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No Idea? Blame Brexit!

Pigs are more creative than that!

‍Even in the summer, markets are driven by a multitude of factors. The only issue is that there are not as many people to take advantage of any moves or sufficient analysts to, well, analyse.

So, what happens? We decide to blame the lowest common denominator and there is no lower or more common denominator than Brexit. Since the departure of the U.K. from the European Union pervades most parts of business, commerce and industry it is an easy target! Haven’t heard yet that Kim Jung-un blames Brexit for his nuclear ambitions but give him time!

The U.K. is slowing down. The reason for that is mostly cyclical but business investment is the single most significant issue facing the economy. Having said that and, oh yes, it’s due to Brexit, it is a very short-sighted C level executive who faces issues in that manner. Losing market share? Find new markets. Prepare don’t prevaricate!

The single currency has risen by close to 10% against Sterling over the second quarter of the year. Mr Mercedes, Mr Blaupunkt and Mr Krupp must be a bit worried about their important U.K. market share falling as Mr Lexus, Mr JVC and Mr. Sharp start to see the potential to undercut them.   

U.S. North Korea and China. A heady cocktail!

It is hard to get a handle of just what Kim Jung-un wants nuclear weapons for. He says that several countries that the U.S. have invaded would have been protected had they had them. Mr. Kim, newsflash! They also had natural resources that the U.S. could appropriate! Not sure you are on anyone’s radar in that regard. China buys all you have anyway.

So, apart from buyers of JPY and CHF who benefits from this escalation of rhetoric? Donald Trump is like the kid who got a bike for Christmas but since there is four feet of snow outside he can’t go out and ride it. Kim is the boy next door who got skis! They are great but he has no idea how to use them.

It is becoming less and less likely that this whole matter will end well particularly since China has now warned Trump to moderate his language. According to Chinese state media, Mr Xi told Mr Trump in a phone call that "all relevant parties" should stop "words and deeds" that would exacerbate the situation.

Meanwhile in the real world.

Central Banks have really stepped up to the plate as the global economy emerges from the crisis that started in 2008. Unfortunately, politicians are about to become involved in Central Bank affairs which could be unfortunate. Janet Yellen, Mario Draghi and Mark Carney will be either leaving their posts or be up for re-appointment starting with Mrs Yellen in January.

President Trump has flip flopped (surprised?) over his assessment of the Fed’s performance. Even if Mrs Yellen wants to carry on, it rather depends on how Trump feels on the day he wakes up and needs to decide.

Carney and Draghi have a bit longer, each about eighteen months. There is little doubt that Sr. Draghi will be replaced by a German. They have been itching to get their hands on “the big job”. So, it will be rate hikes and inflation concerns all round. Mr. Carney had a replacement sorted out but she forgot that her brother was senior executive at one of the banks she was supposed to regulate so had to “fall on her sword”.

The status of these three will be hard to follow but markets will be aroused by change as they always are. Watch this space as the situation develops.

Pigs are more creative than that!

‍Even in the summer, markets are driven by a multitude of factors. The only issue is that there are not as many people to take advantage of any moves or sufficient analysts to, well, analyse.

So, what happens? We decide to blame the lowest common denominator and there is no lower or more common denominator than Brexit. Since the departure of the U.K. from the European Union pervades most parts of business, commerce and industry it is an easy target! Haven’t heard yet that Kim Jung-un blames Brexit for his nuclear ambitions but give him time!

The U.K. is slowing down. The reason for that is mostly cyclical but business investment is the single most significant issue facing the economy. Having said that and, oh yes, it’s due to Brexit, it is a very short-sighted C level executive who faces issues in that manner. Losing market share? Find new markets. Prepare don’t prevaricate!

The single currency has risen by close to 10% against Sterling over the second quarter of the year. Mr Mercedes, Mr Blaupunkt and Mr Krupp must be a bit worried about their important U.K. market share falling as Mr Lexus, Mr JVC and Mr. Sharp start to see the potential to undercut them.   

U.S. North Korea and China. A heady cocktail!

It is hard to get a handle of just what Kim Jung-un wants nuclear weapons for. He says that several countries that the U.S. have invaded would have been protected had they had them. Mr. Kim, newsflash! They also had natural resources that the U.S. could appropriate! Not sure you are on anyone’s radar in that regard. China buys all you have anyway.

So, apart from buyers of JPY and CHF who benefits from this escalation of rhetoric? Donald Trump is like the kid who got a bike for Christmas but since there is four feet of snow outside he can’t go out and ride it. Kim is the boy next door who got skis! They are great but he has no idea how to use them.

It is becoming less and less likely that this whole matter will end well particularly since China has now warned Trump to moderate his language. According to Chinese state media, Mr Xi told Mr Trump in a phone call that "all relevant parties" should stop "words and deeds" that would exacerbate the situation.

Meanwhile in the real world.

Central Banks have really stepped up to the plate as the global economy emerges from the crisis that started in 2008. Unfortunately, politicians are about to become involved in Central Bank affairs which could be unfortunate. Janet Yellen, Mario Draghi and Mark Carney will be either leaving their posts or be up for re-appointment starting with Mrs Yellen in January.

President Trump has flip flopped (surprised?) over his assessment of the Fed’s performance. Even if Mrs Yellen wants to carry on, it rather depends on how Trump feels on the day he wakes up and needs to decide.

Carney and Draghi have a bit longer, each about eighteen months. There is little doubt that Sr. Draghi will be replaced by a German. They have been itching to get their hands on “the big job”. So, it will be rate hikes and inflation concerns all round. Mr. Carney had a replacement sorted out but she forgot that her brother was senior executive at one of the banks she was supposed to regulate so had to “fall on her sword”.

The status of these three will be hard to follow but markets will be aroused by change as they always are. Watch this space as the situation develops.

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