Rise in FTSEs despite Brexit uncertainty

[Spet0789]

MotorcycleBoy
Despite voting to Remain, and being a tad depressed about stuff re. our economy, I don't actually think it will be that bad economically. My rationale being that despite any thoughts I may have about why the Leave vote actually did go through, I am also fully aware that a lot of the Brexit backers were big-money-men and capitalist types (e.g. Rees-Mogg) and I don't think they would have been as eager to back the movement had they not had a belief in some £££ coming out of it. But of course if it (£££) does come, it will come as result of deregulation, lower corp taxes, and less "social" spending.

Some money could come from the mechanisms you suggest, but the big money has always come from growth. Carrying forward policies like you suggest as did Osborne and Cameron is almost guaranteed to lead to a back lash and put some business unfriendly guy in charge who believes in nationalisation etc.

I have no real idea what Rees-Moog et al want or expect but this is how I see things.

A post brexit UK has the opportunity to grow with the world's dynamic economies not shackled to a Europe which is currently run by folk who have no concept of secular growth.

Almost none of the popular 21st century wealth creating business are European.

If you contrast that with the US one sees great wealth creators in Apple, Google, Facebook, Netflix, Tesla etc. Even the coffee and fast food chains in Europe are predominantly US based. Why has Europe not got its own version of these?

Sure you can argue that German is prosperous which is true as the Euro is weak due to the effects of Greece etc. Without the weak Euro Germany would not have such profitable industries and meanwhile the flip side is that Greece is in a terrible mess as they need lower exchange rates but are stuck with the Euro which is high for them.

The whole approach of the EU has failed to produce the growth that the US, China. India etc are seeing and has set up major fault lines between the rich north and the poor south.

The EU politicians are so focused on the political unity that they are missing that Europe is declining almost as if their job is about managing what they have, like 1970's UK rather than growing. In the by and by such an approach will lead to big troubles as we discovered in 1970's UK.

Of course many folk disagree and argue that an integrated Europe is a strong and prosperous thing that no one in their right mind would want to leave, but that is not how I see it.

Regards,

What exactly do you mean by “grow with the most dynamic economies”?

I suspect this is just fluffy nonsense.

Most of these economies (though admittedly not all) are growing from far lower bases of GDP per capita than we are. I am right handed. My son is 7. It doesn’t bother me that his writing is improving faster than mine. I have no desire to start writing left handed to give me room to match his pace of improvement.

Germany and Switzerland to name two are far more tied in with the EU than most Brexiters seem to wish us to be. And yet their exports to those economies are far higher than ours? Could it perhaps be because other policy or economic factors are at work than EU membership?

[TheMotorcycleBoy]

If you contrast that with the US one sees great wealth creators in Apple, Google, Facebook, Netflix, Tesla etc. Even the coffee and fast food chains in Europe are predominantly US based. Why has Europe not got its own version of these?

Sure you can argue that German is prosperous which is true as the Euro is weak due to the effects of Greece etc. Without the weak Euro Germany would not have such profitable industries and meanwhile the flip side is that Greece is in a terrible mess as they need lower exchange rates but are stuck with the Euro which is high for them.

The whole approach of the EU has failed to produce the growth that the US, China. India etc are seeing and has set up major fault lines between the rich north and the poor south.

re. Growth and entrepreneurial gusto you just cannot compare US vs China vs India vs UK vs EU in purely economic terms, in my opinion. You need to look into historic (say 400 years back) and geographic (landmasses, resources, land still ripe to exploit) characteristics to come any closer to what would still be a generalisation.

But regardless of the above.....what about the OP's title Rise in FTSEs despite Brexit uncertainty

Noise or signal? If the latter what's being signalled?

Matt

[Bubblesofearth]

The market is up in recent weeks because of easing of US/China trade relations. That's the 'new news'. The Brexit situation is pretty much unchanged.

BoE

[TheMotorcycleBoy]

The market is up in recent weeks because of easing of US/China trade relations. That's the 'new news'. The Brexit situation is pretty much unchanged.

BoE

I didn't realise this element would have such a marked effect on UK equity pricing (i.e. 7% rise on FTSE250). And surely were the above point so profound wouldn't this contradict the 3% GBP/USD rise favourable to sterling in the same period as noted by Salvor and WorkShy?

Matt

[GoSeigen]

The market is up in recent weeks because of easing of US/China trade relations. That's the 'new news'. The Brexit situation is pretty much unchanged.

BoE

I didn't realise this element would have such a marked effect on UK equity pricing (i.e. 7% rise on FTSE250). And surely were the above point so profound wouldn't this contradict the 3% GBP/USD rise favourable to sterling in the same period as noted by Salvor and WorkShy?

Matt

Yields and modified duration my dear boy!

GS

[odysseus2000]

MotorcycleBoy
Despite voting to Remain, and being a tad depressed about stuff re. our economy, I don't actually think it will be that bad economically. My rationale being that despite any thoughts I may have about why the Leave vote actually did go through, I am also fully aware that a lot of the Brexit backers were big-money-men and capitalist types (e.g. Rees-Mogg) and I don't think they would have been as eager to back the movement had they not had a belief in some £££ coming out of it. But of course if it (£££) does come, it will come as result of deregulation, lower corp taxes, and less "social" spending.

Some money could come from the mechanisms you suggest, but the big money has always come from growth. Carrying forward policies like you suggest as did Osborne and Cameron is almost guaranteed to lead to a back lash and put some business unfriendly guy in charge who believes in nationalisation etc.

I have no real idea what Rees-Moog et al want or expect but this is how I see things.

A post brexit UK has the opportunity to grow with the world's dynamic economies not shackled to a Europe which is currently run by folk who have no concept of secular growth.

Almost none of the popular 21st century wealth creating business are European.

If you contrast that with the US one sees great wealth creators in Apple, Google, Facebook, Netflix, Tesla etc. Even the coffee and fast food chains in Europe are predominantly US based. Why has Europe not got its own version of these?

Sure you can argue that German is prosperous which is true as the Euro is weak due to the effects of Greece etc. Without the weak Euro Germany would not have such profitable industries and meanwhile the flip side is that Greece is in a terrible mess as they need lower exchange rates but are stuck with the Euro which is high for them.

The whole approach of the EU has failed to produce the growth that the US, China. India etc are seeing and has set up major fault lines between the rich north and the poor south.

The EU politicians are so focused on the political unity that they are missing that Europe is declining almost as if their job is about managing what they have, like 1970's UK rather than growing. In the by and by such an approach will lead to big troubles as we discovered in 1970's UK.

Of course many folk disagree and argue that an integrated Europe is a strong and prosperous thing that no one in their right mind would want to leave, but that is not how I see it.

Regards,

What exactly do you mean by “grow with the most dynamic economies”?

I suspect this is just fluffy nonsense.

Most of these economies (though admittedly not all) are growing from far lower bases of GDP per capita than we are. I am right handed. My son is 7. It doesn’t bother me that his writing is improving faster than mine. I have no desire to start writing left handed to give me room to match his pace of improvement.

Germany and Switzerland to name two are far more tied in with the EU than most Brexiters seem to wish us to be. And yet their exports to those economies are far higher than ours? Could it perhaps be because other policy or economic factors are at work than EU membership?

It is of course a complicated things with emotional passions for and against the EU common.

My take is that Europe is not growing fast enough and has none of the big new 21st century industries, while the US and the emerging markets are growing and have the modern industries and in the by and by Europe will suffer in the same way that a slow growth UK did.

It is just a point of view and I could make an argument as to why the EU is a super good thing, but on balance I personally don't believe it is for the reasons I have put forward, although many disagree.

If I am right, post Brexit the UK will grow faster than Europe and vice versa if I am wrong.

Regards

[OhNoNotimAgain]

Some money could come from the mechanisms you suggest, but the big money has always come from growth. Carrying forward policies like you suggest as did Osborne and Cameron is almost guaranteed to lead to a back lash and put some business unfriendly guy in charge who believes in nationalisation etc.

I have no real idea what Rees-Moog et al want or expect but this is how I see things.

A post brexit UK has the opportunity to grow with the world's dynamic economies not shackled to a Europe which is currently run by folk who have no concept of secular growth.

Almost none of the popular 21st century wealth creating business are European.

If you contrast that with the US one sees great wealth creators in Apple, Google, Facebook, Netflix, Tesla etc. Even the coffee and fast food chains in Europe are predominantly US based. Why has Europe not got its own version of these?

Sure you can argue that German is prosperous which is true as the Euro is weak due to the effects of Greece etc. Without the weak Euro Germany would not have such profitable industries and meanwhile the flip side is that Greece is in a terrible mess as they need lower exchange rates but are stuck with the Euro which is high for them.

The whole approach of the EU has failed to produce the growth that the US, China. India etc are seeing and has set up major fault lines between the rich north and the poor south.

The EU politicians are so focused on the political unity that they are missing that Europe is declining almost as if their job is about managing what they have, like 1970's UK rather than growing. In the by and by such an approach will lead to big troubles as we discovered in 1970's UK.

Of course many folk disagree and argue that an integrated Europe is a strong and prosperous thing that no one in their right mind would want to leave, but that is not how I see it.

Regards,

What exactly do you mean by “grow with the most dynamic economies”?

I suspect this is just fluffy nonsense.

Most of these economies (though admittedly not all) are growing from far lower bases of GDP per capita than we are. I am right handed. My son is 7. It doesn’t bother me that his writing is improving faster than mine. I have no desire to start writing left handed to give me room to match his pace of improvement.

Germany and Switzerland to name two are far more tied in with the EU than most Brexiters seem to wish us to be. And yet their exports to those economies are far higher than ours? Could it perhaps be because other policy or economic factors are at work than EU membership?

It is of course a complicated things with emotional passions for and against the EU common.

My take is that Europe is not growing fast enough and has none of the big new 21st century industries, while the US and the emerging markets are growing and have the modern industries and in the by and by Europe will suffer in the same way that a slow growth UK did.

It is just a point of view and I could make an argument as to why the EU is a super good thing, but on balance I personally don't believe it is for the reasons I have put forward, although many disagree.

If I am right, post Brexit the UK will grow faster than Europe and vice versa if I am wrong.

Regards

Stephanie Flanders said at a presentation on Brexit last year that the UK has had the highest rate of growth of any OECD country since 1979.

I never checked the assertion and of course the OECD excludes China but it is food for thought.

[odysseus2000]

MotorcycleBoy re. Growth and entrepreneurial gusto you just cannot compare US vs China vs India vs UK vs EU in purely economic terms, in my opinion. You need to look into historic (say 400 years back) and geographic (landmasses, resources, land still ripe to exploit) characteristics to come any closer to what would still be a generalisation.

But regardless of the above.....what about the OP's title Rise in FTSEs despite Brexit uncertainty

Noise or signal? If the latter what's being signalled?

Matt

You can't compare anything in economics, it is always complicated and messy and one has no way of splitting things into two or more bits to make comparisons over time.

Nevertheless the US has lots of modern profitable industries as I have mentioned that could not exist in the 20th century, Europe has not.

If you want the other argument, it usually goes like: Europe is developed and stable and the population has good and low cost to the user health care whereas the US health care is murderously expensive and many other benefits not found in the US or emerging markets. Additionally Europe has lots of highly sophisticated manufacturing that the emerging markets and the US need and the educated European is far more than the educated American or emerging market person. I can see some truth in all of this.

The problem I have is that without growth that enriches a lot of the population, Europe must decline and that the EU does not consider this an issue when it should.

Regarding your noise or signal question. The change in the FTSE is a product of many factors as other posters have mentioned. Trying to argue that it shows this or that is trying to use science/engineering to study a crowd at a sports game that is running on emotion, not on logic. It is a meaningless question, the sort of stupidity that the media do.

Investment/trading is looking at what price you can buy or sell an asset and the likelihood of a profit or loss. The media is noise that is best shut out.

Regards,

[odysseus2000]

It is often interesting to see what technology the developing world can do and this method of bridge construction is impressive:

https://twitter.com/i/status/1091003038255460353

We are often lead to believe that only the West can do impressive things, but this method of building bridges is just one indication of how fast the developing nations are learning to do things.

One can contrast that to the current electrification process for the railways in the UK which at best gives tiny incremental gains whereas a fast new bridge can produce huge productivity gains.

Regards,

[TheMotorcycleBoy]

It is often interesting to see what technology the developing world can do and this method of bridge construction is impressive:

https://twitter.com/i/status/1091003038255460353

We are often lead to believe that only the West can do impressive things, but this method of building bridges is just one indication of how fast the developing nations are learning to do things.

One can contrast that to the current electrification process for the railways in the UK which at best gives tiny incremental gains whereas a fast new bridge can produce huge productivity gains.

Regards,

Ody, does this post or any of your others actually relate at all to the discussion which I started in my OP?

Humour aside, if you'd like a discussion about bridges or some of your earlier points why don't you create a dedicated thread for these matters?

thanks Matt

[odysseus2000]

Yes it is a about background information.

Earlier in the thread you were saying that Rees-Moog wants Brexit so that social care can be cut, I am attempting to show that the Brexit issue is very complicated & that assertions that Brexit will be bad & that the rise in the FTSE was strange as was your original question are not necessarily correct assertions.

The developing world is growing at extremely fast rates. I was working with Chinese astronomers this summer, they were as good as anyone I worked with at NASA & the Chinese space program is very impressive.

As I have said you are applying engineering & science to subjects which are not governed by them. No one knows the future although the media put up folk saying they do, it is all a joke, the adult version of believing in Father Christmas. The same goes for forecasts by anyone. The folk who make them do so to get a predetermined result. So if you don't want Brexit you have the BoE forecast how bad it will be etc

If you want to learn how to invest & trade you have to have an extraordinary level of knowledge, you have to know what the guy taking the opposite trade is thinking & keep that & your own thoughts constantly in mind, note developments & be prepared to flip from long to short or vice versa in seconds.

You certainly will not get taught this in education even at a business school as evidenced by most of the really successful never having been to business school.

The reality of investment is so different to what Schools and the media present that in the by and by anyone who studies investment will find the news & forecasts hilarious.

Regards,

[TheMotorcycleBoy]

Yes it is a about background information.

Earlier in the thread you were saying that Rees-Moog wants Brexit so that social care can be cut, I am attempting to show that the Brexit issue is very complicated & that assertions that Brexit will be bad & that the rise in the FTSE was strange as was your original question are not necessarily correct assertions.

The developing world is growing at extremely fast rates. I was working with Chinese astronomers this summer, they were as good as anyone I worked with at NASA & the Chinese space program is very impressive.

As I have said you are applying engineering & science to subjects which are not governed by them. No one knows the future although the media put up folk saying they do, it is all a joke, the adult version of believing in Father Christmas. The same goes for forecasts by anyone. The folk who make them do so to get a predetermined result. So if you don't want Brexit you have the BoE forecast how bad it will be etc

If you want to learn how to invest & trade you have to have an extraordinary level of knowledge, you have to know what the guy taking the opposite trade is thinking & keep that & your own thoughts constantly in mind, note developments & be prepared to flip from long to short or vice versa in seconds.

You certainly will not get taught this in education even at a business school as evidenced by most of the really successful never having been to business school.

The reality of investment is so different to what Schools and the media present that in the by and by anyone who studies investment will find the news & forecasts hilarious.

Regards,

Sorry - I posed my original post as an intro to a light hearted reasonably focussed debate about "Recent FTSE350 rise vs. continued Brexit Uncertainty". My OP made this blatantly obvious, it was being a debate opening - without no attempt on my part to link science or engineering to my highlighted observation, never was it in an explicit request for classroom "Investment 101" style lecture.

Most other posters firstly seem to understand this, and secondly seem to be able to phrase their replies in such a way as to avoid extensive use of the second person pronoun and hence the allusion of condescension.

Matt

[GoSeigen]

Most other posters firstly seem to understand this, and secondly seem to be able to phrase their replies in such a way as to avoid extensive use of the second person pronoun and hence the allusion of condescension.

Matt, you're posting on the Odysseus board, waddya expect?

GS

[odysseus2000]

MotorcycleBoy
Sorry - I posed my original post as an intro to a light hearted reasonably focussed debate about "Recent FTSE350 rise vs. continued Brexit Uncertainty". My OP made this blatantly obvious, it was being a debate opening - without no attempt on my part to link science or engineering to my highlighted observation, never was it in an explicit request for classroom "Investment 101" style lecture.

Most other posters firstly seem to understand this, and secondly seem to be able to phrase their replies in such a way as to avoid extensive use of the second person pronoun and hence the allusion of condescension.

Matt

It is just a posting board and I am just giving you my view on things.

I accept that I could be completely wrong and it is up to you what ever you get out of the board and discussion, which may be that you are diametrically opposed to what I believe.

Others have posted different things so you have plenty of opinions to consider.

In the end it all comes down to whether you can make money from investment/trading, no ones opinion matters.

Regards,

[TUK020]

Stephanie Flanders said at a presentation on Brexit last year that the UK has had the highest rate of growth of any OECD country since 1979.

I never checked the assertion and of course the OECD excludes China but it is food for thought.

All depends on your starting point - start low enough (3 day week etc), and anything looks grand.
If they sort things out then Venezuela, Zimbabwe and South Sudan will perform even better!

[odysseus2000]

Stephanie Flanders said at a presentation on Brexit last year that the UK has had the highest rate of growth of any OECD country since 1979.

I never checked the assertion and of course the OECD excludes China but it is food for thought.

All depends on your starting point - start low enough (3 day week etc), and anything looks grand.
If they sort things out then Venezuela, Zimbabwe and South Sudan will perform even better!

Yes, everything always depends on where you start.

In the UK when the railways came business that had no markets suddenly found they could sell to London and achieved huge growth. Nowadays the analogy is having fast broadband come to some place that then allows a business to sell stuff on line that otherwise there was no market for.

The developing world has currently imho many opportunity for such kinds of transition and with prosperity comes punters who want to buy stuff from other countries.

Almost every conference call Tim Cook points out the huge opportunity they see in India from the local prosperity enabling folk to be able to buy Apple products and there one is starting from a low base.

Regards,

[TheMotorcycleBoy]

It is just a posting board and I am just giving you my view on things.

I accept that I could be completely wrong and it is up to you what ever you get out of the board and discussion, which may be that you are diametrically opposed to what I believe.

Diametrical opposition is completely irrelevant. The point is at least staying vaguely on topic.

Others have posted different things so you have plenty of opinions to consider.

Which were on topic.

In the end it all comes down to whether you can make money from investment/trading, no ones opinion matters.

That's subjective!

[WorkShy]

But regardless of the above.....what about the OP's title Rise in FTSEs despite Brexit uncertainty
Noise or signal? If the latter what's being signalled?
Matt

Ok trying to be brief ... but I do tend toward being long of words!

Noise or signal?
Probably signal . The FTSE350 is up 5.05% year-to-date. The realized annualized volatility of the FTSE350 over a 5 year lookback period is 9.8%, so a 5.05% move so far this year is a 1.7 standard deviation move. So the balance of probabilities is that this move contains at least some element of signal rather than just pure noise.

What's being signalled?
Nearly all major stock market indices are up this years: S&P 8.43%, EuroStoxx 5.46%, Nikkei 4.34% etc. Implied volatility has fallen on most asset classes, denoting an expectation for lower asset price volatility in the next few months. Markets hate uncertainty. This we can attribute to a set of positive global risk factors: The Fed moving away from policy tightening, the Fed moving away from balance sheet reduction, the ECB hinting at a later date for the end of QE, some positive signals on trade talks between the US and China.

Is the rise in the FTSE350 due to a fall in Brexit uncertainty?
Probably not. We know that Brexit uncertainty has fallen given the fall in GBP/USD and EUR/GBP fx option implied volatility. Nonetheless, we also know that nearly all global stock market indices have risen this year, most in the territory of 5-6% or so. In that sense, the FTSE350 has in no way outperformed. It seems likely that the majority of any move in the FTSE350 has been caused by global factors.

With regard to the constituent UK indices, the FTSE 100 is up 4.55%, a modest underperformance vs. global stock market indices, and the FTSE250 is up 7.69% a modest outperformance. The exception is the US indices which have benefited understandably from the tailwind from the Fed's decisions. Given the modest appreciation in the trade-weighted GBP of 3%, the 3% outperformance of the domestically orientated FTSE250 over the FTSE100 seems reasonable and perhaps some of that can be attributed to a fall in Brexit uncertainty expressed through the currency channel.

Anyway this is my thought process for what little it's worth.

[TheMotorcycleBoy]

But regardless of the above.....what about the OP's title Rise in FTSEs despite Brexit uncertainty
Noise or signal? If the latter what's being signalled?
Matt

Ok trying to be brief ... but I do tend toward being long of words!

Noise or signal?
Probably signal . The FTSE350 is up 5.05% year-to-date. The realized annualized volatility of the FTSE350 over a 5 year lookback period is 9.8%, so a 5.05% move so far this year is a 1.7 standard deviation move. So the balance of probabilities is that this move contains at least some element of signal rather than just pure noise.

What's being signalled?
Nearly all major stock market indices are up this years: S&P 8.43%, EuroStoxx 5.46%, Nikkei 4.34% etc. Implied volatility has fallen on most asset classes, denoting an expectation for lower asset price volatility in the next few months. Markets hate uncertainty. This we can attribute to a set of positive global risk factors: The Fed moving away from policy tightening, the Fed moving away from balance sheet reduction, the ECB hinting at a later date for the end of QE, some positive signals on trade talks between the US and China.

Is the rise in the FTSE350 due to a fall in Brexit uncertainty?
Probably not. We know that Brexit uncertainty has fallen given the fall in GBP/USD and EUR/GBP fx option implied volatility. Nonetheless, we also know that nearly all global stock market indices have risen this year, most in the territory of 5-6% or so. In that sense, the FTSE350 has in no way outperformed. It seems likely that the majority of any move in the FTSE350 has been caused by global factors.

With regard to the constituent UK indices, the FTSE 100 is up 4.55%, a modest underperformance vs. global stock market indices, and the FTSE250 is up 7.69% a modest outperformance. The exception is the US indices which have benefited understandably from the tailwind from the Fed's decisions. Given the modest appreciation in the trade-weighted GBP of 3%, the 3% outperformance of the domestically orientated FTSE250 over the FTSE100 seems reasonable and perhaps some of that can be attributed to a fall in Brexit uncertainty expressed through the currency channel.

Anyway this is my thought process for what little it's worth.

Thanks for these thoughts, WorkShy. A very interesting answer. I'm also inclined to think that some of the rise was not just "noise".

But there's clearly quite an interplay of factors going on, i.e. not just the "Brexit Effect".

thanks Matt

[UncleEbenezer]

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.