1.0% by 2026​ (British Chambers of Commerce)​​ (Welcome to ICAEW.com)​. Despite these positive projections, the overall growth outlook remains subdued, with persistent global economic headwinds and internal economic challenges. 2. International Trade UK trade dynamics are challenging. The country's trade performance has been hampered by global uncertainties and internal economic adjustments post-Brexit. According to the latest forecasts, UK exports are expected to decline by 1.3% in 2024 before rebounding slightly in subsequent years. Imports are projected to remain weak due to the relatively tepid domestic economic environment​ (British Chambers of Commerce)​. Furthermore, ongoing geopolitical tensions, including conflicts in Europe and the Middle East, continue to impact trade flows. 3. Trade with the EU The introduction of new trade barriers post-Brexit has complicated trade relationships, leading to reduced export performance. The EY Regional Economic Forecast highlights that these barriers, alongside subdued global demand, are expected to constrain trade growth. The ongoing negotiations and adaptations in trade policies will be crucial in shaping future trade dynamics between the UK and the EU​ (EY US)​. 4. UK Unemployment Trends The UK's labor market shows a mixed picture. While employment is set to grow by an average of 1.1% annually from 2024 to 2027, regional disparities persist. London and the South East are forecast to lead in employment growth, whereas other regions, particularly in the North and Wales, are expected to lag behind. Despite these challenges, average earnings are projected to rise, outpacing inflation over the next few years​ (British Chambers of Commerce)​. 5. GDP Trends UK GDP will slowly grow; a meager growth of 0.1% in 2023, GDP is forecasted to grow 0.5% in 2024 and 0.7% in 2025, with improvement to 1.0% by 2026. This sluggish growth is driven by weak consumer spending, inflation, and cautious business investments​ (British Chambers of Commerce)​​ (Welcome to ICAEW.com)​. The National Institute of Economic and Social Research (NIESR) notes that while inflation is expected to ease, core inflation remains stubbornly high, dampening economic recovery efforts​​. Conclusion The UK economy is facing a cautious recovery phase with modest growth prospects. The risk of recession remains. Trade challenges, particularly with the EU, continue to impact economic performance. Strategic policy measures and sustained international cooperation will be pivotal in steering the UK towards a more robust economic future.

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Here we go again. You’ll forgive me if I call BS on this, but the perspective of the current commercial rights holder is on exploitation of an asset with little regard to the history, legacy and value of the asset beyond selling access, experiences and merch. What’s wrong with that, you say? It has a lot to do with what’s at the core of the product and that is the racing, the regs and the schedule. There are 18 months or so before a new Concorde needs to be finalized. The existing document (an iteration of previous documents) isn’t going to require extensive redrafting. They’ve said it themselves. They just want to fine tune it. So what’s the rush if everything is going swimmingly? Why not take this time to really dig in and address numerous substantive issues instead of refining an aging model? Granted many of the things that need attention fall squarely on the shoulders of the FIA and cover things FOM have no right to involve themselves in. Working together toward the goal sounds good, but it’ll take more than a few meetings. It’s time for a serious round of some Charrettes (look it up)! If you need a hint about the real agenda look no further than the linked article. This conversation in Monaco could have been about celebrating Monaco on her 81st running of this jewel in the crown event and everything she means to the sport and business of F1. Instead, much of the conversation was about the LVGP. Sorry, but that’s crass. No divide and conquer? Maybe not among the teams but venues? Watch out…

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2055 is only 30 years from now... A report, published by the UK's Ministry of Defence, offers a forward-looking analysis (to 2055) of the key drivers and trends likely to shape the global landscape over the next several decades summarized as: Global Power Competition: The global balance of power will shift as state and non-state actors compete for influence. Major powers like China and Russia will play pivotal roles, but smaller states and entities will also seek to assert themselves. Demographic Pressures: The global population will continue to grow, but at uneven rates. Rapid population growth is expected in regions like Africa and South Asia, while many developed nations will experience aging populations or declines. Climate Change and Environmental Pressure: Climate change will result in more extreme weather events and environmental stress. Efforts to mitigate its impact will dominate national and international agendas, especially as competition for resources intensifies. Technological Advances and Connectivity: Rapid advancements in data processing, AI, automation, and connectivity will affect virtually all aspects of life, shaping industries, economies, and power dynamics between nations. Economic Transformation and Energy Transition: The shift toward greener energy and the digital economy will create winners and losers, as some societies adapt more quickly than others. The availability of key resources, such as critical minerals, will become increasingly important. Inequality and Governance Pressures: Rising inequality driven by technological disruption and concentrated wealth will exacerbate governance challenges. This could lead to societal tensions and greater pressure on state institutions to reform. The report also highlights paradoxical (complex) trends... a) Increasing global connectivity and growing fragmentation due to shifts in value chains and protectionism, b) juxtaposition of innovation with stagnation in addressing global challenges like poverty and migration. c) Rise of authoritarianism contrasting with growing demands for transparency and accountability. The summary above denotes the major global drivers of change from the report that are deemed to redefine societies, economies, and governance systems. What would you keep, add, remove? #FutureTrends #GlobalStrategy #ClimateChange #TechnologicalAdvances #EnergyTransition #GlobalPowerShift #Inequality #Governance #Demographics #AI #EconomicTransformation #Sustainability #Innovation #DigitalTransformation #StrategicForesight

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** This is not Financial Advice, so do your own due diligence ** History repeats itself. Dont believe me? well here is my proof. CIEN just reported FY2Q24 results and offered a relative soft FY3Q24 guide but reiterated an essentially in-line FY24 guide, which implies a significant 25+% Q/Q growth in FY4Q24. Investors like sheep, are worried about the steep ramp implied in FY4Q guidance and the stock has given up its almost 10% early gains. But here is the thing, its Deja vu time, history is repeating itself. This has exactly been the setup over the past three years. Reminds me of that Bill Murray movie the "Ground Hog Day". For the last three years, the setup for CIEN has been massive 2H ramp over 1H, in particular in the FY4Q. And like clockwork, CIEN delivers on its 4Q boggie and the stock rockets up 10-15+%. I suspect we will see this cycle repeat itself, again! Telecom is a long-duration market, operators have multi-year projects that dont just stop and start again on a dime. Macro overhang will continue but we will be 6 months closer to actual stimulus dollars flowing through. I often struggle why investors don't read history and if they do, then why fail to remember its lessons?

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#Hargreaves_Lansdown Hargreaves Lansdown backed the £5.4 billion bid for the FTSE 100 fund manager today from a private equity consortium, a deal that will end its time as a listed company. The Bristol-based finance firm has been listed in London since 2007. It said today that the final offer valued its shares at 1140p in cash and would include a 30p per share dividend for the financial year which ended on 30 June. Compared to the Hargreaves Lansdown share price before the approach was first made in April, the price is at a premium of over 54%. The consortium is made up of CVC, Nordic Capital and ADIA. Hargreaves Lansdown is named after its founders – Peter Hargreaves and Stephen Lansdown – who set it up as an investment tip sheet. It now runs a state-of-the-art trading platform from which clients can run their own portfolios and pensions. https://lnkd.in/dKpizupy

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A regressive decision by The Scottish Government to reintroduce peak time fares and increase those fares at the same time. ScotRail A short term, non-strategic, anti-competitive, anti-productivity and anti-climate move that will make it harder to do business and much harder for people on low wages to take a job where they have to commute between the two big cities of Edinburgh and Glasgow. To put this move into context, the equivalent return journey over 50 miles in Ireland costs just €19.50 or £16.65. In certain states in Australia public transport is free. Do our government leaders really think that such moves are strategic and set our country up for success?

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The Free Society, What Is Wrong With Kids Today, What We, their parents, Have Done Profoundly Wrong, and The Amnesia Cycle of History. "What is wrong with kids today, is that they have no clear idea with what an unfree society is, hence, "Queers for Palestine". It's a curious thing that people don't understand what it's like to live under Hamas. They don't really understand what the Iranian Revolution aspires to do. They don't understand what is like to live in Stalin's Soviet Union or in Mao's China. If they understood that, then they might be more reluctant to do the kind of things that many students attempted to do these days [...] It is amazing how totalitarian behaviours can creep into a free society. And I think that we've just failed to communicate on freedom as a phenomenon to this generation." Why now, we, we as parents, have "failed to communicate on freedom as a phenomenon", that is another, more paramount of an issue. And, it is NOT "amazing how totalitarian behaviours can creep into a free society", since our political leaders often nurture such behaviours, and since "they" made sure that we are stripped from critical thinking skills. | Alliance for Responsible Citizenship Nial Ferguson Konstantin Kisin #FreeSociety #Freedom #CriticalThinking https://lnkd.in/dMCrhwxk

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Investment in defence technology start-ups is picking up speed in Europe, says the head of Nato’s €1bn venture capital fund, who believes the region can produce several potential multibillion-dollar companies to rival those in the US. The Nato Innovation Fund kicked off its investment programme at the start of this year by backing four start-ups directly, including Wales-based Space Forge with its plans to produce novel materials in space. The fund also put money in four VC funds that focus on “deep tech”, such as robotics, artificial intelligence, space and energy. https://lnkd.in/eqyZcjvj

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Following a comprehensive strategic review by its Board, Witan Investment Trust plc’s assets are to be rolled into Alliance Trust to form Alliance Witan in the UK’s largest ever investment trust merger 👉 https://lnkd.in/dnTxHcJK With net assets of around £5 billion, the two Boards believe the combination of Alliance and Witan will create an even more liquid and cost efficient one-stop shop for global equities, while Alliance Trust’s award-winning multi-manager investment strategy remains unchanged. "A combination of the two companies made a lot of sense and represents continuity for both sets of shareholders. Witan has a large pool of assets. And when combined with ours, the net asset value of the combined company will be in excess of £5 billion." — Dean Buckley, Alliance Trust

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Is Europe Trump Proofed? I joined the BBC today to discuss the US election’s market and global impact and the shivers down the backs of many around the world. Tariffs of course are something that the rest of the world is not looking forward to under Trump 2.0. In the UK and in Europe, we're really caught in the crosshairs of the trade relationship between the US and China. I think the most significant implication is what it means for security and defence and the fact that even though Europe has had time to prepare for Trump, it's not clear that much has been done. #Europe #USElection #GlobalImpact #Trump2024 #Tariffs #TradeWars #USChinaRelations #Security #Defence #EuropePreparedness #BBCInterview #MarketImpact #Geopolitics #Trump #US2024 #DonaldTrump

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Scrap AiM? Things are really hotting up in the war of words over London's junior market. "The UK’s capital markets are “not fit for purpose” and require “radical surgery”, the report from the Tony Blair Institute for Global Change and the centre-right think-tank Onward said." “Aim has failed in its stated purpose of providing a home for scaling businesses. It should be fully merged with the LSE’s main market, with a special route to listing specifically for high-growth firms in emerging technology sectors. Sorry to say, but I believe that is also wrong and it's not AiM's fault. The solutions put forward are always structural, like merging AiM with LSE makes it all better. The reason that companies are not going to AiM is that it is expensive and the reason that investors are not interested is because it's boring and has been engineered by the regulators to be so. Let's say you start a brokerage to specialise in AiM Securities because you and your investors are passionate about UK businesses and they have a risk tolerance. Firstly you will have to plaster your website with risk warnings about the hideous dangers that lurk in these horrible little businesses... and that, more than likely, you will lose all of your money. Then, when something inevitably happens with one of these small businesses (which is the nature of trading in small businesses), something the management has done but is nothing to do with you.....you will spend months justifying why you allowed people to invest in the business which was clearly a bad and dodgy business.. because the FCA have the greatest hindsight risk management tools you could imagine and will bring those to bear. ..and if they come for you as a Senior Manager you could be personally liable. So, my friend, would you build a business in the UK to allow people to bet on small UK businesses when you can just just take your coms from people trading Tesla? CEOs could not give a monkeys what you call the market, what the structure is or where it is frankly. They want the best deal for their shareholders in costs to list, cost of the ongoing compliance with regulations, liquidity and access to capital. Reforming the structure of UK markets is a start but it will not save them, reforming how people invest in them will. The reason AiM was great in 2006/2007 was that it was exciting. Shares going from 3p to 30p was not unusual. There was a community of investors ripping companies apart and building them up. Like it or not, risk capital is in competition with Crypto because crypto is more exciting. It is, of course, monumentally more risky, and one would have thought the FCA would prefer you gamble on a UK business swinging for the fences than a frog meme coin created by a kid 'for lols'? #AiM #LSE

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DAILY DROP As the FT reports that the former UK MPC rate-setter Michael Saunders (now of Oxford Economics) has set out an argument that the Bank of England could cut rates faster than currently expected (still to a landing rate in the 3.25% to 3.5% range - Howard Marks of Oak Tree suggesting between 3% and 4% in the US post Fed cuts), so the British Chamber of Commerce senior economist warns that the rate of UK inflation will rise & stay above target until 2027, in fact rising back to closer to 3% by YE24 so reference rates will be cut less than currently forecast. Who's right? Well I'm more on the BCC side than I am on that of my once former colleague (Salomon Brothers all those years ago) but both paths ultimately lead to the same landing spot - rates higher/normal for longer & confirmation that the free money decade (15 years?) is well & truly over. As we inch towards the defining weeks of the US election campaign, the sideshows are fading & it's back to all about the economy isn't it? Biden/Harris look set to block Nippon Steel's proposed $14.1bn takeover of US Steel (US Steel stock down over 20% as a result), a move also backed by both The Donald & The Reps, as well as by the Pennsylvania (vital election swing state) based United Steelworkers union - a very rare case of unity on any issue in a very divided US. All eyes will be on The Donald later today (just as he likes it!) as he delivers a speech at the Economy Club of New York - will he stay on topic & force the dialogue back on to the economy, or continue to aim personal jibes (which aren't sticking!) at Harris as she continues to ride the wave of positive poll progress post the recent DNC? Interesting viewing/reading for sure. Markets softened on fears of slowing jobs & the risk of a harder than the softest of landings, oil down on fears of reduced demand as a result of that harder landing, Volvo rows back on its previous commitment to be an exclusively electric manufacturer by 2030, VW talks of painful cost-cutting to come as a result of weakening global demand amidst reports that Swiss luxury watchmakers are turning to government financial help programmes to help them weather a downturn in demand. Interesting times. "No-one is so brave that he is not disturbed by something unexpected." Julius Caesar

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In 10.2008-01.2009 I was the highest Sharpe trader in the entire Deutsche Bank, read all about it in my upcoming book

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📣 Today we launch the British Private Equity & Venture Capital Association (BVCA) Manifesto for Growth, along with new data from our report on #investment activity. 🗳️Whoever wins the next General Election will need to introduce policies that attract #privateequity and #venturecapital investment into the UK. And our Manifesto outlines measures to achieve this.  📈Private capital is an essential #partnerforgrowth supporting investment across the nations and the regions of the UK Read our manifesto here https://lnkd.in/gHC6nP73

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H2 2024 G10 Currency Outlook - Courtesy of Caxton. The first half of 2024 has brought about significant changes in the currency market, with the US dollar strengthening due to persistent inflation. [1, 2] Despite initial market expectations of swift interest rate cuts, central banks in major economies have been cautious. [3, 4] Here's a look at the outlook for major G10 currencies for the second half of 2024: British Pound (GBP): After reaching the Bank of England's 2% target, inflation in the UK is expected to continue to fall. [5] The market anticipates the BoE to cut interest rates twice before the end of the year, potentially in August and November/December. [6] These cuts, combined with a widening interest rate differential with the US, could lead to a softening of GBP, particularly against USD. [7] GBPEUR is expected to remain relatively stable due to political concerns within the Eurozone. [8] Euro (EUR): The Euro has weakened following the European Parliament elections in June and the ECB's interest rate cut. [9] While further ECB rate cuts are anticipated, the weak Eurozone economy may limit the extent of these cuts. [10, 11] Political uncertainty within the Eurozone continues to weigh on the Euro's valuation. [4, 9] US Dollar (USD): The US dollar has strengthened year-to-date due to higher-than-expected inflation. [2] The Federal Reserve is expected to cut interest rates at least once in Q4, likely in September or December. [12] Despite the anticipated rate cut, the US economy's relative strength compared to other major economies suggests a strong finish for the USD in 2024. [12, 13] Japanese Yen (JPY): The Bank of Japan is expected to raise interest rates this year, but the increase is likely to be minimal and have little impact on the Yen's valuation. [14] The Yen is expected to remain weak in the coming months. [14] Australian Dollar (AUD): Despite slow economic growth, the Reserve Bank of Australia has signaled a reluctance to cut interest rates. [15] This hawkish stance, coupled with low unemployment and high service inflation, suggests a potential strengthening of AUD, particularly against GBP. [16] New Zealand Dollar (NZD): The NZD has underperformed expectations due to falling inflation and rising unemployment. [17] The market anticipates rate cuts by the Reserve Bank of New Zealand before the end of the year. [17] The outlook for NZD remains uncertain and will depend on upcoming inflation and unemployment data. [18] Swiss Franc (CHF): The Swiss Franc has weakened following interest rate cuts by the Swiss National Bank. [19] Further rate cuts are anticipated as Swiss inflation remains below the SNB's target. [19] Reference: https://lnkd.in/eW_VuCAu

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