4 ms·

In this particularly odd case, the grass voted for the elephant war.

cm2187 10y ago
To be honest I am not convinced the current volatility is 100% Brexit related. If it was, the S&P would have barely moved, I don't think anyone seriously suggests Brexit will affect the US economy. I think the market volatility is way over-done, and reflect more the general nervousness with global and US economic growth rather than the direct consequences of Brexit. Brexit is more of a trigger like a terrorist attack would be. The grass may have voted for the elephant war, but the elephants were pretty pissed off already for other reasons...
- dragonwriter 10y ago
  > I don't think anyone seriously suggests Brexit will affect the US economy. You're wrong: http://www.bloomberg.com/news/articles/2016-06-24/global-recession-risk-above-50-on-brexit-t-rowe-price-warns http://www.bloomberg.com/news/articles/2016-06-24/global-rec...
  - cm2187 10y ago
    Well, there is always someone. I think it's fair to say that slightly higher trade tariffs in the UK will not result in a global recession. It might trigger a sell-off of over-priced stocks, like a crash of the Chinese markets did in August last year, but stocks in the US did not tank because of the Chinese market crash, they tanked because people were concerned about rate rises and the US economy.
    - dragonwriter 10y ago
      > Well, there is always someone. Well, for major-media published people saying that it could lead to a global recession, you've got T. Rowe Price (cited upthread), and an analysis firm economist [0]. And the IMF [1]. And, in a piece where others are warning of other economic risks short of a recession, Morgan Stanley also warns of potential recession. [2] > I think it's fair to say that slightly higher trade tariffs in the UK will not result in a global recession. If the Brexit meant near term certainty with no changes other than slightly higher tariffs on trade between the UK and the EU, sure. But that's not what the Brexit means. [0] http://www.cnbc.com/2016/06/24/ http://www.cnbc.com/2016/06/24/ [1] http://www.theguardian.com/politics/2016/jun/20/european-union-referendum-brexit-us-world http://www.theguardian.com/politics/2016/jun/20/european-uni... [2] http://www.telegraph.co.uk/business/2016/06/21/central-bank-titans-warn-of-brexit-tremors-as-global-recession-f/ http://www.telegraph.co.uk/business/2016/06/21/central-bank-...
    - achamayou 10y ago
      Slightly higher trade tariffs are the best case scenario though. There's a lot riding on the London real estate market at the moment, the financial centre of Europe might be about to shift, and a whole lot of people who live on the wrong side of the border may or may not be incentivised to cross back (both EU migrants and British pensioners). I really do hope you're right, but it's not hard to see why people (and indeed the markets) are nervous. At this point there's no timeline, and it's not even clear who's going to be doing the negotiation to begin with. And then there is a long list of European parties with non-negligible support who are quite keen to follow the same route. Looping back into the OP, the potential for even mild trampling is sizeable.
      - cm2187 10y ago
        I don't really understand by what mean the financial centre will move because of brexit. London has been a financial centre way before the EU even existed, and the bankers do not need to be located where they book things. All banks will need to do is to open or buy a bank in the EU and book their activities there. Some staff will have to move, most won't. If traders or asset managers have to choose between living in London vs Zurich, Luxembourg or Frankfurt, you can bet they will prefer London because of the language and quality of life. Many financial institutions are based in Delaware in the US, but are really ran from New York. Is Delaware really a financial centre competing with New York? There has been a lot of fear mongering going on in this campaign (on both side) and I would take with a big pinch of salt the catastrophic forecasts of the world post brexit. Disclaimer: I work in a bank in the UK.
        achamayou 10y ago
        There's a good summary of what may change here: http://www.ft.com/cms/s/0/a3a92744-3a52-11e6-9a05-82a9b15a8ee7.html http://www.ft.com/cms/s/0/a3a92744-3a52-11e6-9a05-82a9b15a8e... It's very open at this point (since nothing has been decided really), but it's quite difficult to believe that there won't be any shift at all and that London will be able to retain all of its existing financial services marketshare in Europe. I won't comment on your claims about the quality of life in those cities vs London, but I think it's worth bearing in mind the fact that they already have a significant amount of financial businesses today, and that traders and asset managers may not like being paid in a rapidly depreciating currency. There are really some justified concerns about what's going to happen to the financial industry in the UK post-Brexit, it's not just all mindless fear mongering. Your comparison with Delaware and NY isn't applicable at all really. The US operates under a single currency, with a single set of financial regulators, with an even stronger version of passporting. There are local differences in laws and taxes applicable to corporations between states, but nothing like what you find when you cross an actual border.

To be honest I am not convinced the current volatility is 100% Brexit related. If it was, the S&P would have barely moved, I don't think anyone seriously suggests Brexit will affect the US economy. I think the market volatility is way over-done, and reflect more the general nervousness with global and US economic growth rather than the direct consequences of Brexit. Brexit is more of a trigger like a terrorist attack would be. The grass may have voted for the elephant war, but the elephants were pretty pissed off already for other reasons...

dragonwriter 10y ago
> I don't think anyone seriously suggests Brexit will affect the US economy. You're wrong: http://www.bloomberg.com/news/articles/2016-06-24/global-recession-risk-above-50-on-brexit-t-rowe-price-warns http://www.bloomberg.com/news/articles/2016-06-24/global-rec...
- cm2187 10y ago
  Well, there is always someone. I think it's fair to say that slightly higher trade tariffs in the UK will not result in a global recession. It might trigger a sell-off of over-priced stocks, like a crash of the Chinese markets did in August last year, but stocks in the US did not tank because of the Chinese market crash, they tanked because people were concerned about rate rises and the US economy.
  - dragonwriter 10y ago
    > Well, there is always someone. Well, for major-media published people saying that it could lead to a global recession, you've got T. Rowe Price (cited upthread), and an analysis firm economist [0]. And the IMF [1]. And, in a piece where others are warning of other economic risks short of a recession, Morgan Stanley also warns of potential recession. [2] > I think it's fair to say that slightly higher trade tariffs in the UK will not result in a global recession. If the Brexit meant near term certainty with no changes other than slightly higher tariffs on trade between the UK and the EU, sure. But that's not what the Brexit means. [0] http://www.cnbc.com/2016/06/24/ http://www.cnbc.com/2016/06/24/ [1] http://www.theguardian.com/politics/2016/jun/20/european-union-referendum-brexit-us-world http://www.theguardian.com/politics/2016/jun/20/european-uni... [2] http://www.telegraph.co.uk/business/2016/06/21/central-bank-titans-warn-of-brexit-tremors-as-global-recession-f/ http://www.telegraph.co.uk/business/2016/06/21/central-bank-...
  - achamayou 10y ago
    Slightly higher trade tariffs are the best case scenario though. There's a lot riding on the London real estate market at the moment, the financial centre of Europe might be about to shift, and a whole lot of people who live on the wrong side of the border may or may not be incentivised to cross back (both EU migrants and British pensioners). I really do hope you're right, but it's not hard to see why people (and indeed the markets) are nervous. At this point there's no timeline, and it's not even clear who's going to be doing the negotiation to begin with. And then there is a long list of European parties with non-negligible support who are quite keen to follow the same route. Looping back into the OP, the potential for even mild trampling is sizeable.
    - cm2187 10y ago
      I don't really understand by what mean the financial centre will move because of brexit. London has been a financial centre way before the EU even existed, and the bankers do not need to be located where they book things. All banks will need to do is to open or buy a bank in the EU and book their activities there. Some staff will have to move, most won't. If traders or asset managers have to choose between living in London vs Zurich, Luxembourg or Frankfurt, you can bet they will prefer London because of the language and quality of life. Many financial institutions are based in Delaware in the US, but are really ran from New York. Is Delaware really a financial centre competing with New York? There has been a lot of fear mongering going on in this campaign (on both side) and I would take with a big pinch of salt the catastrophic forecasts of the world post brexit. Disclaimer: I work in a bank in the UK.
      - achamayou 10y ago
        There's a good summary of what may change here: http://www.ft.com/cms/s/0/a3a92744-3a52-11e6-9a05-82a9b15a8ee7.html http://www.ft.com/cms/s/0/a3a92744-3a52-11e6-9a05-82a9b15a8e... It's very open at this point (since nothing has been decided really), but it's quite difficult to believe that there won't be any shift at all and that London will be able to retain all of its existing financial services marketshare in Europe. I won't comment on your claims about the quality of life in those cities vs London, but I think it's worth bearing in mind the fact that they already have a significant amount of financial businesses today, and that traders and asset managers may not like being paid in a rapidly depreciating currency. There are really some justified concerns about what's going to happen to the financial industry in the UK post-Brexit, it's not just all mindless fear mongering. Your comparison with Delaware and NY isn't applicable at all really. The US operates under a single currency, with a single set of financial regulators, with an even stronger version of passporting. There are local differences in laws and taxes applicable to corporations between states, but nothing like what you find when you cross an actual border.