Monday, 11 September 2017

London still top financial market #despitebrexit

In not very surprising news, the authoritative survey on financial markets that is out today shows only a slight fall in London in its rating as a Financial Services hub. There is a bigger fall for New York which comes second, only distant Frankfurt gets a better rating.

Really, whatever puffery appears in the press, this is not that surprising. The City is made up mainly of FX Brokers, for whom Brexit means nothing except profits due to volatile markets; insurance, which is a global business not really affected by Brexit - the US hurricanes are a much bigger worry this year; legal and accounting services - for whom Brexit is a payday in terms of advisory work...and then maybe Banking/Mergers and Acquisitions/IPO's.

The bit everyone gets excited about is the least important bit, just because it is understandable and full of alpha-male noisy vessels it gets the most press. The latter piece is also most affected by technology change and so Brexit, as discussed previously, provides a great fig leaf to cover for inevitable salary cuts, redundancies and moving to cheaper jurisdictions.

Brexit I feel though is having an effect, business seems to be slowing as the heat in the political argument grows - and boy is this growing. The main news channels and media are loving the Remainer moaning and indeed, given the believe it themselves, are keen to keep promoting this line. This aspect is definitely making overseas investors nervous and FX market makers are following trend and marking down the pound.

On balance, this is no bad thing as the economy in the UK is badly over-heated as it contains some very large asset bubbles, with no monetary or fiscal tools in place to try and limit these - as such a slow down in activity and consumer spending will at least act as a brake on pumping more air into the bubble. Certainly, weakness in the pound is useful for slowly re-kindling exports and reducing external investment further in favour of increasing inbound investment, even though it makes holidays less fun than they were for many.


E-K said...

There can't be a cliff edge for London - it would cause a global depression.

Electro-Kevin said...

It's worth noting at this juncture that Tony Blair is investing in London commercial properties and holding on to his residentials.

andrew said...


He told you that ?
You have a very wide social circle.

Steven_L said...

Blair probably has so much money he can't not invest (or launder his ill-gotten gains) in just about every asset class going.

Electro-Kevin said...

Is Blair buying property in Frankfurt ? Anyone ???

BenHR said...

Is this now an official measurement? The 'Blair Barometer'!

Electro-Kevin said...

If Freddo chocolate bars can be used as a measure of inflation then a leading Remainer's actions can be used as an indication of what he really thinks the economic impact of Brexit will be.

Has anyone seen him buying up property in Frankfurt ? More to the point, has anyone seen him selling up London property to invest his wealth in Frankfurt ?

Why is no-one who tells us there is going to be a cliff edge doing this ?

Answer - because they know there will be no cliff edge. And there can't be. Because the colossus that is London will take the global economy with it and they know it.

andrew said...

Dear CU,

I find myself in a dark place.
As one of the few sort of remainers left I saw much that was good in the EU project.
Though it had many faults, as a whole it could be thought of as a good thing in the round - a bit like a friendly, but faintly smelly dog.

Now Mr Blair has spoilt it for me.
As a general rule, from about the year 2000 just about everything he says can be taken as a not quite true, and any cause he supports can be taken as working against the interest of the 'man on the bus' in some small way

One good example of this is his sterling middle east peace envoy efforts that have run in close parallel to the rise of ISIL.

Now it seems that he is in favour or the EU and thinks the UK is in trouble - especially the city.

This means the EU is in a bad situation and the UK is not in trouble.

Now it seems TB is buying UK property, which means means London is in trouble - especially if he intends to live there.

It is difficult to keep a track of the many layers of his deceit, this is what John Le Carre is useful for and indeed it may soon come out that he is actually hunting the maltese falcon.

Anyway, I am experiencing a lot of cognitive dissonance as the EU cannot be both good and bad at the same time (or can it).

What do I do?

Electro-Kevin said...

TB always, ALWAYS does the right thing for TB.

His bank account attests. Making money from double-talking is the one thing he's very good at.

Electro-Kevin said...

The situation is a win-win for Leavers. Brexit fails then at least we get to see Blair lose a lot of money.

Nick Drew said...

Dear Andrew, we've replied in a new post ...