David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Fillon Jumps in French Polls as Macron Pays for Campaign Gaffe

    Here is the opening of this topical report from Bloomberg:

    Republican candidate Francois Fillon is back on track to qualify for the run-off in France’s presidential race, a poll showed on Tuesday, as a sweetened program of reforms and intensive campaigning on social media and across the country pay dividends.

    Fillon leapfrogged independent front-runner Emmanuel Macron, gaining three percentage points to 21 percent, while Macron shed five points to 18.5 percent, according to the survey by Elabe for L’Express magazine. National Front leader Marine Le Pen would still get the most votes in the first ballot on April 23 but she would lose to Fillon by 56 percent to 44 percent in the second round on May 7. Le Pen was on 28 percent, up as much as two points.

    Contenders across the board are searching for traction in the most open presidential election in living memory. The campaign has already seen former Prime Minister Alain Juppe lose the Republican primary after a year as favorite while one ex-president dropped out and the incumbent Francois Hollande opted not to run.

    For a dashboard on European political risk, click here

    While no surveys have shown Le Pen winning the presidency, Elabe showed she’s narrowing the gap polling above 40 percent in the second round against both Fillon and Macron for the first time.

    The prospect of the anti-euro Le Pen cutting through the melee to claim victory has pushed the spread between French 10-year bonds and similar-maturity German bunds to its widest in more than four years. The risk premium rose 2 basis points to

    Fillon, a 62-year-old former prime minister, has made gestures to both conservative and moderate voters in the past days with an intense campaigning to ram home his credentials on security while dialing back his plan to cut health care spending. Macron was in London Tuesday to raise his international profile, meeting with Prime Minister Theresa May before a rally later to court expatriate and a fund-raising dinner.

    For an analysis of the hurdles facing a Le Pen presidency, click here

    Running for office for the first time in his career, Macron suffered his first significant misstep of the campaign last week, when he qualified French colonial rule in North Africa as a “crime against humanity.” Since then he’s taken the brunt of rivals’ attacks and was forced to apologize to French citizens who left Algeria when it gained independence in 1962.

    This section continues in the Subscriber's Area.

    Brexit Could Be the Best Thing That Ever Happened to the UK Tech Industry

    The EU used to be a start-up on a mission. The first mission was peace, after two world wars in four decades. Then food security… the single market… eastern expansion… the euro. It achieved extraordinary things. 

    But at some point it grew too big. It did not know what its mission was any more. It caught “institutionitis”. To quote Yuval Harari in his book Homo Deus: “As bureaucracies accumulate power, they become immune to their own mistakes”.

    How do I know this? Well, when your second largest customer, sorry, country, gives you a vote of no confidence, and instead of resigning or promising reform, you continue exactly as before and “punish” it for its “mistake”, you have a clear case of institutionitis.

    When two million migrants enter your Schengen zone illegally in a single year, stoking an alarming rise in the Far Right, and it takes you years to do anything about it, you have institutionitis.

    When four of your member countries still have youth unemployment of more than 40pc five years after the financial crisis, and you say it’s not your problem, you have institutionitis.

    In companies, the cure for institutionitis is the market. Companies that stop caring about their customers will be killed off by a new disruptive company (hopefully one backed by my VC fund) turning up and stealing their customers. The old companies change, or they die. It’s healthy. 

    In government bodies, the cure for institutionitis is democracy. If a government is doing a lousy job, we throw it out and replace it with new leadership and bold policies. That is healthy. It clears out the bureaucrats who have forgotten their purpose. But there is no way to “throw out” the EU if it does a lousy job. 

    What is worse, our national governments, whom we can throw out, increasingly find they cannot make the dramatic change which people are calling for because the EU has tied their hands. So we, too, get infected by EU institutionitis. We cannot behave like a start-up any more. 

    Which brings me to Britain, and our tech sector. I voted firmly to Remain in last year’s Brexit vote, but the EU’s response has forced me, uneasily, to re-think. 

    Most of us in the UK tech sector have blithely assumed the EU is “a good thing” because it gives our companies access to fantastic pools of talent, and untrammelled access to the world’s biggest single market.

    But what about all that fantastic talent outside the EU? Is it really fair that if I am Polish or have an Italian grandma then I get access to the UK willy-nilly, but if I am Indian or Zimbabwean I have to pass stringent tests and arduous visa renewals every year? 

    Tech City & Nesta’s Migration survey, published this week, shows that non-EU nationals make up a higher share of the UK’s tech sector than those from the rest of the EU – and they are more likely to have a Master’s or PhD. 

    ROLI is a case in point: it has 60 Britons in its team, and 17 people from the rest of the EU, but nearly twice as many, 33, from the rest of the world. They include Chinese product designers, Ecuadorian engineers, Korean material scientists, American execs… ambitious companies think beyond the EU.

    At Oxford and Cambridge universities right now, we have more than 11,000 students from non-EU countries such as the US, China and India, against 6,000 from the rest of the EU. Yet our EU bias means we send most of those brilliant non-EU students back home at the end of their studies.

    There is no doubt that extracting ourselves from the EU is going to be an almighty and expensive pain in the neck. 

    Yet Brexit could prove to be a fabulous chance to simplify our immigration policies, so that the most brilliant enterprising people from every country, Asian, African, European or American, have a fair chance to work in the UK, and to nudge our most ambitious entrepreneurs to think beyond the Atlantic, the Mediterranean and the Black Sea in terms of talent. 

    And perhaps the upheaval of Brexit might even cure us of institutionitis, and free us to become a truly “start-up” nation. 

    This section continues in the Subscriber's Area.

    Email of the day 1

    On the problem of antibiotic resistance:

    “Further comment on Amoxycillin, mentioned recently in email of the day 2. When I sent in my original observation on the use of Amoxycillin as a treatment for chest infections in dogs, (very honoured to see my email in print) I was of course using it some 20 years ago when antibiotic resistance was a minor problem. Things are very different now. The truth is that since 1987 there has not been any new class of antibiotics developed. It has simply not proved to be a profitable proposition for drug companies to fund research and development into a drug that will possibly be used in a patient over a period of some five to seven days. Far more profitable it seems, in an era of a rapid increase in the elderly population to develop drugs that are going to be used by this group over many years or even decades.

    This section continues in the Subscriber's Area.

    Email of the day 2

    More on the problem of antibiotic resistance:

    Dear David

     It's a broad generalisation to say there have been no new classes of antibiotics. There have been some but unfortunately not against many of the most deadly bacteria.

     Bacteria are generally divided into 3 classes, the mycobacteria (TB etc), and Gram-positives (MRSA etc) and Gram-negatives (E coli etc). There have been a few new classes of antibiotic in recent decades against 2 of the 3, though not against Gram-negatives such as E coli, K. pneumoniae, A baumannii and P aeruginosa. Gram-negatives have an extra cell coat (2 instead of just one that Gram-positives have) which makes it much more difficult for antibiotics to gain entry. And these bacteria have also developed capability to pump out our antibiotics or degrade them rapidly. Those four Gram-negatives in particular are a major cause for concern, as we have had no effective new chemical classes invented against them since the 1970s. They are increasingly gaining resistance to our best antibiotics. There have been some new antibiotics against them launched onto the market but these are minor variations on the same old chemical templates. These are easier to discover but also easier for the bacteria to resist. We desperately need new chemical templates. All efforts have failed for nearly 4 decades.

     Apart from the scientific problems, there are commercial problems too. The pharmaceutical industry cannot make money from antibiotics for several reasons.

    First, they are very difficult to invent. I heard a talk by Sir Andrew Witty, CEO of GlaxoSmithKline in which he said it has proved to be the hardest area of drug discovery. Scientists from both GSK and AstraZeneca separately published major review articles summarising over a decade of research in each company trying to find new antibiotics, with no success in either company.

    Second, the commercial model is broken. Antibiotics cost a lot to invent yet get used for only a few days when needed, compared with drugs for chronic indications such as cancer, high blood pressure and diabetes which are easier to invent and get used every day. So companies make little money from antibiotics.

     Third, if a drug company does in future invent a stunningly good antibiotic, there will be intense pressure to reserve it for use as a last resort when other antibiotics fail, to save it from resistance for for use in the most seriously ill patients. Again, this indicates low sales volume. It would need very high prices or a very different commercial model to overcome this problem. The review that David Cameron established under Jim O'Neill a few years ago proposed a new commercial model, and also John Rex at Astra Zeneca has been a thought leader on new models. I have attended several meetings with them both including meetings with politicians in parliament but progress seems to have stalled now we have a new government with other priorities.

     Re amoxycillin, my view is that it should never be used alone. It has been an excellent antibiotic for over 3 decades, one of the best, but inevitably bacteria are becoming resistant to it. There is a version in which it is used alongside a resistance breaker called clavulanic acid, (co-amoxyclav is the commercial name, and here is the Wikipedia entry https://en.wikipedia.org/wiki/Amoxicillin/clavulanic_acid). This combination is still effective for many infections. I carry it myself when I travel in the Himalayas, as I will be doing in coming weeks.

    Finally, I thought I would add some advice for subscribers if they get a serious infection.

    This item continues in the Subscriber’s Area.

    This section continues in the Subscriber's Area.

    Musing from the Oil Patch February 21st 2017

    Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section:

    All of the forecasts for domestic oil production appear feasible. The U.S. is home to some of the best oil and gas geology in the world with the largest number of independent explorers testing new theories about where to find and how to produce more hydrocarbons cheaper. These hundreds of independent operators are supported by the largest, most technically sophisticated oilfield service industry. Combine these elements with the deep capital markets existing in the United States that ensures that the petroleum industry has access to adequate capital for creating value for investors, and you have the makings of a vibrant and healthy industry. Depending on events around the world, the risk for the domestic oil industry is that its success could undercut the global oil industry’s recovery and knock down the prospect for a slow steady rise in oil prices and future domestic oil output. We don’t know what the odds of that happening are, but it is a scenario that everyone should keep in the back of their minds as they cheer on the nascent oil industry and oil production recoveries. However, too much U.S. oil success could actually be a bad thing for the industry, but probably a good thing for consumers.

    This section continues in the Subscriber's Area.

    North Korea lights fire under coking coal price

    This article from Mining.com may be of interest to subscribers. Here is a section:

    On Saturday the totalitarian dictatorship's largest trading partner, China, reacted to the Feb. 12 test of a long-range ballistic missile by announcing a ban on coal from the rogue nation till the end of 2017.

    The decision by the China's Ministry of Commerce, issued jointly with the country's customs agency, was made to comply with a UN Security Council resolution that China helped draft and pass in November.

    Along with restricting the export of coal, the resolution also targets non-ferrous metals, statues and other luxury items like tapestries.

    China's import ban on North Korean coal was supposed to be lifted in January but the missile test has meant that Beijing's coal ban will continue.

    Last year China imported 22.4 million tonnes of anthracitic coal that can be used as an alternative to coking coal in the steelmaking process from North Korea, a nearly 15% rise from 2015.

    China forges more steel than the rest of the world combined and the country last year imported a total 59.2 million tonnes of coking coal, an increase of nearly 24% over 2015.

    This section continues in the Subscriber's Area.

    Japan's manufacturing sector hasn't looked this good in years

    Thanks to a subscriber for this article by David Scutt for Business Insider. Here is a section: 

    Output, new orders, new export orders, stock purchases and employment all grew at a faster pace than they did in January.

    As lead indicators, the strength in new orders — both at home and abroad — bodes well for activity levels in the months ahead.

    An increase in order backlogs, along with a faster decline in inventory levels, also points to a strengthening in activity levels.

    “Encouragingly, with backlogs of work accumulating for the first time in 14 months, the added pressures on capacity should ensure growth will be maintained at a solid pace during at least the first half of this year,” said Samuel Agass, an economist at IHS Markit.

    “Subsequently, business confidence was at a survey-high.”

    That’s good news, and suggests the positive momentum in the global economy may have continued after a strong start to the year.

    This section continues in the Subscriber's Area.

    Email of the day on creating Preset Templates

    I would like the code to access Eoin's Dow/Gold chart which was on this weekend's transcript.

    Also is there a chart plotting inflation rate v interest rates.  Again an interesting comment made by Eoin

    This section continues in the Subscriber's Area.