Actual economic effects...

[Spinflight]

FTSE closed on Wednesday at 6138. Closed on Friday at 6138.

Long term borrowing rates have come down as brexit appeared more likely, 10yr ones from 2% down to 1.09% post brexit. Similarly all the European long term borrowing rates rose sharply. Lesson? We are a less risky and more credit worthy outside the EU than in.

One ratings agency did drop our credit worthiness, though oddly the last time they did was out of fear of Eurozone contagion. Seems completely at odds with the long term borrowing rates, which matter quite a great deal given our debts.

The pound dropped, quite significantly. It appears however that there was some 'unusual' activity in the market which forced it down whenever the Leave campaign polled well. To the extent of trying to sell it when there were no buyers.

Some people lost a great deal of money, probably dwarfing the millions contributed to the remain campaign, lets hope it was Goldman Sachs and JP Morgan. :)

Larry my immediate observation would be that quick decisions require everyone to be in the same boat and prepared to start rowing in the same direction. This isn't a comparable situation.

Its too complex to be done quickly. The UK finance industry will want full access to the single market and much of the pressure will be done to get it.

In the end we're probably going to end with some kind of EU lite deal, or EEA style.

The 13%/3% point isn't about a trade war, its about who holds the best hand in negotiation, and the EU does hold a much larger hand than the UK. No matter of sticking your fingers in your ears and saying"project fear" etc will work.

Well potentially because other EU and Eurozone countries might prefer that they didn't

Sure, but the point is that any EU country can use our situation for their competitive advantage, not only France or Germany, and that's perfectly justified. They're entitled to protect their own interests as well as that of the EU. The whole process is a balancing a multiplicity of interests.

It takes some quite special skills to be on the "winning" side (like Larry) and STILL manage to come across as a really, really bad loser (ditto).

Empress,

As my mother would have said 'if you have nothing nice to say, say nothing at all'.

What I find bizarre is the seeming gloating of expats who try to disguise their schadenfreude as fear for the uk.

To be honest I find the fact that Ex pats were allowed to vote and those EU citizens who have made their home in the UK for over 5 years weren't rather annoying. Especially as the Irish were allowed to vote.

Yes,

I think 'skin in the game' really matters here. Fwiw, I did not vote 'leave', I reluctantly voted 'remain' based on time and cost of entangling (and personal financial cost).

However, we are where we are and this doom and gloom can become a self fulfilling prophecy.

Disentangling I meant.

Problem is Larry that the markets don't listen to posters on MN, they make decisions based on economic advice.

No amount of good will or positive thinking can change the fact that the expert advice is fairly downbeat.

Markets don't 'make decisions', they reflect the traders' moods. Global correlations are so high anyway that it is very hard for a major market to be independent of the other major markets.

I suspect if spoos break to new highs next week it won't take long for the ftse 250 to recover its losses.

if spoos break to new highs next week

What does this mean?

Spoos means the s&p500 index, the main u.s stock market index.

Traders' moods simply reflect broader economic mood swings.

Oh whatever Larry, you got the inference don't be stupidly pedantic.

The FTSE is unlikely to recover whilst the pound is so low, only comapnies with lots of earnings abroad will be doing well.

As far as I can see the predictions for the future of the UK economy at the minute are pretty poor, this will influence behaviour more than any small upsurge in FTSE prices.

On top of this you then need to look at the consumer confidence figures, and that of the industry sectors released last week, in all the indicators are not good.

Manon,

Really? Explain the .com bubble then? Or the nikkei at 39

I did not vote "leave"

Really? For someone who claims to be a reluctant remainer, you've been awfully vocal in the leave campaign, for eg

www.mumsnet.com/Talk/politics/a1659764-If-there-was-a-referendum-on-Europe#36783504

39,000

Ah yes, the s&p500. I know what that is.

Spoos is a great word. I can't stop saying it

Spooooooooooooooos

smallfox - your post implied that "markets" took rational decisions based on expert advice.

So larry's correction wasn't merely pedantic.

That thread is from 3 and a half years ago!

I was referring to the behaviour of the markets as a whole, people do it all the time, expert advice is not always heeded but in cases like this where the vast majority of the advice agrees with each other it will influence how the markets (or the traders) behave.

Smallfox,

Generally markets 'climb a wall of fear'. Traders sell short on news and then get squeezed out of positions (of course may go down again later). I suspect that this may happen here.

I think the long term investment plans being held up, the state of the construction industry, the drop in growth in services, the low consumer confidence plus the state of the pound will influence it more.

Sorry, I think you're overly hopeful, the "wall of fear" was the two days after the vote, this is now settling to be a trend.

larrygrylls

Yes, I am with you. Stock market is not the economy anyway.
If we get another round of liquidity assistance or QE, it will shoot up.

Agree that the stock market is not the economy. For that look to the indicators I outlined above, only manufacturing is doing well, service growth slowed and construction fell off a cliff as did consumer confidence, investment is at a very low level too.

There are always speculative fads and pockets of rapid cycling highs and lows within broader economic moods. Hedge funds make £££ on market volatility.

But if traders don't reflect the economic mood around them, why are you so concerned that 'doomandgloom' will become a self-fulfilling prophecy?

Btw my use of the word 'simply' is misleading, 'generally' would have been better.