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Daily briefing - 03 September 2019

How about some flashing warning signs in today's news? Lafferty Group laid out the likely sequence of events for its Brexit Council members two years ago, when signs showed that a no-deal Brexit would be followed by a quick election which leaves Labour in power. Two years later, Boris Johnson has finally seized the controls of Number 10, but he's only part of a larger cabal which includes the ace strategist Steve Bannon, for whom chaos is the preferred operating medium. Now with the pound sinking, and the grinning Trump-Johnson game show host axis as chief conductors of the new economics, it's beginning to dawn on City grandees that this bloody Brexit shambles is going to happen after all. UK Labour party leaders are suddenly finding themselves in the embrace of FT journalists trying to find out who this Labour party is, and what policies they might offer. At the weekend, the FT interviewed bemused shadow chancellor John McDonnell, and couldn't tell if his bank manager demeanour still concealed a militant Marxist thinker. When McDonnell suggested that Labour in power would take ten percent of every company and give it to the workers, the FT kind of nodded along. (Journalists and editors are workers too, you know.)

Meanwhile, the former UK chancellor Philip Hammond told the press that there was no negotiation happening with the EU, despite what the prime minister is saying. "'There is no progress. There are no substantive negotiations going on,' said Mr Hammond, citing the lack of substantive alternatives to the Irish backstop, the insurance policy to prevent a hard border in Ireland."

In a beautiful piece of writing over the weekend, William Dalyrmple points out that it's worth noting, historically, that Boris Johnson appears to want to take the UK back to around 1599. That's the end of the century that has been marked by England crashing out of the Roman Catholic church, then the biggest institution in Europe, to go it alone in the world. That's also the year that the East India Company was formed. It went on to conquer the world and create the British Empire. Johnson can also see clearly the end of that Empire, and wants to launch the next one.

Over at Deutsche Bank comes news that chief executive Christian Sewing will spend one-fifth of his salary every month for the next three years buying shares in Deutsche. "As part of a pledge earlier this summer, chief executive Christian Sewing will buy €21,250 (£19,339) of shares in the bank on the 22nd of each month until the end of 2022, filings revealed today," says City AM. This seems a bit half-hearted. Something on the scale of a few billion every month might help, but really, something such as a strategy would be more useful. Bloomberg reports that chairman Paul Achleitner also invested one million euros in the bank, probably hoping no one notices he is still in charge.

The Indian government is starting to panic at the state of affairs among the big banks, and has come up with the solution that comes to many panicking governments: take these sloth-like behemoths stuffed with bad loans and incompatible IT systems and put them together. This has the advantage of dialling down the attention for a few months while the big banks size each other up. (Just think Deutsche and Commerzbank, for instance). "Investors knocked down shares of India's large state-run banks after the government unveiled its plan to merge several of the lenders, amid concerns that the integration process might delay its bad-loan clean-up and slow lending approvals," writes Bloomberg. "The four key large lenders at the centre of the merged groups - Punjab National Bank, Canara Bank, Union Bank of India and Indian Bank - fell on Tuesday as investors fretted over the impact of absorbing their weaker peers. The mergers were announced after the market shut on Friday and Monday was a public holiday."

Mr Modi's moves come as the UAE - a major source of remittances into India - appears to be searching desperately for funds. Reuters reports that Dubai's Emaar Properties, which is mostly state-controlled, is looking to raise funds by issuing ten-year dollar Islamic bonds. "Emaar, 29.2% owned by the Investment Corporation of Dubai, will meet investors in Asia and London starting on Sept 6. Standard Chartered was hired to coordinate the deal. Other banks leading the transaction are Dubai Islamic Bank, Deutsche Bank, Emirates NBD Capital, First Abu Dhabi Bank, Mashreq Bank and Sharjah Islamic Bank, the document showed." The move to issue bonds by the builder happens as Dubai house prices dropped to the equivalent of 2008 prices.

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