Theresa May secures Brexit deal with EU after all-night talks

The EU and UK are ready to move to trade negotiations after the PM made a pre-dawn trip to Brussels to secure a divorce deal.

The Prime Minister has secured a deal with the EU to push Brexit negotiations to their next phase following an all-night diplomatic scramble.

In an early morning news conference in Brussels – after sharing breakfast with Theresa May – European Commission President Jean-Claude Juncker declared “sufficient progress” had now been achieved on initial divorce matters.

Hailing the agreement as the product of “compromise” from all sides, the EU boss paved the way for Brexit talks to now advance onto details of a transition period and the final post-Brexit EU-UK relationship.

Mr Juncker expressed confidence leaders of the 27 other EU member states would accept the agreement and therefore move to the second phase of negotiations at a Brussels summit next week.

The Prime Minister described the deal as “a hard-won agreement in all our interests”.

Standing alongside Mr Juncker at the news conference, Mrs May told reporters the agreement would guarantee the rights of three million EU citizens living in the UK.

These would be “enshrined in UK law and enforced by British courts”, the Prime Minister said.

She added the so-called Brexit bill, which could be as much as £50bn, would be “fair to the British taxpayer” and also insisted the agreement offered a guarantee there would be “no hard border” between Northern Ireland and the Republic of Ireland.

Moving on to the second phase of Brexit talks, which will include discussions on a transition period, will be welcomed by businesses.

They have warned the Prime Minister a lack of clarity about such a period before the end of the year might lead to them taking decisions that would see investment and jobs moving out of the UK.

There was no immediate backlash from Conservative Brexiteers on the terms of the deal.

Environment Secretary and Vote Leave architect Michael Gove said: “This is a significant achievement because it means the rights of EU citizens are protected in the UK, the rights of UK citizens are protected in the EU.

“We have an agreement that no EU country will be out of pocket as a result of our departure.

“But there will be more money for the NHS and for schools and for housing in this country as a result of our leaving the EU.

“And also we can now get on to talking about that free-trade deal.

“It’s a significant step forward and it’s one I think the overwhelming majority of people in Parliament and in the country will welcome.”

His fellow Cabinet Brexiteer and Vote Leave figurehead, Boris Johnson, praised Mrs May’s “determination in getting today’s deal”.

But, in an apparent warning to the Prime Minister, he insisted a future trade deal must remain “true to the referendum result” by “taking back control of our laws, money and borders for the whole of the UK”.

The deal was also welcomed by prominent Remain supporters on the Tory benches.

In a late night tweet, the Government’s Chief Whip, Julian Smith, made a pledge to Conservative MPs that he would ensure their opinions were listened to during the next phase of negotiations.

Former UKIP leader Nigel Farage said the deal would allow Mrs May to move on to “the next stage of humiliation” in Brexit talks.

Labour’s shadow Brexit secretary, Sir Keir Starmer, cautiously welcomed the agreement as “encouraging” but urged the Prime Minister to adopt a different approach to Brexit.

He said: “As the talks now move on to a discussion about Britain’s future relationship with the EU, Theresa May must seriously reflect on her approach to the negotiations so far.

“We cannot have another year of chaos and confusion or the farcical scenes we saw earlier on in the week that put jobs and the economy at risk.”

The Prime Minister and Brexit Secretary David Davis arrived in Brussels shortly before 6am on Friday, where they held a breakfast meeting with Mr Juncker and the EU’s chief Brexit negotiator, Michel Barnier.

It followed an agreement being reached by Mrs May with Democratic Unionist Party leader Arlene Foster, who had rejected an initial draft agreement the Prime Minister had hoped to seal on Monday.

Mrs Foster told Sky News “substantial changes” to the text had been made to ensure Northern Ireland would leave the EU on the same terms as the rest of the UK.

Steinhoff rocked as CEO Jooste quits over Accounting wrongdoing

Steinhoff International Holdings NV plunged after its chief executive officer resigned amid accounting irregularities, in a reversal of fortune for a south African billionaire who upended the retail industry in Africa and Europe via a series of acquisitions.

The owner of the France-based Conforama furniture chain, Mattress Firm in the U.S. and Poundland in the U.K. said Tuesday that CEO Markus Jooste quit as it appointed auditor PwC to probe the matter. The stock slumped as much as 62 percent early Wednesday in Johannesburg.

The findings mark a striking turnabout for billionaire Christo Wiese, South Africa’s fourth-richest man and biggest shareholder in the company. He became an investor after selling his African clothing chain Pep to Steinhoff in 2014, and has since led an acquisition drive around the world alongside long-term ally Jooste, who has been with the company since 1988. In addition to acquisitions like Mattress Firm, the company has made plays for appliance chain Darty in France and retailer Argos in the U.K.

Wiese, 76, didn’t immediately respond to calls to his office and mobile phone. He has a net worth of $4.3 billion, according to the Bloomberg Billionaires Index.

The findings have implications for Africa’s two largest retailers, Steinhoff Africa Retail Ltd., which was spun off from its parent in September, and grocery chain Shoprite Holdings Ltd,. in which Wiese is also the biggest shareholder. STAR, as Steinhoff Africa Retail is known, slumped as much as 29 percent in Johannesburg and said CEO Ben la Grange resigned. He’s also the chief financial officer of Steinhoff International.

“The trust between Wiese and Jooste is broken, that is why Jooste is out,” Syd Vianello, an independent retail analyst in Johannesburg, said by phone. “Wiese has got a huge amount of money at stake and it’s in his best interest to ensure trust in the company is restored.”

The retailer said Monday it wasn’t able to release audited full-year financial results on Wednesday due to matters related to a criminal and tax investigation in Germany. That probe dates back to 2015, and the company said in August that “no evidence exists” that the company broke the country’s commercial laws. It also said a report in Manager-Magazin that Jooste is among employees being investigated by German prosecutors contained information that was “wrong or misleading.”

Risk Assessment – Face forward

Canadian philosopher Marshall McLuhan once said that “we drive into the future using only our rear-view mirror” nowhere is this description more accurate than in investment industry and specifically the area of risk management.

Rather than engaging in a realistic and informed conversation about future risks, the industry has become myopically focused on a simplistic backward looking measure – volatility. In this short article we examine the problems inherent with this simplistic approach, and suggest steps to improve the accuracy of the risk profiling process to reduce the suitability mismatch that we perceive with some existing tools.

The adoption of simple risk mapping tools that relay on volatility is an understandable reaction to increased regulatory scrutiny and the disappointing performance of many multi-asset portfolios during the financial crisis. However, in an attempt to create a demonstrable process for matching clients to funds, risk assessment tools have tended to ‘boil down’ risk to the single measure of volatility. In doing so, these tools ignore other risks including: permanent capital loss, illiquidity, default, failure to meet objectives, and counterparty.

While the use of volatility as a proxy for risk provides a statistical basis for describing the randomness of capital market movements, its reliance on assumptions and its poor predictive power mean that volatility is both a weak proxy for risk, and an unreliable way to predict severe capital loss. It is therefore of limited use in matching funds to clients.

The calculation of volatility makes two big assumptions: first, that returns are normally distributed, and second, that correlations are stable. Neither is true. A cursory glance at equity return data over very long periods shows that the distribution of returns is subject to both skewness and positive kurtosis. This means that the typically used metrics of mean return and volatility do not fully describe the distribution of returns.

The problem is magnified when using historic data from multi-asset portfolios to predict the future. Traditional risk tools tend to use average correlation data. In reality the correlation relationships that create the diversification benefit of a multi-asset portfolio are unstable. Correlations tend to increase during periods of stress, reducing diversification benefits and increasing losses beyond that which would be expected using average data.

As a consequence of these failings, investors who base their risk assessment on volatility are like McLuhan’s driver, they are susceptible to nasty surprises that are not obvious from the view they have of the market. By focusing on absolute levels of volatility as the key measure of risk, investors are prevented from buying risk assets when prices are low as these typically corresponded to periods of high volatility.  Equally, portfolio managers are encouraged to buy risk assets when prices are high. This buy high, sell low strategy is unlikely to be in the clients’ best interests.

The practical problems with this approach are especially evident when using absolute levels of volatility to match funds to client risk profiles. Morningstar has recently conducted research that shows that the volatility of a conventional multi-asset portfolio varies widely through the market cycle. We created a series of multi asset portfolios and tracked their volatility using the approach stipulated for the calculation of a fund’s synthetic risk return indicator (SRRI) that is included in key information documents (KIID). The volatility of these portfolios varied significantly over time. For example, the volatility of a moderate risk portfolio comprised of recognised benchmark indices varied by 5.3% over the last 9.5 years. This volatility range is greater than the SRRI band (four) used to classify the fund. This means that a portfolio positioned in the middle of an SRRI band at the beginning of the period and rebalanced regularly would breach both the upper and lower boundaries of that band over the period.

In other words, without changing the allocation, the portfolio fund would be both too risky and not risky enough for the same client over the period. A risk mapping process that produces such widely varying results for a stable portfolio is clearly not fit for purpose.

To overcome these problems advisers and investors need to spend less time looking in the rear-view mirror and instead focus on their instruments and the view through the windscreen. In practical terms, there are three ways this can be achieved.

The first is to improve the quantitative the tools used to assess risk. As volatility has become increasingly discredited, many investors are moving towards more sophisticated measures such as the ‘mean conditional value at risk’ that focus on the potential loss in an extreme event. Second, risk must once again become a conversation between the adviser and client rather than a simplistic ‘tick-box’ exercise. Third, as an industry we need to improve both our qualitative methods of assessing the risk of a fund. The objective, attitude, and investment process of the manager is at least as important as the past performance of the portfolio. Managers with similar starting portfolios may generate entirely different results through a crisis, depending on the temperament, past experience and mandate of the investor. It is only through an understanding of the manager that a fund buyer will be able to discern the likely differential in the performance of superficially similar funds across a range of market conditions.

This greater focus on the future rather than the past should considerably improve the changes of the investor reaching their destination safely.

By Dan Kemp, Chief Investment Officer, EMEA

UK and EU ‘appear close to Brexit breakthrough’

There are increasing indications that an agreement on the first phase of Brexit talks is about to be struck.

EU Council president Donald Tusk said he was “encouraged by progress” and a deal on Ireland, the “divorce bill” and citizens’ rights was “getting closer”.

Theresa May is meeting EU figures in an attempt to finalise the deal ahead of a summit in 10 days’ time.

Belgian MEP Philippe Lamberts told the BBC’s Laura Kuenssberg that the UK had made a concession on the Irish border.

The BBC’s political editor said Mr Lamberts had said the UK was prepared to accept that Northern Ireland may remain in the EU’s customs union and single market in all but name. But, she stressed, the BBC has not seen the draft document nor has it been signed off.

Downing Street sources also told her they were cautious as to whether a deal would be done in Brussels on Monday, with one source saying: “There are still moving parts”.

Mrs May is meeting European Commission president Jean-Claude Juncker and Donald Tusk, the president of the European Council.

Scottish First Minister Nicola Sturgeon reacted to reports that Northern Ireland could retain “regulatory alignment” with the EU by saying there was “surely no good practical reason” why other parts of the UK could not do the same.

And Mayor of London Sadiq Khan tweeted that there could be “huge ramifications” for the capital if the country was given this deal, suggesting he would seek something similar.

While the Republic of Ireland’s prime minister, Leo Varadkar, is expected to make a statement later, DUP leader Arlene Foster has said her party “will not accept any form of regulatory divergence” that separates Northern Ireland from the rest of the UK.

She went on to accuse the Republic of Ireland of “seeking to unilaterally change” the Good Friday Agreement – the peace deal that brought an end to the Troubles – without the DUP’s “input or our consent”.

“Of course we will not stand for that,” she added.

Mr Tusk represents the leaders of the other 27 EU members, who all need to agree for there to be a move to the next phase of talks.

The UK voted for Brexit last year and is due to leave in March 2019, but negotiations have been deadlocked over three so-called separation issues.

Where are the talks at?

The EU says it will only recommend the start of talks about future trade arrangements when it deems “sufficient progress” has been made on three issues – the status of expat citizens, the “divorce” bill and the Northern Ireland border.

The UK has been set a deadline of this week to come forward with an improved offer on them, and hopes that the go ahead for future talks will then be given at an EU leaders’ summit on 14-15 December.

On the “divorce bill”, the UK is understood to have recently increased its offer, which could be worth up to 50bn euros (£44bn).

On the issue of rights for the three million EU citizens in Britain, the UK has agreed that those who already have permanent residence will not have to pay to apply for settled status. Those making a first time application for the right to stay after Brexit, however, will face a charge – reportedly similar to the cost of applying for a passport.

Settled status will grant those who have spent five years in the UK equal rights on healthcare, education, benefits and pensions to British citizens.

Ministers have already suggested people legally resident in the UK before an as yet unspecified cut-off date will be allowed to stay and they want to make the process “as easy as renewing a driving licence”.

Is Ireland now the sticking point?

Progress in other areas has led to attention being focused on the Ireland question in recent days.

The Irish government is seeking guarantees from the UK that there will be no customs checks on the border with Northern Ireland after Brexit and movements of goods and people will remain seamless.

Mr Tusk has stated Dublin must be satisfied there will be no return to a “hard border” and as Irish ministers met on Monday, it seemed there was yet to be a resolution.

“We are certainly not looking to veto anything,” its Europe minister Helen McEntee told BBC Radio 4’s Today.

“Ireland wants to move on to phase two but it would be absolutely impossible to allow that when we don’t have an absolutely concrete commitment there won’t be a hard border.”

But according to RTE’s Europe editor Tony Connelly, a draft text being circulated suggests the UK is set to agree to a key Irish demand – that there would be “continued regulatory alignment” for businesses in the Republic of Ireland and Northern Ireland after Brexit.

And Irish prime minister Leo Varadkar, who talked to Mr Tusk and Mr Juncker on Monday morning, says he will be making a statement later:

Although the wording of any proposed deal on the Northern Ireland border is yet to be confirmed, the Democratic Unionist Party MP Sammy Wilson, was unhappy with what had been reported so far.

“We’ve made it quite clear that we will do nothing that would separate us from our main market , which is the United Kingdom – so how could they even deliver on such a promise,” he said.

What’s the view from Brussels?

A spokesman for the European Parliament has hinted that an agreement is close suggesting only a “few words” are missing from a text that both sides can sign off.

Leading MEP Guy Verhofstadt said there was a 50-50 chance of an agreement on Monday.

“I am optimistic that it is possible,” he said. “If there are still outstanding issues on citizens rights, I want to solve them now.”

The BBC’s Europe editor Katya Adler says Brussels is in an upbeat mood, with talk of movement, traction and an absence of negativity in last-minute negotiations before the prime minister’s visit.

Mrs May, she added, will be expected to give personal assurances and iron out outstanding disagreements. If all goes smoothly, a joint UK-EU report will then be published locking in all understandings to date.

Trouble for May back at home?

Mrs May’s meetings comes as the EU withdrawal bill returns to the Commons for a fourth day of debate and leading Tories, including Jacob Rees-Mogg, John Redwood and former chancellor Lord Lawson, signed a letter calling on the PM to refuse to settle the UK’s “divorce bill” unless Brussels agrees to a series of demands.

These included ending the European Court of Justice’s jurisdiction the moment the UK leaves in March 2019, rather than allowing it to continue during an “implementation” phase as the PM has suggested.

Tory MP and pro-Brexit campaigner Owen Paterson claimed he was “right behind” the prime minister, despite signing the letter.

“It is very important that the EU understands that many of us are getting fed up with the fact that they are treating [Mrs May], in some ways, pretty rudely and churlishly and not getting on to the absolute key negotiation, which is the economic relationship we have with the EU once we leave.”

Law firms agree £30m revenue target after merger

Two southeast firms have merged to form a practice with a combined headcount of 225 people and £20m annual turnover.

Illiffes Booth Bennett Solicitors (IBB Solicitors) has brought its 17 specialist practice areas together with full service firm Turbervilles Solicitors.

The deal was completed last week and the new firm will go under the name IBB Solicitors. All Turbervilles employees and the firm’s five partners will move to IBB’s offices in Uxbridge, north west London. The merged firm will be led by managing partner Joanna DeBiase with Turbervilles’ former managing partner, Russell Hallam, joining the IBB leadership team from January 2018.

DeBiase said: ‘Since developing our long-term vision in 2016, we have been looking at ways to make our firm more resilient. Mergers are one of the ways to achieve growth as long as both firms share the same culture and values.

‘At the core, both of our firm’s philosophies have always been about listening to our clients to get a really good understanding of how we can help them.’

The combined firm now aims to grow revenue to £30m by 2023 through the joining of practices working in different sectors.

IBB Solicitors has a clientbase including Aviva, Xerox (UK) and Bellway plc, while Turbervilles’ clients include National Caravan Council, Symrise Limited, WMF UK Ltd and Parexel International.

Hallam added: ‘Like IBB, we were keen to find a partner to boost our service offering to our clients who are mostly based in West London and the surrounding regions.

‘I am in no doubt that our clients will benefit from the combined and distinctive service offering now that two firms have become one.’

10 Success-Boosting Motivation Tips From Millionaire Entrepreneurs

Motivation is a daily struggle for entrepreneurs, so I’ve put together these motivation-boosting tips from 10 of today’s successful entrepreneurs.

1. Fear of failure.

In an article that he wrote for Bloomberg, Mark Cuban stated that he uses the fear of failure for self-motivation.

“No matter what business you’re in, you’re always at risk — particularly in technology, where it changes so rapidly you’ve got to put in the effort to keep up,” writes the Shark Tank panel member. “There’s always the opportunity for some 18-year-old to come out of nowhere and crush you—that motivates the hell out of me.”

“Every one of my companies, whether something I started or something I invested in, is a scoreboard. How am I doing? A lot of investors or advisers play it as a numbers game.”

“If they invest in 20 companies, as long as one success covers 19 losses, they did OK. I look at every loss as a huge failure. I had an investment go bad recently. I lost $1.5 million on it. It pisses me off to no end.”

Failed at something? Ask these Mark Cuban questions.

“You can also use it as motivation. What did I do wrong? Who did I trust that I shouldn’t trust? What can I learn from this situation so I can avoid it next time?”

2. Do what you’re passionate for.

This is the key. However, as Chalmers Brown, co-founder and CTO of Due writes, “We want to not only make a lot of money but enjoy what we do as well. We are willing to take on the risk of unstable pay in exchange for following our dreams.”

“Unfortunately, your dream job may not always be the best decision financially. Sometimes your hobbies are best kept as projects in your spare time for fun (which is great!). If you do want to try to turn your passion into a full-time job, these tips can help you get started the right way.”

3. Keep affirmations where you can see them.

“It’s so easy as an entrepreneur to get sucked into feeling exhausted or frustrated, and often the blame is yours alone,” writes Murray Newlands, founder of online invoicing company Sighted. “But a negative mindset sucks up mental bandwidth and energy that you need to stay focused and successful.

“It is crucial to maintain an optimistic attitude in the face of setbacks. Whenever you see a quote or a picture that helps you stay positive, place it front and center so you can remember what this journey is all about.”

4. Leverage the power of rejection.

“On June 26, 2008, our friend Michael Seibel introduced us to seven prominent investors in Silicon Valley. We were attempting to raise $150,000 at a $1.5M valuation. That means for $150,000 you could have bought 10 percent of Airbnb.”

“Below you will see five rejections. The other two did not reply,” writes Airbnb Co-Founder Brian Chesky on Medium. “The investors that rejected us were smart people, and I am sure we didn’t look very impressive at the time.”

Today Airbnb is valued at just under $30 billion.

5. Surround yourself with highly successful and motivated people.

“No one does it alone,” said Mark Zuckerberg during a Q&A in 2016. “When you look at most big things that get done in the world, they’re not done by one person, so you’re going to need to build a team.”

When building your All-Star team, seek out people who excel in the areas where you’re not strong or have less experience. “You’re going to need people that have complementary skills,” Zuckerberg emphasized. “No matter how talented you are, there are just going to be things that you don’t bring to the table.”

6. Never feel sorry yourself.

“All of my best successes came on the heels of a failure, so I’ve learned to look at each belly flop as the beginning of something good,” said Barbara Corcoran, founder of The Corcoran Group and Shark on Shark Tank.

“If you just hang in there, you’ll find that something is right around the corner. It’s that belief that keeps me motivated. I’ve learned not to feel sorry for myself, ever. Just five minutes of feeling sorry for yourself takes your power away and makes you unable to see the next opportunity.”

7. Look for inspiration.

Inspiration is a driving force that you can use to motivate you. Lyft Co-Founder Jordan Zimmerman said that, “Right now, my daughter is a huge inspiration. Thinking about the future of our cities, the world and what environment she’s going to grow up in.”

“Also, the driver and passenger stories we hear every day. In a past team meeting, we had a mother come in and tell the story herself. She is a Lyft driver living in New York and her daughter is in Los Angeles.

“The daughter was going through a rough living situation with a roommate and had to leave and move into a new place. The mother called a Lyft for her daughter, had a quick conversation with the driver and the driver took care of her daughter in this tough situation.”

“These stories inspire us to think how we can make things more efficient and create a platform for two people to have a really positive interaction?”

8. Don’t obsess over your vision.

Yes. Think about your vision. But don’t spend too much time over it or it will bog you down. Elon Musk, for example, only spends around 30 minutes a week on his vision of SpaceX colonizing Mars. Besides those 30 minutes, Musk spends a majority of his time focused on the milestones that are the most immediate and critical.

9. Be grateful.

“Most of the time when people ask me about motivation, 80 percent of the time I attribute it to gratitude. If you want real fuel to win, be grateful,” writes Gary Vaynerchuk.

“Gratitude is what has gotten me through my toughest moments in business. Whenever I have lost a deal to a competitor, or an incredible employee, or millions of dollars in revenue, I default to gratitude. It’s impossible not to stay motivated or get too down when you’re feeling grateful.”

10. Forget about motivation.

“So many people wait to feel ‘motivated’ before they do anything. Here’s a newsflash: happy productive people do not wait for motivation, they just get on with it,” said Marie Forleo.