Brexit 2017

[Firefly]

But I didn't say the market had reacted to what Christine Lagard said.Merely that sterling was now at levels the IMF said it should be at before the referendum.

My mistake, I thought you were implying that the market took on board what Christine Lagard said. Obviously that's codswallop.

However, you still have not provided any of these political events you think were responsible for the fall in STG. I have provided many links to how the fall in sterling was directly as a result of the Brexit result. Found anything to back up your assertion yet?

The lesson to learn is that markets have a life of their own and trying to formulate government policy based on what you think might happen in two year's time is an impossible task.

I agree, but the market has reacted to what it thinks might happen in two year's time. The result is that Sterling is now less attractive to hold.

 

[Wahaay]

My mistake, I thought you were implying that the market took on board what Christine Lagard said. Obviously that's codswallop.

However, you still have not provided any of these political events you think were responsible for the fall in STG. I have provided many links to how the fall in sterling was directly as a result of the Brexit result. Found anything to back up your assertion yet?



I agree, but the market has reacted to what it thinks might happen in two year's time. The result is that Sterling is now less attractive to hold.

Again you have misunderstood what I was saying which was that markets react generally to political events and I entirely agree that sterling's fall since Brexit was as a result of the vote,a political event.
Markets don't like uncertainty and since the vote there has been uncertainty,not least because May's government has undertaken a massive logistical exercise involving all government departments to ascertain the effects on all aspects of the country of certain policy decisions they might take.
They obviously have a plan in mind now and clearly markets have already factored in what they think that plan will be.
But should a fall in sterling be positive proof that a wrong decision has been taken ? I don't think so.Merely that in the short term markets are uncertain.
But in two years time with a favourable trade deal on the table the markets and sterling might react completely differently.
The reality is no-one knows and particularly not economists as their predictions over the last year have shown.

 

[Duke of Marmalade]

I will repeat my earlier disclaimer that I am no economist but will nonetheless throw in my two cents worth on the performance of the UK economy since Brexit. I understand that, contrary to predictions, the consumer has proved remarkably resilient and this is what keeps the show afloat. Where is the surprise here? The consumer voted for Brexit. The consumer won. Why shouldn't the consumer be confident? The idea that the consumer after getting her wish in the polls would then change her mind about buying that house mystifies me. Economics was always a mystery to me.

But the consumer can only keep defying gravity for so long. For quite some time now the UK consumer has been subidised by unsustainable Government deficits (ok Ireland not much better) and has been running horrendous trade deficits (Ireland much better). The collapse in the exchange rate has not hit home yet but when the UK consumer finds that this year's fortnight in Shagaluf is 20% dearer than last year they will not be so happy clappy.

Dan what can I say in the face of such withering wit? On degrees of certitude regarding nationality, Ray is somewhat dubious, born in Glasgow but wearing the green jersey. Jack on the other hand is 100% Geordie. Were you a slow learner at school, Dan?

 

[Firefly]

Again you have misunderstood what I was saying which was that markets react generally to political events and I entirely agree that sterling's fall since Brexit was as a result of the vote,a political event.

Thanks for clarifying that sterling's fall since Brexit was as a result of the vote not not some other makey-uppy political event or anything the IMF had said.

Why do you think the value of sterling has fallen so much? Please, don't offer up the uncertainty card as surely the value of sterling could have strengthened in that case just as easily? Why do you think a nation's currency becomes less attractive to hold?

 

[Wahaay]

Thanks for clarifying that sterling's fall since Brexit was as a result of the vote not not some other makey-uppy political event or anything the IMF had said.

Why do you think the value of sterling has fallen so much? Please, don't offer up the uncertainty card as surely the value of sterling could have strengthened in that case just as easily? Why do you think a nation's currency becomes less attractive to hold?

Who knows ?
Why do you think the value of the Euro has fluctuated so much in recent years ?
Or the dollar ? Or yen ?
Currencies are constantly in a state of flux and always will be.
Britain remains a powerful trading nation that attracts inward investment from all over the world.

 

[Firefly]

Currencies are constantly in a state of flux and always will be.

I agree. New information, which drives sentiment, affects the price. The new information in this case was the Brexit result as we have established. Why did the Brexit result make Sterling less attractive to hold?

 

[Wahaay]

I agree. New information, which drives sentiment, affects the price. The new information in this case was the Brexit result as we have established. Why did the Brexit result make Sterling less attractive to hold?

Well as we write the pound is rising thanks to May's promise of a vote in Parliament on the final Brexit deal.
Seems some people find it more attractive to hold than at 8am this morning.
Welcome to capitalism baby.

www.poundsterlinglive.com/gbp-live-today/6049-gbp-to-usd-and-eur

 

[Firefly]

Well as we write the pound is rising thanks to May's promise of a vote in Parliament on the final Brexit deal.

So there is still a slight chance it may not go ahead so. And what happens? Sterling becomes more valuable to hold!

Why did the Brexit result (before the above announcement) make Sterling less attractive to hold?

 

[Wahaay]

So there is still a slight chance it may not go ahead so. And what happens? Sterling becomes more valuable to hold!

Why did the Brexit result (before the above announcement) make Sterling less attractive to hold?

As I said before who knows ? That's why traders speculate.
I don't share the view that currency is the only indicating of the economic health of a country - there are a host of others including manufacturing data,unemployment figures etc.

 

[Firefly]

As I said before who knows ? That's why traders speculate.
I don't share the view that currency is the only indicating of the economic health of a country - there are a host of others including manufacturing data,unemployment figures etc.

I agree, but it seems clear to me that the price of Sterling fell after the Brexit result and has now increased as there is a slight chance it might not go ahead. Reasonable?

 

[Wahaay]

I agree, but it seems clear to me that the price of Sterling fell after the Brexit result and has now increased as there is a slight chance it might not go ahead. Reasonable?

There's always a chance it might not go ahead but as a betting man I'd put the odds at very,very long.
May could call a snap election tomorrow and Labour would be annihilated in the North and Labour MPs know that.
She also has a huge degree of support in the Conservative Party with only a few Remoaners like Ken Clarke or Anna Soubry causing trouble.
Will the Lords block it ? Not a chance.
Can Nicola Sturgeon block it ? No. She's already dropped the idea of a second referendum ( which she would lose ) in favour of a ludicrous suggestion that Scotland could remain in the Single Market if the rest of the UK is out. You could hear the laughter all the way from Brussels.
But it's always worth a punt on the off-chance.
For what it's worth May's speech was a good one and has killed off all this talk about Britain having no plan.A surprising amount of detail and,of course,that vote in Parliament was the rabbit pulled out of the hat.
Personally I would have liked her to guarantee the rights of all EU citizens currently in the UK but as she pointed out in her speech while there's a great deal of support for an agreement amongst most EU countries one or two are not being helpful.That's the EU for you.

A quick look at Sterling - heading for its biggest one-day gain since 2008.

 

[Firefly]

There's always a chance it might not go ahead but as a betting man I'd put the odds at very,very long.

The markets probably agree and hence the only slight increase in the price of Sterling..

 

[Firefly]

A quick look at Sterling - heading for its biggest one-day gain since 2008.

From a very low point!

 

[Firefly]

Welcome to capitalism baby.

Indeed!

The Irish government has signalled its intent to exploit May’s plans to leave the single market and customs union with bids to woo EU agencies from London to Dublin.

A spokesperson for the government in Dublin said there were now “economic opportunities that may arise for Ireland” following the UK’s decision.

“Bids for the EU agencies currently located in London – the European Medicines Board and the European Banking Authority have already been announced and the state enterprise agencies are actively pursuing opportunities for increased investment, business and job creation in Ireland,” they said.

“Economic opportunities for Ireland will be pursued vigorously”, the government spokesperson continued.

https://www.theguardian.com/politic...d-of-theresa-mays-brexit-speech-politics-live

 

[Duke of Marmalade]

I have read May's full speech and listened to the BBC News coverage at one o'clock. May's speech is long but it is compulsory reading. I recommend that AAM listeners Google it as soon as possible.

She certainly talks a good talk. In ways a very concilitiary speech to the EU, I am sure the Redwoods of this world cringed at it. The speech makes it very clear what the stakes are. As to the sterling exchange rate, it has been for some time entirely dominated by Brexit. Down on a "hard" message, up on a "soft". At the weekend we were told of a very hard Brexit to be announced by May. Sterling plunged. The speech itself is a breathtaking (I mean that charitably) vision of Britain having its cake and eat it.

Everyone knew the Single Market was a gonner. If free movement of people stayed then there was no Brexit. The real issue was Free Trade with the EU and membership of the Customs Union (common tariff against non members). May's vision is for complete Free Trade with the EU, for freedom to set its own tariffs with the rest of the World, for freedom to set its own regulations and for the end to the UK's contribution to the EU budget. If all that were to happen sterling would soar possibly right back to levels seen at the commencement of the euro (1.5). Of course she is not going to get all that; we would all want a piece of that. But on Monday the markets were fearing that she would throw the toys out of the pram. Instead she sets as her objective the desire to keep all of the EU benefits and escape all of its obligations.

 

[Purple]

I have read May's full speech and listened to the BBC News coverage at one o'clock. May's speech is long but it is compulsory reading. I recommend that AAM listeners Google it as soon as possible.

She certainly talks a good talk. In ways a very concilitiary speech to the EU, I am sure the Redwoods of this world cringed at it. The speech makes it very clear what the stakes are. As to the sterling exchange rate, it has been for some time entirely dominated by Brexit. Down on a "hard" message, up on a "soft". At the weekend we were told of a very hard Brexit to be announced by May. Sterling plunged. The speech itself is a breathtaking (I mean that charitably) vision of Britain having its cake and eat it.

Everyone knew the Single Market was a gonner. If free movement of people stayed then there was no Brexit. The real issue was Free Trade with the EU and membership of the Customs Union (common tariff against non members). May's vision is for complete Free Trade with the EU, for freedom to set its own tariffs with the rest of the World, for freedom to set its own regulations and for the end to the UK's contribution to the EU budget. If all that were to happen sterling would soar possibly right back to levels seen at the commencement of the euro (1.5). Of course she is not going to get all that; we would all want a piece of that. But on Monday the markets were fearing that she would throw the toys out of the pram. Instead she sets as her objective the desire to keep all of the EU good things and escape all of its bad things.

Let's hope she gets all she is looking for; what's good for them is good for us.

 

[Wahaay]

Indeed!

The Irish government has signalled its intent to exploit May’s plans to leave the single market and customs union with bids to woo EU agencies from London to Dublin.

A spokesperson for the government in Dublin said there were now “economic opportunities that may arise for Ireland” following the UK’s decision.

“Bids for the EU agencies currently located in London – the European Medicines Board and the European Banking Authority have already been announced and the state enterprise agencies are actively pursuing opportunities for increased investment, business and job creation in Ireland,” they said.

“Economic opportunities for Ireland will be pursued vigorously”, the government spokesperson continued.

https://www.theguardian.com/politic...d-of-theresa-mays-brexit-speech-politics-live

There's no doubt there could be some opportunities for Dublin as indeed there may be for Frankfurt and possibly Paris and one hopes the Irish government is pursuing these with vigilance.
But they have been saying much the same for the last six months and so far no-one appears to have lured by their entreaties.
The reality is London is a major world financial centre and it is going to remain that way.No-one should get carried away by notions that major financial corporations are going to re-locate their headquarters away from London,particularly if Britain reduces its corporate tax rates in the future.

 

[Wahaay]

From a very low point!

I can remember when one pound bought you two dollars.These things have a habit of correcting themselves over time.

 

[Firefly]

The reality is London is a major world financial centre and it is going to remain that way.No-one should get carried away by notions that major financial corporations are going to re-locate their headquarters away from London,particularly if Britain reduces its corporate tax rates in the future.

Anthony Browne, head of the British Bankers’ Association would seem to disagree with you:

“Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it,” he says.

“Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.”

https://www.theguardian.com/politics/2016/oct/22/leading-banks-set-to-pull-out-of-brexit-uk

 

[Wahaay]

Anthony Browne, head of the British Bankers’ Association would seem to disagree with you:

“Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it,” he says.

“Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.”

https://www.theguardian.com/politics/2016/oct/22/leading-banks-set-to-pull-out-of-brexit-uk

Except that article was dated October last year and doom-monger Anthony Browne of the BBA was roundly laughed at when the story came out.
Can you cite any banks that have started re-locating yet ? You know,the smaller ones at least which were going to up sticks before Christmas.
How about French bank Credit Agricole with revenues of around €30billion,so not your average high street credit union.In November it extended the lease on its current headquarters in the City of London until 2025, indicating it has shelved plans to seek a new base after the Brexit vote.
Then there's UK-based Icap,the world’s largest interdealer broker which reported in November half-year revenues rose 11 per cent to £254m on the back of volatility generated by the UK’s decision to leave the EU.It has no plans to re-locate.
You have to remember that banks have investing huge sums in the City of London since Big Bang,the de-regulation of London's financial markets 30 years ago.Why should they consider leaving at this stage when A50 hasn't even been triggered and the two years of negotiations haven't even started.
I'd be wary of taking much notice of The Guardian's financial coverage too seriously.The Guardian Media Group suffered losses of £173million last year.