First Grexit, Then Brexit, Now Trump?

Bryan Rich ,   CONTRIBUTOR

Forbes

As we head into the election, everyone involved in markets is trying to predict how stocks will perform on the results. When the Clinton e-mail scandal bubbled up again, the stock market lost ground for nine straight days, the longest losing streak since 1980. Since the probe has allegedly ended, stocks have been up.

Does it mean Clinton is good for stocks and Trump is bad for stocks? Not likely.

Big institutional money managers think they have a better understanding of what the world will look like under Clinton than Trump, and therefore feel more compelled to go on with business as usual heading into the event (i.e. allocating capital across the stock market) with the expectation of a Clinton win, and conversely, they’re not as compelled to do so with the expectation that Trump might win (i.e. they sit tight and watch).

Brexit Feels Like a Very British Coup

NOV 8, 2016 1:01 AM EST

Bloomberg

By
Mark Gilbert
There's a joke doing the rounds on Twitter:

Brexit walks into a bar. "Why the long farce?" asks the barman.
Unfortunately, it's too close to the truth to be truly funny. Post-referendum Britain feels oddly different to the pre-plebisicite United Kingdom; less united, certainly, and also somewhat diminished as a kingdom.

Less than five months after the surprise U.K. vote to leave the European Union, and at least four months before exit negotiations will officially begin, the acrimony surrounding Brexit is intensifying.

Brexit: High Court judges to give legal verdict

03-11-2016
BBC

Senior judges heard a challenge last month from campaigners who argue Prime Minister Theresa May does not have the power to invoke Article 50 of the Lisbon Treaty without MPs' approval.
The PM has promised to trigger Article 50 by the end of March 2017.
Its author, Lord Kerr, has told the BBC he believed it was "not irrevocable".
Judges are set to give their verdict at 10:00 GMT.

Brexit so complex it could overwhelm politicians, warn senior academics

Independent group says leaving EU will test constitution and legal framework to their limits and ‘possibly beyond’

The Guardian

Managing Britain’s exit from the European Union is such a formidable and complex challenge that it could overwhelm politicians and civil servants for years, senior academics have warned.

Theresa May has announced she will trigger article 50 – the two-year process of negotiating a separation from the EU – by the end of March next year. The government will also publish a great repeal bill, which will transfer all EU-originated laws into British law, so that MPs can decide how much they want to discard.

Brexit Bulletin: Bankers Threaten Exodus

Bankers threaten early exodus, while PM May tries to head off a constitutional crisis

Bloomberg

Emma Ross-Thomas

Banks will start moving operations out of the U.K. late this year and early next as they anticipate a hard Brexit. That's according to  Anthony Browne, chief executive officer of the banking lobby group BBA, writing in the Observer newspaper on Sunday.

International banks’ “hands are quivering over the relocate button,” he wrote. “Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.”
Without identifying any banks by name, he said lenders can’t wait until the last minute and have to “plan for the worst,” especially because “public and political debate at the moment is taking us in the wrong direction.”
Handily, some real estate companies are already finding them new digs.  A property company managed by Schroders Plc is bidding for an office building in Frankfurt, joining CBRE Global Investors LLC and Standard Life Plc, which are seeking to purchase office space in cities from Dublin to Amsterdam.

Monetary Policy And Political Problems To Drive The Euro Lower

OCT 22, 2016 @ 11:57

Stephen Pope ,   CONTRIBUTOR

Forbes

Over the past week, foreign exchange markets have been offered opposing views on the next play in European and American monetary policy. The differences are wider than the Atlantic Ocean.

In Europe, the Bank of England (BOE) faces many problems as the falling level of Sterling threatens to ignite inflation from its current 1.0% at a time when the economy is struggling to accommodate the uncertainty over the terms of Brexit.

A larger dilemma faces the European Central Bank (ECB). With a tepid economy, GDP growth just 0.3% and unemployment of 10.1% coupled to a fragile banking system it is obliged to hold open the door for further monetary stimulus in December and maintain that accommodation deep into 2017.

Scotland demands to be equal partner in Brexit negotiations

The lead Scottish minister in the process is concerned that the UK is heading for a hard Brexit

The Independent

David Hughes, Lucinda Cameron


The Scottish Government has demanded to be treated as an “equal partner” by Theresa May in the Brexit negotiations, as the Prime Minister called for a “grown up” relationship with the devolved administrations.

The Prime Minister will host the leaders of Scotland, Wales and Northern Ireland on Monday to discuss the Brexit process and her Government's economic plans.

'Brexit' May Hurt Britain Where It Thrives: Science and Research

By KIMIKO DE FREYTAS-TAMURA
OCT. 17, 2016

The New York Times

LONDON — When Adam Durant started his company analyzing climate-related threats to aircraft, he and his team of researchers symbolized the possibilities offered by the European Union.

Soon after graduating from college, Mr. Durant received a prestigious European Union grant to study atmospheric chemistry and conduct climate-related research. When he started his business, he hired staff members from Belgium and France without having to sponsor their visas.

But since Britain voted in June to leave the bloc, Mr. Durant has become the archetype of something very different: a nervous entrepreneur, unsure about future funding and even considering leaving the country.

Nine Things You Need to Know About a ‘Hard Brexit"

Bloomberg

 Simon Kennedy

October 17, 2016 — 7:00 AM EEST

Just when you finally grasped the meaning of “Brexit,” the subject grows more complicated. In London and the capitals of continental Europe, political leaders are preparing to discuss the terms and conditions of the U.K.’s coming separation from the European Union. Two broad options are being shorthanded as "hard Brexit" and "soft Brexit," with the U.K.’s prime minister, Theresa May, thought to lean toward the "hard Brexit" camp.

Brexit means…higher prices

The economic impact of devaluations
Oct 13th 2016, 10:29 BY BUTTONWOOD

The Economist

THE economic arguments for and against Brexit in the course of the referendum campaign were quite esoteric and confusing to the average voter. Similarly, sterling’s decline in the currency markets might seem like the kind of thing that only concerns City traders.

So the row that has broken out between Tesco, Britain’s biggest supermarket chain, and Unilever, the Anglo-Dutch multinational, has made the story concrete in ways that were not apparent before. Unilever wants to raise prices across a range of goods to reflect the fall in the pound, which has dropped from around $1.50 on the day of the referendum to less than $1.22 at the time of writing. Similar falls have been seen against the euro; indeed travellers who change their money at the airport are getting less than a euro per pound.

Less than one euro to the pound at many UK airports

By Ian Pollock
Business reporter, BBC News
10 October 2016

BBC

The continued fall in sterling's value means that the average rate available at 17 airport bureaux de change is now just 99 euro cents to the pound.
The worst rate is currently 88 euro cents at Moneycorp at Southampton airport and the best is €1.06 from the Change Group at Glasgow Prestwick.
Since the UK's Brexit vote in June, the pound has fallen sharply in value.
The average US dollar rate at the airports is down to $1.08 to the pound.
What's the pound exchange rate near you? Please tweet your pictures of currency exchange rate boards to @BBCBusiness and let us know
The survey of airport bureau de change currency rates was carried out by travel money firm FairFX on Monday morning.

London Won’t Easily Surrender Role as Euro Clearinghouse, Hammond Says

Chancellor of the Exchequer says the City should keep the business after Brexit

The Wall Street Journal

By INYOUNG HWANG
Oct. 6, 2016 1:37 p.m. ET


The City of London won’t quietly relinquish its central role in derivatives trading even after the U.K. completes its exit from the European Union, a British official said Thursday.

Philip Hammond, the chancellor of the Exchequer, said firms in London will continue to handle transactions on euro-denominated derivatives. The location of clearing, in which funds are transferred from one account to another, and of settlement, in which financial institutions agree on account balances, has emerged as a key issue in Britain’s departure from the bloc.

London is home to some of the region’s biggest clearinghouses, which are intermediaries that stand between buyers and sellers of financial instruments and act as a buffer should one side fail to hold up its obligation. A threat to the clearing and settlement business could strike at the heart of the city’s large financial industry.

Sterling hits three-year low versus euro as Brexit deadline set

Mon Oct 3, 2016 | 4:31am EDT

Reuters

By Jemima Kelly | LONDON
Sterling slid to a three-year low against the euro and a three-month low versus the dollar on Monday, after a March deadline was set for the start of the formal process that will split Britain from the European Union.

Britain's Prime Minister Theresa May told her Conservative party's annual conference on Sunday that she was determined to move on with the process and win the "right deal", in a move to ease fears inside her party that she may delay the divorce.

Banks Said to Plan for Loss of Euro Clearing After Brexit

Bloomberg
September 22, 2016 — 2:01 AM EEST Updated on September 22, 2016 — 2:33 PM EEST


Executives at global investment banks in London expect France and Germany will prevail in a tussle over the clearing of $570 billion of euro derivatives and are making plans to deal with the fallout, according to people at four of the biggest firms.
They assume the City of London will eventually be stripped of the ability to clear euro denominated swaps after Britain formally exits the European Union, said the people involved in their firms’ contingency planning, who asked not to be identified because the details are private. While that might take years to happen, employees and operations central to the clearing function will be among the first moved to the continent once Brexit is triggered, one person said.
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Britain’s post-Brexit warning for Americans seduced by Trump

The Washington Post
By Sebastian Mallaby September 1 at 11:58 AM

Donald Trump’s ungainly back-and-forth on immigration has a parallel in Britain, which is struggling to make sense of its own impetuous resolution to take control of its borders. Indeed, if Britain after the Brexit referendum is anything to go by, a Trump presidency would be dominated by zigzagging: sometimes to dilute past promises, sometimes to double down. In the terrifying event that Trump actually became president, you’d hear supporters grumbling bitterly about treachery — even as critics wondered furiously why impractical campaign pronouncements were so seductive for so long.

2 Months After ‘Brexit’ Vote, Britain’s Push to Leave E.U. Is a Muddle

By STEPHEN CASTLEAUG. 31, 2016

The New York Times

LONDON — Since Britain’s vote in June to quit the European Union, its government has promised repeatedly to make a success of withdrawal, known as Brexit.

More than two months later, however, it still cannot say how.

On Wednesday, Prime Minister Theresa May called cabinet ministers to a brainstorming session about the withdrawal, pledging to examine “the next steps” for Britain and to identify “opportunities that are now open to us as we forge a new role” in the world.

Britain’s scientists are freaking out over Brexit

The Washington Post

By William Booth and Karla Adam July 31 at 3:00 AM
CANTERBURY, England — Britain has been a powerhouse of discovery since the age of science began. Newton, Darwin, Crick? They parted the curtain on gravity, evolution and DNA.

Now comes Brexit, and to use a non-scientific term, the scientists in the country are freaking out.

Since the vote to leave the European Union last month, leaders of Britain’s scientific academies are making dire predictions about what could happen to research and innovation here.

Damage to British research, the scientists warn, could be among the cascade of unintended — and largely unappreciated — consequences of the vote to exit the bloc.

The researchers worry that Britain will not replace funding it loses when it leaves the E.U., which has supplied about $1.2 billion a year to support British science, approximately 10 percent of the total spent by government-funded research councils.

After the Brexit vote

The first signs of post-Brexit financial stress: property fund suspended
Jul 4th 2016, 16:45 BY BUTTONWOOD

The Economist

AFTER the initial post-Brexit sell-off in sterling and equities, financial markets had quietened down in the wake of the shock referendum result. The FTSE 100 even moved ahead of its pre-Brexit level.

But investor concerns have shown up in another market - property, Today Standard Life, the Scottish insurer, suspended redemptions in its UK Retail property fund, with £2.9 billion of assets under management. Here is the press release.

Nigel Farage, Who Spurred ‘Brexit,’ Resigns as Head of U.K. Independence Party

By STEPHEN CASTLE and STEVEN ERLANGERJULY 4, 2016


The New York Times

LONDON — He spent nearly 20 years pushing for Britain to leave the European Union, and having succeeded in his aim, he is now taking his leave.

Nigel Farage, the politician who probably did more than any other to force the referendum on British membership in the European Union, resigned on Monday as leader of the right-wing populist U.K. Independence Party, saying “I’ve done my bit.”

Mr. Farage, 52, has quit the post before — twice. But on Monday he sounded as if he meant it this time, telling reporters that “my political ambition has been achieved” and that “I want my life back.”

Brexit isn’t the most serious threat to the EU — the euro is

Updated by Timothy B. Lee on June 29, 2016, 10:10 a.m. ET

VOX

Central banks like the US Federal Reserve and the European Central Bank play a critical role in modern economies.

Money is an essential fuel for economic activity, and it’s the job of a central bank to supply enough to allow for robust economic growth. If they supply too much, they produce inflation. Producing too little can tip the economy into a recession — or make an existing recession worse than it would otherwise be.