pound will get scorched. everyone is sick of this. Bojo will now release as guest mentioned yesterday, the back up plan of the backup plan for the backstop backup plan
Joined Nov 2007
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Status: left CanaryWharf desk-tea break
|2815 Comments
well, all these little stories are clearly designed to help out the silly leavers...
Boss "if you order fish you will get a fish"
Cook "we won't cook fish"
Customer "we need another cook "
So GBP lower against everyone, EUR lower same deal. After Brexit, GBP lower, good for exports, so exporters should be upping their game and actively searching for markets outside EU. EUR still down cause the EU will also be licking its wounds but with no upside that I see. Increased exports to US and China...nah not gonna happen. The UK has all the opportunities. Trade with whomever they want, executing one on one deals. Germany perhaps hardest hit, tariffs on exports to UK, increased share of new EU budget, etc., has already made conciliatory remarks. I am wagering on the fact that the UK can come out of this, after a a couple of years and never look back. The EU meanwhile will still be trying to pull up the stragglers but with a reduced budget...Look for side deals everywhere. So will continue to play the game and look for significant volatility. which is a good thing for us traders right?
In my ever, ever so humble, (not) opinion, There is no way that any self respecting Brit can ever go back into that EU pub for a pint. No one likes to get laughed at. So unicorn or no unicorn, GBP lower against everyone, EUR lower same deal. After Brexit, GBP lower, good for exports, so exporters should be upping their game and actively searching for markets outside EU. EUR still down cause the EU will also be licking its wounds but with no upside that I see. Increased exports to US and China...nah not gonna happen. The UK has all the opportunities, if it can take them. Trade with whomever they want, executing one on one deals. Germany perhaps hardest hit, tariffs on exports to UK, increased share of new EU budget, etc., has already made conciliatory remarks. France will do what? Annoy the Germans probably. I am wagering on the fact that the UK can come out of this, after a a couple of years and never look back. The EU meanwhile will still be trying to pull up the stragglers but with a reduced budget..Not good for the EUR. .Look for a change in the political landscape and side deals everywhere. So I plan to continue to play the game and look for significant volatility. which is a good thing for us traders right? Right or Wrong who cares, as Reagan once said Its not east or west its up or down. Up or Down, long or short!
After Brexit, GBP lower, good for exports, so exporters should be upping their game and actively searching for markets outside EU.
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How much lower?
This rosy picture assumes the rest of UK population will gladly send off their purchasing power to the chopping block just to help the "exporters".
It might be a bit hard to do manufacturing, packaging and shipping if a weeks-long general strike takes place, Hong Kong style. And I don't think the exporters' clients will appreciate the delay either and will wait for the situation to calm down. Manufacturing capacity isn't all that scarce these days.
I am not saying that it will necessarily happen that way, rather that it is always a good idea to examine assumptions closely.
{quote} Or you could go a different restaurant (or get a different Parliament) who will give you the fish you now badly want?
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Or....everyone in the restaurant gets fired.....new crowd offers a brand new menu.....there's still fish on the menu but with more details (actual facts) about how it might be cooked and how long it will take....overwhelmingly the customers order chicken.......no one ever speaks of fish again.
{quote} Or....everyone in the restaurant gets fired.....new crowd offers a brand new menu.....there's still fish on the menu but with more details (actual facts) about how it might be cooked and how long it will take....overwhelmingly the customers order chicken.......no one ever speaks of fish again.
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Or the tasty fish dishes are so popular after a bit of re-adjustment that the restaurant becomes a specialist fish restaurant (and then someone orders chicken and has to wait an eternity...)
In my ever, ever so humble, (not) opinion, There is no way that any self respecting Brit can ever go back into that EU pub for a pint. No one likes to get laughed at. So unicorn or no unicorn, GBP lower against everyone, EUR lower same deal. After Brexit, GBP lower, good for exports, so exporters should be upping their game and actively searching for markets outside EU. EUR still down cause the EU will also be licking its wounds but with no upside that I see. Increased exports to US and China...nah not gonna happen. The UK has all the opportunities,...
{quote} How much lower? This rosy picture assumes the rest of UK population will gladly send off their purchasing power to the chopping block just to help the "exporters". It might be a bit hard to do manufacturing, packaging and shipping if a weeks-long general strike takes place, Hong Kong style. And I don't think the exporters' clients will appreciate the delay either and will wait for the situation to calm down. Manufacturing capacity isn't all that scarce these days. I am not saying that it will necessarily happen that way, rather...
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There are too many of the "Nah! Banging yer 'ead against the wall mate...can't be done," brigade. To find out that it can be done and how to do it, look to Dyson, Triumph and the Britsh formula one industry. to show how to build, package, ship product and handle labor relations. There are many other fine examples examples,
In 2018, the UK’s exports of goods and services totalled £642 billion and imports totalled £680 billion. The EU accounted for 45% of UK exports of goods and services and 53% of imports in 2018.
Overall, the UK imports more than it exports meaning that it runs a trade deficit. A deficit of £142 billion on trade in goods was partially offset by a surplus of £105 billion on trade in services in 2018. The overall trade deficit was £38 billion in 2018.
The UK had a trade deficit with the EU of £67 billion in 2018 and a trade surplus of £29 billion with non-EU countries. -www.parliament.uk-
If we stay in the EU, will it get any better, we have always run a trade deficit with the EU and always payed into their system. How does that make sense?
In this scenario, not assumption, the GBP will float lower until such time as the country benefits from the enema and gets on with making stuff for its own people to buy and the world will buy. that's my hope.
Its a great for traders. how low will the GBP go, there a lot of noise around 1.20 to 1.18. But what happens if while the GBP is inching down, the USD picks up a little steam. ooops...Metals are in play, one should not ignore metals.
There are too many of the "Nah! Banging yer 'ead against the wall mate...can't be done," brigade.
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Actually I don't know if it can or can't be done. And I am eagerly awaiting to see how post-Brexit UK fares.
I simply raised the point that there are some underlying assumptions in the proposal of the pound experiencing a large drop at this stage of the situation that need a closer scrutiny. Like:
- low currency is good for exporters but that is true in any situation not just Brexit. Yet all advanced economy currencies move in ranges relative to each other despite the above and do not experience sustained weakening moves over the long term. So there has to be more to the currency value than just simple weakening to boost exports. Like that there is a significant segment of the economy that actually benefits from stronger currency, like importers and consumers.
- the assumption that Britain will be able to continue to happily export competitively in the backdrop of sustained mass public unrest raised by those segments of the population who oppose Brexit and its economic consequences - if such unrest takes place, I am not saying it necessarily will.
- the assumption that the East Asian mercantilist economic model is still valid and has enough future life for a late entrant like UK to be able to take advantage of it. In other words, you hope the world will buy your goods assuming that the world will not say "hell no, we want YOU to buy OUR stuff so OUR people get richer not YOUR people".
- the assumption that the UK will be able to complete the transition from a mature economy with high cost of living, high wages, financialized economy geared towards export of services to a freshly re-industrialized economy geared towards manufacturing exports smoothly and on time.
It might be that the Brexit aftermath will be able to force the pound to go much lower (towards parity), yet it is far from certain. As it stands now, it is already quite far below PPP value, so there is already a current pushing in the opposite direction.
It also assumes the rest of the world (mostly EZ but also USA) will not make monetary adjustments to offset the drop in the pound and return the relative valuation back in range.
Looking at metals and so on is fine, why not look at equities, too. How would a sudden sell out of FTSE100 and the broader UK stock market (let's say 20-30% drop) affect GBP? What would the social unrest ignition potential of such a drop be?
No one said it would be easy
its may be simpler than that, when the majority of traders are long, banks look to go short and take their money and vice versa. at this moment punters are 75% long GDP/USD. Bet you banks are just wringing their hands waiting to go short and take all that money.
not into equities, bad memories....don't know enough about futures or options.
at this moment punters are 75% long GDP/USD. Bet you banks are just wringing their hands waiting to go short and take all that money.
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Pity I did not bet you on it.
It turns out the punters got it right this time. Maybe the banks decided to clean out the shorts first. Or somebody's big option bet needed to be forced into a margin call. Or they just like to buy low and sell high unlike dumb money who buy high hoping to sell higher and sell low hoping to cover lower. Who knows.
Yesterday's >300 pips move both in cable and GBPJPY demonstrates very well the force of the stretched rubber band pulling the highly oversold pound up towards PPP value. The move continues upwards as I write this reply. This is different than the usual drama where there is a sharp medium sized move followed by a counter move a few hourly candles later.
The only thing I am really p**ed off is I missed it being out of the market for the whole day due to travel. Ah well...next time. Not going to chase it.
not into equities, bad memories....don't know enough about futures or options
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Well, I do. Equities (aggregated into indexes) and currencies are inversely correlated. This usually plays out very nicely in the dollar being the global master currency ("risk on" - dollar down, "risk off" - dollar up). The reason is that selling shares sucks dollars out of the system and turns them into cash.
The correlation between GBP and FTSE100 is not nearly as clear cut, but the broad UK stock market has stayed mostly up all the way back to June 2016 despite the expected adverse effect of Brexit on UK businesses. Is the equity market absolutely ignoring Brexit risks? Or, are the big financial players offloading their equity holdings into market heights while driving the pound down hard to prop up the equity valuations? If the latter takes place, once the selling is complete....the bids on the FTSE will vanish and with them a large portion of UK pensioners' wealth after UK equities experience a sudden death. I expect they will also flip the GBP switch and drive the currency up, as they start buying back shares dumped by panicked dumb money with expensive pounds at a nice discount. It might not happen, but it is a possibility that should be kept in mind.
{quote} Actually I don't know if it can or can't be done. And I am eagerly awaiting to see how post-Brexit UK fares. I simply raised the point that there are some underlying assumptions in the proposal of the pound experiencing a large drop at this stage of the situation that need a closer scrutiny. Like: - low currency is good for exporters but that is true in any situation not just Brexit. Yet all advanced economy currencies move in ranges relative to each other despite the above and do not experience sustained weakening moves over the long term....
The problem is until now UK needed imports, lots of them. And there are businesses build around these imports. And many of those are listed on the stock market. You get the drift.
High value exports need imports, by the way. Hard to see what UK can export that is 100% generated in UK - beside hubris and shepherd's pie.
Not to worry. We know UK don't need exports either.
Why would there be unrest from anti Brexit its the other way round
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About what? You got your referendum, you won it, article 50 was triggered. And since yesterday it seems like you will even get a deal (maybe....kind of....). Oct 31, do or die, is nigh. BoJo won't have to die in a ditch.
Still no Unicorns though. I suppose that is a good reason to be unhappy.
Never seen "winners" whine and complain like sore losers before.
Joined Nov 2007
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Status: left CanaryWharf desk-tea break
|2815 Comments
I'm not unhappy as long as we leave, the only time for unrest is if we don't, since like you say leave won.
low exchange rate stimulate's the country,
Why do you think Trump cry's about the $
BTW I think there's something wrong with this deal from yesterday ,that's later
{quote} Yes, bones, we know. The problem is until now UK needed imports, lots of them. And there are businesses build around these imports. And many of those are listed on the stock market. You get the drift. High value exports need imports, by the way. Hard to see what UK can export that is 100% generated in UK - beside hubris and shepherd's pie. Not to worry. We know UK don't need exports either. {quote} About what? You got your referendum, you won it, article 50 was triggered. And since yesterday it seems like you will even get a deal (maybe....kind...
BTW I think there's something wrong with this deal from yesterday ,that's later
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I also happen to think the deal is fishy, too good to be true, but that's irrelevant. It is the market reaction that is important. Its intensity and persistence seems way too high for simple market news move that is usually faded within a few hours. It could be the initial impulse of a new uptrend or a major retracement. GBP is already up near resistance area, so QUO VADIS. Too late to buy in too early to short.
Edit at 13:45 CEST: GBPUSD and JPY just hit the daily 3std dev Bollinger. If someone wants to play a quick short on the pullback now is the time. I already caught 2 falling knives. Off market for today. Time to go out for a coffee and lovely afternoon.
I'm not unhappy as long as we leave, the only time for unrest is if we don't, since like you say leave won. low exchange rate stimulate's the country, Why do you think Trump cry's about the $ BTW I think there's something wrong with this deal from yesterday ,that's later {quote}
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Have the same feeling on the deal. winding down the clock with a flurry of activity, a slight of hand perhaps. One has to believe that there are ongoing talks with all parties, behind the scenes, on how to prosper and encourage and develop post Brexit alliances. In the meantime play the game. today the theme is "Germany Strong" Ireland and UK talking. tomorrow Macron will say something stupid. that's the way of it...me thinks... I most certainly have not closed my GDP/JPY short. But, attempting to protect the pot with a flip side long, which today. so far, is doing well