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This is a City AM Studios production.
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Hello and welcome back to Business as Usual with me, Martin Kimber.
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And me, Matt Kenyon.
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Coming up on the podcast today, Revolute boss Nick Staronsky is sued by a luxury yacht broker for 17.5 million euros.
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BP blames government policy in part for ditching its Naughty oil field.
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Can Andy Burnham reverse Aberdeen's oil workers' fortunes and drill baby drill?
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Plus, Apple launches a major legal challenge against a home office.
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So it may be August, but the corporate stories are coming in thick and fast.
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So thank God that joining us to make sense of all of it is our capital markets connoisseur, Simon Hunt.
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Good morning.
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Welcome back, Simon.
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Simon, let's kick off with this Nick Stransky news.
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Why is a yacht broker taking him to court?
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So, uh a while back, Stransky, the founder of Revolute, bought a massive um 350 million euro super yacht.
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Um I had a look at some of the photos earlier, and it's absolutely gorgeous.
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It is a 102-meter super yacht called Nixie, and it features a glass-bottomed infinity pool.
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But it he uh was approached by this yacht dealer who set him up with this uh guy who's offloading this yacht, and it transpires that, at least according to Cecil Wright, I think his name is, the the guy who who's the the dealer behind the yacht, Sarunsky then bypassed him and went straight to the yacht owner in order to swerve the commission fee that you'd have to pay if he went through the very challenge a bank approach to a financial problem.
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Yeah, it's sort of like when you get a cleaner via a cleaning service and then you say, I'll have to.
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So I should have your WhatsApp.
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Yeah, yeah, yeah.
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Not that I've done that.
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No.
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I suppose I mean I mean that 17.5 million euros sounds like a lot.
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The 350 uh million price for the yacht sounds like a lot.
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But I suppose even a week ago, we had analysts talking up Revolute as a potential trillion dollar company at some point in the next 10 years.
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So it might be a drop in the ocean.
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It is it is a drop in the very good nautical fund there.
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Um but I mean you I mean, I'm obviously not going to come to his defense because he might end up in court over this now.
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But if someone was selling you something and they and you had to pay 17 million commission fee, you might think, hmm, is there a way I can get around that?
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We've been reporting a lot, particularly on our morning live blogs, on the wildly fluctuating oil prices of late and some of the surges they've been coming to.
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What has this meant for BP's profit margins?
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Well, perhaps unsurprisingly, they are up, they are through the roof.
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Uh, you know, energy companies have been one of the rare um beneficiaries of of uh the sort of turmoil uh in Iran because shorter supplies means the price goes up, means they can charge more, means they put more dollar in the bank.
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Uh so their profit is for the first half of this year is has pretty much doubled.
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Uh, but it's less a good of a good story for the UK because BP has said uh they intend to offload their uh North Sea assets.
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Um the chief executive Meg O'Neill was uh interviewed by uh CNBC earlier, and she said when we look when we look at how it fits into our portfolio, it just doesn't compete for capital.
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So as far as she is concerned, as far as soon as the BP can get rid of their UK assets, the better.
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That's slightly unnerving because it's the the North Sea and North Sea drilling is becoming a bit of a hot button issue.
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It's being looked at as one of the ways of alleviating our incredibly high energy prices, particularly for companies.
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Who would they offload this to?
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Why why does it not seem like a good deal for BP?
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Well, I don't forget the uh costs and the sort of taxes involved uh for drilling in the UK are much higher than it would be, you know, in say the Middle East or in other places like that.
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Um so just that the margins involved are much thinner.
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And so if if you're BP and you're making massive profit at the moment, you just you're not that worried about um your the smaller parts of your portfolio that just aren't generating uh the same level of income as the bigger ones.
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The BP chief executive also said that it's a matter of consistency, right?
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So they want to know what the tax situation is going to be for the foreseeable five, ten years.
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And yeah, and they just don't know.
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And and also it's it's exhausting the whole sort of back and forth we've seen over the past few months about North Sea oil licenses.
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Uh will will there be a ban on any more drilling forever?
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Will some new licenses be granted?
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Will all of them be granted?
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Um, and these are, you know, it is true to say that we do have resources in the in the North Sea, but they are relatively small compared to places in the Middle East, compared to the US and Canada.
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And so is it really worth the effort of having to put up with all of these squabbles with all this uncertainty if you're an oil major like BP?
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Just finally, Simon, why are companies whose customers are mostly retired booming right now?
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Yeah, so I've uh put together what I'm calling the OAP ETF, a collection of 10 London listed stocks, uh, and they have both outperformed the FTSE and the NASDAQ so far this year.
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So my OAP ETF is up 18% year to date.
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Oh, congratulations.
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Uh whereas the NASDAQ, sorry, I didn't actually invest in it, but the NASDAQ is up 13%.
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It's all the brainwork.
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And the FTSE 350 uh is up nine percent.
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So I've got stocks in there like um Saga, who do the you know old people cruises, like Smith and Nephew, who do what's called orthopedic reconstruction, in other words, hip and knee replacements.
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Smith and nephew is a brilliant name for a Victorian company.
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Yes, yeah, very much so.
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Yeah.
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It almost sounds like it's uh sort of like a detective duo or something, doesn't it?
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But also got obviously the big pension and annuities firms in there, like LNG, Aviva, and healthcare firms, Primar Health Properties and Target Healthcare that do care homes.
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So if you bet on old people, you seem to be doing pretty well for yourself.
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Um I spoke to Russ Mould, uh a friend of CCAM.
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Great man.
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Um and he said um part of this is investor sentiment has soured a little bit on tech stocks the last few weeks.
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There's been concern about is is there a bit of a bubble?
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Are they a bit overvalued?
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And in times of uncertainty like this, you can rely on the dependent old people because their spending is fairly consistent, they generally are wealthier, they have quite a lot of money.
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And because their income is is obviously coming almost like in a lot of cases exclusively from uh welfare benefits paid out of taxpayers' uh um contributions.
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Yeah, so yeah, so you know it's well known that the the boomer generation has been one of the most sort of economically successful, so it perhaps shouldn't be a huge surprise that boomer-oriented stocks are also doing pretty well.
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Simon Hunt, thank you very much for joining us.
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Well, it's a day that ends in a Y, which means it's time for more budget speculation.
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Uh, one sector which we'll be closely watching uh this year's autumn statement is the banking industry, an area that has so far avoided higher fees with some rare successful lobbying of the Treasury and the former Chancellor Rachel Reeves.
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Joining us to discuss where the new Chancellor John Healy might get the billions from to fund all of Andy Burnham's commitments is Evelyn Gomez Lichti, a multi-asset strategist at the Japanese bank Mizuho.
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Welcome to the studio.
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Thank you.
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Thank you for having me.
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Who do you think the winners and losers are going to be of this budget?
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So, in terms of winners and losers, I think Burnham has been very clear he wants to be much more active than Starmer.
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And he has already announced his some of some cost of living measures, and I I wouldn't discard any sort of other measures to try to help the households with the ongoing energy price shock.
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Um, but yeah, I I don't think that we're gonna get any sort of major change.
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And as I said, the budget is already very constrained.
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Headroom has probably decreased quite a lot from what I've seen, just the move on guild yields and the borrowing figures here to date, which I mean they're not too off compared to the OBR forecast, but they still point to a decrease in headroom.
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Uh I estimated from the 23.6 that we had in March towards something closer to 10 potentially.
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Um, so I think the plan for him will be to reiterate fiscal rules and on the other hand stress again his long-term investment commitment.
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So, in terms of the stability rule, and sorry, this answer is come becoming a little bit too long.
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I think uh probably the winners would be more on the investment side of the mandate.
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Perhaps we get some sort of talk about all these housing reforms that he wants to do and how he wants to put it into the, you know, the more investment plans, capital spending.
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Perhaps we get some increase in defense spending, especially given the the war and the conflict that we're seeing in the Middle East.
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Uh, but that probably is going to be most of it going to the capital spending part of the mandate.
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So investment should be the big winner.
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And I think maybe the cost of living, because it needs perhaps broader reforms, it may be a bit more conservative than what people may be expecting, or that's at least my view.
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But I think it's definitely true that this budget, partly because it's so early on in his tenure and only be a few months in, probably, as you say, will be more uh conservative.
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But also you alluded to his having a more maximalist agenda.
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Do you think that he's potentially just kicking quite a lot of bigger government spending down the line uh into say next year when we might see even more constraints on uh the public purse?
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One of the things I'm worried about is uh Burnham is coming into a mandate where he only has around two years and a half left until the next elections.
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So I think it's difficult to um encapsulate all these plans that are very long-term reforms in very little time.
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And this is just the nature of how these reforms are.
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Um investment takes time, changes in the in in the country, in in parts of the infrastructure of the country, and especially these sh changes in in direction that he wants to deliver in in a positive way, like for example, building all his council uh housing plans, which I think could be a good thing, but that takes time and that needs a longer horizon in mind.
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So going back to the can kicking and comment, I think autumn is certainly too early to deliver something like that.
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Obviously, all these speculation has been uh slashed right now, but I wouldn't be surprised if uh we get some sort of early election or snap election next year if the polls remain um in a good position for the Labour Party.
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And from what I've seen this week, actually, they've had some good polling and they've uh been able to poll almost above reform.
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Yeah, and possibly even above reform in a couple of polls.
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Yeah.
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So that would secure him more time.
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If he's able to call an early election next year and secure another five years mandate, that would give him probably more time.
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You're absolutely right about you know, turning around an economy is like turning around an oil tanker, right?
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You know, it doesn't happen very quickly, and yet we have this electorate that seems to be craving uh instant change and and immediate change, and and and I think that's probably where reformers seeing their positive numbers from.
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Just finally, um Rachel Reeves's autumn statement last year was was kind of outdated by the time we hit sort of February-March because the war in Iran kicked off and that ate into her fiscal headroom.
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We've just seen the US intervene in Japan on the yen, uh, and there's a little bit of a debt crisis starting to build over there, which can have ripple effects across the world economy.
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Is there a a risk that this budget coming in October will be quite quickly out of date if Britain continues to be buffeted by these external factors?
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Yes, that's a big risk.
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And in fact, I think if you go to any trading floor today, you will see that oil, oil, oil is the most important thing.
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It's true we had this yen intervention story, and that has given us a lot of uh opportunities to talk about our strength, which is the yen and the Japanese market, which is great for us.
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Um but it goes to show that um the UK autumn's uh budget is within a global context where there's a lot of uncertainty, and this is not only relevant for Burnham and and the new government, but also for the Bank of England, for example, and whether they want to hike or hold.
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Um given that we we really don't know what's going to happen.
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Uh so can the autumn budget um be outdated very quickly if the current conditions remain?
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Yes, for sure.
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If um we get some sort of resolution in the Middle East, then I think that would be a longer lasting story.
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Evelyn Gomez, Lichti, multi-asset strategist at Mizuho Bank.
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Thank you very much for joining us.
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And finally, Apple is going after the Home Office with a new legal challenge.
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This follows government efforts to force the tech giant to hand over encrypted user data.
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So the British state wants a backdoor into the contents of iCloud accounts, which would obviously have quite major implications for user privacy.
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Our professional services editor Maria Ward Brennan is all across this.
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What's going on here?
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Yes, there's another sort of diplomatic row about to kick off between Washington and London.
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So this is the second uh filing of this.
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Um Apple initially went to the court to the tribunal um last year when it first came out that the government, the Home Office, wanted to sort of seek um under the it's called the Snooper Charter.
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Um, and obviously Apple's very firmly against this, wanted to seek legal action against it.
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But because of the diplomatic um relations getting involved, London quietly went went a bit quiet on it.
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And even though it was supposed to be in a tribunal early this year, never went ahead.
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Um but then lo and behold, here we go again, and they issued uh Apple with a second notice.
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And obviously, Applebean Apple has issued another legal filing to the special tribunal that focuses on this.
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So we can imagine that obviously you know diplomatic relations will get back involved, or it actually might go to the tribunal this time around.
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Apple have said that they've never built a skeleton key for any of their uh systems and and they never will.
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Uh if through some inexplicable way the Home Office were to get their way and and to kind of force them, that they would presumably have to comply, or or what would happen then?
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I I feel like they will fight this tooth and nail.
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Apple is that's the whole bread and butter, is protect protective, encrypted data that no one can break.
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And as we spoke about earlier, there was a case in the US where the FBI was involved, and there's been some horrific cases along the way where people have gone missing and there's murder charges, and yet they will not break their data protection for those.
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Because again, once you break one, you break it all for everything, and then it defeats the purpose of what they have to offer of a really encrypted sort of protection against for their users.
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That's a bread and butter.
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I suppose if we take this to its logical conclusion, and I suppose the the main example of when Apple was forced to comply with a kind of European regulation was when they had to switch all of their iPhone charges to uh to USB a few years ago to comply with EU rules.
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Yes.
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This feels, as you've alluded to, more philosophical, more fundamental.
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Let's say if you were to put to sort of look into the crystal ball of this, and let's say they lose this legal challenge and a British court says you have to hand over the data.
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What what what do you think the sort of extreme scenarios are like?
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Could we just see an instance where Apple just pulls out of the UK?
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Is that how far it could go?
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I do think that because already you have to keep in mind, because of the initial instance of this case back last year, they already suspended and disabled their advantaged data protection in the UK.
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So they've already made moves and threatened the UK going, right, well, if you want to play ball, we can pull out.
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And given the fact that the UK market is obviously a very important market to them, it's not enough to jeopardize their entire branding around the world and make it open to one case.
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You can easily pull out one market and make it a signal to the fact that you know the backlash alone from the public will be enough that the government would have to maybe do a U-turn, you could expect.
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That's true, because if I suppose if they make the precedent here, many other governments, particularly in Europe, but also I mean in all over the world, could could demand the same thing and suddenly they they've broken that precedent and anything could happen.
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It's game over, and it's again, it's their branding, it's their their entire bread and butter.
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And once um, because that that's sort of being the thing.
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Again, if they can turn around to the FBI and say, listen, I'm I'm sorry about that missing person that once we break this key here and give it over, you could find that person because it was tracking it.
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Um but if they can turn around and say, sorry, we can't get involved in that, it kind of shows you that where they draw the line on this matter.
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Just finally, it's also interesting how much more muscular the White House has become on backing its tech stocks to the absolute hilt.
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So that example with the with the FBI, I can't remember if that was a Democratic or a Republican White House.
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I know he's sort of sapping down, but he has been sort of in the ear of Donald Trump for for such a long time.
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Um so you know you can imagine that they've sort of obviously tipped away of putting London back into their place, if you if you may.
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Well, we shall be watching the outcome of this with great interest, if only because I don't want to have to give back my iPhone.
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I don't want Apple to pull out.
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Apple ecosystem.
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They have locked me in.
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Yes.
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Oh, sorry, Mr.
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Android.
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Yeah, so cool.
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Well, thank you very much.
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Thank you.
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Well, that's just about all we have time for today.
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Thank you very much for listening to or watching Business as Usual.
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As ever, please do not forget to subscribe to CTAM's various daily and weekly newsletters, and of course, don't forget to download our free app.
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It's got everything those expensive apps have except ours is free.
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We'll be back in your podcast feeds tomorrow at 6am.
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But for now, goodbye.
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Goodbye.
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This is a City AM Studios production.
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Hello and welcome back to Business as Usual with me, Martin Kimber.
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And me, Matt Kenyon.
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Coming up on the podcast today, Revolute boss Nick Staronsky is sued by a luxury yacht broker for 17.5 million euros.
00:00:16.800 --> 00:00:21.039
BP blames government policy in part for ditching its Naughty oil field.
00:00:21.199 --> 00:00:26.480
Can Andy Burnham reverse Aberdeen's oil workers' fortunes and drill baby drill?
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Plus, Apple launches a major legal challenge against a home office.
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So it may be August, but the corporate stories are coming in thick and fast.
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So thank God that joining us to make sense of all of it is our capital markets connoisseur, Simon Hunt.
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Good morning.
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Welcome back, Simon.
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Simon, let's kick off with this Nick Stransky news.
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Why is a yacht broker taking him to court?
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So, uh a while back, Stransky, the founder of Revolute, bought a massive um 350 million euro super yacht.
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Um I had a look at some of the photos earlier, and it's absolutely gorgeous.
00:01:03.359 --> 00:01:11.200
It is a 102-meter super yacht called Nixie, and it features a glass-bottomed infinity pool.
00:01:11.359 --> 00:01:36.560
But it he uh was approached by this yacht dealer who set him up with this uh guy who's offloading this yacht, and it transpires that, at least according to Cecil Wright, I think his name is, the the guy who who's the the dealer behind the yacht, Sarunsky then bypassed him and went straight to the yacht owner in order to swerve the commission fee that you'd have to pay if he went through the very challenge a bank approach to a financial problem.
00:01:37.040 --> 00:01:40.719
Yeah, it's sort of like when you get a cleaner via a cleaning service and then you say, I'll have to.
00:01:40.879 --> 00:01:41.920
So I should have your WhatsApp.
00:01:42.159 --> 00:01:42.959
Yeah, yeah, yeah.
00:01:43.120 --> 00:01:44.079
Not that I've done that.
00:01:44.480 --> 00:01:44.799
No.
00:01:45.200 --> 00:01:49.040
I suppose I mean I mean that 17.5 million euros sounds like a lot.
00:01:49.280 --> 00:01:52.319
The 350 uh million price for the yacht sounds like a lot.
00:01:52.400 --> 00:01:58.480
But I suppose even a week ago, we had analysts talking up Revolute as a potential trillion dollar company at some point in the next 10 years.
00:01:58.719 --> 00:02:00.879
So it might be a drop in the ocean.
00:02:01.120 --> 00:02:04.079
It is it is a drop in the very good nautical fund there.
00:02:04.400 --> 00:02:09.439
Um but I mean you I mean, I'm obviously not going to come to his defense because he might end up in court over this now.
00:02:09.599 --> 00:02:17.280
But if someone was selling you something and they and you had to pay 17 million commission fee, you might think, hmm, is there a way I can get around that?
00:02:17.680 --> 00:02:25.599
We've been reporting a lot, particularly on our morning live blogs, on the wildly fluctuating oil prices of late and some of the surges they've been coming to.
00:02:25.759 --> 00:02:28.319
What has this meant for BP's profit margins?
00:02:28.639 --> 00:02:32.240
Well, perhaps unsurprisingly, they are up, they are through the roof.
00:02:32.400 --> 00:02:47.280
Uh, you know, energy companies have been one of the rare um beneficiaries of of uh the sort of turmoil uh in Iran because shorter supplies means the price goes up, means they can charge more, means they put more dollar in the bank.
00:02:47.439 --> 00:02:52.319
Uh so their profit is for the first half of this year is has pretty much doubled.
00:02:52.400 --> 00:03:02.240
Uh, but it's less a good of a good story for the UK because BP has said uh they intend to offload their uh North Sea assets.
00:03:02.479 --> 00:03:14.639
Um the chief executive Meg O'Neill was uh interviewed by uh CNBC earlier, and she said when we look when we look at how it fits into our portfolio, it just doesn't compete for capital.
00:03:14.800 --> 00:03:20.080
So as far as she is concerned, as far as soon as the BP can get rid of their UK assets, the better.
00:03:20.319 --> 00:03:24.639
That's slightly unnerving because it's the the North Sea and North Sea drilling is becoming a bit of a hot button issue.
00:03:24.800 --> 00:03:31.280
It's being looked at as one of the ways of alleviating our incredibly high energy prices, particularly for companies.
00:03:31.759 --> 00:03:33.199
Who would they offload this to?
00:03:33.439 --> 00:03:36.000
Why why does it not seem like a good deal for BP?
00:03:36.319 --> 00:03:46.879
Well, I don't forget the uh costs and the sort of taxes involved uh for drilling in the UK are much higher than it would be, you know, in say the Middle East or in other places like that.
00:03:47.120 --> 00:03:51.199
Um so just that the margins involved are much thinner.
00:03:51.360 --> 00:04:03.439
And so if if you're BP and you're making massive profit at the moment, you just you're not that worried about um your the smaller parts of your portfolio that just aren't generating uh the same level of income as the bigger ones.
00:04:03.680 --> 00:04:07.520
The BP chief executive also said that it's a matter of consistency, right?
00:04:07.759 --> 00:04:12.159
So they want to know what the tax situation is going to be for the foreseeable five, ten years.
00:04:12.240 --> 00:04:13.680
And yeah, and they just don't know.
00:04:14.000 --> 00:04:20.000
And and also it's it's exhausting the whole sort of back and forth we've seen over the past few months about North Sea oil licenses.
00:04:20.399 --> 00:04:23.680
Uh will will there be a ban on any more drilling forever?
00:04:23.839 --> 00:04:25.519
Will some new licenses be granted?
00:04:25.680 --> 00:04:27.120
Will all of them be granted?
00:04:27.279 --> 00:04:37.759
Um, and these are, you know, it is true to say that we do have resources in the in the North Sea, but they are relatively small compared to places in the Middle East, compared to the US and Canada.
00:04:37.920 --> 00:04:45.279
And so is it really worth the effort of having to put up with all of these squabbles with all this uncertainty if you're an oil major like BP?
00:04:45.600 --> 00:04:51.360
Just finally, Simon, why are companies whose customers are mostly retired booming right now?
00:04:51.680 --> 00:05:04.160
Yeah, so I've uh put together what I'm calling the OAP ETF, a collection of 10 London listed stocks, uh, and they have both outperformed the FTSE and the NASDAQ so far this year.
00:05:04.319 --> 00:05:07.680
So my OAP ETF is up 18% year to date.
00:05:07.839 --> 00:05:08.480
Oh, congratulations.
00:05:08.639 --> 00:05:12.800
Uh whereas the NASDAQ, sorry, I didn't actually invest in it, but the NASDAQ is up 13%.
00:05:13.199 --> 00:05:13.839
It's all the brainwork.
00:05:14.000 --> 00:05:16.959
And the FTSE 350 uh is up nine percent.
00:05:17.040 --> 00:05:28.160
So I've got stocks in there like um Saga, who do the you know old people cruises, like Smith and Nephew, who do what's called orthopedic reconstruction, in other words, hip and knee replacements.
00:05:28.399 --> 00:05:31.439
Smith and nephew is a brilliant name for a Victorian company.
00:05:31.680 --> 00:05:32.800
Yes, yeah, very much so.
00:05:32.959 --> 00:05:33.199
Yeah.
00:05:33.519 --> 00:05:37.120
It almost sounds like it's uh sort of like a detective duo or something, doesn't it?
00:05:37.360 --> 00:05:48.079
But also got obviously the big pension and annuities firms in there, like LNG, Aviva, and healthcare firms, Primar Health Properties and Target Healthcare that do care homes.
00:05:48.240 --> 00:05:52.560
So if you bet on old people, you seem to be doing pretty well for yourself.
00:05:52.720 --> 00:05:56.800
Um I spoke to Russ Mould, uh a friend of CCAM.
00:05:57.120 --> 00:05:57.519
Great man.
00:05:57.680 --> 00:06:04.800
Um and he said um part of this is investor sentiment has soured a little bit on tech stocks the last few weeks.
00:06:04.959 --> 00:06:07.040
There's been concern about is is there a bit of a bubble?
00:06:07.120 --> 00:06:08.560
Are they a bit overvalued?
00:06:08.720 --> 00:06:19.680
And in times of uncertainty like this, you can rely on the dependent old people because their spending is fairly consistent, they generally are wealthier, they have quite a lot of money.
00:06:20.000 --> 00:06:30.959
And because their income is is obviously coming almost like in a lot of cases exclusively from uh welfare benefits paid out of taxpayers' uh um contributions.
00:06:31.279 --> 00:06:42.319
Yeah, so yeah, so you know it's well known that the the boomer generation has been one of the most sort of economically successful, so it perhaps shouldn't be a huge surprise that boomer-oriented stocks are also doing pretty well.
00:06:42.639 --> 00:06:45.040
Simon Hunt, thank you very much for joining us.
00:06:47.120 --> 00:06:52.160
Well, it's a day that ends in a Y, which means it's time for more budget speculation.
00:06:52.399 --> 00:07:05.600
Uh, one sector which we'll be closely watching uh this year's autumn statement is the banking industry, an area that has so far avoided higher fees with some rare successful lobbying of the Treasury and the former Chancellor Rachel Reeves.
00:07:05.839 --> 00:07:17.439
Joining us to discuss where the new Chancellor John Healy might get the billions from to fund all of Andy Burnham's commitments is Evelyn Gomez Lichti, a multi-asset strategist at the Japanese bank Mizuho.
00:07:17.600 --> 00:07:18.560
Welcome to the studio.
00:07:19.120 --> 00:07:19.439
Thank you.
00:07:19.600 --> 00:07:20.399
Thank you for having me.
00:07:20.720 --> 00:07:23.839
Who do you think the winners and losers are going to be of this budget?
00:07:24.319 --> 00:07:32.160
So, in terms of winners and losers, I think Burnham has been very clear he wants to be much more active than Starmer.
00:07:32.639 --> 00:07:44.160
And he has already announced his some of some cost of living measures, and I I wouldn't discard any sort of other measures to try to help the households with the ongoing energy price shock.
00:07:44.399 --> 00:07:50.720
Um, but yeah, I I don't think that we're gonna get any sort of major change.
00:07:50.879 --> 00:07:54.480
And as I said, the budget is already very constrained.
00:07:54.639 --> 00:08:09.120
Headroom has probably decreased quite a lot from what I've seen, just the move on guild yields and the borrowing figures here to date, which I mean they're not too off compared to the OBR forecast, but they still point to a decrease in headroom.
00:08:09.199 --> 00:08:15.120
Uh I estimated from the 23.6 that we had in March towards something closer to 10 potentially.
00:08:15.920 --> 00:08:27.600
Um, so I think the plan for him will be to reiterate fiscal rules and on the other hand stress again his long-term investment commitment.
00:08:27.839 --> 00:08:33.039
So, in terms of the stability rule, and sorry, this answer is come becoming a little bit too long.
00:08:33.440 --> 00:08:38.639
I think uh probably the winners would be more on the investment side of the mandate.
00:08:38.879 --> 00:08:48.879
Perhaps we get some sort of talk about all these housing reforms that he wants to do and how he wants to put it into the, you know, the more investment plans, capital spending.
00:08:49.039 --> 00:08:57.120
Perhaps we get some increase in defense spending, especially given the the war and the conflict that we're seeing in the Middle East.
00:08:57.200 --> 00:09:03.039
Uh, but that probably is going to be most of it going to the capital spending part of the mandate.
00:09:03.600 --> 00:09:06.159
So investment should be the big winner.
00:09:06.320 --> 00:09:16.399
And I think maybe the cost of living, because it needs perhaps broader reforms, it may be a bit more conservative than what people may be expecting, or that's at least my view.
00:09:16.720 --> 00:09:24.720
But I think it's definitely true that this budget, partly because it's so early on in his tenure and only be a few months in, probably, as you say, will be more uh conservative.
00:09:24.799 --> 00:09:28.080
But also you alluded to his having a more maximalist agenda.
00:09:28.399 --> 00:09:38.240
Do you think that he's potentially just kicking quite a lot of bigger government spending down the line uh into say next year when we might see even more constraints on uh the public purse?
00:09:38.720 --> 00:09:49.120
One of the things I'm worried about is uh Burnham is coming into a mandate where he only has around two years and a half left until the next elections.
00:09:49.759 --> 00:09:58.879
So I think it's difficult to um encapsulate all these plans that are very long-term reforms in very little time.
00:09:59.519 --> 00:10:02.240
And this is just the nature of how these reforms are.
00:10:02.480 --> 00:10:22.960
Um investment takes time, changes in the in in the country, in in parts of the infrastructure of the country, and especially these sh changes in in direction that he wants to deliver in in a positive way, like for example, building all his council uh housing plans, which I think could be a good thing, but that takes time and that needs a longer horizon in mind.
00:10:23.120 --> 00:10:29.840
So going back to the can kicking and comment, I think autumn is certainly too early to deliver something like that.
00:10:30.080 --> 00:10:46.159
Obviously, all these speculation has been uh slashed right now, but I wouldn't be surprised if uh we get some sort of early election or snap election next year if the polls remain um in a good position for the Labour Party.
00:10:46.240 --> 00:10:53.360
And from what I've seen this week, actually, they've had some good polling and they've uh been able to poll almost above reform.
00:10:53.840 --> 00:10:55.919
Yeah, and possibly even above reform in a couple of polls.
00:10:56.159 --> 00:10:56.320
Yeah.
00:10:56.960 --> 00:10:58.480
So that would secure him more time.
00:10:58.559 --> 00:11:06.240
If he's able to call an early election next year and secure another five years mandate, that would give him probably more time.
00:11:07.039 --> 00:11:11.600
You're absolutely right about you know, turning around an economy is like turning around an oil tanker, right?
00:11:11.679 --> 00:11:22.639
You know, it doesn't happen very quickly, and yet we have this electorate that seems to be craving uh instant change and and immediate change, and and and I think that's probably where reformers seeing their positive numbers from.
00:11:22.879 --> 00:11:34.720
Just finally, um Rachel Reeves's autumn statement last year was was kind of outdated by the time we hit sort of February-March because the war in Iran kicked off and that ate into her fiscal headroom.
00:11:34.879 --> 00:11:45.679
We've just seen the US intervene in Japan on the yen, uh, and there's a little bit of a debt crisis starting to build over there, which can have ripple effects across the world economy.
00:11:46.000 --> 00:11:54.960
Is there a a risk that this budget coming in October will be quite quickly out of date if Britain continues to be buffeted by these external factors?
00:11:55.360 --> 00:11:56.480
Yes, that's a big risk.
00:11:56.639 --> 00:12:04.480
And in fact, I think if you go to any trading floor today, you will see that oil, oil, oil is the most important thing.
00:12:04.639 --> 00:12:14.159
It's true we had this yen intervention story, and that has given us a lot of uh opportunities to talk about our strength, which is the yen and the Japanese market, which is great for us.
00:12:14.639 --> 00:12:31.519
Um but it goes to show that um the UK autumn's uh budget is within a global context where there's a lot of uncertainty, and this is not only relevant for Burnham and and the new government, but also for the Bank of England, for example, and whether they want to hike or hold.
00:12:32.000 --> 00:12:35.440
Um given that we we really don't know what's going to happen.
00:12:35.600 --> 00:12:44.399
Uh so can the autumn budget um be outdated very quickly if the current conditions remain?
00:12:44.639 --> 00:12:45.360
Yes, for sure.
00:12:45.600 --> 00:12:51.200
If um we get some sort of resolution in the Middle East, then I think that would be a longer lasting story.
00:12:51.600 --> 00:12:55.440
Evelyn Gomez, Lichti, multi-asset strategist at Mizuho Bank.
00:12:55.519 --> 00:12:57.200
Thank you very much for joining us.
00:12:59.679 --> 00:13:04.159
And finally, Apple is going after the Home Office with a new legal challenge.
00:13:04.240 --> 00:13:09.759
This follows government efforts to force the tech giant to hand over encrypted user data.
00:13:09.919 --> 00:13:19.759
So the British state wants a backdoor into the contents of iCloud accounts, which would obviously have quite major implications for user privacy.
00:13:20.000 --> 00:13:23.440
Our professional services editor Maria Ward Brennan is all across this.
00:13:23.600 --> 00:13:24.720
What's going on here?
00:13:25.039 --> 00:13:30.399
Yes, there's another sort of diplomatic row about to kick off between Washington and London.
00:13:30.559 --> 00:13:33.759
So this is the second uh filing of this.
00:13:33.840 --> 00:13:45.600
Um Apple initially went to the court to the tribunal um last year when it first came out that the government, the Home Office, wanted to sort of seek um under the it's called the Snooper Charter.
00:13:45.919 --> 00:13:50.720
Um, and obviously Apple's very firmly against this, wanted to seek legal action against it.
00:13:50.879 --> 00:13:57.919
But because of the diplomatic um relations getting involved, London quietly went went a bit quiet on it.
00:13:58.000 --> 00:14:01.519
And even though it was supposed to be in a tribunal early this year, never went ahead.
00:14:01.600 --> 00:14:06.320
Um but then lo and behold, here we go again, and they issued uh Apple with a second notice.
00:14:06.399 --> 00:14:12.320
And obviously, Applebean Apple has issued another legal filing to the special tribunal that focuses on this.
00:14:12.559 --> 00:14:20.080
So we can imagine that obviously you know diplomatic relations will get back involved, or it actually might go to the tribunal this time around.
00:14:20.480 --> 00:14:26.480
Apple have said that they've never built a skeleton key for any of their uh systems and and they never will.
00:14:27.120 --> 00:14:37.039
Uh if through some inexplicable way the Home Office were to get their way and and to kind of force them, that they would presumably have to comply, or or what would happen then?
00:14:37.360 --> 00:14:40.080
I I feel like they will fight this tooth and nail.
00:14:40.240 --> 00:14:46.639
Apple is that's the whole bread and butter, is protect protective, encrypted data that no one can break.
00:14:46.720 --> 00:14:59.840
And as we spoke about earlier, there was a case in the US where the FBI was involved, and there's been some horrific cases along the way where people have gone missing and there's murder charges, and yet they will not break their data protection for those.
00:14:59.919 --> 00:15:09.519
Because again, once you break one, you break it all for everything, and then it defeats the purpose of what they have to offer of a really encrypted sort of protection against for their users.
00:15:09.600 --> 00:15:10.639
That's a bread and butter.
00:15:10.960 --> 00:15:24.399
I suppose if we take this to its logical conclusion, and I suppose the the main example of when Apple was forced to comply with a kind of European regulation was when they had to switch all of their iPhone charges to uh to USB a few years ago to comply with EU rules.
00:15:24.559 --> 00:15:24.799
Yes.
00:15:25.039 --> 00:15:29.360
This feels, as you've alluded to, more philosophical, more fundamental.
00:15:29.679 --> 00:15:38.720
Let's say if you were to put to sort of look into the crystal ball of this, and let's say they lose this legal challenge and a British court says you have to hand over the data.
00:15:38.960 --> 00:15:41.200
What what what do you think the sort of extreme scenarios are like?
00:15:41.440 --> 00:15:44.080
Could we just see an instance where Apple just pulls out of the UK?
00:15:44.399 --> 00:15:45.519
Is that how far it could go?
00:15:45.679 --> 00:15:54.879
I do think that because already you have to keep in mind, because of the initial instance of this case back last year, they already suspended and disabled their advantaged data protection in the UK.
00:15:55.039 --> 00:16:00.240
So they've already made moves and threatened the UK going, right, well, if you want to play ball, we can pull out.
00:16:00.399 --> 00:16:09.519
And given the fact that the UK market is obviously a very important market to them, it's not enough to jeopardize their entire branding around the world and make it open to one case.
00:16:09.679 --> 00:16:18.720
You can easily pull out one market and make it a signal to the fact that you know the backlash alone from the public will be enough that the government would have to maybe do a U-turn, you could expect.
00:16:18.960 --> 00:16:29.519
That's true, because if I suppose if they make the precedent here, many other governments, particularly in Europe, but also I mean in all over the world, could could demand the same thing and suddenly they they've broken that precedent and anything could happen.
00:16:29.759 --> 00:16:33.039
It's game over, and it's again, it's their branding, it's their their entire bread and butter.
00:16:33.120 --> 00:16:35.200
And once um, because that that's sort of being the thing.
00:16:35.279 --> 00:16:45.120
Again, if they can turn around to the FBI and say, listen, I'm I'm sorry about that missing person that once we break this key here and give it over, you could find that person because it was tracking it.
00:16:45.200 --> 00:16:51.440
Um but if they can turn around and say, sorry, we can't get involved in that, it kind of shows you that where they draw the line on this matter.
00:16:52.080 --> 00:16:59.200
Just finally, it's also interesting how much more muscular the White House has become on backing its tech stocks to the absolute hilt.
00:16:59.360 --> 00:17:04.079
So that example with the with the FBI, I can't remember if that was a Democratic or a Republican White House.
00:17:06.880 --> 00:17:12.559
I know he's sort of sapping down, but he has been sort of in the ear of Donald Trump for for such a long time.
00:17:12.799 --> 00:17:19.200
Um so you know you can imagine that they've sort of obviously tipped away of putting London back into their place, if you if you may.
00:17:19.519 --> 00:17:24.720
Well, we shall be watching the outcome of this with great interest, if only because I don't want to have to give back my iPhone.
00:17:24.799 --> 00:17:26.240
I don't want Apple to pull out.
00:17:26.640 --> 00:17:27.440
Apple ecosystem.
00:17:28.799 --> 00:17:29.599
They have locked me in.
00:17:31.039 --> 00:17:31.200
Yes.
00:17:31.519 --> 00:17:32.240
Oh, sorry, Mr.
00:17:32.480 --> 00:17:32.960
Android.
00:17:33.119 --> 00:17:34.480
Yeah, so cool.
00:17:35.279 --> 00:17:36.640
Well, thank you very much.
00:17:36.880 --> 00:17:37.279
Thank you.
00:17:37.519 --> 00:17:39.599
Well, that's just about all we have time for today.
00:17:39.680 --> 00:17:43.359
Thank you very much for listening to or watching Business as Usual.
00:17:43.519 --> 00:17:51.440
As ever, please do not forget to subscribe to CTAM's various daily and weekly newsletters, and of course, don't forget to download our free app.
00:17:51.599 --> 00:17:55.599
It's got everything those expensive apps have except ours is free.
00:17:55.759 --> 00:17:58.240
We'll be back in your podcast feeds tomorrow at 6am.
00:17:58.559 --> 00:17:59.519
But for now, goodbye.
00:17:59.759 --> 00:18:00.720
Goodbye.
