Author Topic: Brexit consequences.  (Read 9165 times)

Moonraker

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Brexit consequences.
« on: June 27, 2016, 04:47:49 pm »
Don't expect return to normality any time soon. This is bad. Taken from a US viewpoint, but applies everywhere.

We all know by now that Britain voted to leave the E.U.: the so-called Brexit is
underway.

Unfortunately, it isn’t that simple as far as investors are concerned. What
matters now is what happens next. What are the broader implications of the
decision and what moves can be taken to at least minimize the damage, or maybe
even profit from the market disruption?


Let’s look at each of those questions separately, starting with the political
and economic implications.

Consequences Of The Vote

1. The U.K. Prime minister, David Cameron will step down. Cameron has already
announced this, but interestingly will resign effective in three months time,
which leads to the second point...

2. Nothing will happen quickly. This is an unprecedented event; there is no
blueprint as to how that actual exit will proceed, and negotiations will
probably drag on for years

3. In a broader sense, it will endanger the European Union. The victory for the
“Leave” campaign in Britain will embolden and strengthen anti-EU voices in other
countries. Those voices are already being heard, most significantly in France,
Italy, and Greece. Whether they succeed or not will largely depend on the extent
of the visible economic damage to the U.K. over the next year or so. A complete
collapse of the E.U., and therefore the Euro, is unlikely, but possible, and
would be devastating to the global economy if this takes place.

4. It will endanger the U.K.’s existence. In many ways, this threat is more real
and immediate than the one to Europe. Sinn Fein, the old political wing of the
IRA, has already called for a vote on a united Ireland based on the fact that
Northern Ireland voted to remain. Given that Scotland voted overwhelmingly in
the same way, renewed calls for a referendum on their independence will surely
come. If the nationalists in both cases get their way and then make it a single
issue vote, they would probably win.

5. Both the U.K. and the Eurozone will suffer economically over the next couple
of years. Every economic entity that has studied the effects of a Brexit has
concluded that this will be the case. Even the pro-leave campaign has admitted
as much and the massive drop in the Pound tells you that the market believes it
to be true. Recession looks almost certain in the U.K. and distinctly possible
in Europe.

6. That weakness will spread to the U.S. economy. This is less certain, but
looks likely to some degree. Trade accounts for 30% of U.S. GDP and Europe,
including the U.K., makes up 11% of that. The direct impact should not,
therefore, be too large, but the knock on effects of slow or negative growth
throughout Europe will still have an effect. At the very least, fears of that
have made it much less likely that the Fed will raise rates this year.

From a strategy perspective, then, there are several conclusions that can be
drawn.

What Investors Can Do Now

1. At some point, U.S. stocks will represent value. Of course, what matters here
is the timing. Usually, when the market is positioned wrongly going into news,
the immediate reaction is an overreaction, but this is different. This may be an
event, but it has long-term economic consequences, and as they sink in further,
selling early next week would be no surprise. Wait and see is the best policy,
but by the end of next week some value should present itself.

2. Yield is the place to hide. Given the likely impact on the Fed decision,
dividend payers such as utilities and telecom stocks, and things like REITs and
maybe even MLPs will outperform the broader market

3. Stick to the U.S. market. The huge drops in the British, European and
Japanese stock markets may look tempting, but they are the result of very real
potential problems.

4. If you are investing for more than a few years in the future, do nothing.
Times like this just have to be ridden out by long-term investors. If you have
extra cash to invest, wait a while and then begin dollar cost averaging in once
the dust has settled. If you feel you must do something, then a small investment
in something like VXX, which tracks the VIX or SDS, a leveraged S&P 500 Bear ETF
will provide some insurance and give you some profit to offset losses if the
drop continues.

The thing to remember above all else is that the only thing that is certain at
this point is that there will be uncertainty. The decision by the U.K. voters
will have a lasting impact, both politically and economically, but how severe
the effect will be on U.S. investors cannot be known. There will be volatility
as things play out and it will take a lot of patience to ride that out, but
ultimately that will, as is most often the case, probably turn out to be the
best policy.

Orca

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Re: Brexit consequences.
« Reply #1 on: June 27, 2016, 07:10:57 pm »
In my personal view. I think there is a reason why Cameron and Johnson will not trigger Article 50 soon. That is the red button that triggers the missile for the exit. They are playing for time. Why would they do this? Surely they could hand that to Brussels immediately and start the process. Cameron has said that he himself will not do it.
 
An early election will have to be held as early as August and they may just include a new in or out with their campaigns as this is in the forefront of voters minds. As it is, they realize now that many exit voters have changed their minds after seeing the aftermath of there choice.
They also fear the loss of Scotland and North Ireland that they love so dearly. They were not told that. Voters have to be told but the campaigners failed to do so.

Now the exit voters also realize that London will become a ghetto with most international banks like HSBO relocating to the continent and many manufacturers following. London is the financial hub of the world but will no longer be so.

It is a fact that the young adults are in favour of "stay in" but only 25% of them voted. The bosses are well aware of this too.
In the meanwhile we will have to bear the volatility but "exit" will not happen.

I started here with nothing and still have most of it left.

Orca

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Re: Brexit consequences.
« Reply #2 on: June 27, 2016, 07:34:40 pm »
And I almost forgot. EU member states will no longer need to stop illegal migrants at their borders from entering non EU countries.
France will be happy as thousands of these illegal migrants are swarming at Calais trying to cross the English Channel into Dover. They no longer need to stop them.
Was the referendum held to halt illegal migration. Hell no. It aids it.
I started here with nothing and still have most of it left.

gcr

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Re: Brexit consequences.
« Reply #3 on: June 27, 2016, 11:38:59 pm »
I tend to agree you synopsis of events in Britain. There seems to be some infighting within the party between the Cameron aligned and the Boris Johnson crowds. I know that Cameron did agree the poll if he won the last elections but now this poll/referendum seems to indicate that the Johnson grouping had poor judgment in determining or anticipating the outcome of a no vote. Now the nation can seem the angst and consternation that the decision has unleashed. I don't want to even anticipate the depths of despair Britain could potentially experience if the remaining EU country told all British citizen to toddle off home and find a job their as opposed to their job in a EU country - this could potentially trigger a mass unemployment situation in Britain. Could be a good time to buy a house in Britain   
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Orca

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Re: Brexit consequences.
« Reply #4 on: June 28, 2016, 07:12:22 pm »
It has now been revealed that the Article 50 was never signed by the Brits and this may pose a problem.
The Conservative Party that is in the "remain" camp was voted in by majority and can still "remain" despite a referendum due to their mandate.

When Cameron leaves, the next candidates for PM are all in the "remain" camp except for Boris Johnson who I'm sure has second thoughts now. He turned pale at the outcome and was visibly shaken and at loss of words for the first time. He is known as a great speaker.

If the Labour Party wins, Corbyn is also in the "remain" camp.
This leaves UKIP Party that has always promoted "out" as the winner.

I cannot see the UK leaving.
 
 
I started here with nothing and still have most of it left.

Moneypenny

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Re: Brexit consequences.
« Reply #5 on: June 29, 2016, 09:32:06 am »
There is always a silver lining.

Moonraker

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Re: Brexit consequences.
« Reply #6 on: June 29, 2016, 12:26:00 pm »
Bloomberg ..

Granted, if the EU refuses to budge, other nullification scenarios remain in
play. Since the law doesn't rule it out, for instance, parliament might override
the referendum.

Conceivably, if that happened, the Leave campaign and its 17 million supporters
would then say, "Oh, all right, if you feel that strongly, we'll stay."

Conceivably, the current spasm of paralysis in Westminster will lead to an early
general election, with the traditional parties melting down and candidates
aligning on Leave and Stay platforms, and the new Stay Party promising another
vote with the threshold for Brexit set at 80 percent.

Conceivably, the Stay Party would win the election. That could happen.

Conceivably, Boris Johnson will join the ranks of the tearful voters who say
they didn't really mean it, and could they please vote again, while Nigel Farage
will explain he was only joking, and tell people to stop taking him so
seriously.

Conceivably, Britain will ask itself what it could do to seem even more
ridiculous in the eyes of the world, and go sobbing to Brussels to ask for
forgiveness.

So, yes, I can imagine Britain reversing itself on Brexit. But it's a bit of a
stretch.

Orca

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Re: Brexit consequences.
« Reply #7 on: June 29, 2016, 10:25:08 pm »
Perhaps this recovery over the past 2 days will set a precedent for the market on these events. If a strong country like Britain exiting had little effect then others following will have no effect.
The FTSE has recovered all it's losses.
Lets hope it continuous. 
I started here with nothing and still have most of it left.

Moonraker

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Re: Brexit consequences.
« Reply #8 on: November 03, 2016, 01:38:04 pm »
Given the court ruling today that the UK government must hold a vote in parliament before starting the 2 year countdown to Brexit, it could open the possibility that Brexit will not happen. We will need to wait for the Supreme Court appeal that has been granted to the government to take place between December 5th-8th.

Quote
‘Were the government to be overruled in its appeal, there is a real prospect that Brexit can be overturned. Losing the legal challenge leaves Britain with the prospect of its own government voting against the will of the people. This will not sit well with the majority of the British public who voted for Britain to leave the EU.

‘The only result of this decision being confirmed can be a general election whereby the British public can be given another opportunity to exercise their democratic rights.’

£ has shot up today as a result with stocks like Brait, Redefine International et al showing good gains. Let's see what transpires.

Brexit ruling will not derail article 50 timetable, says No 10

« Last Edit: November 03, 2016, 05:19:18 pm by Moonraker »

yozzi

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Re: Brexit consequences.
« Reply #9 on: November 04, 2016, 09:42:26 pm »
From what I'm hearing from friends, family over there is that there will be another vote and Brexit won't happen!

TARobertx0X4e

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Re: Brexit consequences.
« Reply #10 on: March 15, 2017, 09:44:58 am »
Dich vu mua ban dashcoin. Mua btce gia cao và ban btce dich vu hoan toan tu dong, bao mat thong tin khac hang!

jaDEB

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Re: Brexit consequences.
« Reply #11 on: March 15, 2017, 10:52:10 am »
CCO  :wall:
jaDEB

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PlatinumWealth.co.za

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Re: Brexit consequences.
« Reply #12 on: March 15, 2017, 11:02:01 am »
Don't even get me started on #CCO.

 :mad:
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