The wait is nearly over

Tesla helped stocks recover on Thursday. The stock rose over 20% on the day after the company reported better earnings than expected in the quarter. A stock that is often a go-to short for many hedge funds proves once again that betting against Mr Musk can be painful.

We are almost there after 4 months to prepare and many, many headlines about how Ms Reeves and the Labour Party plans to stimulate growth; at the same time, her boss seems to want her to bite the hand that will help them do that, the private sector. There is a lovely story in today’s Telegraph of a construction worker, who I assume did fit into Mr Starmer’s definition of a working man, who has sold part of his stake in a nutrition company he started from scratch for £69m. I assume he will not fit into Mr Stamer’s definition now, despite all the good he can now do for the economy due to his hard work.

Ms Reeves plans to stimulate the economy by changing the fiscal rules so that she can spend up to 70 billion pounds more than she could under the old rules. Two-year treasury yields have risen in anticipation of this change and jumped again yesterday. As Ms Truss found out everything will be in the delivery, on Wednesday.

 Inflation has been falling recently as the money supply has been reduced, and higher interest rates have led to less money in circulation. Will the Bank of England and bond investors be frightened that increases in borrowing and spending will once again push prices higher? This will be the dilemma for the Bank of England when they next meet to decide what to do with interest rates. The wait for how Ms Reeves plans to stimulate the economy has been a painful one. Yesterday, there were signs that the wait was affecting business confidence, as the CBI business confidence index had its biggest monthly decline in over 2 years. New orders fell, with domestic orders experiencing the steepest decline since July 2020, alongside lower export orders. The composite flash Purchasing Manager Survey came in weaker than expected. Continuing the decline that started in August. All this sounds a bit gloomy; when expectations are low, it makes them easier to beat, at least the uncertainty will be out of the way.