Business Week: Alarm as Trump inches ahead of Clinton

Talk of the margin of victory and turning red states blue has been replaced with talk of the world “teetering” on the brink – following an opinion poll showing next week’s US presidential election locked in a virtual dead heat.

Republican candidate Donald Trump took a one-point lead over Democratic candidate Hillary Clinton for the first time since May in a Washington Post/ABC News tracking poll, conducted after the FBI announced it was reopening an investigation into Clinton's emails.

“The fate of the world is teetering and you are going to have to make sure that we push it in the right direction,” US president Barack Obama told supporters this week as investors became more and more alarmed at the apparent late surge in support for Trump.

Global equity prices and the dollar slid, while gold rallied as investors shunned risk. The Mexican peso slid versus all major peers on concerns that Mexican exports will suffer if Trump gets in.

Bloomberg's dollar index dropped amid speculation the election's fallout could deter the Federal Reserve from raising interest rates next month. One analyst said markets were in the "early stage of panic" about next week's vote.

Former taoiseach John Bruton had his say, remarking in The Irish Times Business Podcast that a Trump presidency could lead to a global trade war that would hurt the Republic's interests.

"Trump could impose his 45 per cent tariff on Chinese imports and 35 per cent on Mexican imports pretty much straight away," he told The Irish Times Business Podcast.

“I think we could have a trade war if he does the things he says he’s going to do, because others will retaliate. Europe is very dependent on demand from China. If the Chinese are hit very hard with the tariffs Trump is threatening them with, that could lead to all sorts of negative consequences.”

Smurfit Kappa’s chief executive also expressed concern, even signalling the paper packaging group’s appetite for US deals would wane in the event of a Trump presidency.

"I think it's just still unbelievable we could be contemplating a Donald Trump victory," Tony Smurfit, the group's chief executive, told The Irish Times.

“Assuming Hillary wins, it won’t change anything,” he said, referring to the company’s interest in US acquisitions, but a Trump win would mean “the world will take a more cautious approach [on US investments]”.

Brexit opportunities

If that wasn’t enough geopolitical unrest for you, there was more to be had in Europe. Following a meeting with British prime minister Theresa May, Taoiseach Enda Kenny suggested the UK could trigger article 50 and leave the EU months earlier than expected.

“So we have no time to waste,” he said.

That will be music to the ears of the Dublin Chamber of Commerce which has warned that the Republic could lose out in the race to encourage UK businesses to move here due to competitive and infrastructural failings.

“They are probably not seeing enough impetus,” said spokesman Graeme McQueen. “If we’re serious about taking advantage of opportunities in the wake of Brexit, we need to be responsive and, at the moment, we’re not.”

Despite those concerns, there has been a 30 per cent rise in enquiries to estate agents from UK firms looking to relocate here.

That’s according to the Royal Institution of Chartered Surveyors which also found that 73 per cent believe there is likely to be an increase in firms looking to move from the UK over the next two years.

A survey by Engineers Ireland, of members working in Ireland or Britain, indicated Brexit has already caused commercial deals to be either deferred or adversely adjusted for almost 40 per cent of respondents.

The pace of growth in the Irish services sector has continued to slow, reaching its lowest level in more than three years in October. Export business was particularly badly hit, recording its worst growth rate in more than four years as Brexit and the impact of sterling’s weakness took its toll.

The currency did enjoy some respite on Thursday though.

It jumped 1.5 per cent to a four-week high as UK government bond yields shot up after the Bank of England scrapped plans to cut interest rates and said the chances of a rate hike had risen.

The pound reached $1.2488 after the Bank of England’s inflation report, which was its strongest since the “flash crash” of October 7th when the currency plunged 10 per cent in a matter of minutes. Sterling was the world’s worst-performing currency last month, trailing behind about 150 peers.

Despite the bounce, a new report by the UK’s National Institute of Economic and Social Research found its trade in services with the EU is likely to fall by 60 per cent if it leaves the European single market. That’s even in the event Britain secures a free-trade agreement with the EU after Brexit.

Despite some speculation, Mark Carney, the governor of the Bank of England, will be the man to steer the UK economy out of Europe after he indicated his intention to leave his role in June 2019.

The announcement followed a period of sustained attacks by Brexiteer critics who have been calling for him to resign ahead of time.

In a letter to Britain’s chancellor of the exchequer Philip Hammond, he said that by extending his term until Britain has left the EU, he hoped he would “help contribute to securing an orderly transition to the UK’s new relationship with Europe”.

Rush Credit Union

Back in the Republic, there was more than one financial institution in the dock this week. Ulster Bank became the most fined bank in Ireland after it was hit with a €3.3 million penalty by the Central Bank for breaches of anti-money laundering and terrorist financing regulations.

That means the bank has now been fined more than either of the troubled Quinn Insurance and Irish Nationwide institutions. Regulators said the bank had admitted the breaches, which occurred over a six-year period, and said the incidents highlighted “significant failings” in the company’s procedures.

Elsewhere, Rush Credit Union was placed into provisional liquidation following an application by the Central Bank amid allegations of money laundering, the misappropriation of funds and other financial improprieties.

The High Court was told criminal prosecutions may be brought arising out of investigations with gardaí notified of suspected money laundering.

The court heard the credit union had net liabilities of €2 million and had a €4.73 million hole in its reserves. Credit unions are required by the regulator to have at least 10 per cent reserves of total assets but its figure was minus 8.7 per cent.

Unemployment figures

The economy’s recovery appears to be continuing as the Republic’s unemployment rate fell to another post-crash low of 7.7 per cent last month.

The latest official figures show the number of workers classified as unemployed in October was 168,800, equating to an annual decrease of 29,000 or 1.5 per cent.

That being said, fears are growing for up to 100 jobs at web company Yelp’s European headquarters in Dublin, after the Californian-headquartered business review site told analysts it will shut most of its international operations.

There was better news emanating from Irish security firm Integrity360, which announced plans to create 150 new jobs at its Dublin headquarters over the next two years. The firm said it would fill 50 jobs by the end of the year, with the remaining 100 by the end of 2018.

In Galway, Apple's plans for an €850 million data centre investment have stalled over local objections. Apple has asked the High Court to fast-track a legal challenge against its development in Athenry as it seeks to avoid delay of up to 18 months.

While the planned investment was welcomed by local business interests, and is supported by many who live in the town, about 20 objectors, including some local residents, objected when planning was sought from Galway County Council.