Macro Digest: The UK General Election finally agreed, Brexit not so much
Chief Economist & CIO
Summary: Labour leader Corbyn today "caved" in and will vote for motion to call General Election tonight.
Background: PM Johnson has been unable to sell his Brexit deal, now he is seeking a new mandate through a General Election.
Macro Impact: More time will pass before we get back to the issue Brexit – EU has granted a delay until January 31st. PM Johnson wants clear political mandate and the polls right now support him.
Market Impact: Market reaction muted – FTSE selling off slightly, while GBP came in bid post announcement breaking. (see charts below)
Conclusion: It increases chances of Brexit being passed by January 31st, but... it comes at the worst price – continued pause in real economic agenda’s in Europe and in the UK. UK credit-impulse will drag down UK growth through end of Q1-2020 setting up major expansionary policy from “newly elected PM Johnson” in 2020. Will UK be first in using MMT? We think so...
The latest POLLS in the UK: https://www.politico.eu/europe-poll-of-polls/united-kingdom/
Conservatives @ 37%
Labour @ 24%
Lib. Dems @ 17%
We think that the end result will be a higher POLL for Liberal Democrats due to their clear stance on BREXIT, but more to come as election is called...
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.