There have been some loveably bizarre events taking place this week, and (for once) it wasn't all in Westminster. Round up your week with our summary below!
If Mum’s Involved, It’s Gone Too Far
We’ve all been embarrassed by our parents. I know I have. But imagine you’re the CEO of an embattled ecommerce giant and none other than your own mother steps in to accuse journalists of giving you a hard time. So it was this week with The Hut Group (THG), whose CEO Matt Moulding is still trying to find a solution to the company’s apparent share price death spiral. Step forward Mother Moulding, who saw fit to email Sunday Times associate editor (and business journalist heavyweight) Oliver Shah with a reprimand so severe it could have featured in that scene in the second Harry Potter film where Ron gets a howler for stealing his father’s car. “You must lead very dreary lives in your dead-end jobs,” she remarked. That’ll show ‘em.
Kid Rock is Back, And it’s Bad
Having obliterated his impression of Lynyrd Skynyrd, Kid Rock returned this week with an awful attempt at a political anthem. New single We The People takes aim at Joe Biden, Anthony Fauci, Twitter, and – in a move reminiscent of Mrs Moulding herself – the “mainstream media”. “Inflation’s up, like the minimum wage, so it’s all the same, and ain’t a damn thing’s changed,” Mr Rock remarks in the track, which, stylistically, is a poor attempt at Rage Against The Machine, Aerosmith, Run DMC, and the Beastie Boys. For a song calling for “love and unity”, the whole thing seems a bit, well, radicalised.
Things Are on a Knife Edge in Ukraine
As the internet flooded with memes about Boris Johnson’s apparent non-birthday party, commentators were quick to point out that the United Kingdom (as a member of NATO) had much bigger problems amassing on the Ukrainian border. It all comes down to whether Putin will click his fingers and give an invasion the green light. For now the Ukrainian government does not think an invasion is imminent, though Joe Biden has said it is likely an invasion will happen in February. Russia itself has declared there is “little ground for optimism”, though it denies it is planning an attack. Morningstar’s new editorial manager for EMEA, Lukas Strobl, has summarised the situation for markets here. And as for the UK’s politicians, everyone agrees they should probably start acting like grown ups.
The Fed is No Longer Being “Reserved” About Inflation
This week Federal Reserve officials continued to lay the groundwork for a series of interest rate increases in 2022, letting investors know that the first step would be on its way as soon as March. In its release, the committee acknowledged inflation is “well above 2%” and that the labour market was “strong”. In other words, there's nothing holding the committee back from a series of rate hikes at this point. Morningstar’s Eric Compton summarises the situation in this article, which originally appeared on our US sister site.
Jack Monroe’s Onto Another Winner
Having successfully sued former Apprentice finalist-turned far right political commentator (and Australia deportee) Katie Hopkins for defamation in 2017, food poverty campaigner Jack Monroe was back in the news this week talking about inflation and food poverty. She thinks the Office for National Statistics’ (ONS) official assessment of inflation does not take into account the diminished purchasing power of lower income households, and wants the UK’s official statistics body to account for it in its releases. For its part, the ONS has agreed to a change, and, for hers, Monroe is already working on a new index. A tribute to the Terry Pratchett novel Men At Arms, the “Vimes Boots” index is inspired by the author’s explanation of the cost of being poor. “A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time,” Pratchett wrote, “while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet”. Read James Gard's explanation of events here.
There’s a Tax Row Brewing
For the most part, chancellor Rishi Sunak has appeared relatively absent from the airwaves during the past few weeks. If you take a forgiving view of the situation, you might argue he has plenty to be getting on with, but if you’re a cynic like me you may also choose to believe the slickly-manicured Richmond MP is probably lying in wait for the moment he can take the top job. That is changing though, and it is all because of an apparent plan in Camp Johnson to scrap planned National Insurance hikes. The bid is nothing more than an attempt to woo backbenchers disillusioned by every instance in the last four weeks (nay, two years) when Johnson should have resigned. Even if the u-turn is scuppered, however, events are likely to reveal whether Sunak is full of fighting talk.
Accenture is Bucking the Trend on Consultancy
It’s not been a brilliant few years for corporate consultants. Repeated scandals, from Carillion to Wirecard, have called the integrity of the larger consultancy firms into question, and have led to repeated calls to break up the UK’s “big four” players. Accenture is not a “big four” company, but it did feature in our list of best sustainable companies to own, and with the lowest ESG risk rating at that. Morningstar Research Services’ equity analyst Julie Bhusal Sharma is a fan, citing Accenture’s strong reputation for reliability and its “treasure trove of institutionalised industry expertise and experience”.
It's Too Early to Celebrate on Governance
It’s frankly too early to start celebrating the success of ESG given the tiny minority of businesses actually doing business ethics well. That’s the conclusion of a major report from the World Benchmarking Alliance, which this week argued just 1% of companies in its social transformation baseline assessment were doing enough to meet its core expectations. Of the 1,000 companies it assessed, just 10 provided a satisfactory performance on social indicators spanning human rights, decent work, and ethical conduct in lobbying and taxation. Last week, my own editor’s column touched on the social impact side of ESG investing. This reveals just how much an uphill struggle improving the “G” part will be.
The Year of the Tiger is Upon Us
In a timely look at China equity investing ahead of Chinese New Year, Morningstar’s Lukas Strobl asked JPMorgan Asset Management's global market strategist Mike Bell for a hot take on whether to buy or sell China. “If you look over since 2010, there have been four occasions on which MSCI China has gone down by more than 30%, including the most recent one,” Bell tells Strobl in this video. "On the prior three occasions, once Chinese stocks had fallen 30%, they were always higher a year later, and two years later, they were a minimum of 25% higher, and on the other two occasions, they were more than 40% higher two years after they had fallen by 30%.” That’s not a perfect guide, of course, but it may dampen your pessimism if you’re worried about the region’s prospects.
It's Harvest Time for Guitarists With Opinions
At Morningstar we’re used to bringing you news of top-tier musicians selling the rights to their back catalogues for tidy sums. Less common are events concerning artists’ refusal to deal with bigger companies on moral grounds. Step forward Canadian songsmith (and hearse-driving legend) Neil Young, who has now added medical misinformation to his already-impressive list of political campaigning topics. Back in the day, Young reprised his turbulent relationship with musicians David Crosby, Stephen Stills and Graham Nash to launch a tour in protest against the Iraq war. Now, he’s pulling his music from Spotify in protest against the platform’s hosting of Joe Rogan’s podcast, which Young argues spreads medical misinformation. It’s rare to find profanity on these pages, but perhaps the signs were there. “And as an afterthought, this too must be told,” Young once sang. “Some people have taken pure bullsh*t and turned it into gold.” Rust really doesn’t sleep.
