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November 13, 2017

Comments

joe

John Redwood the politician will not be fully blamed for Brexit. John Redwood the "adviser" will be directly blamed and lose bonus on poor financial advice.

Sterling has weakened not risen since last October 2016 and is slightly up since October 2017 as the Bank of England was signalling bank rate rises. It has fallen again on further political uncertainties at Westminster. The rate is most sensitive to Brexit negotiation good or bad news. Once UK finally gives up trying to outwit the EU then the £ will fall heavily. That is good for FTSE shares as earnings are enhanced by the weaker exchange rate.

You possibly have made a classic mistake of using regression over years that are irrelevant to today's circumstances. That UK is breaking with its biggest trading partner is unprecedented so any past data won't help predictions. In the same way the Brexit and Trump votes were unique unprecedented situations and forecast incorrectly - presuming incorrectly that voters would act as they had in the past.

The wisdom of Brexiters is not something I have come across before.

chris

Joe - I'm not saying we should apply that regression blindly. Obviously, Brexit is bad for the economy and therefore £: the qn is how much of that bad news is already in the price. I was pointing out that Brexit isn't everything.
Another issue here is that a loosening of fiscal policy - either next week or later - would be £-positive.
You're right about incentives. But I'm not sure this is relevant to Redwood's financial advice. What stops people investing well isn't a lack of incentive, but (inherently) bounded knowledge and rationality.

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