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Rise in FTSEs despite Brexit uncertainty

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odysseus2000
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Re: Rise in FTSEs despite Brexit uncertainty

#199087

Postby odysseus2000 » February 5th, 2019, 3:50 pm

UncleEbenezer wrote:A straw in the wind. It was reported a couple of weeks ago that Rees-Mogg's hedge fund has been closing bets against the UK economy. One might infer he's now at last looking for a way to support a damage-limitation deal, or will at least be willing to allow one.

When Soros made gazillions betting against the UK, he at least wasn't doing it from within Parliament and pulling the Prime Minister's strings.


Rees-Moog is big in the media, but seems to be loathed in Parliament with very little influence.

He is after all just a back bencher with as far as I know zero ministerial experience and although a millionaire based on his various investment schemes, none of which as far as I am aware are classed as hedge funds although they can likely do similar types of trade. Being richer than many other MP's will also not endear him to many who are poorer on either side of the house.

Also he was not so long ago talking about the fall in the UK markets as a likely buying opportunity.

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Re: Rise in FTSEs despite Brexit uncertainty

#199091

Postby odysseus2000 » February 5th, 2019, 4:08 pm

It is kind of interesting to look at the register of member's interests and in the context of the earlier post that for Rees Moog:

https://publications.parliament.uk/pa/c ... _jacob.htm

The top entry shows that for 30 hours work he received £21,003.53, that is £700 per hour.

This is about 100 times the minimum wage and will be taxed.

His monthly earnings for 30 hours work vary between about £14k and £21k through out 2018.

Based on £14k per month his pre tax earned income will be £168k, plus his MP's salary etc

Various other media articles, tv appearances etc bring in 10's of hundreds and he has property and income etc etc.

Also several un-remunerated directorships etc

I doubt Brexit makes any difference to his financial situation, although his media appearances probably allow him to be more generous to his many children.

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Re: Rise in FTSEs despite Brexit uncertainty

#199104

Postby TheMotorcycleBoy » February 5th, 2019, 5:11 pm

UncleEbenezer wrote:A straw in the wind. It was reported a couple of weeks ago that Rees-Mogg's hedge fund has been closing bets against the UK economy. One might infer he's now at last looking for a way to support a damage-limitation deal, or will at least be willing to allow one.

When Soros made gazillions betting against the UK, he at least wasn't doing it from within Parliament and pulling the Prime Minister's strings.

I have heard about Rees-Mogg's Somerset Capital, but what are you referring to exactly above?

Do you mean that he has been short selling UK firms or GBP or something?

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Re: Rise in FTSEs despite Brexit uncertainty

#199161

Postby stevensfo » February 5th, 2019, 9:08 pm

odysseus2000 wrote:It is kind of interesting to look at the register of member's interests and in the context of the earlier post that for Rees Moog:

https://publications.parliament.uk/pa/c ... _jacob.htm

The top entry shows that for 30 hours work he received £21,003.53, that is £700 per hour.

This is about 100 times the minimum wage and will be taxed.

His monthly earnings for 30 hours work vary between about £14k and £21k through out 2018.

Based on £14k per month his pre tax earned income will be £168k, plus his MP's salary etc

Various other media articles, tv appearances etc bring in 10's of hundreds and he has property and income etc etc.

Also several un-remunerated directorships etc

I doubt Brexit makes any difference to his financial situation, although his media appearances probably allow him to be more generous to his many children.

Regards,


Brexit will make a lot of difference to his financial situation!

Rees-Mogg has offices in Singapore. That's where Dyson is taking his company. He's so happy about Brexit that he has to travel for the fresh air.

Imagine all those sparkling clean carpets in his offices. :-)

Not to mention the investment opportunities when the pound falls and Rees-Mogg buys half of England, Cameron one quarter and Blair maybe ten percent.

Steve

odysseus2000
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Re: Rise in FTSEs despite Brexit uncertainty

#199176

Postby odysseus2000 » February 5th, 2019, 10:09 pm

stevensfo wrote:
odysseus2000 wrote:It is kind of interesting to look at the register of member's interests and in the context of the earlier post that for Rees Moog:

https://publications.parliament.uk/pa/c ... _jacob.htm

The top entry shows that for 30 hours work he received £21,003.53, that is £700 per hour.

This is about 100 times the minimum wage and will be taxed.

His monthly earnings for 30 hours work vary between about £14k and £21k through out 2018.

Based on £14k per month his pre tax earned income will be £168k, plus his MP's salary etc

Various other media articles, tv appearances etc bring in 10's of hundreds and he has property and income etc etc.

Also several un-remunerated directorships etc

I doubt Brexit makes any difference to his financial situation, although his media appearances probably allow him to be more generous to his many children.

Regards,


Brexit will make a lot of difference to his financial situation!

Rees-Mogg has offices in Singapore. That's where Dyson is taking his company. He's so happy about Brexit that he has to travel for the fresh air.

Imagine all those sparkling clean carpets in his offices. :-)

Not to mention the investment opportunities when the pound falls and Rees-Mogg buys half of England, Cameron one quarter and Blair maybe ten percent.

Steve


The biggest landowners in the UK are headed by the Forestry commission and then lots of other folk own big parcels.

https://www.lovemoney.com/gallerylist/7 ... s-revealed

Rees-Moog, Cameron, Blair would need to borrow astronomical sums to buy the chunks of land suggested, that is if anyone would sell.

Dyson already owns 33,000 acres of the UK

Rees-Moog and the other politicians are currently not in the top 50 of landowners.

Regards,

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Re: Rise in FTSEs despite Brexit uncertainty

#199208

Postby TheMotorcycleBoy » February 6th, 2019, 6:52 am

Ok, back to the OP, ;)

SalvorHardin wrote:Yes. The sterling - US dollar spot exchange rate is an excellent proxy for how the world views Britain's economy (relative to the USA). On the day after the Brexit vote sterling fell by around 10% against the dollar, which was the market telling the world that it thought that the eventual outcome would be terrible for the British economy.

The strength of the pound and the FTSE250 in 2019 are telling us that the markets' view is that the economic outlook for the UK domestic economy has improved since 2018. Now this doesn't necessarily mean that this is all because of an improving Brexit outlook. For example, the Italian recession (and probable German recession) will have made investors look on Britain a bit more favourably.

So yes, indeed, the correlation between the sterling - US dollar spot rate and world views of the Brit economy. So for the first few weeks of Jan there seems to be a vague similarity (!!) between the increase the £/$ rate and the rise in the FTSE 250, however in this first week in Feb the FTSE 250 continues upward progression, despite the £'s strength against the $ falling in same time frame.

as in:
TUK020 wrote:Don't equate FTSE100 with the UK economy.
About 70% of FTSE100 earnings are overseas.
Brexit bad news = sterling goes down = s.p. of companies with ,$earnings (RDSB, BP, GSK) or Euro (ULVR) goes up.

Ahh... so fall in £ expectations improves market pricing in for UK firms with foreign earnings (as TUK says immediately above), but UK firms that need to buy from abroad with UK earnings will be priced down (like some in the FTSE 250) since they will struggle to maintain profitability heights. ?


Don't fear Ody - I'm not trying to produce a mathematically rooted predictive model for my observations - just trying to learn more about the macro-economics side of things.

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Re: Rise in FTSEs despite Brexit uncertainty

#199215

Postby Spet0789 » February 6th, 2019, 7:38 am

TheMotorcycleBoy wrote:Ok, back to the OP, ;)

SalvorHardin wrote:Yes. The sterling - US dollar spot exchange rate is an excellent proxy for how the world views Britain's economy (relative to the USA). On the day after the Brexit vote sterling fell by around 10% against the dollar, which was the market telling the world that it thought that the eventual outcome would be terrible for the British economy.

The strength of the pound and the FTSE250 in 2019 are telling us that the markets' view is that the economic outlook for the UK domestic economy has improved since 2018. Now this doesn't necessarily mean that this is all because of an improving Brexit outlook. For example, the Italian recession (and probable German recession) will have made investors look on Britain a bit more favourably.

So yes, indeed, the correlation between the sterling - US dollar spot rate and world views of the Brit economy. So for the first few weeks of Jan there seems to be a vague similarity (!!) between the increase the £/$ rate and the rise in the FTSE 250, however in this first week in Feb the FTSE 250 continues upward progression, despite the £'s strength against the $ falling in same time frame.

as in:
TUK020 wrote:Don't equate FTSE100 with the UK economy.
About 70% of FTSE100 earnings are overseas.
Brexit bad news = sterling goes down = s.p. of companies with ,$earnings (RDSB, BP, GSK) or Euro (ULVR) goes up.

Ahh... so fall in £ expectations improves market pricing in for UK firms with foreign earnings (as TUK says immediately above), but UK firms that need to buy from abroad with UK earnings will be priced down (like some in the FTSE 250) since they will struggle to maintain profitability heights. ?


Don't fear Ody - I'm not trying to produce a mathematically rooted predictive model for my observations - just trying to learn more about the macro-economics side of things.


What you say is true - foreign currency income becomes more valuable (in pounds) while foreign company costs become more onerous. Those effects are causative (currency move causes change in corporate profitability).

There is also a further correlative relationship in that a weaker currency is often an indication that the market expects to see lower growth from an economy and therefore lower returns on assets denominated in that currency. So even an entirely GBP business with no foreign currency revenues or costs is likely to experience a share price fall when the currency weakens as its business prospects are exposed to the same macroeconomic ‘ill winds’ as caused the currency move.

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Re: Rise in FTSEs despite Brexit uncertainty

#199226

Postby odysseus2000 » February 6th, 2019, 8:59 am

Spet0789

There is also a further correlative relationship in that a weaker currency is often an indication that the market expects to see lower growth from an economy and therefore lower returns on assets denominated in that currency. So even an entirely GBP business with no foreign currency revenues or costs is likely to experience a share price fall when the currency weakens as its business prospects are exposed to the same macroeconomic ‘ill winds’ as caused the currency move.


Except that if you have funds mandated to maintain a certain fraction in equities, they may choose to overweight small caps believing that in general such business will have less exposure than bigger ones and so e.g. One can see the US Russel index rise when the bigger cap index say Dow or S&P sell off due currency worries caused by this rebalancing.

Private investors who have no restrictions on what they may do might follow or go to cash & wait for lower prices in the bigger business of the larger index.

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Re: Rise in FTSEs despite Brexit uncertainty

#199248

Postby Spet0789 » February 6th, 2019, 10:21 am

Maybe I miss your point but I don’t understand it or agree. It’s rare for mid cap and large cap indices from the same country to move in opposite directions but one may outperform the other over a period of time.

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Re: Rise in FTSEs despite Brexit uncertainty

#199255

Postby odysseus2000 » February 6th, 2019, 10:32 am

Spet0789 wrote:Maybe I miss your point but I don’t understand it or agree. It’s rare for mid cap and large cap indices from the same country to move in opposite directions but one may outperform the other over a period of time.


Just my observations from watching the US markets that there are times when the Rut (US Small caps) moves in the opposite direction to the bigger index.

One explanation given for such movements is the equity balancing one I gave before.

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Re: Rise in FTSEs despite Brexit uncertainty

#199282

Postby TheMotorcycleBoy » February 6th, 2019, 12:29 pm

Spet0789 wrote:There is also a further correlative relationship in that a weaker currency is often an indication that the market expects to see lower growth from an economy and therefore lower returns on assets denominated in that currency. So even an entirely GBP business with no foreign currency revenues or costs is likely to experience a share price fall when the currency weakens as its business prospects are exposed to the same macroeconomic ‘ill winds’ as caused the currency move.

Ahh... interesting, since yesterday's fall in £ against the $, seemed to result in only a small rise of about 0.8% in the FTSE 250, but a larger rise of about 2% in the FTSE 100. Presumably this (disregarding "noise") relates to the aggregate balance in local/foreign profits and costs which is possibly different in those two markets.

Matt


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