Voted Leave: D+1 - whats the Economic Plan

[kurt535]

Assuming a popular 'Leave' win, whats the economic plan the next morning given FTSE and £ will be potentially practising skydiving?

Does the BoE cut or raise rates and start Quant Easing again?

What happens to Government Gilts?

Is our credit rating lowered?

Does the housing market stop?

Does the Prime Minister suffer a Commons Vote of No Confidence - adding to the financial turmoil?

[kurt535]

- funny you mention big drop then recover....spoke to some pals on a trading desk today who said leave vote hasn't been properly priced into market but is starting to now with new polls that are coming out.

[kurt535]

emicen said:

Day 1 - the market reacts as a bunch of scared children always do, run away

Days 2-5 - gradually more and more of the children go "wait, what am I actually running from?" and wander back

Days 6-exit date - the market wanders up and down much the same as VW shares have done since their emissions scandal with good news and bad about how exit negotiations are progressing

Much the same as the IndyRef up here, a vote for the change doesn't mean the change happens that day, the next day or even the next week.

But, a vote leave is a step change in economic policy - in the same way ERM exit was. I am also wary it links into how the market views the UK Gilt market - Government IOU'S - currently trading on record lows. Will we have to raise rates to attract investors to them? This would fly in the face of quant easing which took bonds out the market if I remember correctly.

[kurt535]

RobDickinson said:

emicen said:

Day 1 - the market reacts as a bunch of scared children always do, run away

Exaggerated by sharks making a killing...

Markets have exaggerated falls caused by people forced to dump positions by their clearing houses due to margin calls which, i understand have been raised this week.

[kurt535]

stongle said:

It's algos that force exaggerated market moves, not City W*nkers etc. Average execution on LSE 13 years ago 60k, today circa 5k. Let's not let facts get in the way of a sensible debate.

As for pricing in Brexit, only starting in earnest now. Seen some vol, but don't think anyone could be believe the collective stupidity of the U.K. electorate if this pans out per the opinions polls (hopefully wrong).

Leave campaign is a total sham, lost all credibility denouncing independent economic advice (the IMF are Cameron's lackeys? Tell that to Merkel when they were sticking one in her eye on Greece 3 weeks ago).

Hopefully this opinion poll (that's the referendum) is ignored, and we get back to normality. Anyone predicting the economic effects of this in days is an idiot of the highest order. We are looking at the medium to long term value destruction of companies - and an absence of a sensible plan (I'd love someone to tell me that post Brexit politics will be orderly but can't see that happening - ever. We could never capitilise on the opportunity of a Brexit - it was a question that should never been asked of the masses).

Edited by stongle on Tuesday 14th June 07:52

Edited by stongle on Tuesday 14th June 07:53

I fear you are right Stongle. Leaving is just fine but I've yet to hear the economic plan.It genuinely concerns me. Markets getting hit today as i write this....time to lock in my interest rate on my mortgage too I think.

[kurt535]

Jinx said:

lostkiwi said:

Greg66 said:

kurt535 said:

Assuming a popular 'Leave' win, whats the economic plan the next morning given FTSE and £ will be potentially practising skydiving?

Does the BoE cut or raise rates and start Quant Easing again?

What happens to Government Gilts?

Is our credit rating lowered?

Does the housing market stop?

Does the Prime Minister suffer a Commons Vote of No Confidence - adding to the financial turmoil?

IME of threads on here, Leavers have no plan and take perverse pride in that. They regard it as someone else's job to sort out the mess.

Although they will assure you that (a) nothing will change, (b) everything will get better; (c) the appallingly corrupt EU will become our number 1 trusted trading partner; (d) Cameron will have to resign. Reconccile all four of those statements and you've unlocked the keys to the Leave hive mind.

Personally? I think the uncertainty of what happens next and in what period will hurt sterling, knock our credit rating and cause an interest rate rise. Liquidity and business turnovers will lower because people tend not to spend so much when things are uncertain. And after a couple of years when leavers realise that leave wasn't a magic bullet that cures all the problems in their lives there will be quite the backlash.

Totally agree.
I've mentioned about the lack of a plan and how we are effectively being asked if we want to jump off a cliff in the hope the water is deep enough to soften the landing but as usual just get smart answers and no substance.
The levels of unknowns in a Brexit are enormous.

The leavers are not in government. Will not be in government on the 24th June and do not have a mandate to run the country. This is a question over the whether to remain a member of the political entity called the EU. The running of the economy and the country will still fall to the Houses of Parliament and the BoE. The fact is if a Brexit vote comes to pass many more options over the economy will be viable - if that scares you then perhaps I'd step away from the trading desk.

Sorry Jinx, we will agree to disagree. Politics and UKOK are the smokescreen to the economic issues that have not been addressed by Brexit. if it was just politics, £ and FTSE wouldn't be getting hit.

[kurt535]

OP - markets getting whacked due to economic problems associated with leaving. Politics not moving £ FTSE at the moment.

My heart is happy to leave but my financial head sees us being launched into a global economy that is very unstable. Therefore, the image of UK, the plucky Brit, forging ahead post EU is not working for me. We won't automatically have a wave to ride. And the bond market situation is still largely unknown by Joe Soap......

[kurt535]

stongle said:

CrutyRammers said:

Yeah, because, sod democracy, it's all about the money, right?

Pretty much. Most people vote with their pockets; the Brexit debate has done nothing but increase partisan politics. This in turn will return weaker governments (making it more difficult to pass reforming legislation).

Pan Pan Pan said:

How about starting trading again with former common wealth countries, and others that we are not allowed to make trade deals with whilst we were in the EU?

And what do you think will happen to these countries and BRICs when the Fed starts hiking / returns to a "normal" interest rate policy. 3, 5, 10 years of recession? - how many Range Rovers will Brazil be buying if no one can f**king eat? (upside, we might export a lot of water cannons though). This could be a generational issue. If you don't understand macro economics; you ought not be voting.

This is a poorly timed spectacle, given highly fragile global economics & cycle. Its actually now a decision between a seat at the table to (positively influence) events or the abyss.

And for the record, my heart favours leave and self determination. Head says its simply not practical, given Global events / economy and the poor state of UK politics.

Edited by stongle on Tuesday 14th June 11:19

Stongle, well said. My sentiments entirely.

[kurt535]

If border controls are desired by all, it is true we lose our border control 'over there'. I can't see French Police doing us a favour and pulling migrants off the 08:30 to St Pancras. Migration could, therefore, equally blow upend create more economic problems.

Again, it comes down to what happens D+1 and I am none the wiser.

[kurt535]

don4l said:

Mario149 said:

This thread is very telling. Someone who voted Leave from a heart PoV is asking what the economic plan is and the 70-odd percent of Brexit supporters on PH can't give any half decent answer.

I think that the debate is now over. Project Fear has failed. Let's all try to be productive from here on.

I wonder if Cameron will do the honourable thing on Friday week, or will he try to cling on. We don't need another fiasco like when Brown tried to claim squatters rights.

9/4 to go within 2016 on paddy power: i have my £250 wagered.

[kurt535]

Jinx said:

Mario149 said:

This thread is very telling. Someone who voted Leave from a heart PoV is asking what the economic plan is and the 70-odd percent of Brexit supporters on PH can't give any half decent answer.

So tell me what is the economic plan of staying in the EU? How is the Greek euro crisis going to be solved?

Jinx, currently, from an economic perspective, lesser of the two evils. global economy having problems right now - reflected, like i keep worrying about - in the zero to negative yield bonds out there...

[kurt535]

1 hour ago: 10 year German govt bonds went negative as investors bought quality over probable uk exit......

http://www.bbc.co.uk/news/business-36526008

serious s**t!!

[kurt535]

back on topic....flight to german bunds at the expense of buying uk gilts.......it is, whatever way you look at it, a vote of economic no confidence in uk.....

so, whats the leave camp's answer to calming exit concerns?

[kurt535]

don4l said:

Jockman said:

Just found another bit in the same article about negative German bonds...

..... It reflects the persistent failure of the eurozone to generate a really convincing recovery from the financial crisis.

Exactly. The investors clearly think that the German stock markets are not going to do well in the next few years.

Its laughable if you think this doesn't include the UK FTSE thats been bent over the last few days and being asked to relax.....

[kurt535]

Jockman said:

Robertj21a said:

kurt535 said:

back on topic....flight to german bunds at the expense of buying uk gilts.......it is, whatever way you look at it, a vote of economic no confidence in uk.....

so, whats the leave camp's answer to calming exit concerns?

Personally, I wouldn't do anything about it. The various markets will always react however they want and are always likely to go into panic mode when there's any uncertainty. Once the decision to leave is confirmed it will be for the country to pull together and show the world how we can trade quite capably without the EU.

Agreed. Markets are prostitutes. They will sleep with your best friend if it makes them money.

Do you have a pension Jockman?

[kurt535]

Pan Pan Pan said:

stongle said:

Greg66 said:

When you're playing games over the make up of the Govt of the (as leavers love to remind us) the fifth largest economy in the world, you think two weeks is the limit of what one's long term view should be?

Exactly. And a big reason we are the 5th largest economy, is in part due to membership of the EU. To suggest otherwise makes you [bricktop mode] a bit of a f**king prat[/bricktop mode].

Absolute b*llocks. the UK has made itself the worlds fifth largest economy DESPITE being a member of the EU.
The EU has never given the UK a single net penny since the UK joined the EEC 40 years ago, and has run a trade SURPLUS with the UK where the EU has sold MORE to the UK than the UK has sold into the EU.
The only question is how well the UK could have done if it had not been dragged down by the parasitic EU sucking cash and business OUT of the UK.
If vote leave wins we will have a chance to find out.

Pan Pan Pan, I'm curious how you conclude our trade deficit is due to being a member of the EU? Do we have any have trade surpluses with any decent sized countries in the world?

[kurt535]

Pan Pan Pan said:

kurt535 said:

Pan Pan Pan said:

stongle said:

Greg66 said:

When you're playing games over the make up of the Govt of the (as leavers love to remind us) the fifth largest economy in the world, you think two weeks is the limit of what one's long term view should be?

Exactly. And a big reason we are the 5th largest economy, is in part due to membership of the EU. To suggest otherwise makes you [bricktop mode] a bit of a f**king prat[/bricktop mode].

Absolute b*llocks. the UK has made itself the worlds fifth largest economy DESPITE being a member of the EU.
The EU has never given the UK a single net penny since the UK joined the EEC 40 years ago, and has run a trade SURPLUS with the UK where the EU has sold MORE to the UK than the UK has sold into the EU.
The only question is how well the UK could have done if it had not been dragged down by the parasitic EU sucking cash and business OUT of the UK.
If vote leave wins we will have a chance to find out.

Pan Pan Pan, I'm curious how you conclude our trade deficit is due to being a member of the EU? Do we have any have trade surpluses with any decent sized countries in the world?

If you do even a little research, you will find out that the UK has had a trade deficit with the EU in almost all of the 40 years since the UK joined the common market, If one then considers that the EU has never given the UK a single net penny for the `privelege' of running that trade deficit for 40 years (you do know what trade deficit means don't you?) the `great deal' of being in the parasitic EU does not seem so great (for the UK) does it?

Still curious can you name countries who we have a trade surplus with?

[kurt535]

Zod said:

(I posted this in the echo chamber thread too)

It seems then that Vote Leave's plan is to spend four years negotiating a new deal with the EU and then invoke Article 50 (the article that sets out the process for a Member State to declare its decision to leave and begin a two year negotiating process). Vote Leave plans to begin that six year process (four years plus two, taking us to 2022, not 2020 as they claim) by breaching the Treaty of Lisbon with its bill to nullify the ECJ. That will get the negotiations off to a good start!

Then, presumably over the next four years (I couldn't find the statement on their website), Vote Leave's plan is to breach all the fundamental EU Treaties by repealing the European Communities Act, introducing a "Free Trade Bill" that would repudiate the Single Market, bringing in an asylum and immigration control bill and ending VAT on energy bills.

How any sane person can think that beginning a negotiating process with an an immediate repudiatory breach of the current arrangements and an announcement of planned repudiatory breach of every other fundamental part of the current arrangements will result in a positive future relationship is beyond me.

My next confusion is caused by Vote Leave saying what they will d, post win vote but, they aren't in power. So who will do the negotiation - and what if that person does it differently to how VL say it will happen???? It must mean a snap general election or leadership challenge I'm guessing - more market instability...

[kurt535]

Actually, right now, considering everyone's answer to me on here, there clearly isn't viable plan should the country vote to leave. Nobody can offer a hard viable (albeit opinion) economic 'road map'.

Im concluding nobody knows what will happen other than a run on sterling, ftse and UK bonds

I know from my previous careers as a bond trader what you do to stabilise a currency and bond markets but it concerns me so many people in our country don't know. I also know the ECB and BoE are having a lot meetings to agree to try and prop the markets up post-leave vote but given the interest rates levels and quant easing already in place, I can't see how the dam waters can be held back.

I am really hoping it will be a non event but Plucky Brit spirit could be about to meet the mother of all tsunamis.

Incase you wonder which way I am voting, I think the referendum is 20 years too late and right now being given to the voters at a really dangerous global economic time. Staying in looks really bad but leaving looks, at this point in time, far worse.

[kurt535]

tarnished said:

Robertj21a said:

Personally, I wouldn't do anything about it. The various markets will always react however they want and are always likely to go into panic mode when there's any uncertainty. Once the decision to leave is confirmed it will be for the country to pull together and show the world how we can trade quite capably without the EU.

Yep.

And an undervalued stock market is a great place to find a bargain before the inevitable rise.

stock markets, taking dividends out has been a loser to the tune of 30% over last 10-15 years. bad place for your cash.