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Of course much of the reason has to do with the Brits themselves. Much like mainstream GOP voters, who are now mortified at the prospect of Trump, the U.K. populace woke up the next morning with the single horrifying thought – “What have we done?” Ever since then, U.K. politicians have been scrambling to mitigate the fallout from the vote.
U.K.’s new Prime Minister Theresa May, who herself campaigned on the Remain side, has made all the right noises about following through while actually doing everything she can to make sure that Article 50 is never invoked. Remember that until the U.K. actually invokes Article 50 — to formally give notice — the country remains a full-fledged member of EU. And it’s business as usual for all concerned.
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| Little wonder that the British pound has stopped falling. |
Little wonder then, that the British pound has stopped falling. The pound has basically hovered above the 1.3000 level to the dollar for more than a month, despite some horrid U.K. data that saw business sentiment drop at its sharpest rate on record. The basic line of thinking among traders right now is that Brexit is bull: U.K. authorities will somehow figure out a way to undo the vote, keep Great Britain in the union and preserve London’s coveted position as the finance center of the world.
| “The basic line of thinking among traders is that Brexit is bull.” |
Tomorrow, the Bank of England meets and all signs point to a rate cut. But, there is a debate as to how deep the cut will be. Right now, U.K. rates stand at 50 basis points. The BoE could take an ax and chop rates down to zero essentially as a preemptive move to keep the country from falling into a recession. Or, it can move gradually and slice just 25 basis points off the rate and preserve its options for further easing down the road. Either way, the market focus will be on the central bank’s assessment of the current state of the U.K. economy.
For now, the country appears to have avoided financial Armageddon, and the capital flight that so many investors feared would take place has not materialized. Of course, that could all change in a flash if U.K. authorities actually decide to pull the trigger on Article 50. But until that happens, Brexit is looking more and more like a tempest in a teapot and the currency could see a rebound as more investors breathe a sigh of relief.
Happy trading,
Boris Schlossberg
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Payroll processor ADP estimates that American companies added 179,000 jobs in July, reports U.S. News & World Report. A survey by ADP indicates that the services industry added 185,000 jobs and manufacturers added 4,000 jobs. However, construction companies slashed enough workers to significantly negate those gains. Still, the July job estimate affirms a wobbly upward trend that includes 144,000 new jobs in April, 11,000 in May, and 287,000 in June.
Advertising executive Kevin Roberts has agreed to leave the Publicis Groupe after he triggered a firestorm by making dismissive, sexist remarks about gender diversity in the advertising industry, reports The New York Times. In an interview with Business Insider, Roberts reportedly suggested women were happier in non-leadership roles and stated that the discussion over gender diversity was “all over” on Madison Avenue.
For the first time in history, the U.S. government has approved a plan by a private company to fly to the moon, reports CNN.com. The company, called Moon Express, has stepped up to compete for the $25 million Lunar XPrize. The jackpot has been put up by Google for the first privately financed expedition to reach the moon before the end of 2017.
Hulu – the streaming TV service – is worth $5.8 billion, reports CNN.com. That’s based on Time-Warner shelling out $580 million for a 10 percent share of the service, which offers TV content via numerous platforms, including computers and smartphones. Time-Warner joins three other companies that own parts of Hulu. They are Disney, Comcast, and 21st Century Fox.
The Money and Markets team
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By ignoring the popular vote to leave the EU, British politicians show that they aren’t for the people at all. Apparently votes aren’t important. They are more like “suggestions.”
Seriously. And who claps for that? NOT the British citizens that voted. I don’t believe they are happy about it.
Votes have always been no more than suggestions to the politicians, and they often ignore the suggestions in favor of actions that appear to give themselves a better chance of re-election. Me First, is nearly always their motto.
Votes are just there to give the illusion that we, the public, participate in democracy. There were people warning that the UK would never follow through with Article 50, and I had my suspicions it would go this way from the beginning. The same thing is true here in the US; we are asked to “participate in democracy” every few years by pulling one of two prepared levers. Does anyone here actually think your concerns are being address? In the US, our Congress has single digit approval ratings. Let’s get to the point as to why things are this way: big business.
All of us here should at least admit we have culpability in this farce. The capitalism we praise and read praise about daily is completely at odds with democracy: big business interests will always beat public desires. Look at denuclearization, look at climate change, look at tax increases for the rich, look at marijuana legislation. These (and many others) have massive public support backing them. Aside from marijuana legalization, does anyone think action by the Western governments is imminent? Doubtful. This is why revolution is actually an option for most of us who are paying attention.
There’s a first time for everything, but until now there has never been an earnings recesssion during an advancing (even if barely) economic cycle, without setting off a 20% plus stock market declinee
The Philadelphia Fed has an indicator that has infallibly fallen below a certain level before or during the early stages of every recession for quite some years. It is now below that level.
As Someone living in the uk I would say
Brexit means brexit.Only a fool would invoke
Article 50 immediately.i suspect early in 2017
It will happen.
If politicians were to ignore the will of the
People chaos would ensue.
Ignoring the will of the people happens daily in the U.S.. Honoring the will of capitalist corporations is thriving. We the people have become a nation of consumption crazed, debt driven, media saturated sheep.
In the U.S., only 60%, and usually less, of the electorate votes on a good election day. Hence we wind up with a Congress that has done basically nothing for 8 years, and blames everything economically and politically gone wrong on the President, whoever he is. This is anarchy.
I hope the U.K. can do better, and that they are trying.
“The Road to Freedom: How Britain Can Escape the EU”. by Gerard Batten.
We can unilaterally withdraw from the EU without invoking Article 50 and instead, revoke the, “European Community Act of Parliament, 1972.”
That will then free us to withdraw on our own terms, while at the same time respecting International Law.
Sounds like sense in this storm of confusion and inaction.
A job for Parliament then?
May crawling off to Merkel, of all people, to get some assurance that she is doing the right thing?
Stomach Turning!
What a great point you make! I was a lecturer in European Law and I have made the suggestion that if we repealed the 1972 Act, we could stay in the EU and reject any regulations that were not to our benefit. What could Brussels do to enforce their rules? If they issued a fine, we could ignore it. The French have been breaking the rules for years, but the British have an unfortunate “fair-play” mentality where they keep to their agreements and contracts. One thing we can be sure of is that Brussels would never expel the UK as we saw how desperate they were for us to stay in the EU.
Britons realize that once Britain is free of the EU, it can again govern itself, and its economy can be freed from some of the burdensome regulations that Brussels is imposing. They will also be able to expel hundreds of thousands of Europeans who are raising the British unemployment rate, either by taking jobs in Britain, or by taking the dole. There will be short term costs to Brexit, but the long term gains will quickly make up for those costs.
The British ruling class may be horrified at the prospect of Brexit, but I see no reason to believe that any of the Brexit voters have changed their minds.
they need to pull the trigger on Article 50, delaying it will only cause more anxiety. There will be some pain at first, there always is with major changes, but they will finally be out of the clutches of the New World order, and that is what this vote was all about. They were smart to be the first off that sinking ship that is Europe
I, like many others, voted Brexit to avoid the British taxpayer being on the hook for the many hundreds of billions needed to bail out various banking systems in the EU.
Nothing has happened since then to persuade me that I made a mistake.
Well finally Steve, someone has a clear picture of the big deception of the EU. If the U.K. doesn’t exit, it will become an entity of none speaking English People…bankrupt keeping all the non citizens on the dole…
I don’t think that the US government owns the Moon. But, maybe they believe that they laid claim to it in 1969!
The US signed the 1967 space treaty that prevents countries on Earth from claiming sovereignty over celestial bodies. So no, the US doesn’t claim ownership over the Moon.
And youR point is…?
The media made up all of this hysteria about the end of the world for the UK…because the elites did not like the outcome of the vote. The FTSE has been up nicely since the day after the vote…..thank you very much!
Europe and the EUR is going down. UK leave and fast before you have to make Italian and Spanish banks whole with your tax money (Greece, Portugal and Cyprus can lick some stones they are too small to matter). Europe is governed by an unelected mafia but there are no cool chicks, no coke and no guns, not fun. And don’t worry, Paris is not going to take over London. Who will, on his free will, put themselves in danger from the French government. Nor will Frankfurt for that matter. Germans don’t have clue about finance, look at DB and Commerzbank.
Time for Britain to follow though with Article 50 and they should cut the budget , lower taxes and regulations to get the country going again ! Enough with the monetary easing let businesses and citizens keep more of what they earn and Britain will rise again . Just check out Romania who cut taxes last year . Little wonder there economy is growing again and unemployment fell by 4 percent .
With the terrible state of most of the EU banks, the high levels of unemployment, the economic stagnation that could evolve into a recession, the possibility that the EU is disintegrating, and the threat of terrorism in those countries, Brexit seems like a triggering event the EU could do without right now.
It’s clear Germany and France want to acquire the role of “EU financial center”, moving it from London as well as have other EU functions from the UK to their countries. Thus, self-interest spurs them to encourage a rapid UK exit. Hopefully, less vested voices will prevail as the timing of the divorce is decided.
Deferring Article 50 seems a rational step not only for the UK but for the greater EU. It gives the UK time to develop their “game plan” for how to implement the dissolution and to perpetuate / reorder essential economic and social connections with the EU countries. It is not in the best interests of any European country to have a dysfunctional dissolution.
And with the UK’s NATO role, it seems critical to retain a certain level of civility and decorum as common interests and sharing of critical intelligence information will continue to be needed. With the dual potential instabilities of Putin continuing his empire re-building and a possible Trump presidency in which he both seems intent on appeasing Putin and being critical of NATO, especially in the Baltic states, it is easy to see how regional instability is probable in the coming decade.
This continual obsession with lowering interest rates to add growth to the economy is flawed. What difference is a 25 basis point cut going to make when people have lost control over their financial future. Many I have spoken to believe we are approaching perilous times and lack confidence in the governments of the day. We use to stand for something and now we sit down and rely on handouts. We can’t sit by and have four more years of failed policies from a person who believes it’s a woman’s turn to lead. What an unbelievable mess we face.
Back to the future:
Backtracking on Brexit will cause the Tory party to splinter and the further rise of the even more right wing (e.g. UKIP). Even if UKIP break in half, the halves will draw Tory voters angry that a group of Toffs with their nose in the EU trough have usurped the sovereignty of the people who they pretend to serve, but merely serve themselves.
The EU is doomed because you cannot have a strong exchange rate without a strong economy so Greece, Italy, Spain and Portugal will be economically strangled until they are forced out of the Euro-zone in an uncontrolled manner.
A month after the first world war began, Germany drew up some far-reaching war aims including French power would be broken and Belgium reduced to vassal status. Mitteleuropa, a German-dominated customs union, would give Berlin economic hegemony.
Crony Capitalism or why I buy gold. A quotation I read this morning. If you really like Tesla I think I can find some Tucker shares for you to buy. They are collectibles by now.
The quotation Businesses cannot stand on their own feet without some form of Government aid. Whether that be in QE form or direct subisidies, the marketplace is no longer a “Free Market”. Tesla and its dependents are an example of what is wrong with our capital market system.
Elon Musk is using the Government as a backstop for his businesses. He is depending on easy money to support companies that would otherwise fail from debt. In short, the business structure of Tesla, SolarCity and SpaceX is a microcosm of the problem with our current capital markets. unquote. There is your financial Daily Bread for the day.
Throw out the GOP along with their trade programs of GATT and NAFTA and return Glass-Steagall (which they all voted to remove) and life will improve in America immediately, and the Stock Market will go to the moon as the Chinese threat goes away….
I voted for Brexit-England has always been adrift of the machinations of Europe. I demand that May honour her commitment when she said Brexit means Brexit. Article 50 must be triggered or else democracy in Britain is a sham-the will of the people must prevail in any democracy worth its name..
The better educated young of England voted by a huge majority to stay…… Generally those better educated young people are right…… If Great Britian goes the way of exit, Great Britian will be no more, as the Scots will go for sure…..
Just as our Donald is going down in flames (Thank God!), surely the British version will also soon leave the public limelight, and both countries will be better off, with a memory of “Never Again” like a bad hangover!……. :(
The better educated in England are the rich business people who benefit from cheap labor and offshoring while the middleclass lose there jobs to foreigners and off shoring !!
As a Brit who voted for Brexit all I’ll say is that Theresa May and her merry men will be voted out if they do not follow through. I wonder where you have the evidence it is not going to happen ? The UKIP party are waiting in the wings to pick up the votes if Brexit fails to materialise.
This is wishful thinking on your part Boris!
Article 50 will be invoked, at the beginning of next year, as promised by the new government..
Get used to it – or are you one of the metropolitan elite who doesn`t really believe in democracv? The writer CP Snow wrote: “The trouble with many people who like to call themselves democrats, is that secretly they despise universal suffrage!”
The very people the Brits had the sense to vote against – while they still can!!!
Chill Boris, and get over it.Don`t be a Remoner.
Richard