Cable has strengthened notably in the last week or so as Cameron and Osborne unleashed phase 2 of "project fear" and 'some' Brexit polls suggested market fears of a 'leave' decision were overblown. However, the broad polls still show the decision is too close to call, which is why the news from Ladbrokes – Britain's largest bookmaker – that they have seen a sudden surge in Brexit bets in the last few days. Interestingly, sterling has started to leak lower today…
As WSJ reports, some analysts point out that political polls and betting have called British political events incorrectly before, and that sentiment in referendums can swing in the closing days of campaigning.
“In the early months of this year, there was a big selloff in Brexit-related stocks,“ said James Ross, who manages Henderson Global Investors’ U.K. Alpha Fund.
”But since around the turn of this month we’ve seen a rapid reversal, and complacency has reached a bit of a dangerous level.”
A few cherry-picked headline polls and Cable has surged 4 handles as confidence that Brexit will not happen lifts…
But while that has become the narrative for the mainstream, professionals have been hedging Sterling volatility at a record level…
As Bloomberg reports, investors are now paying a record premium to hedge against the pound’s fluctuations over the next month as risks surrounding the U.K. referendum on European Union membership persist. Sterling’s one-month implied volatility versus the dollar has surged to 7.83 percentage points relative to historical swings, from 2.56 yesterday.
Which is odd because the aggregate polls now have Brexit a higher probability than Bremain…
And as far as people putting their money where their mouth is – Ladbrokes not a huge increase in th eproportion of money being bet on Brexit…
While we assume The Fed will be carefully watching the polls – desperate for another excuse to hold for one more month – we suspect the surge in cable of the last week was more squeeze than faith in Bremain, and as Automatic Earth's Raul Ilargi Meijer notes, the Euro is just 15 years old, but the EU goes back many decades. Strategic positions have long been taken in trenches that have long been dug. Is that the fight you want to fight? There’ll always be a Europe, but there’s nothing inevitable or incontrovertible about the EU, or about Brussels being its capital. All it takes is perhaps for one country to say “Thanks, but no, thanks.” The EU for all its bluster is very vulnerable.
So there’s your voting options. But it should be clear that the Brexit vote is headlined by the wrong people, for all the wrong reasons, and with all the wrong arguments. It can’t be exclusively about money, but it is. And if the Unholy Union falls apart sometime further down the line regardless, a vote for Remain on purely financial grounds will take on a whole different light: wasted energy, wasted money, wasted morals.
Besides, nobody knows what the -financial- effects of a Brexit will be, and any claims that are made to the contrary are just guesses based on whatever political -career- preferences the person or institution making them has. ‘Things’ ‘could’ crash on Trump victories and they could crash on Brexit, but any numbers attached to these potential events are 100% made up. It’s hilarious to see Treasurer George Osborne declare with a straight face that a Brexit would cause UK home prices to fall by 18%, but that’s all it is.
First question is: you sure it’s not 18.5%? What genius advisor came up with that number? Or did they have a committee of wise men in a week-long cigar-fueled brainstorming session that split their differences? Second question: do you guys realize that falling home prices are exactly what at least half of Britain is looking for? That distorting your real estate market to the extent that nobody can afford a home anymore is a dead-end street that kills cities and communities and people in the process?
I should stop here right? I can write a book about this, not because Brexit is such a huge subject (just see if anyone in Europe cares), but because the EU is such a yuuge disaster, and there will be many more opportunities to return to the topic. I have tons more little notes scribbled down, and a flood more crazy claims and comments will be made by various parties in the ‘fight’. Just wanted to say that this whole ‘debate’ -if you can call it that- has so far been very different from what it should have been.
Why would you want to belong to a team like the EU? I know that Cameron does, and so does Corbyn, but none of that is reason you should too. Nor should you want to ‘Leave’ because Boris Johnson wants to. You need to look out over the whole landscape. But that’s just me.
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