“Overnight the value of the Pound to their global peers is less. And to rub salt into the wounds, most folks who voted no would do well to peer into their pension funds. They would see the value, in Pound terms, has diminished significantly too. Stocks in the UK took an almighty pasting Friday, perhaps it was and is a little overdone.”
To market to market to buy a fat pig Ooops. Guess how wrong I was?!? Very, it turns out. The polls were right and wrong, the bookies were dead wrong. The upshot of the “leave the EU” vote was that British people began googling like crazy what the EU really was. Dinkum, as they say down under. Michael made the point that you shouldn’t leave such important decisions in the hands of those without the necessary skills to weigh up the future. There is a reason that politicians vacillate and hedge their bets, in the same way that economists have two hands.
What is interesting is that the older voter in the UK almost entirely wants to be British again (whatever that means) and the younger voters want to be European. You could of course blame politicians for the mess in the first place, a referendum on the EU? Really? People will just vote with their narrow minded views and not see that the movement of goods and people is a wonderful thing. You cannot fight the will of the people. There are many unintended consequences to isolation. Can you get stupider than this? Check this out: The British are frantically Googling what the E.U. is, hours after voting to leave it.
I am reminded of the relative economic prowess of North Korea to their South Korean neighbours during some of my reading. During the late 1960’s, ethnic Koreans in Japan chose to move to North Korea, their path seemed better, the economic prospects were brighter in the communist country. At least it seemed so on paper. A decade and a half on from the split, the North with their communist ways seemed far better than the South with their relative (not entirely) free market approach. Today the results are laid bare for all to see, the North is a basket case with people genuinely shorter and stunted as a result of low nutrition, as a result of failed economic policies. The South, well, their internet is so quick (not that it is a measure of human progress) that they have chill sessions to detox from technology. Two worlds and two paths chosen sixty years ago with consequences for ordinary people.
I am not suggesting that for a second that the UK will ultimately follow this path. Politically it looks like a mess. The Scottish Parliament has suggested that they may want to block this move, perhaps paving a path for the country to enter the EU themselves. So let us see what transpires when the dust settles. I saw that Europeans (from the mainland) were trying hard to expedite the “article 50” so that any other country thinking about this, in the political sense it is nationalists and right wingers, hardly the best sort at dinner parties, were set to think twice about the political implications.
Overnight the value of the Pound to their global peers is less. And to rub salt into the wounds, most folks who voted no would do well to peer into their pension funds. They would see the value, in Pound terms, has diminished significantly too. Stocks in the UK took an almighty pasting Friday, perhaps it was and is a little overdone. The FTSE did bounce pretty hard off the lowest levels, banks and financials were still dealt an almighty blow. Three and some change percent down on the day might not sound that bad, it is against the backdrop of a pound that weakened. Get to that in a minute. Barclays was down 17.68 percent, Lloyds fell 21 percent, the Royal Bank of Scotland was off 18.04 percent. HSBC, with operations globally, as well as Standard Chartered, fell 1.43 and 2.58 percent respectively. Hargreaves sank 15.4 percent, Provident fell 16 and a smidgen.
Aldermore, a relatively new business, that provides loans to small and medium size businesses, fell an astonishing 32 percent on the day. Taylor Wimpey (used to be Taylor Woodrow), a bigger and well established homebuilding company fell nearly 30 percent. It wasn’t all carnage, the weaker Pound has some positive implications for several businesses. Obviously the gold producers who felt the strong winds at their backs, as the metal price climbed heavily. ARM holdings, the British software and chip maker soared. Costs in global terms just got cheaper?
Most important, what to do? You could have guessed that our answer would be nothing. Do nothing. In fact, in the great British tradition of doing little in times of adversity, Keep Calm and Carry On. Or in French if you will: “Restez Calme et Continuez”, or German “Bewahre Ruhe mach weiter”. Anyhows, this is not cut and dried. A year ago the Greeks voted to stop austerity. Did it happen? No. Felix Salmon points this out on Twitter:
Many passionate people around, I saw on CNBC this morning, in an external broadcast, someone shouted off screen as he passed by walking his dog. The hosts, Geoff Cutmore told that fellow to get lost. It made for excellent TV, live, you can’t make that stuff up. I would not jump to conclusions immediately. What it has done however is reveal the bad and good side of humans. Sadly.
Quick sticks (hurry up, without delay), market check of Wall Street Friday night. It was a horrible and no good day for stocks. Eddy Elfenbein pointed out that the levels were back at previous Tuesday’s level, unlike the Pound which was at a 30 year low. The nerds of NASDAQ fell over 4 percent, the broader market S&P 500 fell nearly three and two-thirds of a percent, the blue chip Dow Jones Industrial Average fell nearly 3.4 percent. And there was a rush to Treasuries. I suspect that for the Fed, this may well be a wait and see approach. Global bond yields across the board were trading at all time lows. Everywhere, meaning developed world.
Down at the bottom end of Africa, the currency was rubbished, the markets (the Jozi all share) were down over three and a half percent by the close. Stock futures in the UK point to another sell off of around one and a half percent. UK Chancellor didn’t resign and said that they have a robust plan. Perhaps there will be loads of this today and over the coming days. Or as one of our favourite South Africans (who must be English by now) David Bloom said, this thing is set to linger for some time. Unless of course parliament is dissolved and the Brits get to vote again. Who knows!
Linkfest, lap it up
What does sticking on Scuba gear and your approach to business have in common? It turns out that the fear of the unknown, once you get over that, you will do well in almost everything, it goes without saying I guess – What Scuba Taught This Yik Yak Product Manager About Business
Remember when Apple bought a stake in Didi Dache, the cabs company with the hailing app. It is awesome to see the people behind the business – Meet The Woman Behind China’s Largest Ride-Sharing Service. Average age of employees, 26! That is either awesome or not, depending on where you are in the technology is awesome spectrum.
Bright liked this and was fascinated by it – “Nitro” coffees and beers are the coolest things to sip this summer. What makes them so creamy?
Every once in a while an insane advert comes along that inspires, and perhaps we need a little of that today. This advert is really worth watching – Michael Phelps returns for one last time. It is what happens behind the scenes that makes you great.
Home again, home again, jiggety-jog. Naspers numbers late on Friday evening. Not enough time to have a strong look, also bear in mind that the investor call is this afternoon, so we are not looking at the full picture. We will reveal more tomorrow for all and sundry, what is getting the most headlines is the loss of DSTV subscriber numbers. That will always be the case.
Sent to you by Sasha, Byron and Michael on behalf of team Vestact.
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