james
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Post by james on Mar 23, 2016 0:15:41 GMT
synopsis that 'sterling will get spanked' ? Sterling will get very thoroughly spanked, down to parity with the US Dollar. Businesses that export will explode with the glee of their management because of the effect on their prices abroad. There will be grumbling about the prices of imports. The world will continue to turn. Countries concerned about a currency depreciation war will grumble about the UK doing it just to help exports. Stock markets around the world will plummet. For at least five minutes. It's quite a decent time to be holding non-UK investments as a hedge. Of course if brexit doesn't happen the Pound will rise and that will cause losses. Personally I aim to be very heavily invested in P2P before this happens. And after. Because the bull market we're in is long in the tooth and we're way overdue a major correction and anything can be an excuse for that. There are also good times to be in cash. I think I might buy some gold. Maybe a single sovereign.  Though I'm tempted to add a one kilo silver doorstop. Just to bug any precious metal fans by showing pictures of it.
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Post by ablrateandy on Mar 23, 2016 1:02:44 GMT
I saw a presentation recently where a decent analyst predicted parity with the USD within a year. It's an outside view.... but one that is feasible. If sterling bounces up to 1.48 or anything close I'll buy more USD assets as I think that any scent of a split vote will push some of the Asian investors to panic dump sterling assets. It's probably going to play out like the Scottish referendum, with a pre-vote panic for a month as the Daily Mail Effect kicks in.
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jo
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Post by jo on Mar 23, 2016 8:43:37 GMT
There's an old currency adage that 'sterling goes down by the elevator and up by the stairs'.
That said, it does have a tendency to confound. In Feb 09 it touched the 1.35s and the usual financial media suspects on CNBC/Bloomberg and the likes were confidently predicting dollar parity by year end. That was the low.
That said (again!) it did have a rather ominous first month-end close below 1.40 for 35 years at the end of Feb so it's worth watching. If eurgbp reaches ~81.00 I'll be looking to hedge some euro exposure.
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Post by propman on Mar 23, 2016 8:50:41 GMT
I firmly believe that the markets discount tail risk too heavily as no professional investor is willing to pay the price for something unlikely to happen, however they know this and so panic to cover the position when it gets more likely.
As a result, probably money to be made, although the I would say a 1.2/1 hedge is a better bet and get ready to go long sterling when the likely panic ensues. Won't let you retire for a small stake, but has a much better chance of coming up positive even in a "Remain" scenario.
Re the politics, it is the "punish the miscreant and discourage the rest" that will make a quick even del unobtainable. But politicians think short term and so when this hits their exports, Germany will lead the effort to get a sensible deal. Unfortunately you don't need a multi-coloured coat to realise that in the meantime GB will suffer, not least from Scottish Independence worries and even when they get their act together the wrangling over the detail will make any deal long drawn out or sub-optimal for GB.
the more interesting question is will we be able to get quick deals with non-EU markets? US has said they won't play ball, but India & China might, while I defer to the experts to comment on Japan whose trade strategy I have never understood.
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Post by xyon100 on Mar 23, 2016 10:06:50 GMT
If eurgbp reaches ~81.00 I'll be looking to hedge some euro exposure. I would be waiting for the Pound to go lower than that, though don't ask me why. Gut feeling as much as anything, which seems to be as accurate as anything else. My two last serious Euro to Pound purchases were at 97P and 91P with another a couple of years back at 85P. It's easy to forget that on the Euro the Pound has been as strong as 59P and as weak as parity. If I recall correctly, the Euro was even above parity at one point.
More on topic, I just ignore suggestions that an out vote will mean the UK is going to have a wall built around it. Where these people get the idea that the UK is a lame duck dependent on the EU to survive is beyond me. Any attempt by the EU to punish us for leaving is going to be a shot in it's own foot and they know it.
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adrianc
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Post by adrianc on Mar 23, 2016 10:37:50 GMT
I saw a presentation recently where a decent analyst predicted parity with the USD within a year. It's an outside view.... but one that is feasible. Well if you're convinced then just buy a 1 year GBP/USD 1.00 one-touch. For £10mm payout, I can see an 8% offer (£800k price) on one of my fx e-platforms (and that's in Asian hours). That would almost nail down the retirement fund and school fees in one go (then again given the inflation rate on school fees perhaps not ...) Anyway it's got to be an easier way of making money than messing around with all these fiddly loan things Can you translate that to English for me, please? You would bet £800k on US$:GB£ being 1:1 in 12months, and they'd pay out £10m? £80 would get you a grand? Hmm... NO. Silly idea. BAD idea...
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Post by propman on Mar 23, 2016 14:10:14 GMT
More on topic, I just ignore suggestions that an out vote will mean the UK is going to have a wall built around it. Where these people get the idea that the UK is a lame duck dependent on the EU to survive is beyond me. Any attempt by the EU to punish us for leaving is going to be a shot in it's own foot and they know it.
They do, but they also know that we will be hurting more and they will be worried about other contributors exiting. Add in EU bureaucracy and having to get all 27 countries signed up and you cannot assume that they will quickly reach a fair agreement. Its a bit like the old adage (was it Keynes?) that while markets will return to equilibrium, but someone betting on that may well go bust in the meantime!
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pikestaff
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Post by pikestaff on Mar 23, 2016 15:36:58 GMT
Obviously you can't trade in £1k payout clips ... Spread betting? (This is not a recommendation.)
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ablender
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Post by ablender on Mar 24, 2016 7:12:14 GMT
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brin
I am trying to stay calm.
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Post by brin on Mar 24, 2016 10:47:42 GMT
Baggy, in reality, no one knows definitively what will happen, if such people existed then we would have had prior warning of the 2008 collapse, everything is speculation, innuendo and inference, read post's and trust your gut feeling, no annalist or speculator can offer you better. My problem is, what steps could be taken to reduce the downside of the outcome of the vote for a 'normal'* person, ie derisk it? Hello Jonah, an therein lies the problem, is there to be downside if we leave?, is there to be downside if we stay? or where is the upside? will there be upside if we stay or leave. Who knows. .. I am not sure anyone does.
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jonah
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Post by jonah on Mar 24, 2016 10:52:45 GMT
My problem is, what steps could be taken to reduce the downside of the outcome of the vote for a 'normal'* person, ie derisk it? Hello Jonah, an therein lies the problem, is there to be downside if we leave?, is there to be downside if we stay? or where is the upside? will there be upside if we stay/leave or both? Who knows. .. I am not sure anyone does. I didn't say which outcome! i was meaning the specific currency change called out above... So to be clearer, are there suggestions to how a reduction in the strength of the pound could be mitigated by folk who don't trade in multimillion spot futures?
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bigfoot12
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Post by bigfoot12 on Mar 24, 2016 11:05:13 GMT
Hello Jonah, an therein lies the problem, is there to be downside if we leave?, is there to be downside if we stay? or where is the upside? will there be upside if we stay/leave or both? Who knows. .. I am not sure anyone does. I didn't say which outcome! i was meaning the specific currency change called out above... So to be clearer, are there suggestions to how a reduction in the strength of the pound could be mitigated by folk who don't trade in multimillion spot futures? But what is a normal person? If sterling falls petrol should become more expensive, many companies exports should do well, those companies with costs in sterling but sales in other currencies might do well, companies which import most of their raw materials might do badly. Property popular with international buyers might do well (as it cheapens for them). You need to look at your own situation and decide what would be better and what would be worse with the GBP 10% weaker. Also it isn't obvious that the EUR does that well if we vote to leave the EU.
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Though I'm tempted to add a one kilo silver doorstop. Just to bug any precious metal fans by showing pictures of it. 
