Brexit-- Implications for Markets and Stocks

[Graham Osborn]

Financial market panic and guys like Soros is the problem since it creates issues for the banks when risk aversion goes up: capital reserves, loan loss ratio, etc. Regarding Soros, I can guarantee you that I won't cry when this guy is gone.

 

Cardboard

 

Poor Soros.  I wonder if Buffett would be hated as much if he still shorted.  Soros is much more entertaining during times like these because he is a trader, whereas Buffett just yawns and says the world will work itself out in 10-20 years (not his problem).  To Buffett's credit, he understood the PR value of being long-only by mid-life.

 

One thing I like about Soros is he shows how you can have a long-term view but express it through shorter term market moves, much as PTJ did.  Sounds like he was long the pound, but short stocks, and once he knew the results he went short DB and I presume some other EU banks.  It takes a lot of guts to sell after that kind of drop.

 

Soros knows the cogs and wheels of Europe like few others.  Although he's willing to flip any trade on a dime based on what the market is telling him, his broader portfolio strategy operates over a span of decades.  That's why he's been around all these years, and will hopefully make it a few more :)

 

Point being, if two old guys (Soros and Rogers) - who beat the market for decades, made some incredible macro predictions (Rogers predicted in the late 90s that the 00s oil boom would end about 2015), and lived through WW2.. the breakdown of Bretton Woods.. the collapse of the former USSR.. - think that Brexit might be a major step in Europe's decline, I'm paying attention.  I may not agree with everything they say, but I'm definitely not brushing them off like the words of some EU finance minister.

 

 

 

 

 

 

[Liberty]

John Oliver follow up on Brexit (sorry if it's a repost):

 

[Guest wellmont]

soros was one of the only guys who had this brexit all sussed out. where was Kbass focused? china. where was the trade? Europe. soros for months has been hinting that there was a real possibility that uk would vote to leave. he did not cause this turmoil. he warned that it would happen. he left bread crumbs. but most people were focused elsewhere. would be speculators were too busy with their twitter schadenfreude on ackman vrx musk tesla and solarcity to notice that something big was about to happen.

 

Soros also has become more astute politically over time. instead of shorting the pound, he targeted DB and ancillary securities, and made an absolute killing. and without the arrows that came his way last time when he took down the pound sterling.

 

with this trade soros proved yet again that in the realm of macro strategists, he stands alone.

[netnet]

 

 

Poor Soros.  I wonder if Buffett would be hated as much if he still shorted.

When did Buffett do non-arb related shorting?

[Ballinvarosig Investors]

Soros also has become more astute politically over time. instead of shorting the pound, he targeted DB and ancillary securities, and made an absolute killing. and without the arrows that came his way last time when he took down the pound sterling.

Hold on here, Soros only shorted Deutsche Bank the day after the Brexit vote, it's only slightly down since then.

[doughishere]

Implications for Markets and Stocks, WEB 1966:

 

After the Dow declined from 995 at the peak of February to about 865 in May, I received a few calls from partners suggesting that they thought stocks were going a lot lower. This always raises two questions in my mind: (1) if they knew in February that the Dow was going to 865 in May, why didn’t they let me in on it then and (2) if they didn’t know what was going to happen during the ensuing three months back in February, how do they know in May? There is also a voice or two after any hundred point or so decline suggesting we sell and wait until the future is clearer. Let me again suggest two points: (1) the future has never been clear to me (give us a call when the next few months are obvious to you- or, for that matter the next few hours); and, (2) no one ever seems to call after the market has gone up one hundred points to focus my attention on how unclear everything is, even though the view back in February doesn’t look so clear in retrospect.

[TwoCitiesCapital]

Implications for Markets and Stocks, WEB 1966:

 

After the Dow declined from 995 at the peak of February to about 865 in May, I received a few calls from partners suggesting that they thought stocks were going a lot lower. This always raises two questions in my mind: (1) if they knew in February that the Dow was going to 865 in May, why didn’t they let me in on it then and (2) if they didn’t know what was going to happen during the ensuing three months back in February, how do they know in May? There is also a voice or two after any hundred point or so decline suggesting we sell and wait until the future is clearer. Let me again suggest two points: (1) the future has never been clear to me (give us a call when the next few months are obvious to you- or, for that matter the next few hours); and, (2) no one ever seems to call after the market has gone up one hundred points to focus my attention on how unclear everything is, even though the view back in February doesn’t look so clear in retrospect.

 

+1

 

I especially like his comment about the lack of clarity when the market is rising.

[VersaillesinNY]

Entire speech by George Soros:

Statement submitted to the European Parliament Joint Hearing: “Budgetary implications of the current refugee and migration crisis”

 

https://polcms.secure.europarl.europa.eu/cmsdata/upload/03654ee6-376d-4043-a222-5af8ff117b81/Statement-submitted-to-the-European-Parliament-Joint-Hearing-by-George-Soros-on-30-June-2016.pdf

 

Partial speech: http://www.cnbc.com/2016/06/30/brexit-is-a-negative-shock-soros.html

 

Statement-submitted-to-the-European-Parliament-Joint-Hearing-by-George-Soros-on-30-June-2016.pdf

[doughishere]

lol.....this is like House of Cards. lol...the theories are wow.

 

 

SuperSlam64 327 points 2 hours ago*

To the uninformed about UK politics: This isn't nearly as much of a big deal as Boris Johnson announcing that he wouldn't run for PM. Nigel Farage was an elected MEP (Member of European Parliament) and leader of UKIP (the United Kingdom Independence Party). The whole platform of UKIP was leaving the EU. This is close to being achieved (although it could still technically not happen). UKIP has a single seat in a 650 seat parliament in the UK and so wields almost zero power. If the UK successfully leaves the EU, Farage's seat as an MEP will no longer exist and as the whole platform that the party has attracted support using is close to being achieved, Mr Farage is smart to get out now before his party's appeal collapses. I say this because in the 2015 election where UKIP got 3.8 million votes (in my opinion because they would without a doubt have called an EU referendum) they still only got 1 seat. This is where FPTP favours the bigger parties. Now this is just a hunch but I suspect they'll do worse in 2020 due to the referendum having already taken place and now with Farage stepping down this will be exacerbated.

Boris Johnson on the other hand was the favourite in book makers to succeed David Cameron as Prime Minister, as the head of the "official" leave campaign he was naturally seen as the captain to sail the ship so to speak, and most people have suspected that he has had eyes on the position of Prime Minister. He is also an MP and so could actually serve as Prime Minister and so his refusal to run despite all of this largely seems as him taking a lack of responsibility for driving the UK out of the EU so he can attempt to salvage his political image for 2020.

Farage on the other hand can't be held accountable because most people don't vote in European elections and even if they did MEPs hold very little power. MEPs don't even really have constituents because they are elected using a proportional system. In summary it seems very convenient that Farage, who in the video touts himself as a "businessman who never wanted to be a career politician", resigns immediately after a vote that will trigger the UK's exit from the EU which "coincidentally" will benefit him as he will be subject to less regulation and "red tape" as he calls it. And here's the messed up thing, the people who voted to leave will largely be the ones that the lack of regulation will effect. Potentially driving down wages and eroding worker's rights.

Edit: This is just my interpretation of the events, but of course other factors are involved and will have influenced these politicians decisions and actions.

permalinkembed

 

[Aberhound]

EU will go into turmoil as they seek to impose an un democratic federal state. So the negotiations are unlikely to be rational. So the pound will fall to par as Martin Armstrong suggests. EU will suffer runs on their banks and will be forced to lend trillions at zero percent to the banks until they are forced to impose bail ins. US stocks will do well in the turmoil as capital flees Europe. The bail ins are inevitable as the ECB will have a choice of collapsing the monetary system or a collapsing the banks per the Hayek instability hypothesis. When the banks start to fail the secrecy around derivatives will cause runs on all EU and UK banks. Europe federalizations will be agreed in crisis,  probably in secret, which will be time to buy stocks. Bail ins will cause the Euro and EU stocks to drop sharply the same as the Great Depression. That will be the time to buy EU stocks just like 1933 was the time to buy US stocks during the collapse of thousands of banks but before you knew how much money you would get back. Incidentally the flaw in bail ins is that you get equity which will quickly be worth little as banks are terrible businesses when debts are not repaid and the bad news is mostly hidden. At least in the Great Depression you got scrip from the banks which you could use to pay off your debts at par if you had debts at the same bank or sell at 25 cents on the dollar allowing others to pay off their debts cheaply. This allowed people to wipe out their debts allowing recovery which probably won't occur in the EU causing the population to suffer needlessly. This will prolong the downturn. Leave while you can. Remember the goal of these clowns is global government and such chaos is their main tool. The rosy scenario would be to federalize quickly but since this means that the squeaking socialists in each nation state will lose their plush jobs I doubt they will give up their perks easilly hence my pessimism.

[rb]

The conspiracy power is strong today.

[prevalou]

EU will go into turmoil as they seek to impose an un democratic federal state. So the negotiations are unlikely to be rational. So the pound will fall to par as Martin Armstrong suggests. EU will suffer runs on their banks and will be forced to lend trillions at zero percent to the banks until they are forced to impose bail ins. US stocks will do well in the turmoil as capital flees Europe. The bail ins are inevitable as the ECB will have a choice of collapsing the monetary system or a collapsing the banks per the Hayek instability hypothesis. When the banks start to fail the secrecy around derivatives will cause runs on all EU and UK banks. Europe federalizations will be agreed in crisis,  probably in secret, which will be time to buy stocks. Bail ins will cause the Euro and EU stocks to drop sharply the same as the Great Depression. That will be the time to buy EU stocks just like 1933 was the time to buy US stocks during the collapse of thousands of banks but before you knew how much money you would get back. Incidentally the flaw in bail ins is that you get equity which will quickly be worth little as banks are terrible businesses when debts are not repaid and the bad news is mostly hidden. At least in the Great Depression you got scrip from the banks which you could use to pay off your debts at par if you had debts at the same bank or sell at 25 cents on the dollar allowing others to pay off their debts cheaply. This allowed people to wipe out their debts allowing recovery which probably won't occur in the EU causing the population to suffer needlessly. This will prolong the downturn. Leave while you can. Remember the goal of these clowns is global government and such chaos is their main tool. The rosy scenario would be to federalize quickly but since this means that the squeaking socialists in each nation state will lose their plush jobs I doubt they will give up their perks easilly hence my pessimism.

 

The question is : where are the bad loans ? Since the last crisis banks are very careful on their exposure. Even bad loans at italian banks are overcollateralized.

[Aberhound]

I do not like how contributors who read a lot of books get labelled for mentioning trends which are not mentioned in the drivel known as the popular press. This is a prediction thread so speculate away but be ready with sources to back your arguments!

 

My speculation is largely based on the writings of Felix Somary. We all might learn something by reading memoirs of such well connected people.

 

https://www.amazon.com/Raven-Zurich-Memoirs-Somary-1881-1956/dp/1850650187#customerReviews

 

Amongst his last books he predicted the end of communism and soon after the end of democracy and capitalism because the elites would seek profit without risk. Haven't we seen this when Europeans bank levered 75 times or more during the greatest bond bull market in history manage to lose money and almost wipe out equity holders and now have imposed a flawed bail-in mechanism threatening to transfer depositor monies to senior bond holders? Some people enjoyed profit without risk just like Somary predicted. The conclusions follow due to the iron law of politics that bad systems tend to get worse. Fortunately the law of rhythm also suggests that day follows night so our children or grandchildren may enjoy better times when people realize the harm to themselves and others which arises from supporting dominators then choose to stop. The sooner people turn off the TV and read more broadly then contemplate, the sooner this will occur.

 

[doughishere]

Krugman had a marvelous comment about an hour ago.

[VersaillesinNY]

Standing Up for Europe / Op-Ed by George Soros

 

https://www.project-syndicate.org/commentary/momentum-turning-in-favor-of-europe-by-george-soros-2017-06