Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>UK retail sales failed to recover from the November lockdown. Stricter prohibitions on activity in January have caused spending on cards to collapse back to May levels, which will be especially bleak for retailers who never enjoyed a festive consumption binge.</li>
<li>Mobility metrics have also stepped down in the new year, and now indicate a GDP retreat to its June levels. I assume the same in my bottom-of-consensus forecast, where the trough is shallower but is likely to have a flatter recovery than the first lockdown.</li>
</ul>


UK retail sales failed to recover from the November lockdown. Stricter prohibitions on activity in January have caused spending on cards to collapse back to May levels, which will be especially bleak for retailers who never enjoyed a festive consumption binge.
Mobility metrics have also stepped down in the new year, and now indicate a GDP retreat to its June levels. I assume the same in my bottom-of-consensus forecast, where the trough is shallower but is likely to have a flatter recovery than the first lockdown.


<ul>
<li>Upside news in the UK CPI and RPI inflation rates was concentrated in areas that do not exhibit a substantial payback relationship into Januarys. The resulting step higher is especially pronounced on the RPI where house price growth remains spiked to excess.</li>
<li>Despite the latest rise, underlying pressures appear to remain muted, with the median rate at 1.4% y-o-y not yet breaking the downtrend. Headline rates should fly through this on April base effects, but the subsequent peak above 2% is likely to be short-lived.</li>
</ul>


Upside news in the UK CPI and RPI inflation rates was concentrated in areas that do not exhibit a substantial payback relationship into Januarys. The resulting step higher is especially pronounced on the RPI where house price growth remains spiked to excess.
Despite the latest rise, underlying pressures appear to remain muted, with the median rate at 1.4% y-o-y not yet breaking the downtrend. Headline rates should fly through this on April base effects, but the subsequent peak above 2% is likely to be short-lived.


<ul>
<li>The UK and EU negotiators have agreed a deal on their future trading relationship, broadly along the lines of the compromise we’ve expected for over a year. It should be approved by both parliaments, albeit with the European leg as a belated rubber stamp.</li>
<li>This deal remains a skinny one, focussed on goods, despite the fat legal text. Additional trade frictions are still likely to weigh on growth in 2021 and beyond, although such economic damage is small beer compared to the Covid-related catastrophe.</li>
</ul>


The UK and EU negotiators have agreed a deal on their future trading relationship, broadly along the lines of the compromise we’ve expected for over a year. It should be approved by both parliaments, albeit with the European leg as a belated rubber stamp.
This deal remains a skinny one, focussed on goods, despite the fat legal text. Additional trade frictions are still likely to weigh on growth in 2021 and beyond, although such economic damage is small beer compared to the Covid-related catastrophe.


Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Always The Magician: Founded in 2010, Metro Bank plc (MTRO.LN) [Metro] was the first de novo high street bank in the United Kingdom in over 150 years. After a period of rapid growth, Metro ran into some difficulties. Over the years, we have learned never to count out Founder Vernon Hill (former Chair and Founder of former Commerce Bancorp in New Jersey) who always walks between the raindrops. Metro has moved forward with the sale of its mortgage portfolio to Natwest Group plc on December 18, 2020; and *Large Capital Gain: The sold Metro portfolio should provide the company with and GBP 83mm gain on sale – representing 42% of market-cap. The sale of 20% of Metro’s loan portfolio also removes Metro’s need to issue expensive MREL debt versus its prior debt guidance issuance of between GBP 200-300 mn.

 *Always The Magician: Founded in 2010, Metro Bank plc (MTRO.LN) [Metro] was the first de novo high street bank in the United Kingdom in over 150 years. After a period of rapid growth, Metro ran into some difficulties. Over the years, we have learned never to count out Founder Vernon Hill (former Chair and Founder of former Commerce Bancorp in New Jersey) who always walks between the raindrops. Metro has moved forward with the sale of its mortgage portfolio to Natwest Group plc on December 18, 2020; and *Large Capital Gain: The sold Metro portfolio should provide the company with and GBP 83mm gain on sale – representing 42% of market-cap. The sale of 20% of Metro’s loan portfolio also removes Metro’s need to issue expensive MREL debt versus its prior debt guidance issuance of between GBP 200-300 mn. 

<ul>
<li>UK retail sales were broadly battered by the second national lockdown in November, with a 3.8% m-o-m headline decline. High demand at food stores and weakness in clothing and fuel was unsurprising, but non-store sales failed to capitalise further.</li>
<li>The sector has reversed its recent gains by returning to the level from between June and July. A repeat of March’s GDP elasticity or a similar overall reversal would be less bleak than I previously assumed, but remains recessionary over the winter.</li>
</ul>


UK retail sales were broadly battered by the second national lockdown in November, with a 3.8% m-o-m headline decline. High demand at food stores and weakness in clothing and fuel was unsurprising, but non-store sales failed to capitalise further.
The sector has reversed its recent gains by returning to the level from between June and July. A repeat of March’s GDP elasticity or a similar overall reversal would be less bleak than I previously assumed, but remains recessionary over the winter.


United Kingdom

SPDR FTSE UK All Share ETF is an open ended, UCITS IV compliant exchange traded fund, domiciled in Ireland. The fund's objective is to track the performance of FTSE All Share Index. The Fund invests in physical securities in the index.

SPDR FTSE UK All Share (FTAL LN)

UK: No Sales Binge Between Prohibitions

UK retail sales failed to recover from the November lockdown. Mobility metrics now indicate a GDP retreat in Jan-21 to its June levels. I remain...

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UK: Inflation Stepped up in Dec-20

Upside news in UK inflation is unlikely to unwind, but underlying pressures remain muted. April base effects will drive headline rates higher,...

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Brexit: Yippee Ki Yay, Negotiators

The UK-EU negotiators agreed a skinny goods-focussed deal. Trade frictions are still set to weigh on growth in 2021 and beyond, although the damage...

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Metro Bank Plc – Emrys

METRO BANK PLC: Metro was the first de novo high street bank in the United Kingdom in over 150 years. Metro ran into some difficulties, and moved...

Thomas J. Monaco

UK: Retail Reverses Gains Since June

UK retail sales were battered by the second national lockdown in November. A repeat of March’s elasticities or a similar overall reversal in GDP...

Phil Rush