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. :)

I don't think we know how 'sensible' Hammond is yet. He has stated we will come out of the single market, which he said before the vote would be 'catastrophic'.

If the Tories were definitely going to put economics before ideology we wouldn't be where we are now.

Then again TM said that she wanted to see worker representation on company boards, (can't remember her exact words.) Can't see that happening in a month of Sundays, was my first thought.

There are just so many competing demands that it won't be possible to satisfy everyone.

Japan has several problems fairly unique to them: very warped demographic distribution, virtually zero immigration and a very sexist society.

By the way, it was not me who referenced the Guardian. I don't read it.

It will be interesting to see how the Tory machinations play out between hard and soft Brexiteers.

Fox and Davis think they're putting the economy first, but will the soft Brexit Tories allow them to take a punt on their American Dream?

There will be compromises and the Tories may not be perfect but I do think May and Hammond are sensible. I really don't understand the total pessimism of some people on this thread. Of course they won't please everyone. But the government will do its best to avoid a recession and encourage investment and growth. It's not an impossible task surely? And Brexit does mean they are free to do some new things and change direction.

May and Hammond aren't really the ones in charge of Brexit, it's Davis - Brexit minister, Fox - trade and Johnson - foreign secretary.

It's a bit rich to say the government will do what they can to avoid a recession given that they triggered it.

I am not sure that Davis et al. are really in charge of Brexit. They have not gone to any talks with Merkel, Hollande, Sturgeon, Kenny, which they might have been expected to along with May. They seem to have been tinkering around on the sidelines, but making a lot of noise about the wonderful trade deals which will come their way.

I am not sure that Davis et al. are really in charge of Brexit. They have not gone to any talks with Merkel, Hollande, Sturgeon, Kenny, which they might have been expected to along with May.

Not sure who they are meant to talk to. EU leaders talk directly to leaders. Senior civil servants working directly for the leaders, chat among themselves. David Davis is none of these & other countries’ leaders will either speak directly to Theresa May or discussions will be between the civil servants. Eventually the Brexit secretary will eventually be able to talk to the EU Commission but they have already said “no negotiation until notification”

Liam Fox may have preliminary conversations about new trade deals around the world but he is unlikely to get anywhere until we have our new trade agreement with the EU. Commitments in different deals often interact/conflict with each other. Negotiating is expensive & no country is going to spend large amounts of money until there is more certainty. Presumably that's why US Trade Representative said yesterday the US wouldn’t negotiate a deal with UK until our relationship with the EU is more clear.

FTSE 250 is finally back to where it was before the Brexit vote.
I know it's helped by the low pound and it could all take a dive tomorrow, but it's still encouraging. Those who were not reassured by the recovery of the FTSE 100, often point out that the 250 is a better indicator of the UK economy than the more global 100.

Interestingly within that FTSE250 increase, housebuilding and domestic-focused banks and insurers still look pretty terrible.

I know in the short term markets are a voting machine and the long term an adding machine (cheers Benjamin Graham), but would be interesting to know what's driven that rise. Lots of companies will start announcing half-year results from about now, which will create a bit of volatility and perhaps be revealing on business sentiment.

Speaking of domestic focused banks, Virgin Money has delayed the launch of their SME business lending in the wake of brexit uncertainty.
www.ft.com/cms/s/0/fea7e3e8-532e-11e6-9664-e0bdc13c3bef.html

I'm seriously thinking about taking out an ft subscription, given that so much is going on!

I'm certainly getting the benefit of it over the last month...

Global equity markets are higher, driven by various stimulus packages (Japan most recently). However, given that remainers were using ftse 250 to tell everyone else the sky was falling in, they are left with considerable amounts of egg on their face.

Although part of the rise is merely fx translation, some of it is due to the devaluation being a real economic stimulus.

There were also a couple of recent articles by scientists saying that funding had not been affected by Brexit.

"Although part of the rise is merely fx translation, some of it is due to the devaluation being a real economic stimulus."

You forgot quantitative easing.

Stock markets are up because that is what happens when liquidity (amount of cash in the market) skyrockets and bond markets offer no return whatsoever.

They will have to be careful with it. That way lies the phenomenon we call a Bubble.

Can you explain what you mean by devaluation acting as an economic stimulus Larry, I am not sure I follow.

This ft diagram perhaps shows the splits of the FTSE250 movements better: UK financials v bad, mining/resources v good.

The kind of thing which is more worrying in real economic terms is this: Capita are reporting some delays in decision making by their clients (although Capita note they will make money in the medium term as clients need help in responding to Brexit, consultants never lose ). next.ft.com/content/a00e6ee1-e65f-3ef1-b76f-7de8779c283e

I see today's CBI retail data was a total shocker...looking forward to the consumer confidence survey out later this week

More good news: www.bbc.co.uk/news/business-36901027

Cote,

How can you say I forgot something that I used as my primary explanation in my first sentence.

Just curious...

I hope people won't be to shocked when it turns out opening trade with the other 90% of the world is actually a good thing for the UK.

There's a suggestion people are having more staycations and I certainly noticed a lot more holidaying European families ( not eastern) in my local Tescos last week end.

"How can you say I forgot something that I used as my primary explanation in my first sentence."

Because "stimulus package" (what you said) isn't the same thing as " quantitative easing" (what I said).

Because there hasn't been a stimulus package yet, but there has been quantitative easing.

There is apparently a stimulus package in the works though, expected for next month.

Cote,

www.telegraph.co.uk/finance/economics/12152707/What-is-quantitative-easing-and-why-might-we-need-more-of-it.html

Maybe you should read the above article to
Learn that quantitative easing is a form of monetary stimulus, exactly what I was referring to in the case of Japan.